KARACHI, Jan 17: The State Bank of Pakistan has asked banks to ensure that their recovery or collection officers do not resort to any verbal or physical harassment of delinquent credit cardholders, their family members, referees and friends during recovery or collection efforts.

The banks were also advised that interest amount should be charged on net credit i.e. after deducting the amount paid by the cardholder. The SBP asked banks to resolve complains of cardholders in 45 days of the launching of complaint.

Detailed instructions were issued by the SBP on Saturday which would help reduce complaints against banks issuing credit cards, deteriorating services, over-billing, abusive language and harassment tactics being used by the recovery sector of banks.

The banks earned serious allegations of torturing cardholders and their families for recovery of loans which hit the credit card business in the country.

After a public criticism, banks slowed their recovery process and are awaiting better laws of recovery.

“Recovery and collection officers should not humiliate publicly or in private or intrude the privacy of the credit cardholder’s family members, referees and friends,” said the SBP.

Telephone calls and visits to credit cardholders for recovery of unpaid dues should be restricted to a convenient time and the same may be defined in the bank and DFIs public policy and it should be properly communicated to customers at the time of issuance of credit cards.

In addition, recovery should only be made from principal cardholder, and in no case supplementary cardholders will be subjected to any sort of pressure to pay the unpaid amount.

However, supplementary cardholders may be contacted only to enquire about the whereabouts of the principal cardholder.

The SBP said banks or DFIs should not start recovery process for reported disputed transactions until the investigation carried out by card-issuing bank, DFI, Banking Ombudsman or State Bank of Pakistan is completed.

In case of wrong or inappropriate basis of rejection of customer claim, bank or DFI would be liable for penalty.

The SBP advised banks to simplify credit card terms and conditions, and keep them clear and understandable, both in English and Urdu.

“In order to mitigate fraudulent use of credit cards, banks and DFIs should have a built-in functionality in their systems to monitor usage of credit card,” said the SBP.

Additionally, it should also promptly identify unusual or out-of-pattern transactions.

Banks and DFIs were advised to establish an appropriate complaint resolution structure in place, commensurate with the volume of complaints and better service consideration.

Credit card complaints resolution mechanism must be prominently disclosed on the official website of the bank and DFI.

The bank and DFI may also arrange online complaint registration on their websites.

“In no case, complaint resolution time should exceed 45 days from the date of complaint for the transaction under dispute originated within Pakistan,” said the SBP.

The SBP said the interest amount should not be charged to customer during investigation period. Bank or DFI will recover interest amount accumulated during investigation period only when the dispute is settled in favour of bank or DFI.

If decision turns in favour of the customer, the bank or DFI needs to refund the amount of disputed transactions, even to those customers who had made the payment of disputed transaction and cancelled the card after lodging complaint.

It further said banks and DFIs should seek prior consent of their customers and account holders for informing them on new products and services on telephone.