Thursday, September 11, 2008

HSBC bank to pay compensation for ‘defaming’ defaulter

Some of the banks have made practice of making a defaulting customer's name online. The state consumer commission terming this practice as highly offensive and uncivilized, has directed banks not to use this method.

Commission president Justice JD Kapoor has directed the RBI governor to issue instructions to all banks to stop this unfair trade practice. He said that the banks should not post the customer's name on website and to other banks.

The commission president passed this judgment during the hearing of a case, filed against the Hong Kong & Shanghai Banking Corporation (HSBC) Ltd. The commission president has directed the HSBC bank to pay a compensation of Rs 12,000 to one Atul Kumar for blacklisting him and posted his name on Satyam website even when he had paid the amount outstanding against his credit card. "Every bank is supposed to assess the credibility of a person independently as and when he applies for a credit card or loan and not on the basis of record of any other bank," said Justice Kapoor.

He added: "Undue demands are raised by banks against credit card holders or disputes crop up over the outstanding amount. In that case, it is unfair to taint the image of the person by circulating his name online or among other banks. The bank has no business telling the world at large that a person has defaulted or gone bankrupt."

Complainant Atul Kumar had filed a petition before the commission after his card was deactivated and his name was blacklisted on Satyam's website by the bank. After returning from abroad after trip in 2005, he found that the bank had deactivated his card. The bank gave the reason for its action that Rs 46,000 was outstanding against his credit card. By May 2005 he made a payment of Rs 40,000, in spite of which the bank did not activate his card and in its place blacklisted him.

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