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July 25, 2008

Niraj Wadhwa* was surprised when he opened the envelope he received one Saturday afternoon. There was a small, flashy credit card tucked inside the envelope. "Not again," Niraj murmured to himself.

He had not asked or applied for it. But the issuing bank decided that he should have one without his permission.

This was the third such credit card Niraj had received after he joined a financial sector BPO in Hyderabad six months back. Interestingly, the card belonged to the bank where he had his salaried account. "They know exactly what my salary and banking habits are and perhaps because of that they gave me a credit limit of Rs 30,000," says the 22 year old.

"I wanted to return it but then had to find time when I could do it," he sighs. Niraj works night shifts and sleeps during the day.

Also, it's not that he is not a credit card fan. Niraj is already using two credit cards -- one belonging to the same bank where he has his salary account -- since the last two years. However, an unsolicited credit card was the last thing he needed in his life.

Cut to Mumbai. Raji Patwardhan*, a mother of two, was shocked when she used an unsolicited credit card at a known grocer's and the transaction did not go through as it was blocked by the issuing bank as a pick up card ie a stolen card. A frantic call to the bank's call centre resolved the matter for her but not before she swore she will never ever use unsolicited credit cards.

Niraj and Raji from two different places in India may not be two random cases who got unsolicited credit cards. For, the banking regulator, the Reserve Bank of India [Get Quote], RBI, has geared up for some action after receiving several complaints on this front.

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A circular issued by RBI advising banks on July 23 about unsolicited credit cards states "unsolicited credit cards should not be issued and that in case an unsolicited card is issued and activated without the consent of the recipient and the latter is billed for the same, the card issuing bank shall not only reverse the charges forthwith, but also pay a penalty without demur (raising any objections) to the recipient amounting to twice the value of the charges reversed." Rejoice!

What's more, the person getting an unsolicited credit card could approach the Banking Ombudsman who would decide on the amount of compensation payable by the issuing bank to the one who receives such cards.

You can seek this compensation based on the amount of time you will lose in canceling such cards, money spent in doing the same, and for the mental harassment and anguish it will cause to you.

There's even help if an unsolicited credit card has been misused by somebody else before reaching you.

Citing some instances the RBI has observed that the card issuing bank will be solely responsible for losses arising out of such misuse. The card receiver or the person in whose name such a card has been issued will bear no responsibility. Rejoice again.

But how the banks implement these orders from RBI is another question. "This could perhaps win RBI a host of credit card users but only if such advice is heeded by the issuing banks in letter as well as spirit," says Niraj who's a bit sceptical about how the credit card issuing banks will look at it.

"What happened to the RBI order restricting credit card companies from using high-handed tactics in recovering loans from defaulters?" he demands. "We still get to hear and read about such incidents still happening," he adds showcasing his scepticism.

* Names changed to protect identity

Did you ever get a credit card without applying for one? What happened after that? Did you use it or decide to cut it to pieces? What hassles did you face because of an unwanted credit card?  

Let us know on the message board below!

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