The recent hype over Shumaila Anjums credit card case must have left many bankers pondering over how to reduce such fraudulent practices in future. Well, for starters if producing photo-cards is expensive then the least banks can do, is ask their merchants to check for photo identity proof at the time of the transaction - particularly for those involving high amount.
To further guard against frauds, the banks can also start sending cellular SMSs to their customers immediately after the transaction to that remedial action can be taken promptly, if need be. Although this service is currently being offered by some banks, it is mostly optional and is not yet a common banking practice.
And since they are at it, they should try to resolve other issues as well. For instance, when it comes to recovery, banks are quick to charge on the customer - calling him at odd timings with some outsourced recovery officers even threatening and disrespecting him in his neighbourhood amongst other antics.
But then such activities are in clear violation of central banks guidelines that require banks and DFIs to ensure that their recovery officers do not resort to any verbal or physical harassment of the delinquent card holder or their close ones. In fact the guidelines issued by the State Bank of Pakistan require recovery team to restrict their telephone calls and visits to a convenient time.
On an ancillary note, the policy to put the names of credit card defaulters in Credit Information Bureaus (CIB) or any other form of credit evaluation data check has to be made comprehensive and suited to Pakistani culture & current banking practices.
Its easy for banks to place ones name in CIB because he missed a payment - however small (say Rs 2000) - without having investigated the matter thoroughly, whereas the root cause of many such defaults lie at banks end itself. Many times the customer - who cant often read English or Urdu properly - isnt informed thoroughly by that over eager credit card salesmen. Even if they did, a lot of times bills do not reach on time.
Then there is negative selling, where many consumers are just sold or sent different forms of consumer assets (such as insurance, e-banking cards) whose fees is charged on their cards, without having being told all its details, if told at all.
By the time such disputes are resolved, the customers name has already gone into data check. This then demands another long process to wipe the credit slate clean - in contrast with SBPs guidelines to update borrowers record through interim update within 10 days from the date of settlement. And while it is logical to place a minimum limit check before any defaulters name is placed in CIB, it also makes sense for banks to make their processes transparent and efficient enough so that such unnecessary disputes arising out of banks fault do not create hassle for consumers.
Lastly, a long standing issue. Why do many merchants still charge an additional 2.5 percent when a consumer is paying through credit or debt card? It is simply a disincentive for plastic economy.