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Sachin (Senior Executive)     20 January 2017

Citi bank credit card

Hello,

I have a Citi Bank credit card which was taken at Mumbai during the year 2013 and now its been blocked due to overdues. The total outstanding amount is 80,000 and the last amount paid was in April 2016. In Nov 2016, the bank updated my CIBIL account with "Write Off" as I failed to make any payment past April 2016 due to my worst financial status. Having said that, I would like to clear the entire outstanding amount and close the account with them to get my financial position back up and running as smooth as earlier days.

I have been searching in Internet from a couple of days for a suggestion on the correct payment mode to clear this outstanding. Some say Crossed Cheque, some DD and haven't really seen anyone quoting about NEFT or Online payment. Is it not safe at this stage? Please advise what payment method should I opt to clear this due at the earliest possible time. Should I go back to Mumbai if the payment is through Cheque or DD? Also, please help me with your helpful suggestions on how to deal with 'No Due Certificate' from Bank as I have seen people posting in some forums asking to take the letter first and then proceed with the payment, obviously which is not going to work.

Appreciate your quick responses and thank you so much for the help.

Regards,
Sachin



Learning

 5 Replies

Dr. Atul [9013898936] (Lawyer, Scholar)     20 January 2017

The only difficulty I can see is the accumulated interest for outstanding amount, which can be susbtantial.

Write a letter to Citibank seeking closure of your credit account (irrespective of whether it is already blocked). Ask Citibank to furnish the latest certified account statement through postal mail within 3-4 days of your letter to facilitate closure of the account; do not undertake anything in writing regarding making payments just yet. Send this through Registered Post/Speed Post (as per Citibank website, you can do so by writing to  Citibank Mail Room, No. 2 Club House Road, Chennai 600002).  

As and when you receive a Statement (be prepared for a shock) and if it figures okay, make payment through a cheque deposited in a Citibank dropbox (keep a copy of the all letters and cheque). 

When the Cheque is cleared, write to Citibank again seeking the post-payment statement/no-dues and apply for your Credit Score from CIBIL; it'll cost a small amount of money (https://www.cibil.com/creditscore/). If the CIBIL score has not been updated, seek a rectification from Citibank and CIBIL by making a request in writing.

Sachin (Senior Executive)     20 January 2017

Thank you so much for your quick response.

Regarding statement, I have already received the latest one in my registered email ID, a week back. Is this e-statement not sufficient? Should I still request for a physical statement? The problem with this is physical statement will go to the registered address and I had given my company's address. Currently am not working there and in a different city too.

As far as the amount is concerned, its around 80,000 and some change (the actual amount was 52,000 when the last payment was cleared in April 2016). I have heard that the total outstanding amount (with interest) freezes when they update CIBIL with "Write Off". Please advise if this is not correct.

Dr. Atul [9013898936] (Lawyer, Scholar)     21 January 2017

I'm not quite certain about a halt in levy of interest once the outstanding is reflected as a 'write-off' in account books. Final payment without interest on outstanding would sound like 'settlement' to me ('settlement' is a different head from 'write-off' and though not as grave, still considered to negatively impact the credit score). I think that interest is charged despite write-off as the write-off asset is always recoverable. Anyhow, I'll check it up tomorrow and let you know what I find.

As of now, pay the amount reflected in the latest statement in your possession, through a dop-box-cheque (if the principal is undisputed; e-mail statement is fine for the moment, though it would be preferable to have a hard copy of the full and final closure statement after all dues have been cleared). Immediately after that, write a letter to Citibank giving them complete details of your credit card account, amount payable as per the last statement received by you and the cheque details of the cheque deposited by you; ask for account closure and no-dues certificate. In addition to that, ask them to change your mailing address to an address accessible to you.

Dr. Atul [9013898936] (Lawyer, Scholar)     21 January 2017

Having looked around a bit, I still think that the bank might continue to charge interest on the outstanding amount, write-off notwithstanding. See Anjoo Sharma v. HSBC Bank (Indiankanoon.org Link :: State Consumer Disputes Redressal Commission Link). Though on the facts of the case, the consumer dispute was held in favor of the complainant/consumer, I personally feel that the defence was not led or presented properly and there even sounds like a disconnect between the HSBC commercial and legal (insofar as it can be assumed from the Commission's decision). Be that as it may. See these relevant parts (quoted decision in italics, empahsis is mine):

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The opposite party bank resisted the case. While denying each and every allegation made in the complaint, however, it admitted that it had issued two credit cards

...
The statements of account for the period from 6.1.2006 to 5.1.2007 show that in respect of one of the credit cards the outstanding balance was Rs. 1,95,241.62 against which it has received Rs. 1,87,996/- as on 8.1.2007. Thus the interest amount was not cleared. In respect of second card for the period from 10.11.2006 to 9.12.2006 outstanding balance was Rs. 2,18,342.59 as on 1.1.2007. The bank had received an amount of Rs. 10,000/- on 27.12.2006 and Rs. 2,08,343/- on 8.1.2007. Interest charges on the outstanding payments due on credit cards were levied only on the last date of billing. In the event any payments are made during the period, interest on the outstanding amounts would be charged to the date of payment and the same would be reflected in the subsequent statement.

...

The bank while admitting the payments made by her towards credit cards, however contended that in respect of one of the credit cards the outstanding amount was Rs. 1,95,241.62 as against which, it has received Rs. 1,87,996/- as on 8.1.2007. She might have deposited the cheque on 5.1.2007 for payment of said amount but it was cleared on 8.1.2007. Therefore she was liable to pay interest component in the interregnum on the outstanding amount of Rs. 1,95,241.62 levied from 5.1.2007 to 8.2.2007 viz., Rs. 7,245/- This amount was not paid. Pertaining to the second credit card as against outstanding amount of Rs. 2,18,342.59 as on 9.12.2006 the complainant had paid Rs. 10,000/- on 27.12.2006 and Rs.2,08,343/- on 8.1.2007. She had failed to pay interest for the interregnum period. They informed the principal outstanding and not interest. In both the cases the effective date of payment could be reckoned from 8.1.2007.

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I think the Complaint turned on the fact that the bank had admitted having recieved the outstanding payment and having issued an dendorsement to that effect, albeit mistakenly as alleged.

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[A]dmittedly one Ms. Deepthi, Manager of the bank had acknowledged that the bank had received the amounts by way of cheques As on date outstanding vide Ex. A5 & A6 the date being 5.1.2007. As we have earlier pointed out the defence of the bank is that the complainant was liable to pay the amount together with interest till 8.1.2007 the day on which the amount was received and for the interregnum period interest would be charged and therefore till such payment was made, it cannot be assumed that the entire amount was paid. The complainant asserts that had this been the practice Ms. Deepthi, Manager could have informed the said fact or made an endorsement to that effect . Contrarily by positively mentioning As on date Outstanding would undoubtedly indicate that the entire amount was paid. The bank while admitting that their office had issued the certificate that there were no outstanding wanted to wriggle out by stating simply that it was a mistake on the part of the office. Having accepted the mistake that they are estopped from contending that the amounts due were not paid. The bank could have filed the affidavit of Ms. Deepthi  to prove that it was not towards outstanding and some amount was still due. She would be in  better position to explain as to the endorsement which completely exonerates  the complainant from paying  any of the amounts. Equally, when the complainant asserts that  when she did not receive any communication with regard to cancellation of  these cards, she met  Mr.  Kamalesh Rangan, Associate Vice-President, Customer Services & Personal Finance  along with an advocate Mr. Ramana Rao, who stated that he had waived off the amount due to wrong calculation. The bank did not choose to file the affidavit of  said Mr. Kamalesh Rangan to deny the said fact. Instead it had filed the affidavit of Mr. Srikanth Racha, Legal  Officer  who was admittedly not present at any of these transactions. He could not  deny the facts that were alleged by the complainant. He was not aware of any of these transactions.

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The Competition Commission decision in Pravahan Mohanty v. HDFC Bank Ltd. may also be useful. The consumer (referred to as the informant under Competion Act) before the Director General, Competition Commission had charged the bank of having acted in abuse of dominant position. Relevant portion as under:

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The informant referred to Page 29 of the Cardmember Agreement where it is mentioned that interest and any other applicable charges shall continue to accrue on the Card Account until the outstanding balance of such Card Account was reduced to nil and this clause was operative even after the cancellation of the credit card by the bank. 

[B]anks have been advised vide our circular no. DBOD No.Dir BC.88/13.03.00/2009-10 dated April 09, 2010 ... It has also been stated in the Circular that ... If a credit card holder wanted to surrender his card then the bank should accept the surrender subject to settlement of the dues by the cardholder.
...
In this case IP has alleged unfair, indeed unconscionable and illegal, conditions imposed in the Cardmember Agreement as well as unfair, indeed hugely excessive and legally untenable, price - which includes "interest", "finance charge", "service charge", "illegally collected "service tax" and interest thereon, non-refundable entrance fee and annual membership fee, cumulative interest on interest in the event of a single default - unilaterally imposed on the Cardmember.
...
The question which arises as to why in the case of credit cards the interest is charged on daily basis.

...
36. Therefore in pursuance of section 27 of the Act,
(i) the bank should cease and desist from carrying on business on the basis of the Cardmember agreement and the bank should not abuse its dominance with reference to its consumers.
(ii) the bank should not enforce the Cardmember agreement and should not recover from the informant than that what was due and should not charge any interest after the use of the card was stopped.

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After going though these two (rather prolix) decisions, I'd say that they give you a fair idea of what the bank's defence would be, if it comes to that. So far as Anjoo Sharma is concerned, I'd even go so far as to say it was a defensible stand on part of the bank. But it also gives a fair indication on how to approach the bank to safeguard yourself; it'd be a good idea to call for the latest statement from your bank and make a payment as soon as you receive it, maybe even NEFT, to avoid accuring of interest. What seems to have worked in favor of the complainant/consumer in Anjoo Sharma was the statement received, payment made and endorsement issued by the bank on the spot. I'm not sure if this can be done on any branch on Citibank (it'd would depend on the commercial practice which I'm not aware of; probably even best to call up the Citibank Customer Support and ask them if you can visit any branch of Citibank and receive a latest statement from any such branch and handover the payment cheque to said branch).


(Guest)

Dear Sachin,

Mr. Atul has explained the process very well. But, since yours is a case of written off amount, I may like to add in addition to Mr. Atul's advice, if that may help you avoid some anticipated long struggle in future in getting your amount appropriately accounted for in your account, as wasting some days more now may probably help you save some years of struggle in future to set right your CIBIL record.

In my view, since your account is written off, any deposit made blind-folded may probably go the sundries of the bank instead of direct credit to your credit card account. On that, probably, you may again have to struggle for getting that appropriately adjusted in to your credit card account.

So, better make some correspondence with the bank asking them to revive your credit card account by showing your intention to make payment of dues. Wait for the response, That may not only provide you surety that your deposit would genuinely go to the credit of your account, but also may help you get appropirate background evidence if per chance some dispute remains there. So, make payment for deposit in to your credit card account after your account is revivied

 


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