Banks use deceptive techniques to recover defaults


LAHORE: Commercial banks are deceiving its credit card debtors through different means, banks’ customers told Pakistan Today on Saturday.
They said, bank officials use various means to deceive the defaulters. They would make a phone call to defaulters of credit cards, and ask them to pay the minimum amount, as the bank had decided to offer them settlement, in which case the customers would only need to pay 50 percent or even less of the total amount. The banker would ask customers to pay minimum installment of the settled amount at the earliest. However, after the payment, the bank does not issue a letter of settlement, in fact the credit card bill received by the customer next month does not account for any settlement amount. Interestingly, bank officials later call the customer and tell a different story, which again attempts to deceive the customer.
Generally, the financial crunch has led to an increase in credit card default in the past two years. The job market had squeezed and unemployment is on the rise, resulting in bank defaults. Non-Performing Loans (NPLs) have also increased sharply over the last two years and currently touch Rs 460 billion. According to the State Bank of Pakistan (SBP), there has been an increase of Rs 2.6 billion in NPLs in the second quarter of the fiscal year. NPL, at the end of March 31st, 2010 was roaming at Rs 457.2 billion but on June 30th, 2010 it touched Rs 459.8 billion.
The Central Bank has already instructed banks to be lenient and honest in the recovery of loans, however banks officials continue to lie with the customers, said a customer, Imran Ahmed, who was cheated by a bank official in similar way. Imran Ahmed was issued a credit card in 2004 and he made timely payments till 2009, after which he lost his job. “I used to pay minimum installment till April but in later months, it was not possible for me to pay the installments and I defaulted,” he said, adding, he received calls from bank officials, who asked him to pay the amount. “I made the bank aware of my financial problems but the bank did not listen,” he said. Imran Ahmed, while narrating his story said that he received a call from an official of the bank around three months back. “The caller said that my settlement has been approved and now I have to pay only 50 percent of my consumed amount while all other charges have also been waived off,” he said, adding, the bank official informed that my settlement letter would be dispatched in a couple of days. “The banker asked me to pay a minimum amount i.e. Rs 2,700 for further processing and the next day I deposited the money,” he said. But the bank did not issue any letter and instead issued next month’s bill. “I was astonished to see that penalties were imposed while there was no settlement,” he said, adding, another bank official called him and said that the settlement was approved and he need not worry. Imran once again paid the minimum amount but next month there was a status quo. “I called the help line and came to know there is no settlement in the system of the bank,” Imran said, adding, he was deceived by the bank’s officials. Another credit card user, Farooq Shah also narrated a similar story.
A banking industry source said that the recovery officers of the bank lie with the customers to improve recovery. “The customer must ask for black and white documents before paying any amount,” a senior banker said, adding, the customers have the right to ask for document and then pay the amount.