Sucheta Dalal :Caveat emptor! cardholder beware
Sucheta Dalal

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Caveat emptor! cardholder beware  

May 31, 2005

Intro: The blog Saara Akaash, by N.P.Ojha has this shocking report on how banks are stretching Reserve Bank requirements under privacy rules to get ordinary people to waive fundamental rights. Worse, it is being done through negative consent - which means that if you don't respond within a fixed time, the consent is taken as granted.


Caveat Emptor:


Caveat emptor! (Standard Chartered; Credit cards)


Ms Aparna Mitra (Head Service – Credit Cards) of Standard Chartered Bank has sent a letter to the cardholders of the bank requiring consent from the customers (actually, not as much as requiring as intimating the assumption of consent – the letter states “Non-receipt of any communication from your end by June 10th 2005 will be deemed as acceptance of consent and authorization”) in respect to sharing customer information with other parties.


The letter is made out as being occasioned by a (3-year old) circular from the Reserve Bank of India “bearing reference no. DBOD No. DL.BC.29/ 20.16.002/ 2002-03 directing all Banks operating in India to periodically submit credit information pertaining to their customers to the Credit Information Bureau (India) Ltd. or any other agency authorized by RBI”.


In a classic sleight-of-hand, the letter then goes on to construct a clause for consent and authorization that goes much beyond what the RBI requires and where any future extension of consent and authorization will be beyond what is required by an independent body such as the RBI.


According to the clause which all customers are required to agree:

“authorize the Bank to disclose to Credit Information Bureau (India) Ltd. (CIBIL) or any other agency authorized by RBI or such other parties as the Bank shall deem fit” (note that “the Bank” is Standard Chartered); “The Customer(s) also consent and authorizes CIBIL or any such other agency authorized by RBI or such parties as the Bank shall deem fit, to use, process the said information disclosed by the Bank in the manner deemed fit by them and to furnish for consideration, the processed information or products thereof prepared by them, to Banks/ financial institutions and other credit grantors or registered users, as shall be specified by RBI in this behalf or otherwise” (Emphasis provided)


In one stroke, Standard Chartered is not just assuming full ownership of all information that customers have submitted but is also abrogating the right to provide it – free or otherwise – to anyone it pleases, for any purpose that Standard Chartered or the subsequent entity (in whose hands this information reaches) may want to use it for.


And Standard Chartered is doing this beautifully – by just appending a few words to what the RBI is requiring it to do (for the record, the creation of CIBIL and RBI’s support to this new organization in form of requiring banks to share data with CIBIL is an extremely important and beneficial step for all involved in the personal credit industry – including customers – in our country).


Why is this important at all? Well, as an overarching cause, note that they’re taking your and my personal particulars (including, but not just restricted to, financial data) and trading in it – which is absolutely not their remit. And, to be very specific, note that the next time an auto-loan salesperson calls you on your mobile phone, you have actually authorized that call to be made.


No wonder there are a number of people who despise these MNCs (in banking or otherwise): Standard Chartered wouldn’t have tried such a trick in any developed market that it operates in – it is using the lower standards (with respect to data protection and consumer awareness) prevalent in this country to “get away with what it can”. Despicable. Next, consider that it is such exploitation of loopholes that lead to the government and regulatory agencies becoming very prescriptive in their recommendations – so, the RBI could have had issued a circular with specific wording on the communication between banks and their customers. But, had that been the case, I am sure there would be editorials and (planted?) news stories about “license-raj-mentality” or “overzealous regulators” and such like.


For things to change (without throwing out the baby with the bathwater), at least one of the three conditions – consumers becoming powerful as an organized group, RBI’s ombudsman becoming proactive and powerful, some sort of a producers guild becoming forward looking in respect to consumer issues – need to be met. Till then, thank you very much but I do not want any personal loans, so don't call me: should my needs change, I will call you.



I have written to Ms Mitra at the address supplied, specifically excluding the discretionary portions from the consent, but I doubt if she or her employer will pay any heed (surprise me, StanChart).





-- Sucheta Dalal