SBI Cards Filed 19,000 Criminal Cases For Failed Payments; Even Rs 13,000 Pending Due Is A Criminal Offense!

State Bank of India, India’s biggest Public Sector Bank in India, with a network of over 15,000 branches spread across the lengths and breadths of the country has a piece of information, which must be conveyed to you as early as possible.

Before that, we’d recently filled you in with the information that SBI Cards and Payment Services Ltd, SBI’s credit card unit has filed initial share sale documents, which could comprehend the company selling shares worth around ?9,600 crore.

Anyway, a much more publically narrowed down news awaits you today, which will directly affect the common man, if not taken care of.

It turns out that SBI Cards may block the customer’s account, if the credit card payment isn’t received within a stipulated payment due date, as communicated through statements and SMS. The account block, in such cases, may be temporary or permanent depending on delinquency stage, default potential, payment history.

On second thoughts, this is a pretty serious matter.

SBI Cards’ Recorded Debts

SBI Cards IPO prospectus has recently released data, which reveals that the company has filed 19,201 cases under Section 138 of the Negotiable Instruments Act and 14,174 cases under Section 25 of the Payment and Settlement Act 2007. 

For those of you needing to peek into the matter, a case is typically filed under Section 138, when a cheque is dishonoured due to insufficiency of funds, or as we may know it by ‘cheque bouncing’. On the other hand, a case is filed under the Payment and Settlement Act when there is a failure in electronic payments due to insufficiency of account balance.

Surprisingly, the cumulative amounts resulting for these two cases were just ?25.52 crores and 72.6 crores respectively, which is not a big amount when it comes to banks undergoing debts and all. This implies an average case of just ?13,290 and ?51,220 in credit card debt under the two acts respectively. 

However for you reading, the final takeaway is that no debt is too small and you could be facing criminal charges against you if you fail to repay the debt. Yes, criminal charges!

What If You Cannot Pay Your Credit Card Bill on Time?

According to the IPO prospectus details by SBI Cards, users who’re unable to pay their stipulated amounts until the payment due date, shall find their SBI accounts blocked, which may be temporary or permanent depending on their delinquency stage, default potential and payment history.

After 191 days, such credit card accounts resulting from payment due date are moved to a recovery pool, or post charge-off bucket. In such circumstances, a set of legal tools are used by the credit card company.

In order to deal with this, the company has resorted to alternate dispute resolution channels like arbitration, conciliation, bilingual legal notice, privilege police complaint and lok adalat depending upon risk profile. It has also used quasi-legal, legal action under Sec 138 of Negotiable Instruments Act. 

For those who are taking this matter not so seriously, both of the above mentioned sections provide for a quality jail time up to two years and a fine for up to twice the amount dishonoured.

Before charging you off with any of the above two Section Acts, the credit card company has to send you a notice asking for payment within 30 days of the cheque bouncing/auto debit failure. If you fail to make the payment within 15 days of this notice, a case under these sections can be filed.

You should also note that a credit card default can move you into a blacklist with credit rating agencies like CIBIL. This will make it harder to get future loans or credit cards even if you subsequently pay off your debt. According to the prospectus, there are around 3.6 crore credit cards in force in India and SBI cards which has issued 83 lakh credit cards commands a roughly 23% market share.