While credit cards play an essential role in the lending process, card users often remain confused about interest rate calculations by the card issuer. For example, one credit card user of ICICI Bank found that he was charged extra for late payments on his dues. The Bank denied charging any additional interest to the user, causing him to file a complaint and escalate the issue. When the matter reached the banking ombudsman, ICICI Bank reversed the interest charges.
The case is related to Sunil Kumar (name changed), who holds an Amazon Pay ICICI Bank credit card. As per his credit card statement on 5 March 2024, there was a closing balance of Rs7,057.13, and the due date was 23 March 2024. He paid the dues after 12 days or on 2 April 2024, for which ICICI Bank levied Rs664.34, including interest of Rs563 and IGST of Rs101.34.
Mr Kumar alleges that ICICI Bank charged him Rs159.37 as interest on an opening balance of Rs4,713 for the first 12-day period which, he says, is relatively higher than his calculations. He says, “I computed the interest for each line item and found that the interest amount calculated by ICICI Bank was much higher than the value I computed. The first line item in my account statement (retail – principal + interest pending from the previous cycle) shows 12 days and Rs159.37, the interest charged at 42%pa (per annum) on Rs4,713. However, my calculation shows 12 days x 42/365 X 4713/100, the interest at around Rs65.04.”
He says he wrote to ICICI Bank but received no response on the formula for calculating interest on late payments for the credit cards.
Mr Kumar then escalated the matter before the banking ombudsman (BO). Meanwhile, on 5 June 2024, ICICI Bank emailed him about the total dues application on his credit card and the reversal of interest charges without citing any reason.
“We would like to inform you that as per the statement dated 5 March 2024, there was a closing balance of Rs7,057.13 for which due date was 23 March 2024. However, we had not received your payment on or before the due date, towards which interest charges of Rs563 levied on 5 April 2024 along with applicable IGST. Further, we would like to inform you that merchant credit has been received for an amount of Rs2,821, including Rs2,198 on 14 March 2024, Rs139 and Rs484 on 16 March 2024. In this connection we would like to inform you that merchant refunds, cancelled transactions and reversals are considered as a payment towards the outstanding dues of the card Rs7,057.13. We have received the total payment of Rs7,057.13 on 2 April 2024, which is after the due date. Due to which you were levied with interest charges. Notwithstanding the above, we have reversed the interest charges levied in your credit card account on 4 May 2024,” the mail from ICICI Bank says.
While closing his case on 14 June 2024, the BO informed Mr Kumar that ICICI Bank had reversed the interest and late charges. “In connection with your complaint regarding the levying of higher late payment charges on outstanding credit card dues, comments were sought from the regulated entity. The ICICI Bank has confirmed the reversal of charges. Accordingly, we are closing the complaint.”
Moneylife contacted ICICI Bank seeking clarification on the allegations made by Mr Kumar and the subsequent reversal of charges. An official told us that “As per banking practice, in case a credit card customer does not pay the total amount due (TAD) by the due date, interest is charged on the unpaid transaction(s) from the date of the transaction(s) till the payment is done in full. In this case, we would like to confirm that the Bank accurately charged a total interest of Rs159.37 for three unpaid transactions of the previous cycle from the date of the transactions till the date of payment. Further, our officials explained this to the customer.”
ICICI Bank also shared an example of the calculation of interest charges on late payments for credit cards.
Interestingly, while the grievance of Mr Kumar was about wrong calculation of interest of Rs159.37 for the balance of Rs4,713, ICICI Bank reversed entire interest charged on his dues of Rs7,057.13.
ICICI Bank told Moneylife as well as Mr Kumar that the interest rate charged is ‘accurate’. However, ICICI Bank has yet to respond to our question about reversing the interest charges for Mr Kumar. We will update this article as and when we receive a reply from ICICI Bank on reversing the interest charges.
Coming to these antics of ICICI Bank and my own personal experience, I share it with other readers and would appreciate feedback from Mr. Sapkal here.
I went to Kenya on 17th May. On the 19th, I withdrew 15,000 Kenyan Shillings from an ATM there. My Credit Card statement (it was related to my Lifetime Platinum card not Amazon Pay Card, though I have the latter) dated 23rd May was received in time, showing the debit and the interest charges (which I believe they do charge for withdrawal from any ATM, domestic or international?).
Surprisingly, these interest charges (with 9% each of SGST & CGST) were mentioned under a card number which I did not recognise. On visiting the ICICI branch office/s, I was informed that this was the card number of my original/first credit card (expired in 2014 and subsequently renewed twice with another number) and which their system has as my Account Number.
Why the system has such an anomaly, where the interest charges pertaining to the use of the present card, are mentioned under the Account Number (taken from the 2014 expired card) and not as part and parcel of the present card statement, only the idiots who designed the system can answer.
The entire amount against that statement was settled in full on the due date of 10th June. Imagine my surprise and irritation when I received my next statement on 23rd June, when further interest charges (still appearing under the non-existent card number/their claimed Account Number) were there. On again physically visiting the bank (I refuse to install their app or do any Net banking), I was told that since I settled the account on the due date of 10th June, these charges were the interest accrued from the date of that statement (23rd May) till the 10th of June.
It is only when I read this article, that I am realising that this very likely is the same hanky-panky faced by the subject of Mr. Sapkal's article. It would be nice to get confirmation on that OR that interest charges for using the ATM to withdraw cash are governed differently?
Coming to the comments made by Anil and Amazon Pay card, I fully endorse his accusation of getting cheated when it comes to calculating and crediting the Cash Back. Writing twice to Amazon Pay (their Grievance Cell, no less) has elicited not even an acknowledgement, much less an explanation. Mr. Sapkal would be a better person to answer whether this bullshit comes under the purview of ICICI Bank or Amazon.
Just an hour ago my Amazon Pay account was blocked (after being in use since Jan 2016) for not completing my KYC. On exploring further, Amazon insists (taking recourse to RBI guidelines) for the KYC being completed only through eKYC and the use of Aadhaar. Use of the latter is anathema to me and ultra vires of the SC ruling asking us to obtain an Aadhaar card solely for linking with the PAN and required to file your IT returns (which I did just two days back). No other agency, including the RBI, has the right to insist on the use of Aadhaar. Am I correct and how do I fight that?
Many thanks for a patient reading and I do look forward to some actionable feedback, either from Mr. Sapkal or other concerned readers.
This itself will run into 100's of crore rupees.
Customers usually assume that the bank is honest and takes it statements on trust. Nobody rechecks the statement issued by banks. each such action is a criminal breach of trust.
Alas, India does not have class action suits, therefore organizations like ICICI bank get away with such criminal acts with impunity.
Cheers for the RBI and ICICI Bank