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Informist, Thursday, Nov. 27, 2025

 

--HC: System needed to swiftly block credit card after inadvertent OTP sharing 

--HC: No late fee charge on customers who complained of credit card fraud 

--CONTEXT: HC order on plea against fraudulent transactions on credit cards 

--HC: RBI to ensure complaints not rejected in mechanised process 

--HC directs strengthening of RBI's ombudsman mechanism for complaints 

 

NEW DELHI – The Delhi High Court on Thursday said banks cannot charge late payment fees and interest on customers who have lodged complaints of credit card fraud and those complaints are yet to be resolved. The high court said there ought to be a mechanism by which customers can immediately contact the concerned bank to block their credit card in cases of inadvertent sharing of one-time passwords.

 

Further, the high court remarked that the Reserve Bank-Integrated Ombudsman Scheme, 2021, has to be an "effective scheme and not a mere toothless division" of the central bank. The high court issued directions to strengthen the RBI's ombudsman mechanism for complaints. The Reserve Bank of India should take steps to ensure that all customer complaints are not rejected solely through a mechanised process, the court said. The rejection of complaints by the ombudsman through a mechanised model results in more disputes being filed in consumer forums, commercial courts, civil courts, and writ petitions, the court said. 

 

Issues which ought to be resolved at the level of the ombudsman of the RBI should be resolved at that stage itself, and for that purpose, if any strengthening of the human resources at the ombudsman's office is required, it should be undertaken, the court said. Whenever complaints filed before the RBI ombudsman are rejected, they should undergo a second-level human review by trained legal personnel to ensure they are not rejected for minor errors, the court added.

 

Justice Prathiba M. Singh said that the RBI should issue directions to all banks to create a flowchart in the complaints tab on their websites, where the manner in which a customer can register a complaint with the customer care executive, branch manager, as well as the nodal officer, can be communicated to the customers. If the ombudsman's complaint redressal mechanism is made more effective and efficient, litigation in courts and consumer forums can be reduced considerably, the court said. The high court asked the RBI to place an affidavit on record by Jan. 15 2026, stating the measures taken to implement its directions.

 

The high court also pulled up recovery agents for sending threatening messages to the petitioner, Sarwar Raza, by visiting his residence and demanding payment of the alleged outstanding amount. This amount was the transaction value on Raza's second credit card, which was issued to him by Citibank without his consent. Such conduct by recovery agents is condemnable and not at all permissible, the court said. The court held Citibank responsible for the harassment inflicted on Raza by the bank's recovery agents and directed the bank to pay INR 100,000 in costs to Raza.

 

The court noted that the alleged outstanding amount had already been re-credited to the petitioner by Citibank during the hearing. No payment of late fee, interest charge, or any amount in respect of the amount should be charged by the bank, the court said. The CIBIL score of Raza should not be changed merely based on the disputed transactions, and the same shall be restored if there are no other grounds for changing the score, the court said.

 

Raza, an advocate, was issued a Citibank credit card in January 2022 and a second card in April 2022. Raza said that the second credit card was issued without any request made from his side. Raza filed a complaint with the bank about the incident. However, the bank issued a statement for the second credit card stating that INR 76,777 was debited towards a rent payment transaction on Paytm. Consequently, Raza again complained to the bank and the Delhi Police's cyber cell about the issue.

 

Following Raza's complaints, the bank provisionally credited the petitioner with INR 76,777. However, in July 2022, the bank closed Raza's complaint, reversed the provisional credit, and began billing the disputed amount in billing cycles from that month onward. The bank said the transaction was affected using a personal identification number, an internet personal identification number, and a one-time password. The petitioner contended he had not entered these numbers, as the second credit card had neither been activated nor used by him. 

 

Upon the bank's closure of the complaint, Raza approached the Reserve Bank of India's ombudsman. However, the ombudsman closed the complaint, and Citibank continued to levy interest and penalty on the allegedly fraudulently debited amount from the second credit card.  End

 

Reported by Surya Tripathi

Edited by Saji George Titus

 

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