Citibank: Frauds and stinks

Google search on Citibank gives results, with most links of fraud stories. There is no surprise. Its credit card business is run on most customer unfriendly terms. Has anyone heard of a bank charging its customers 42% annual rate of interest. It will shock people out of their senses. The Citibank charges a whopping 42% annual rate if customer makes partial payment of the total outstanding.  

The Citibank will easily put to shame even the village money-lenders. Village money-lenders, made infamous by Premchand classics, would have hardly charged anything, that the Citibank does. 

When its customer care was asked how could it charges 42% annual rate, half a dozen of its executives parroted, that they intimate customers in the monthly statement, that they would be charged in the range of 2.1% to 3.7% per month, which translates to 25.2%-42% per annum. However, the Citibank imposes the highest in the range, that 42% to all the customers. One of its executive explained, it is so because of the automated billing.

Does the government or the Reserve Bank of India allows Citibank to impose such an obnoxious rate of interest? Ask its executives, they will have only one answer, that they comply with the regulations of the RBI. But under what RBI regulations, does Citibank impose 42% rate of interest, none of these executives have any answer. They will say -- We will e-mail you the RBI guidelines on this. None of these promised e-mails ever come. 

Muge Yuzuaka with e-mail id m.yuzuak@citi.com (m.yuzuak@citi.com) heads the Citibank credit card business in India. When it was asked from her to provide details of the RBI guidelines under which the Citibank charges 42% interest, her representative Nabil Khatib, Manager-Executive Response unit, replied saying: "We wish to clarify that Citibank is compliant with all regulations laid down by the RBI." But there is no mention of which RBI guidelines. 

Khatib, when asked during a call that he made, if he had ever heard of 42% interest even being charged in villages by money-lenders he was at loss of words. His defense, also repeated in the e-mail, was that the Citibank intimates Most Important Terms and Conditions (MITC) in its applications, statements and on its websites. 

However, when the Citibank executive comes to sell the card, he hardly mentions such terms and conditions and just takes a signature and one is lured by its multi-national reputation. "Your rate of interest initially is 3.15% per month (i.e.37.8% annualized). This can change periodically based on your spend, payback and utilization patterns. Your rate of interest can increase upto 3.5% per month (i.e.42.0% annualized), in case of default.The default interest rate will apply till the time the account is regularized plus 3 months of performance review period," Khatib explained in his e-mail. 

This top ranking Citibank official has no shame for utter lying. This is for the reason, that even without default the Citibank imposes 42% interest, notwithstanding the record of the customer. 

Worse is that most of its customer care centres are outsourced where people with no understanding of banking system takes calls of  customers. Ask them about RBI regulations, they will fumble for words.

Ironically, the credit card companies are functioning on their whims and fancies, with the RBI and the Ministry of Finance always keeping blind eye on them. A credit card mafia has taken over the reigns, which is being run in the most unprofessional manner, with no business ethics. 

Citibank had few months ago hit the headlines for swindling Rs 400 crores from high networth individuals in Gurgaon. The company washed off its hands by blaming some of its officials for the scam. 

The murky deals of companies like Citibank are going freely apparently as there is no governance existing in India for the last three years. Take your eyes to any field, it appears the government has mortgaged people to the greedy corporate sharks with no exception.