Banks can charge late fee only if payment is delayed by three days from the due date.

                                      

The Reserve Bank of India has stated that banks can levy a penalty on a credit cardholder only if they fail to receive payment for three days after the due date. The directive will benefit those whose payment gets delayed due to a bank holiday or for any other reason.

Besides not charging a penalty, the RBI has said banks should report delayed payment to credit information companies like Cibil only when a credit card account remains `past due' for more than three days. At present all banks state that late payment charges are applied if payment is not made by due date. The late payment charges vary between `100 to `700 depending on total payment due.

Although earlier RBI had issued a directive stating that the next statement date should be the reference date for computing penalties and reporting defaults to credit bureaus, banks have continued to use the due date for imposing late fee.

In a circular issued to all banks, RBI said in order to bring in greater credit discipline and to provide operational flexibility to credit card issuers, `past due' status of a credit card account for classifying bad loans would be reckoned from the payment due date mentioned in the monthly statement. "In case of banks, a credit card account will be treated as non-performing asset if the minimum amount due, as mentioned in the statement, is not paid within 90 days from the payment due date mentioned in the statement." Banks shall report a credit card account as `past due' to credit information companies or levy penal charges, only when a credit card account remains `past due' for more than three days. The number of days past due and late charges shall, will be computed from the payment due date mentioned in the card statement.