New Delhi: Taking banks to task for their errant practices and to ensure transparency in credit card operations, RBI has hinted that it may make it essential for banks to refund the small credit balance if the credit card is not used or remains inactive for more than six months.

While the public sector banks wait for eight years before any credit card account is written off, it has been a regular practice by foreign and private sector banks that they stop sending the statement once a credit card account remains dormant for six months. While making a payment, a credit card holder usually rounds off the amount to the next integer. This extra amount keeps on accumulating in the credit card holders account if the credit card is not used. Commonly known as the small credit balance, which is usually Rs.100 or less, this amount is then written off to a suspense account and transferred to a profit and loss account.

Though these credit card balances could seem paltry for one account but they can it can become large once these sums get transferred to the profit and loss account. RBI has taken a strong view on managing the credit card balances in this way and has asked the banks to justify this shady practice. It has raised its concerns whether a period of six months is enough to suspend a credit card account and transfer its funds. RBI wants the banks to inform the credit card holder about his small credit balance and refund the same amount if the credit card has expired or made inactive.