In a recent report, it was revealed that Indian banks have implemented a policy restricting credit card users from making payments exceeding their outstanding balance.
Furthermore, in cases where such overpayments have occurred, banks are promptly refunding the surplus amount back to the users.
Read on to find out all the details about this new policy by Indian banks!
Banks Not Allowing Overpay of Credit Card Dues; Refunding Excess Money
The primary motivation behind this policy shift is the banking sector’s growing concern regarding potential money laundering and fraudulent activities.
A quoted bank executive highlighted instances where surplus amounts left in a customer’s credit card were exploited for unauthorized international transactions, facilitated through hacking methods.
To enforce this policy, banks have integrated protective measures within their applications, ensuring that customers cannot make payments surpassing their credit card dues. While transfers to other banks are permitted, in such cases, the card-issuing banks promptly return any excess funds within a week.
As per reports, leading banks like HDFC Bank, SBI Card, and Axis Bank have updated their applications to disallow customers from exceeding their outstanding amounts through their apps. However, it’s worth noting that some ICICI Bank customers have reported being allowed to make overpayments.
What Is The Reason Behind This New Policy?
A spokesperson from HDFC Bank emphasized the rationale behind this policy, stating that customers cannot hold excess funds within their credit cards, clarifying that credit cards are intended as lending products, not savings accounts.
They referenced recent guidelines mandating banks to refund any excess credit balances within a specified period. The spokesperson emphasized that a credit card operates differently from a prepaid card product, which permits loading and utilization of funds.
Traditionally, customers tend to overpay their credit card dues in anticipation of substantial upcoming purchases or international travel. However, with this new policy in place, these customers may find themselves with fewer alternatives to manage their finances in this manner.
The policy seeks to streamline credit card usage, ensuring transactions align with the designated payment limits for each individual account, thereby enhancing security and minimizing potential risks associated with overpayment.