Banks should give clear reason for application denial

[aayusharyan]

Ref RBI Circulars:
- https://www.rbi.org.in/commonperson/English/Scripts/Notification.aspx?Id=1574
- https://rbi.org.in/Scripts/NotificationUser.aspx?Id=3315&Mode=0

RBI says this.

Banks have been advised that in case of all categories of loans irrespective of any threshold limits, including credit card applications, banks should convey in writing the main reason/reasons which in the opinion of the bank have led to the rejection of the loan applications. It is reiterated that banks should convey in writing the main reason/reasons which have led to the rejection of the credit card applications.

Now, how we can use this for the benefits of consumers.
Basically, banks have the habit of giving a blanket reason of that the card application has been rejected because of Internal Policies of the bank. (I applied for Change of Address for an existing Credit Card and I received this response) But that reason can be considered as unclear and we can request for a more clear reason for rejection. Reasons like Age mismatch, Low Credit Score, too many cards issued recently, etc etc.

BUT NOT REJECTED BECAUSE INTERNAL POLICIES.

I am making this a habit now that for every rejection, I will not stay quiet. I will raise my voice. 1 hard credit enquiry has been made, I will fight for it. If Level 1 doesn't help, will raise to Level 2. (Contact emails can be found here - this thread)

I am sure we all would have faced situations where immediately after applying they give rejection. (Sometimes even before doing vKYC or even asking income documents). What reason they give? Internal Policies. 🤦🏻‍♂️ With citing this circular in the support emails, we have better chances of moving the balance needle towards us again.

But, there is a Catch
In theory, it can be said that Banks have advised to do this, not mandated. So, the banker can argue that they are not required by law to state the reason. (That's why they still keep doing that, because they are not penalised for that). In that case, I would say keep pushing, maybe this particular agent didn't wanted to help, maybe next agent will help. If nothing, then go for OB, when all the other approaches are exhausted. Also, to be noted, RBI has used the term main reason/reasons. Bank person can theoretically argue that Internal Policies is the main reason, but again. Take a day off, then reply again in hopes of some other agent who can be more helpful.

There is no harm in trying
With each of my email for rejection reason, I am also attaching some of the content for re-evaluation of my credit card application. Because end of the day, that's all that matters (I get the Card I applied for and spent my Enquiry on). (Reference details can be found here - this thread)

---
My experience:
- Rejected for SBI (applied through Sprint Portal) -> Sent Email -> this comment.
- Rejected for StanC (This also online application) -> Sent Email -> Waiting for response.
Please share your experiences also, I will keep indexing them here. Eventually, if we can prepare some sort of template for this for the benefits of consumers, it will be awesome. 😍

 

[MangoRush]

I recently wrote a mail to Federal Bank. Level 1 didn't help. Now wrote to Level 2

 

[KLB@96]

Yes, this is so irritating. RBL and Axis declined my application a week ago. RBL says rejected as unable to verify information and axis says same old internal reason. This is the third time ax has rejected without any proper reason. I hold 10 CC and 790+ score with 7 years old history

 

[aayusharyan]

I recently wrote a mail to Federal Bank. Level 1 didn't help. Now wrote to Level 2

Yes, do share the result with us.

 

[aayusharyan]

Yes, this is so irritating. RBL and Axis declined my application a week ago. RBL says rejected as unable to verify information and axis says same old internal reason. This is the third time ax has rejected without any proper reason. I hold 10 CC and 790+ score with 7 years old history

Agreed, this blanket internal reasons things just keep us guessing what can be wrong instead of telling us what's wrong so that we improve in the next application. It's very frustrating.

 

[viznu99]

I suspect, which channel utilized for application does play a major role indeed.

Funny example from last yr
- Cibil was 800 & was holding Amex PC / DCB / SBI AI at the time ~ but got rejected by Axis Vistara (online) 😆 I couldn't believe it !
More than angry i was really amused..!
- Within 48 hrs reapplied offline & it went through w/o any issues

 

[RishiKiDev]

As legendary MJ once said,

"All I wanna say that, they don't really care about us"

 

[aayusharyan]

I suspect, which channel utilized for application does play a major role indeed.

Funny example from last yr
- Cibil was 800 & was holding Amex PC / DCB / SBI AI at the time ~ but got rejected by Axis Vistara (online) 😆 I couldn't believe it !
More than angry i was really amused..!
- Within 48 hrs reapplied offline & it went through w/o any issues

Yes, possible. My theory is that when agents apply, they know exactly what they should fill in the form for better results. But we don't. That's why through an agent we have higher chances.

 

[viznu99]

Yes, possible. My theory is that when agents apply, they know exactly what they should fill in the form for better results. But we don't. That's why through an agent we have higher chances.

True that.. And there is more to it - the credit policies are different for different sales channels.. Issuance of card isn't just basis the applicant's eligibility, but also heavy weightage internally towards a channel's performance

Eg. A certain sales team / or even city - generally gives higher bad debt is less likely to entertain a high value customer also... But a channel generally known to onboard good quality customers will be allowed to onboard mediocre value customers

 

[cryoengine]

It is simply not worth pursuing for an answer, especially from Axis. The only card that is easily approved from an online application is the Flipkart card. The rest of them are a lottery.

I feel the online application system is designed to reject, so people will try to go offline process and an agent will get a commission. That is why offline process has no cooldown.

 

[aayusharyan]

True that.. And there is more to it - the credit policies are different for different sales channels.. Issuance of card isn't just basis the applicant's eligibility, but also heavy weightage internally towards a channel's performance

Eg. A certain sales team / or even city - generally gives higher bad debt is less likely to entertain a high value customer also... But a channel generally known to onboard good quality customers will be allowed to onboard mediocre value customers

Interesting point of view. Wow, one learns new thing every day.

 

[aayusharyan]

It is simply not worth pursuing for an answer, especially from Axis. The only card that is easily approved from an online application is the Flipkart card. The rest of them are a lottery.

I feel the online application system is designed to reject, so people will try to go offline process and an agent will get a commission.

It just takes 5 minutes to draft an email.
Ideally with people sharing their experience, we can have a repository of emails for each bank which we know has high chances of working (Like if we need to include certain key words, or add certain documents which the bank usually asks, things like that).

 

[RishiKiDev]

It just takes 5 minutes to draft an email.
Ideally with people sharing their experience, we can have a repository of emails for each bank which we know has high chances of working (Like if we need to include certain key words, or add certain documents which the bank usually asks, things like that).

They won't disclose their underwriting protocols as people will try to bypass it by taking corrective measures.

Their underwriting may not be politically correct, that may be the reason for not disclosing certain things.

If you will see the list of their unserviceable pincodes mostly you will find slums and population areas of a certain community.
So everything might not be black and white but shades of gray that maybe embarrassing for the bank to meet public perception

 

[aayusharyan]

They won't disclose their underwriting protocols as people will try to bypass it by taking corrective measures.

Their underwriting may not be politically correct, that may be the reason for not disclosing certain things.

If you will see the list of their unserviceable pincodes mostly you will find slums and population areas of a certain community.
So everything might not be black and white but shades of gray that maybe embarrassing for the bank to meet public perception

Right, very possible. Then that's where my alter motive kicks in. if they are ashamed to disclose, after pushing enough, maybe. Maybe, they will just issue the card. Eventually it's in the hand of that one PNO (or similar level person / team) to make that choice.

If they don't anyway we were rejected. But the thought is to not just give up. Try for the sake of that 1 wasted Enquiry which (theoretically) reduces the chances of future application approvals.

 

[RishiKiDev]

Right, very possible. Then that's where my alter motive kicks in. if they are ashamed to disclose, after pushing enough, maybe. Maybe, they will just issue the card. Eventually it's in the hand of that one PNO (or similar level person / team) to make that choice.

If they don't anyway we were rejected. But the thought is to not just give up. Try for the sake of that 1 wasted Enquiry which (theoretically) reduces the chances of future application approvals.

Yeah if you have certain leverage against them then you can ask for anything and they'll oblige.

But till then we need the RBI to enforce the Banks to atleast tell us the nearest reason why was it rejected without disclosing their underwriting protocols.

But its most likely impossible as the Banks have a considerable lobby in the RBI
You can say how fast the lobby acted to shutdown the BNPL industry as they were becoming a challenge to traditional players.

 

[aayusharyan]

Yeah if you have certain leverage against them then you can ask for anything and they'll oblige.

But till then we need the RBI to enforce the Banks to atleast tell us the nearest reason why was it rejected without disclosing their underwriting protocols.

But its most likely impossible as the Banks have a considerable lobby in the RBI
You can say how fast the lobby acted to shutdown the BNPL industry as they were becoming a challenge to traditional players.

True true, a change is due, slowly but eventually it will happen. Like OB. It will happen, but we as consumers also need to spread knowledge about these things. And exercise the provisions that have been given to us by RBI.

 

[niranjan0]

I got a mail from SBI that said,

Thank you for showing interest in SBI Credit Card.
While processing your credit card application for issuance of SBI Credit card, we observed that
unfortunately, you do not meet the age eligibility criteria set forth in our internal policy. We, therefore,
regret to inform that we will be unable to process your credit card application further.
The reason for decline of your credit card application is a business decision, taken in good faith and
certainly in no way, is indicative of your credit worthiness. Please accept our sincere apologies
towards the inconvenience caused to you in this regard.
It is our constant endeavor to ensure that our services always drive positive customer experience and
hence, to have an opportunity to serve you, we would like you to consider applying for our secured
card. Issuance of the secured credit card is subject to our internal policy criteria governing issuance
and you are required to fulfill the following eligibility parameters:
a) You should be an account holder of the bank.
b) You should have a term deposit with the bank, which will be kept under lien during the tenure of
credit card
Please contact the branch representative at the nearest bank branch for further details in this regard.
You may also visit our website sbicard.com.

 

[j_s]

But, there is a Catch
In theory, it can be said that Banks have advised to do this, not mandated.

The contents of this circular has been included in the Fair Practices Code. That's pretty much mandatory.

 

[Lobogris]

Agreed, this blanket internal reasons things just keep us guessing what can be wrong instead of telling us what's wrong so that we improve in the next application. It's very frustrating.

Fully agree with you. It will help the customers as well as the bank. If a bank requires, say, minimum 5 years of credit history, then we can stop wasting our time and theirs by applying several times before we reach that threshold. If they think the reason is too many accounts or too low income, again, the customer can try and change that before applying again. Now we go blindly and waste our and their time.

In fact, the complete approval threshold and scoring system should be made public. Why should it be a secret? I should be able to see how I scored on each factor and what the factors are.

 

[shrewdoc]

The contents of this circular has been included in the Fair Practices Code. That's pretty much mandatory.

This seems to be just a fairytale in India. Else, we shouldn't be hearing of all the things that still happen till date. 😀