Wierd Refund on a cancelled transaction

[curios_mind_huh]

I cancelled an order placed with my Federal Celesta credit card. Got the refund processed and was reflecting in my credit card's unbilled transactions. Two days later though, Federal bank refunded this amount back to my attached Savings Bank account.

Granted this reflects in my available credit limit and I have to pay it back anyways once the bill is generated, Why do they even refund it back to Savings account? Will this create any problem at the time of statement generation resulting in a penalty?

 

[NABNAB is verified member.]

Because of the RBI's latest directives I guess. ICICI also does the same.
No need to worry.

 

[curios_mind_huh]

Because of the RBI's latest directives I guess. ICICI also does the same.
No need to worry.

Wouldn't people take advantage of this and get zero-interest 45 day loans? You just have to make a large transaction just after your statement generation date and cancel it, to get the amount back to your bank account.

 

[Dreams Of Desire 💓]

Yes it's idiotic new rule of rbi.
Restrict your card limit and added deposits in your savings account what an idea sirji🤬

 

[curios_mind_huh]

Yes it's idiotic new rule of rbi.
Restrict your card limit and added deposits in your savings account what an idea sirji🤬

Well, I have a cumulative credit limit of 40L. If I decide to withdraw 5L from different cards each month and offload it into a FD that pays me 0.3% per month, I'd still walk away with close to 2k without putting any serious dent on my spend-credit limit ratio.

This is a disaster waiting to happen!

 

[NABNAB is verified member.]

Wouldn't people take advantage of this and get zero-interest 45 day loans? You just have to make a large transaction just after your statement generation date and cancel it, to get the amount back to your bank account.

Yes it's idiotic new rule of rbi.
Restrict your card limit and added deposits in your savings account what an idea sirji🤬

Well, I have a cumulative credit limit of 40L. If I decide to withdraw 5L from different cards each month and offload it into a FD that pays me 0.3% per month, I'd still walk away with close to 2k without putting any serious dent on my spend-credit limit ratio.

This is a disaster waiting to happen!

Here, Only those who have a Bank account along with CC will receive the refund in this manner.
And by abusing this trick one must be ready for the IT notice 😉

Actual MITC states that refunds aren't counted as repayment. (Most banks still do consider them.) So, this is helpful incase if any bank isn't considering the same.

 

[Talkwithfino]

Because of the RBI's latest directives I guess. ICICI also does the same.
No need to worry.

Can you pls share those....?

Actual MITC states that refunds aren't counted as repayment. (Most banks still do consider them.) So, this is helpful incase if any bank isn't considering the same.

Actually they cannot do that. RBI rules clearly say refund has to be adjusted against Payment Due.

 

[NABNAB is verified member.]

Can you pls share those....?

Actually they cannot do that. RBI rules clearly say refund has to be adjusted against Payment Due.

Sorry, I haven't kept the link saved. Will try to find and share.

Yup, they can't.