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Wednesday, April 6, 2011

BI must impose sanction on Citibank

Jakarta (ANTARA News) - Bank Indonesia (BI) or the central bank as the banking world`s regulator must impose a penalty on Citibank for mismanaging the billing of its credit-card customers through the services of debt collectors, an observer said.

"Citibank must be given a penalty by the regulator, especially after the death of Irzen Octa who was brutalized by Citibank`s outsourced debt collector," said Indonesian banking observer Mirza Adityaswara here Wednesday.

Mirza said Citibank had violated the central bank`s regulation on violence done by debt collector companies , and they must take responsibility for what had happened.

The possible sanction to be imposed by the central bank was to revoke Citibank`s credit card issuance right based on the current valid regulation, Mirza said.

According to BI Regulation No.11/11/2009 on payment tool activities using credit cards, debt collecting rule must not use violence.

Previously, Bank of Indonesia`s public relation officer Difi A Johansyah said that the central bank would impose an administrative sanction on Citibank for violating the regulation by using third party services in billing their credit card customers.

The central bank had also issued Circular No 11/10DASP/2009 that regulates credit card debt collecting services.

The circular stated that the debt collector services can only be used for credits is considered as a non performing loan, the collection must not use any act of violence and bank will take full responsibility on this activity.

It was earlier reported, a Citibank credit card customer, Irzen Octa, had died in a room of a Citibank office at the Menara Jamsostek building in central Jakarta, after being pressured by a few debt collectors to pay his bill.

The police had stated that the debt collector company was the suspect in this case, and Citibank a witness.

According to BI data, there are 20 Indonesian banks that issue credit cards with backing of five credit card principals namely American Express, Japan Credit Bureau, Mastercard International, Visa Card International and China Unionpay.

In 2010, over 13.5 million credit cards circulated in Indonesia with transaction amounting to 199.036 million US dollars or Rp63.208 trillion.

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