Aayush Rajaji
TF Buzz
Hey everyone,
Like many of you, I've been getting increasingly frustrated with the absurd ₹99 + GST "Reward Redemption Fee" that banks like HDFC, SBI, ICICI, and Axis charge us.
It feels like a scam. We pay an annual fee for the card, we spend our own money to earn points, and then the bank charges us again just to access the "reward" we've already earned. It's the definition of double-dipping.
I decided to stop complaining and do something about it. I've drafted and submitted a formal representation to the Governor of the RBI, arguing that this practice is not just unfair, but is a potential violation of Indian law.
I'm sharing the full text here so you can use it to file your own complaint. The more of us that do this, the higher the chance the RBI will be forced to act.
The TL;DR of the Argument:
* It's a "Reward Mirage" [1]: Banks advertise high reward rates, but the value is destroyed by hidden fees and terrible conversion rates. That ₹99 fee can wipe out the entire value of small redemptions.
* Banks Are Already Paid: They make plenty of money from our Annual Fees, Merchant Discount Rate (MDR) on every swipe, and insane interest rates (up to 42%!). This fee isn't for "processing"; it's pure profit.
* It's an Unfair Trade Practice: Under the Consumer Protection Act, 2019, representing something as a "reward" and then charging for it is a misleading practice.[2, 3] It's also a "Deficiency in Service."
* It Violates RBI's Own Rules: The RBI's "Charter of Customer Rights" guarantees us the right to "Fair and Honest Dealing." This fee is the opposite of that.[4, 5, 6]
* The Proof is in the Market: Cards like the Amazon Pay ICICI Card and SBI Cashback Card are wildly successful and have ZERO redemption fees.[7, 8, 9] This proves the fee is not a necessary operational cost.
The Action Plan: Let's Flood the System
Here is the full text of the letter I sent. I encourage you to copy it, add your own details, and submit it to the RBI. It takes less than 10 minutes.
Step 1: Go to the RBI's Complaint Management System (CMS) Portal:
https://cms.rbi.org.in [10, 11, 12]
Step 2: Copy and paste the text below into the complaint form.
> Subject: Formal Representation: Unfair Trade Practice & Potential Statutory Violations in Levying "Reward Point Redemption Fees"
> Respected Authority,
> I am writing to you as an affected customer of the Indian banking system. As a user of credit cards issued by, I have personally been subjected to the "Reward Point Redemption Fee" on multiple occasions. This practice is an unfair trade practice that erodes consumer trust.
> 1. The Core Issue: A 'Reward' Should Not Incur a Penalty
> The term "reward" implies a benefit. By charging a fee to access this earned benefit, banks are penalizing customers for redeeming what is rightfully theirs. This transforms the reward from a benefit into a product that the customer must purchase.
> 2. The Flawed Justification: Bank Revenue Models
> The argument that this fee covers "administrative costs" is not tenable. Banks already derive significant revenue from Annual Fees, Merchant Discount Rate (MDR), Interest on Revolving Credit (up to 42% APR), and Late Payment Fees. The additional ₹99+GST fee is an opportunistic profit center, not a cost-recovery measure.
> 3. The Contradiction in Market Practice
> The inconsistency of this practice proves it is not an operational necessity. While most major banks charge this fee, prominent cards like the Amazon Pay ICICI Bank card and the SBI Cashback card operate successfully with zero redemption fees, proving a fee-free model is viable.
> 4. Potential Violations of Indian Law and Binding Regulations
> This practice may constitute a direct violation of the Consumer Protection Act, 2019:
> * Unfair Trade Practice (Section 2(47)): Charging a fee for a "reward" is a misleading representation of the service's quality and standard.
> * Deficiency in Service (Section 2(11)): Failing to provide a cost-free way to redeem earned rewards is an imperfection and shortcoming in the quality of the service promised.
> Furthermore, this practice contradicts the principles of the RBI's own Charter of Customer Rights, specifically the "Right to Transparency, Fair and Honest Dealing."
> 5. Requested Action from the Reserve Bank of India
> I respectfully request the RBI to intervene and protect consumer interests by issuing a master directive to abolish "reward point redemption fees" entirely for being anti-consumer and in potential violation of statute.
> This small but significant fee, when multiplied by millions of customers, represents a substantial transfer of wealth from consumers to banks based on a deceptive premise.
> Thank you for your time and consideration.
> Sincerely,
Like many of you, I've been getting increasingly frustrated with the absurd ₹99 + GST "Reward Redemption Fee" that banks like HDFC, SBI, ICICI, and Axis charge us.
It feels like a scam. We pay an annual fee for the card, we spend our own money to earn points, and then the bank charges us again just to access the "reward" we've already earned. It's the definition of double-dipping.
I decided to stop complaining and do something about it. I've drafted and submitted a formal representation to the Governor of the RBI, arguing that this practice is not just unfair, but is a potential violation of Indian law.
I'm sharing the full text here so you can use it to file your own complaint. The more of us that do this, the higher the chance the RBI will be forced to act.
The TL;DR of the Argument:
* It's a "Reward Mirage" [1]: Banks advertise high reward rates, but the value is destroyed by hidden fees and terrible conversion rates. That ₹99 fee can wipe out the entire value of small redemptions.
* Banks Are Already Paid: They make plenty of money from our Annual Fees, Merchant Discount Rate (MDR) on every swipe, and insane interest rates (up to 42%!). This fee isn't for "processing"; it's pure profit.
* It's an Unfair Trade Practice: Under the Consumer Protection Act, 2019, representing something as a "reward" and then charging for it is a misleading practice.[2, 3] It's also a "Deficiency in Service."
* It Violates RBI's Own Rules: The RBI's "Charter of Customer Rights" guarantees us the right to "Fair and Honest Dealing." This fee is the opposite of that.[4, 5, 6]
* The Proof is in the Market: Cards like the Amazon Pay ICICI Card and SBI Cashback Card are wildly successful and have ZERO redemption fees.[7, 8, 9] This proves the fee is not a necessary operational cost.
The Action Plan: Let's Flood the System
Here is the full text of the letter I sent. I encourage you to copy it, add your own details, and submit it to the RBI. It takes less than 10 minutes.
Step 1: Go to the RBI's Complaint Management System (CMS) Portal:
https://cms.rbi.org.in [10, 11, 12]
Step 2: Copy and paste the text below into the complaint form.
> Subject: Formal Representation: Unfair Trade Practice & Potential Statutory Violations in Levying "Reward Point Redemption Fees"
> Respected Authority,
> I am writing to you as an affected customer of the Indian banking system. As a user of credit cards issued by, I have personally been subjected to the "Reward Point Redemption Fee" on multiple occasions. This practice is an unfair trade practice that erodes consumer trust.
> 1. The Core Issue: A 'Reward' Should Not Incur a Penalty
> The term "reward" implies a benefit. By charging a fee to access this earned benefit, banks are penalizing customers for redeeming what is rightfully theirs. This transforms the reward from a benefit into a product that the customer must purchase.
> 2. The Flawed Justification: Bank Revenue Models
> The argument that this fee covers "administrative costs" is not tenable. Banks already derive significant revenue from Annual Fees, Merchant Discount Rate (MDR), Interest on Revolving Credit (up to 42% APR), and Late Payment Fees. The additional ₹99+GST fee is an opportunistic profit center, not a cost-recovery measure.
> 3. The Contradiction in Market Practice
> The inconsistency of this practice proves it is not an operational necessity. While most major banks charge this fee, prominent cards like the Amazon Pay ICICI Bank card and the SBI Cashback card operate successfully with zero redemption fees, proving a fee-free model is viable.
> 4. Potential Violations of Indian Law and Binding Regulations
> This practice may constitute a direct violation of the Consumer Protection Act, 2019:
> * Unfair Trade Practice (Section 2(47)): Charging a fee for a "reward" is a misleading representation of the service's quality and standard.
> * Deficiency in Service (Section 2(11)): Failing to provide a cost-free way to redeem earned rewards is an imperfection and shortcoming in the quality of the service promised.
> Furthermore, this practice contradicts the principles of the RBI's own Charter of Customer Rights, specifically the "Right to Transparency, Fair and Honest Dealing."
> 5. Requested Action from the Reserve Bank of India
> I respectfully request the RBI to intervene and protect consumer interests by issuing a master directive to abolish "reward point redemption fees" entirely for being anti-consumer and in potential violation of statute.
> This small but significant fee, when multiplied by millions of customers, represents a substantial transfer of wealth from consumers to banks based on a deceptive premise.
> Thank you for your time and consideration.
> Sincerely,
