New rules have been issued by the Reserve Bank(RBI) of India for debit and credit card issuance as well as for instructions for Banks and non-banking finance companies (NBFCs). These new restrictions were issued by the Central Bank and will be applicable from July 1, 2022.
RBI will penalize the Banks and NBFCs for their non-compliance with new guidelines. If the customer requests to cancel the Card, the issuer must process his request within seven days of receiving a card cancellation request, provided there are no outstanding debts. Further, the RBI noted that the new guidelines require the client’s consent to disclose any information they have received when creating an account or issuing a card.
The RBI has granted permission to Urban cooperative banks (UBCs) having a minimum net worth of $100 crore, to set up credit card business, after getting permission from regulators. It is crucial to note that such UCBs must have a core banking platform. According to RBI’s revised rules, UCBs won’t be allowed to issue co-branded credit cards. The Regional Rural Banks (RRBs) with a net worth of 1,000 crores are allowed to issue credit cards in collaboration with their sponsor bank or any other banks.
In accordance with a regulation issued in the RBI, “NBFCs can not issue debit cards, credit cards, charge cards, or similar products virtually or physically” without obtaining prior approval. Beyond these guidelines, in addition, the RBI has ordered banks to offer alternatives for blocking or disabling form factors through the internet, mobile banking IVR, SMS, or any other method.
According to the RBI’s circular, the following are the guidelines for debit cards:
- Banks are required to create a comprehensive debit card policy with the approval of their Boards and provide debit cards to clients in accordance with that policy. The banks don’t require the RBI permission for the same.
- Any bank will not issue debit cards to holders of cash credit/loan accounts. However, banks could still issue debit cards to the accounts linked to the Pradhan Mantri Jan Dhan Yojana overdraft facility.
- Banks cannot compel its customer to use debit cards, nor can they link the facility of issuing debit cards to avail of any other Bank services. Scheduled Commercial Banks (SCBs) can issue other form factors, such as wearables, after receiving the express approval from the customer.
- According to the new RBI debit card guidelines, a debit card facility can be provided to the customers having Savings/Current Accounts. Banks cannot force customers for using their debit card service. Also, the debit card facility cannot be linked to any other bank service.
Take a look at the RBI’s new credit card issuer guidelines:
- The Key Fact Statement must be included with every credit card application form by the issuer. It should contain key information about the card such as the interest rate and charges. In case the credit card application declines, the credit card issuer company must inform the customer in writing the reason for the rejection of the application.
- Banks are prohibited from issuing unsolicited credit cards to customers or upgrading existing cards, without their specific consent. If they do so, they could face a penalty up to twice the amount of the charges incurred.
- The RBI has directed Banks and NBFCs to follow the ‘’Fair Practices Regulations for Lenders’’ while contacting the customer for the collection of their outstanding dues.
- Card issuers must ensure that their agents are not involved in any activity that could jeopardize their reputation or integrity. Also, ensure that the client’s information remains completely confidential when they appoint third-party debt collection agencies.
- Card issuers/agents must not intimidate or harass any customer, in their debt collection efforts. This includes acts that humiliate publically or intrude on the privacy of credit cardholders’ families, referees, and friends, make threatening or anonymous calls or make false and misleading representations.
- If a credit card is not activated for 30 days from the date of issue, the Card issuers will need to obtain a One Time Password (OTP-based) consent from cardholders. The customer’s credit card account will automatically be canceled if the client refuses to activate the card. Such card cancellation requests are to be processed within seven days from the date of receiving the customer’s request. The cardholder must pay all fees in order to cancel an inactive card.
*This year, the Reserve Bank of India issued master directives to banks and non-banking financial corporations (NBFCs) for the issuing of credit and debit cards. Payment banks, state cooperative banks, and district central cooperative banks are exempt from the requirements. In Addition to banks, NBFCs that have been granted permission by the RBI to offer credit cards will be required to follow RBI’s rules.
In its circular, the RBI also requested that card issuers establish a grievance redresses system and publicize it publicly. Card issuers must also guarantee that their contact center personnel is appropriately educated to competently manage and escalate a complaint if required.
For detailed information, view the official circular of RBI- Click Here