The Reserve Bank of India has issued a new set of guidelines for credit and debit cards. These include a set of standard operating procedures (SOPs), as well as consumer protection measures as credit card usage explodes in India. It is hoped that the new rules will protect consumers from frauds and hidden charges, among other things.
In its new guidelines, the central banker has a long list of guidelines, rules and penalties for banks and credit card issuers. Credit transactions exploded during the pandemic. The total outstanding credit cards in December 2019 stood at 55 million. At the end of February 2022, the number was 72 million.
The broad idea of RBI’s guidelines is to further enhance consumer protection, especially in cases of frauds, theft, unauthorised usage and more.
Key Highlights (Credit Cards)
No hidden charges on credit cards issued free of charge.
Card issuers can now consider an insurance cover for liabilities arising out of lost credit cards, or credit card frauds. For this, the issuer will have to obtain explicit permission from the card holder.
Will require a one-time password to activate a credit card that has not been activated within 30 days from the date of issuance. This will help cover scenarios where an unauthorised person intercepts cards before their delivery to the customer.
Credit information of the card holders shall not be reported to any credit bureaus like Cibil, CRIF, Experian, etc., before the activation of the card.
Ensure complete transparency in the conversion of credit card transactions into equated monthly instalments (EMI) by clearly mentioning the amount of principal, interest, discount and charges, if any.
EMI conversion with interest shall not be disguised as no-cost or zero-interest EMI.
In case of rejection of a credit card application, the issuer shall convey in writing the reason for such rejection.
Closure requests for an existing credit card shall be honoured within seven working days. Failure to do so shall result in a penalty of ₹500 per day of delay, payable to the customer.
Closure of credit cards if not used for a period of one year, with a 30-day notice to the card holder.
Any changes in charges related to the credit card shall be intimated 30 days prior to their implementation.
Key Highlights (Debit Cards)
Debit cards shall only be issued to customers who have a savings bank or current account.
No debit cards shall be issued to cash credit or loan account holders.
Banks shall not force a customer to avail a debit card, and shall not link holding a debit card to avail any other facilities provided by the bank.
Other form factors of debit cards, such as wearables, may be issued by scheduled commercial banks.