RBIs New Credit Card Rules

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Effective from July 1,2022, the Reserve Bank of India has issued new directions about credit and debit cards. As per the new guidelines issued by the RBI written consent would be required for all the applicants for a credit card. These guidelines are officially known as the Reserve Bank of India (Credit Card and Debit Card-Issuance and Conduct) Directions, 2022 and provide a thorough set of instructions primarily to the card-issuers about issuing credit and debit cards, co-branded cards, billing, and telemarketing, among other matters.

Unsolicited Cards and Losses

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  • The directions don՚t cover every aspect related to credit and debit cards and need to be read along with any other RBI directions about specific aspects like those covering technology & cyber security of credit and debit cards.
  • The directions earmark which banks to be engaged in the credit and debit card business.
  • Credit cards could be issued by most Scheduled Commercial Banks (SCBs) with a net worth of ₹ 100 crores.
  • One of the exceptions is that of Regional Rural banks (RRBs) which need to collaborate with other banks to do so.
  • Subject to certain guidelines, Urban Cooperative Banks (UCBs) with a net worth of more than ₹ 100 crores can issue credit cards.
  • The UCB can only issue credit cards to the members and cannot issue co-branded credit cards.
  • Also, the total unsecured loans and advances given by a UCB cannot exceed 10 % of its assets.
  • Credit cards can also be issued by the NBFCs registered with the Reserve Bank of India with a minimum net owned fund of ₹ 100 crores provided they have a Certificate of Registration and permission for entering the business.

Issuing Debit Cards

  • Debit cards can be issued by all the banks without even RBI՚s approval.
  • Such cards can only be issued to the customers with Savings Bank/Current Accounts and cannot be issued to cash credit/loan account holders.
  • Banks may link ‘the overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana accounts with a debit card.’
  • The customers cannot be forced by the bank to get a debit card.

Issue of Co-Branded Cards

  • Any co-branded credit/debit cards need to give an indication that it has been issued under a co-branding arrangement.
  • The co-branding partner cannot market the card as its own.
  • A partner is limited to marketing and distributing the cards along with providing access to the goods and services.
  • Those NBFCs who wish to venture into co-branded cards should investigate the guidelines on issue of Co-Branded Credit Cards contained in the Master Directions applicable to NBFCs.

Unsolicited Facilities

  • The issuers as per the new guidelines cannot unilaterally upgrade credit cards and increase credit limits without the explicit consent of the customer.
  • Without explicit consent, no unsolicited loans can be granted.
  • Unless it՚s a replacement or a renewal, no card issuer can send an unsolicited card to a customer.

Provisions Regarding Telemarketers

  • Card-issuers must ensure that any telemarketers they engage to promote their services comply with TRAI regulations along with the guidelines on Unsolicited Commercial Communications-National Customer Preference Register (NCPR) .
  • Telemarketer cannot contact customers outside of a 10: 00 a. m. to 7 p. m. window.
  • Direct sales or marketing agents cannot take any decision about issuing cards.

Redressal of Grievances

  • The Card-issuers are expected to have a grievance redressal mechanism in place and publicizing it through:
    • Electronic and print media
    • Credit card bills
    • Account statements
  • In case complainants don՚t receive a satisfactory response from the issuer within one month after the complaint date, they could approach the Office of the RBI Ombudsman.

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