The RBI’s new guidelines will go into effect on 1 July 2022. These regulations apply to both credit card users and issuers. The new RBI rules for credit and debit cards mandate that credit card issuers implement reforms such as eliminating hidden fees and providing protection against credit card fraud, theft, etc.
The new set of rules is targeted at resolving credit card customers’ concerns, such as billing cycle-related problems, charges on disputed purchases, and others. The modifications effective from July 1 2022, have allowed credit card consumers and issuers ample time to prepare.
Credit Card Providers in India
The guidelines specify which banks may issue credit and debit cards. Credit cards can be issued by most Scheduled Commercial Banks (SCBs) with a net value of Rs. 100 crores. Regional Rural Banks (RRBs) are an exception since they must partner with other banks to accomplish so.
Similarly, Urban Cooperative Banks (UCBs) with a net value of greater than Rs. 100 crores are permitted to issue cards subject to certain restrictions. They can, for example, only issue credit cards to members. They cannot issue co-branded credit cards, and a UCB’s total unsecured loans and advances cannot exceed 10% of its assets.
Credit cards can be issued by NBFCs registered with the Reserve Bank with a minimum net owned fund of Rs 100 crores, provided they have a Certificate of Registration and authorisation to enter the industry.
RBI New Guidelines for Credit Card
Listed here are the RBI guidelines for credit cards.
- As per the RBI’s new guidelines, no charges will be made on any transactions under dispute until the disagreement has been resolved.
- Cardholders will have the ability, once during their lifetime, to modify the billing cycle associated with their credit card. This will provide for greater flexibility in situations in which card issuers do not adhere to the standard billing cycle. It is important to take note that certain institutions currently provide customers with this choice.
- Refunds for transactions that were either unsuccessful or reversed will be applied to the total amount that the cardholder still owes.
- Cardholders will get responses to any complaints they have lodged regarding inaccurate billing within the next thirty days.
- Card issuers are responsible for ensuring that cardholders’ invoices are generated and delivered to them without any delays and that cardholders are given at least 15 days to settle their bills after receiving them.
- If a transaction is cancelled or refunded, card issuers are required to get approval from the cardholder before increasing the credit limit beyond the predetermined amount. The threshold for this has been established at either 1% of the initial credit limit or INR 5,000, whichever is lower; the decision will be made based on this.
Other rules for Issuing Credit Cards in India
The RBI’s new guideline outlines the do’s and don’ts for the credit card providers in India. Some of them are mentioned below:
- In addition to the credit card application, issuers are required to include a one-page Key Fact statement that contains comprehensive information regarding the card. During all critical conversations, they are also required to communicate the Most Important Terms and Conditions (MITC). These include information regarding any charges, withdrawal and credit limits, billing details, minimum amounts that must be paid, procedures for default, termination, loss or theft of the card, and recourse for complaints.
- The issuer of the credit card is required to provide a written explanation to the cardholder whenever the card is declined.
- Card issuers can provide insurance cover for lost cards in their offerings. However, to give it to a client, they require the express permission of the cardholder, which might come in the form of a signed document or an equivalent digital method.
- The card’s issuer shall request consent based on an OTP before activating the card if it has been more than 30 days since the card was issued and the card has not been activated.
The new credit card rules in India will be in place as of July 1, 2022. These rules apply to both those who use credit cards and those who give them out. Reserve Bank of India (RBI) has issued rules for credit and debit cards, which required credit card issuers to make changes to protect consumers from credit card fraud, theft, and other problems. The new rules are meant to make both people who give out credit cards and people who use them safer.
1. When are the new RBI guidelines for credit cards coming into effect?
RBI’s new guidelines will become effective from 1 July 2022.
2. Can credit card holders change the billing cycle associated with their credit cards?
Yes, credit card holders can change the billing cycle associated with their credit cards, just once.
3. Is the credit card issuer required to explain why they declined a credit card application?
When the cardholder’s credit card is declined, the credit card providers in India must provide a written explanation to the cardholder.
4. What is the information that the card issuer must provide the cardholder?
With each application, issuers must also include a one-page Key Fact statement with comprehensive details regarding the card. As part of every critical conversation, they must also communicate the Most Important Terms and Conditions (MITC).