The Reserve Bank of India (RBI) has come up with some new guidelines for credit card issuers and cardholders, which need to be followed strictly by the banks as well as non-banking financial institutions. These guidelines include the eligibility criteria that the card issuers need to fulfill to undertake credit card business, card issuance terms & conditions, credit card closure, fees & charges, bill payments, and a lot more things. These new guidelines will come into effect from July 1, 2022, and it is advisable for all the credit card issuers to go through all the directions mentioned in the document now so that they do not face any difficulties further. In this article, we have mentioned some of the most important points from the RBI’s guidelines. Keep reading for more information:

RBI Credit Card

RBI’s New Credit Card Guidelines

Following are some of the key details that we have filtered out of the RBI’s new detailed guidelines. All the points should be noted and followed carefully by the credit card issuers in India:

Credit Card Issuance

Following are the new guidelines that need to be followed by card issuers while onboarding new customers or issuing new credit cards:

– Along with the application form, there should be an attached key statement including important charges like interest rate. Also, if an application gets rejected, the card issuer needs to specify a valid reason behind the same.
– The Most Important Terms & Conditions should be sent to the customers along with their new credit card at their postal address.
– If the card issuer is offering any insurance benefits to a cardholder, consent must be obtained in written or digital mode from the cardholder.
– Unsolicited Credit Cards should not be issued or upgraded.
– If a cardholder has not activated his/her card within 30 days of issuance, the card issuer needs to obtain an OTP-based consent from the cardholder for activating their credit card.
– The card issuer shall not report any information related to a new card to credit bureaus before the card gets activated.
– The process of converting credit card transactions/bills into EMIs should be completely transparent from the end of the card issuer.

Closure of Credit Card

RBI has also included the closure of a credit card account in its new guidelines. Following are a few important points that must be kept in mind by the card issuers:

– If a cardholder requests the closure of an account, the request must be taken into consideration by the card issuer within 7 working days, provided that the cardholder does not have any outstanding balance on the card they are willing to close.
– If a cardholder hasn’t used a card for one year, the card issuer shall initiate its closure and inform the cardholder via message/email/post about the same. If they do not receive any reply within 30 days of sending the message, the credit card will be closed by the issuer.
– If a credit card with an outstanding balance has been closed, the remaining outstanding balance will be sent to the cardholders’ savings accounts.

Fees & Charges

Some important RBI guidelines regarding the fees and charges of credit cards are as mentioned below:

– If the interest rates vary for different transactions or on the basis of payment histories of different cardholders, it should be informed to the cardholders and there should be transparency about the same.
– The interest charges for different transactions like cash advances, and balance transfers should be mentioned in the MITC with examples.
– No hidden charges should be there.
–  Card issuers shall aware the customers of the consequences of making only the minimum due amount and there should be a clear warning about the same in the MITC.

Credit Card Bills

Reserve Bank of India has also included credit card bill payment terms and conditions in its guidelines. The following are a few important of them:

– The card issuers need to make sure that the cardholders receive their billing statements on time and they have sufficient time (at least one fortnight) to pay the bills.
– The card issuers should at least once provide their customers with an opportunity to set/modify their billing cycle at their convenience.
– Any amount that has been refunded to a credit card account before the payment due date (even after statement generation) should be adjusted against the card’s outstanding balance & must be informed to the cardholder.
– No fee should be charged for any transaction that is reported as ‘fraud’ by the cardholder until the issue gets resolved.

Eligibility for Banks/NBFCs for Credit Card issuance

The eligibility criteria that have been specified in the RBI’s guidelines to undertake credit card business in the country are as follows:

The Scheduled Commercial Banks (SCBs) with a net worth of more than Rs. 100 Crore can get into the credit card business.
RRBs (Regional Rural Banks) can undertake credit card business in partnership with their sponsor bank or any other recognized bank.
UCBs (Urban Commercial Banks) with a net worth of a minimum of Rs. 100 Crores can get into the credit card businesses. However, UCBs need to get their application approved by RBI and can only issue credit cards to their members, not to non-members.
NBFCs (Non-Banking Financial companies) associated with RBI can not undertake credit card business without getting approval for the same from RBI.

Click here to read detailed guidelines that have been issued by RBI.

Bottom Line

The new guidelines issued by the RBI will be effective from July 2022, and it is advisable for all the credit card issuers, banks, and NBFCs to go through all these directions before they come into effect. And all financial institutions need to make sure that they fulfill all the terms and conditions mentioned in the guidelines. The credit cardholders should also read these guidelines so that they can understand their rights as a cardholder and the responsibilities of their card issuer. If you are finding it difficult to understand any of the points mentioned above, feel free to ask us in the comment section below!

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