On 21st April, 2022, Reserve Bank of India issued Master Directions– RBI (Credit Card and Debit Card- Issuance and Conduct) Directions, 2022. Enforceable from 1st July 2022, these directions regulate the conduct of Credit/Debit payments in Banks and Non-Banking Financial Companies (NBFCs). These provisions are non-operative on Payments Banks, State Co-operative Banks and District Central Co-operative Banks. These directions aim to adapt friendly provisions for credit/debit card customers and introduce Co-branding cards.
Issuance of Credit Cards
- Applicability: These directions are applicable on-
- Scheduled Commercial Banks (SCBs) with a net worth of Rs. 100 crores.
- Urban Cooperative Banks (UCBs) with a net worth of more than Rs. 100 crores.
- Non-Banking Financial Companies (NBFCs) with a minimum net owned fund of Rs 100 crores.
Exceptions to the rule-
- SCBs do not include Regional Rural Banks (RRBs), however, RRBs are permitted to issue credit cards in collaboration with their sponsor bank or other banks.
- UCBs should apply to the concerned Regional Office of the Reserve Bank with a copy of Board resolution to that effect.
- NBFCs should be registered with the RBI holding Certificate of Registration.
- Issue of Credit Cards:
- Customer Acquisition–
The conduct of credit card business by any bank involves two steps while issuing the credit cards under Part 6 of Directions. The issuer has to provide one-page Key Fact Statement and other to provide Credit Card. Making it friendly, the customer can be given an option to cover the card with insurance cover. On the explicit consent of the user in writing/digital mode, this shall cover the card-holder with liabilities such as card frauds, loss of cards, etc. The issuer (defined under Part-3vi) is not allowed to pass on the information of the holder to any Credit Information Companies. Within 30 days such cards with are inactive will be withdrawn and reported immediately. They can also send the Most Important terms and conditions (MITC) during important communications.
- Underwriting Standards–
In cases where the holder holds more than one credit card, credit limit of the holder will be considered and assess the credit risk taking into account the independent worth of the applicant. Loans available on the card will be in compliance with the guidelines of RBI.
- Interest Rates/charges (Part 9):
- Card issuer with the instructions from RBI will mark a justifiable interest rate on credit card, determine the rate ceiling in line with secured loans, these will vary on the basis of card holder’s financial history.
- When the Card issuer requires submitting Annualized Percentage Rates, in cases of retail purchases, cash advances, the rates are calculated and charged with annual fee. Card-issuers will inform the cardholders of the implications of paying only ‘the minimum amount due’. With no hidden charges, the payments will be made with prior notice one month.
- Closure of Credit Cards:
Credit cards can be closed off within seven days of the request from the cards holder applied through helpline/ Interactive Voice Response, etc. These are subject to payments of due charges from applicant. Charge of Rs. 500 will be levied on the issuer in case of failure to close off the card within seven days.
When a credit card is not used for more than a period of 1 year, closure of such cards will be processed within 30 days with condition of no-response from user.
Issuance of Debit Cards
- Issue of Debit Card:
After the approval from Board and RBI, the banks will issue the debit cards on Savings/Current Accounts. No loans are allowed on these debit cards, but overdraft facility by Pradhan Mantri Jan Dhann Yojana will be applicable on such debit cards.
Banks shall not force a customer to avail debit card facility and shall not link issuance of debit card to availment of any other facility from the bank.
- Closure of Debit Cards: The debit cards can be closed off on the prior request from holder applied via mobile banking, internet banking, SMS, IVR or any other modes.
- Any bank that has issued/report on products prior to the effective date of the Master Direction, will have to submit a detailed report to Department of Regulation within 30 days from the effective date.
- Co-branded Card:
Defined under Part 3ix, Co-branded Card is a card that is issued jointly by a card-issuer and a co-branding entity bearing the names of both the partnering entities.
- Issue of Co-branded Cards: Under Chapter IV, RBI shall allow banks to issue Co-branded cards- debit/prepaid cards). These shall be restricted under co-branding arrangement which will not allow partners to exhibit/market their own products.
The co-branded card will prominently bear the branding of the card-issuer.
- Co-branding partner under the tie-arrangement will be allowed to market/distribute cards to card-holder for good/services. Exception it follows, that, no other information is allowed to be passed on by the partner under this arrangement.
- NBFCs, opting for a co-branding arrangement for issue of credit cards with a card-issuer, will follow the Guidelines on issue of Co-Branded Credit Cards contained in the respective Master Directions applicable to NBFCs.
Provisions bind the telemarketers to not to contact the customers outside of 10:00hrs-19:00hrs.
Telemarketers will have to comply with directions/regulations issued by the Telecom Regulatory Authority of India (TRAI) along with the guidelines issued on “Unsolicited Commercial Communications – National Customer Preference Register (NCPR)”.
- Redressal of Grievances:
- The grievance redressal procedure involves details such as name, direct contact number, email-id and postal address of the card –issuer to mention in the bills. With prior approval from Board, specific timeline has to be decided after which the issue will addressed by showing it up on the homepage.
- A provision for automatic escalation of unresolved complaints from a call center/base level to higher authorities. The process included the system of acknowledging customers’ complaints for follow up, such as complaint number/docket number, even if the complaints are received over phone.
- Card-issuer will be liable to compensate the complainant I situations of loss of finances/timeline or any other harassment/ anguish experienced by the user. When the issues a are not addressed within on-month the complainant can move the Office of the concerned RBI Ombudsman.
- Confidential Information of Customers:
- No information of the end users can be shared with any organization without explicit consent of the customers. Card-issuers will have to ensure strict compliance to the extent legal framework on data protection. No agencies, can obtain the information of customers which are of nature that violates the law. Card- issuers will be responsible for any data leaked about the customers.
- No assess will be allowed to partners of co-branding entity other than marketing and distribution. In cases of two banks under such arrangement, will ensure to follow the restrictions implied under Part 27 of the Master Directions.