RBI amends credit and debit card guidelines: What’s new? (2024)

The Reserve Bank of India (RBI) on March 7 amended its debit and credit cards guidelines initially published in April last year. and answered Frequently Asked Questions related to various provisions in the guidelines. The central bank originally notified the guidelines for the issuance of credit cards and debit cards in April 2022 and you can find a summary of the original provisions here. Below are the new changes added to the card guidelines that card issuers need to follow:

• Monitoring of business credit card usage: According to the new guidelines, Business credit cards are only allowed for business expenses and card issuers have been asked to put in place an effective mechanism to monitor the end use of funds. This requirement comes at a time when RBI placed restrictions on Visa forbidding the use of business cards for making payments to non-card accepting entities via third-party fintech companies.

• Changes in credit card closure delay charges: If card issuers fail to complete the process of closure within seven working days, they are liable to pay the cardholder a penalty of ₹500 per calendar day of delay. Earlier the word “calendar” wasn’t mentioned, resulting in misinterpretations that the penalty was only applicable per business day of delay.

• More than once modifications in the billing cycle: Cardholders must be provided an option to modify the billing cycle of the credit card at least once, at the cardholders’ convenience. Earlier, this provision said that issuers must provide “a one-time option” for cycle change, now it says that this option must be provided “at least once”, letting card issuers offer this option more than once if they wish to.

• Form factors for debit and credit cards: All types of card issuers can issue other form factors such as wearables (smartwatches, wristbands, key chains, etc), in place of or in addition to a plastic debit or credit card after obtaining explicit consent from the customer. Earlier only Scheduled Commercial Banks were permitted to do this and only for debit cards, not credit cards. Banks were also required to submit detailed reports to RBI before issuance of any other form factors, but this is no longer required.

• Prohibition in sharing data with outsourcing partners: Card issuers are not allowed to share card data (including transaction data) of the cardholders with their outsourcing partners unless the sharing of such data is essential to discharge the functions assigned to the latter. In case of sharing of any data, explicit consent from the cardholder should be obtained and the storage and the ownership of card data must remain with the card issuer.

• Co-branding partners to display transaction details: Earlier, the co-branding partner was not allowed to access information relating to transactions undertaken through the co-branded card. Now, for the convenience of the cardholder, they are allowed to draw card transaction-related data directly from the card issuer’s system in an encrypted form and display it on their platform. The information displayed should be visible only to the cardholder and not to the co-branding partner.

• No prior approval for co-branding: Prior approval is not required by the banks and NBFCs registered with the RBI Bank to become a co-branding partner of card issuers.
• Customers can decline card renewals:Before dispatching a renewal for an existing card, the cardholder must be provided an option to decline the same. Earlier, card issuers could automatically send renewal cards.
• Interest on the outstanding amount after adjusting for credits: Card issuers can levy interest past the due date only on the outstanding amount, not the total amount due, and only after adjusting for payments, refunds, and reversed transactions. The earlier provision did not specify an adjustment for inward credit, which could have led to higher interest charges for users.
• Information on payment options: Card issuers are required to provide the list of payment modes authorised by them for making payment towards the credit card dues, in their websites and billing statements. Further, card issuers must advise cardholders to exercise due caution and refrain from making payments through modes other than those authorised by them. This provision did not exist earlier.
• Reasons for blocking or deactivating cards: If card issuers, at their discretion, decide to block, deactivate or suspend a debit or credit card, they must follow the standard operating procedure approved by their board, and must immediately intimate the cardholder through means like SMS, email, etc. along with reasons thereof.

Along with the amendments outlined, RBI issued a separate notification on March 6 directing credit card issuers to offer credit cards from different card networks (American Express, Diners Club, Mastercard, RuPay, Visa) at the time of card issuance and allow for switching networks during renewal.

Also Read

• What’s New In RBI’s Guidelines For Credit Cards And Debit Cards
• Credit Card Issuers To Allow Customers To Choose Card Networks: RBI
• RBI Directs Visa, Mastercard To Halt Certain Card-Based Business Payments
• RBI Announces A Better Card Tokenisation Method For Consumers

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