New RBI Rules for Credit and Debit Cards Effective July 2022

RBI's New Rules For Credit, Debit Cards: The Reserve Bank of India (RBI) has instructed credit card issuers not to issue unsolicited credit cards or upgrade current cards without the customer's specific agreement. "The issue of unsolicited cards/upgradation is strictly prohibited," the RBI stated in its master directives on credit and debit card issuance. These guidelines will take effect on July 1, 2022.

.@RBI issued new directions on Credit Card and Debit Card which shall be effective from July 01, 2022. pic.twitter.com/x69PyOYL1B

— Prasar Bharati News Services पी.बी.एन.एस. (@PBNS_India) April 24, 2022

The new RBI guidelines will help credit cardholders in several ways, as outlined in this article.

1) Card issuers must include a one-page Key Fact Statement with the credit card application, which contains important information about the card, such as the interest rate and the number of charges. If a credit card application is denied, the card issuer must notify the applicant in writing of the specific reason(s).

2) Card issuers may consider establishing an insurance cover, at the request of consumers, to cover liabilities arising from lost cards, card fraud, and other similar incidents. When card issuers offer insurance coverage to their cardholders through partnerships with insurance firms, they must receive clear consent in writing or electronically from the cardholders, as well as the names and addresses of nominees.

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3) It is strictly prohibited to offer unsolicited cards or upgrades. If an unsolicited card is issued or an existing card is updated and activated without the receiver's specific agreement and the latter is billed for it, the card-issuer must not only reverse the charges right away but also pay the recipient a penalty equal to twice the amount of the reversed charges. In addition, the person in whose name the card is issued can file a complaint with the RBI Ombudsman, who will determine the amount of compensation payable by the card-issuer to the recipient of the unsolicited card, based on the provisions of the Ombudsman Scheme, such as for lost time, expenses, harassment, and mental anguish suffered by the complainant.

4) Unsolicited or applied-for cards have been misused before reaching the people whose names they were issued. It is emphasised that any damage incurred as a result of the abuse of such unsolicited cards is solely the responsibility of the card issuer, and the person in whose name the card was issued is not liable.

5) Card issuers must get the cardholder's One-Time Password (OTP)-based consent before activating a credit card if the card has been inactive for more than 30 days from the date of issuance. If the consumer does not consent to the card being activated, the credit card account will be closed without charge to the customer within seven working days of the customer's confirmation. The closure of an inactive card is subject to payment of all dues by the cardholder in the case of a renewed or replacement card.

6) Before activating a new credit card account, the card issuer must report any credit information about the account to credit reporting agencies. Any credit information on such inactive credit cards that have already been reported to credit information companies will be removed promptly; under no circumstances will it take more than 30 days from the effective date of these instructions.

7) Consent for the cards issued, as well as any products or services provided in conjunction with the cards, must be given expressly rather than impliedly. To put it another way, before providing a credit card, the applicant's written consent is necessary. Card issuers might also employ additional digital channels in conjunction with multifactor authentication to acquire express client approval. Any other digital means utilised by the card issuer must be reported to the Reserve Bank of India's Department of Regulation.

8) Card issuers must ensure that the telemarketers they hire follow the Telecom Regulatory Authority of India's (TRAI) directions and regulations on the matter, as well as the recommendations provided in "Unsolicited Commercial Communications–National Customer Preference Register (NCPR)". Customers will only be contacted by card issuer employees between 10:00 a.m. and 7:00 p.m.

9) Before converting credit card transactions to Equated Monthly Instalments (EMIs), card issuers must explicitly state the principal, interest, and upfront discount granted by the merchant/card-issuer (to make the conversion free of charge). The same must be stated individually on the credit card bill or statement. The interest component of an EMI conversion cannot be disguised as a zero-interest or no-cost EMI.

10) Card issuers must guarantee that the credit limit sanctioned and disclosed to the cardholder is not exceeded at any time without the cardholder's informed permission.