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RBI Updates Guidelines for Credit and Debit Cards

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The Reserve Bank of India has nearly overhauled credit card regulations, making them more secure. The Central Bank of India issued new guidelines to the issuers. They must issue new cards only after they have received a written or digital request. New credit card guidelines have been published

The RBI made it mandatory that the issuer honor any request to close a credit card within seven days. 

Failing to do that the issuer will have to pay the penalty of ₹500 per day of delay to the customer till the closure of the account, provided there is no outstanding in the account.

Here are 10 key changes in the new credit cards rules that will take effect on July 1, 2022.

1] When determining the interest rate for credit card dues, card-issuers should follow the instructions of the Reserve Bank of India on interest rates on advances. Credit card interest charges shall be reasonable in relation to the cost of credit cards and the amount of return that the card-issuer could reasonably expect. In accordance with their Board approved policy, card-issuers must also set an interest rate ceiling for credit cards. This includes processing charges and any other charges.

2] Card-issuers are responsible for ensuring that no incorrect bills are issued to cardholders. The card-issuer must provide an explanation to cardholders who protest any bill. Documentary evidence, where applicable, shall also be provided within a maximum time period of 30 calendar days from the date of the complaint. No charges shall be levied on transactions disputed as ‘fraud’ by the cardholder until the dispute is resolved.

3] Credit cardholders must not accept unsolicited loans, or any other credit facility, without first seeking their consent. If an unsolicited credit line is extended to a cardholder, without their written/explicit consent, they will be asked to withdraw it. The RBI Ombudsman may also decide to assess the case and determine the appropriate penalty.

4] Card-issuers cannot unilaterally increase credit limits or upgrade credit cards. Every time there are changes in terms or conditions, the cardholder must give their explicit consent. Cardholders will be informed by the card-issuer if their credit limit is being reduced.

5] Card-issuers/their agents shall not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the credit cardholders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations.

6] The disclosure of customers’ information to the DSAs/DMAs/recovery agents shall also be limited to the extent that will enable them to discharge their duties. The card-issuer shall not divulge personal information about cardholders that are not needed for recovery purposes. The card-issuer must ensure that DSAs/DMAs/recovery agencies do not misuse customer information in marketing credit card products.

6] According to the RBI guidelines, any request to close a credit card must be honored by the credit card-issuer within seven days. Cardholders are responsible for all dues. If the card issuer fails to process of closure of credit card within seven working days, it should pay penalty of ₹500 per day of delay to the customer till the closure of the account, provided there is no outstanding in the account.

7] Any changes in charges will be effective with prospective effect and must be notified at least one calendar month before they are made. Any cardholder who wishes to give up his/her card in the event of a change in charges is allowed to do so. However, all dues must be paid.

8] No hidden fees will be charged for credit cards that are free of charge.

9] Credit card issuers don’t follow a consistent billing cycle for all cards. Cardholders will have the ability to change the billing cycle at any time to give them flexibility.

10] Card-issuers shall seek explicit consent of the cardholder to adjust credit amount beyond a cut-off, one percent of the credit limit or ₹5000, whichever is lower, arising out of refund/failed/reversed transactions or similar transactions against the credit limit for which payment has already been made by the cardholder. Within seven days of credit transaction, the card-issuers must obtain consent via SMS or e mail. The card-issuers shall reverse the credit transaction to the cardholder’s bank account, if no consent/response is received from the cardholder.


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