The Reserve Bank of India (RBI) last week announced new rules pertaining to the issuance of debit and credit cards to customers. Once the new rules come into effect, card companies will require the explicit consent of a customer to issue a credit card or upgrade an existing one. The new guidelines issued by the RBI will be effective from July 1.

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If an unsolicited card is issued or an existing card is upgraded without the consent of the recipient and the latter is charged for it, the card issuer will not only have to reverse the charges, but also pay a penalty of twice the value of the charges reversed to the customer.

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For closure of a credit card, the RBI has made it mandatory for the issuer to honour the request within seven working days, failing which the issuer will be penalised. In such a case, the card issuer will have to pay a penalty of Rs 500 per day for the delay to the customer till the account is closed, as long as there is no outstanding in the account.

RBI's new rules will hugely benefit the customer as many of them struggle to close their cards.

The card issuers will have to get an One Time Password (OTP)-based consent from the customer to activate a credit card. If the cardholder does not activate it within 30 days, the credit card account shall be closed without any cost to the customer from the 37th day after it has arrived.

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In case a card has not been used for one year, it can be closed after sending a notice to the customer.

The card issuers will have to provide a concise one-pager of all the fees and charges along with the credit card application to the customer. The fact statement will cover important aspects such as interest rate and quantum of charges.

If the issuer rejects a credit card application, it will have to convey the same in writing to the customer providing the specific reason/s which led to the rejection of the application.

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Card issuers can provide the customer with the option of choosing an insurance cover to take care of liabilities arising out of lost cards, frauds and thefts. Issuers will have to take the written consent of the customer to provide this service, in partnership with insurance companies.

Sometimes, unsolicited cards are misused even before it reaches the person in whose name it has been issued. In such instances, the card issuer will alone be responsible for the loss arising out of the misuse of the card.

Card issuers will have to make sure telemarketing calls follow the rules and regulations on the subject issued by the Telecom Regulatory Authority of India (TRAI). The representatives of the card issuing companies can only contact the customers between 10 am and 7 pm.

Also read: More banks to enter credit card space in next 2 years: HDFC Bank

(Edited by : Shoma Bhattacharjee)

First Published:Apr 25, 2022 5:38 PM IST