The Buyt Desk
The Reserve Bank of India (RBI) has introduced new rules for credit and debit card operations including issuance, closure and billing of cards. The central bank said that the new credit card rules will come into effect from July 1, 2022. These new rules will be master directions by the RBI regarding the issuance and operation of credit and debit cards. Under the Reserve Bank of India Directions, 2022 it will be applicable to Scheduled Bank and all Non-Banking Financial Companies (NBFCs) in India but not Payments Banks, District Central Co-operative Banks and State Co-operative Banks.
What are the new credit card rules that will be effective from July 1 2022?
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Unsolicited credit card – As per the RBIs new rule, the issue of unsolicited credit cards is strictly prohibited. If without the explicit consent of the recipient an unsolicited card is issued or an existing card is upgraded and activated and the recipient is billed for the same then the card issuer should reverse the charges and also pay a penalty without demur to the recipient. The penalty will be twice the value of the charges reversed as per new rules.
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Billing cycle – The time frame in which a credit card bill is generated is known as the billing cycle of a credit card. As per the RBI’s new guideline, the credit card billing cycle from July 1st will be from the 11th of the previous month and to the 10th of the current month.
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Sending bills – From now on, the card issuers should make sure that the bill is sent on time and there is no delay in dispatching/ sending/emailing bills and statements. Also should ensure that the customer has enough days (at least fifteen days) to make payment before the delay interest is charged. RBI has ordered card issuers to set up a proper mechanism to ensure that the cardholder is in receipt of the billing statement.
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Wrong bills – New RBI rule says that the card issuers shall not raise or issue wrong bills to cardholders. If the cardholder complains about a bill issued, then the card issuer should provide an explanation. And if needed the card issuer should even provide documentary evidence to the cardholder within 30 days from the date of complaint.
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Closure of credit card – The new RBI rule says that the credit card issuers should respect the request from cardholders to close their credit cards and action should be taken within seven working days provided there is no outstanding in the account. After the closure of the credit card issuer must immediately notify the cardholder about the same through email, SMS, etc. If the card issuer is unable to complete the process of closure within seven working days, then the issuer should pay a penalty of Rs 500 per day of delay to the customer. The penalty is applicable till the closure of the account.
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Response within 30 days of filing a complaint – The card issuer must respond to a cardholder within 30 days from the day of the complaint raised. And if needed documentary evidence should be provided.
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Credit balance to be transferred to bank account – During the closure the card holder’s bank account information should be collected to transfer the balance. Once the account is closed and if any credit balance is available in the cardholder’s account then the same should be transferred to their bank account.
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Credit closure if unused – The new rule says that the bank may close a credit card which is not been used for more than a year provided that the card has no outstanding balance. The credit card holder should be informed about the same before cancelling the card. The card issuer can deactivate the card account when the cardholder does not reply within 30 days of informing.
