RBI Credit Card Rules wef July 2022 Summarized in 25 Points

On 21st April 2022, RBI released a circular with updated rules and regulations related to Credit Cards. In today’s post, I am trying to summarize it in my own words.

  • These rules apply to all scheduled banks except payments banks, co-operative banks, and district co-operative banks.
  • These rules apply to all NBFCs (Non-banking financial companies)
  • These rules will be effective from 1st July 2022 onwards.
  1. NBFCs can start issuing credit cards on their own (without needing any partner bank). However, approval from RBI is necessary.

  2. In case of Credit Card Approval, the card issuer has to send a 1-page leaflet mentioning the important features of the card, fees, interests charged, etc, and MITC (Most Important Terms & Conditions) along with the welcome kit.

  3. In case of Credit Card Rejection, the card issuer has to inform the customer in writing about the exact reason for rejection.

  4. Card issuers offering Credit Card Insurance services via 3rd Party tie-ups, have to obtain explicit written consent or digital consent (maybe via link/SMS) from the customer.

  5. Credit Card upgrades have to be provided with explicit written/digital consent from the customer. In case a credit card is upgraded without consent and the customer is charged, the card issuer will reverse the charges, and also pay a penalty to the cardholder a value twice the amount charged. In case the cardholder approaches the RBI Ombudsman for grievance redressal, RBI will determine the compensation amount.

  6. In case a Credit Card is misused before reaching the customer, then it will be the responsibility of the card-issuer only, and not the cardholder.

  7. If a Credit Card has not been activated within 30 days of issuance, the card issuer should ask for OTP-based consent before activating the credit card. In case no consent is received, the card issuer should inform the customer about it and close the card within 7 days without any charges to the customer.

  8. No Card issuer should report a new card account to credit bureaus before it has been activated. In case it is already reported, they should be immediately withdrawn.

  9. Card issuer telemarketers can call customers between 10am and 7pm only.

  10. Any Credit Card transactions converted into EMI should be completely transparent. Before the conversion, it should clearly display the principal, rate of interest, and upfront discount provided by the merchant or card issuer to make it a No-Cost EMI. This should also be indicated in the credit card statement.

  11. Any request by the customer for ‘Closure of Credit Cards’ shall be honored within 7 days, provided all dues are cleared already. Customers should have all modes of communication (email, SMS, etc.) for requesting card cancelation. The card issuer cannot force the customer to send written mail by post etc. for closing their credit card account. Also, the card issuer should confirm the customer via email and SMS after their card account is closed. In case the card issuer fails to honor the card cancelation request within 7 days, they will be liable to pay a ₹500 penalty per day to the customer, for each day of delay.

  12. In case a Credit Card has not been used for over 1 year, the card issuer shall notify the customer about card closure and wait for 30 days before closing the card account.

  13. Any credit balance available on a credit card while closing a credit card, should be transferred to the bank account of the cardholder.

  14. The Credit Card welcome kit as well as credit card statement should prominently mention the ‘Annual Interest’ in case of delayed payments, along with proper calculation of the late payment charges. It should also prominently mention the bad implications of paying only the minimum due amount.

  15. Credit Card issuers shall offer a 3-day grace period post due date before reporting late payments to Credit Bureaus and start calculating late payment charges. However, the late payments should be computed from the due date only.

  16. Any changes in Credit Card fees (annual fees, interests, etc.) should be informed to the customer at least 30 days prior to the actual implementation.

  17. No hidden charges can be applied on Lifetime Free Credit Cards.

  18. There should be no delay in sending Credit Card statements (especially, physical statements) and the customer should get at least 2 weeks from the date of reception of the statement and the due date for the payment.

  19. Card issuers should not send wrong bills to the cardholders. In case the cardholder disputes any transaction in the Credit Card statement, the card issuer should provide detailed documentary evidence regarding the same. The cardholder should not be charged until the dispute is resolved.

  20. Cardholders should be provided with a one-time option to modify their bill generation date to their desired date.

  21. Any refunds/reversed transactions/failed transactions credited to the credit card before the due date have to be considered as payment towards the card and adjusted accordingly. In case the cardholder already made a payment, the card issuer has 2 options:

a. Take the cardholder’s permission and adjust the refunded amount against the credit limit up to 1% of the credit limit or ₹5000, whichever is lower, and credit the rest to the cardholder’s bank account.

b. In case the cardholder’s consent is unavailable, or in case the cardholder asks so, the card issuer should credit the entire amount to the cardholder’s bank account.

  1. In case of Co-Branded Credit Cards, the co-branding partner cannot advertise the card as their own product, and has to explicitly mention the card issuer’s name. Also, co-branded card issuers should not get customer account information other than the Level 1 support.

  2. Every credit card issuer should have a proper grievance redressal mechanism in place, and all levels of contacts for grievance redressals have to be mentioned in the credit card statements. Also, all grievances raised by the customer should have to be checked on priority.

  3. Credit card support team should be trained adequately so that they can handle customer grievances, and the unresolved queries should be automatically transferred to the next level of grievance redressal. The customer should be given an acknowledgment number for follow-up purposes.

  4. The card issuer should appropriately compensate for any financial loss, time, and mental harassment arising out of the grievance redressal mechanism. In case the card issuer cannot resolve it within 30 days, the cardholder may approach the RBI Ombudsman for grievance redressal.

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