Last Updated on May 2, 2022 by Aradhana Gotur

On 21 April 2022, the Reserve Bank of India (RBI) issued new guidelines for credit card issuance. The RBI (Credit Card and Debit Card – Issuance and Conduct) Directions, 2022 apply to all scheduled banks except state co-operative banks, payments banks, district central cooperative banks, and non-banking financial companies (NBFCs) operating in India. These new directions will kick in on 01 July 2022.

Let’s look at how these credit card-related guidelines help you as a customer.

  1. The credit card issuer must furnish a one-page key fact statement detailing the rate of interest, charges, and other important information. This help serves as a quick guide to deciding whether a credit card’s terms are favourable to you or not.
  2. The issuer is expected to communicate in writing the reasons for rejecting an application for a card. This helps you work on shortcomings.
  3. Banks are prohibited from upgrading an existing card or issuing unsolicited credit cards without your consent. If they still do, banks will have to compensate you by paying double the billed amount as a penalty.
  4. Issuers and third-party agents cannot resort to harassment or intimidation during the recovery of credit card dues. They are required to follow fair practices and observe strict customer confidentiality. Cardholders can also approach the RBI Ombudsman in case of grievances.
  5. Card issuers can only offer insurance against loss of cards and frauds after obtaining written consent from the cardholder or in digital mode, along with nominee details. So beware of card issuers that sell insurance as a mandatory product.
  6. NBFCs are prohibited from undertaking debit and credit card business without RBI’s prior approval. So don’t fail to check if an NFBC is authorised to sell credit cards before signing up for one.
  7. Card issuers must be transparent about credit card transactions that are converted into EMIs (equated monthly instalments). Before the conversion, they must communicate the principal, interest rate, and upfront discount. This info must also be disclosed separately in the credit card bill/statement. Issuers are prohibited from disguising EMI conversion with the interest component as no cost EMI.
  8. Issuers are to allow cardholders a one-time option to modify the billing cycle of the credit card based on their convenience.
  9. The cardholder’s credit card closure requests must be worked on within seven working days, provided all charges are duly paid. Any delay in the closure within the stipulated time will result in a penalty of Rs 500 per day to you.
  10. The card issuers must openly quote Annualised Percentage Rates (APR) on credit cards for different situations, including balance transfer, retail purchase balance, cash advances, non-payment of the minimum amount due, and others. They are also required to explain the calculations with examples.
Aradhana Gotur
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