RBI Rules on Credit Card

Credit Card Rules by RBI

The following is the list of credit card rules by the Reserve Bank of India:

1. The interest rate on credit cards will be in line with other unsecured loans including processing charges as per the board-approved policy of the credit card issuers.
2. Transparency will be maintained in levying differential interest rates, in case the interest rates vary as per the payment history of cardholder.
3. Credit card account remaining in 'Past due' status for more than three months will be levied with penal charges
4. As per RBI, customer confidentiality and integrity of the credit card issuing company should be maintained during recovering dues by the third-party agents.
5. Card issuers or the agents should not interfere in the privacy of the policyholder or intimidate them.

New RBI Credit Card Rules Effective 1 October 2022

The Reserve Bank of India (RBI) issued new rules regarding credit cards and debit cards on 1 April 2022 which has come into effect recently. Here are the new regulations:

• One-Time Password (OTP) to be asked for by card issuersBanks or companies issuing credit cards will have to ask the cardholder for OTP if the latter has not activated their card after 30 days of its issuance. If the cardholder does not provide their consent, then the credit card account is to be closed within seven days and no amount must be charged whatsoever.
• Approval of credit limitThe credit limit approved by the card issuer to the cardholder must not be breached at any point in time unless the latter's consent has been taken.
• Interest RateNo unpaid charges, taxes, or amount charged must be capitalised by the bank or card issuing companies.

Tokenisation of credit cards by 30 September 2022

RBI made it mandatory that all the credit card data used for online, in-app, and point-of-sale transactions must be replaced with tokens by 30 September 2022. This is a layer of security added to ensure that the customer's digital payment experience is safe and secure and also lowers the risk of any fraudulent activity.

MITC and its importance

MITC is a document that holds crucial information regarding a product. For credit cards, MITC is to help customers understand interest rates, billing information, penalties and other charges.

Credit Card MITC

• Customers will receive MITC separately: As per the new rules given by RBI, it will be mandatory for credit card issuers to send the MITC separately to all the customers along with the credit card welcome kit. Moreover, the credit card issuers will have to provide a new copy of MITC to all the customers each time a condition is modified. The credit card customers are also entitled to receive a signed copy of the agreement between them and the credit card company, and a copy of MITC at the registered e-mail address or on the registered postal address.
• MITC will be disclosed to customers in multiple stagesThe following are the stages through which MITC can be disclosed to the customers:
  • Marketing stage: While marketing the credit card, the card issuing company will update the customer about the various fees and charges related to the card.
  • Credit card application stage: While applying for the credit card, the card issuing company will update the customer about other important information such as withdrawal limits, billing information, etc.
  • Welcome kit stage: At this stage, when the customer has acquired the card, the card issuing company will update the customer about information such as termination of credit card membership, grievance redressal, lost/theft of card, etc.
  • Credit card billing stage: At this stage, the card issuing company will communicate to the customer about information such as billing statements, other fees and charges, withdrawal limit, etc.
  • The credit card issuing company also has to update the cardholder about any changes in the terms and conditions on a regular basis.
• MITC will have illustrated examples: In order to make things easier for customers to understand, the MITC should contain specific examples.
• MITC has to explain the information sharing procedure with credit bureaus: The RBI has given directions to credit card issuing companies to explain to the customers about the information sharing procedure with credit bureaus in MITC. This will make the entire procedure more transparent and understandable for card holders.

Contents of the MITC document

According to the directions given by RBI, the MITC must contain the below mentioned information:

• Fees and charges related to the credit card:
  • Joining fees of the credit card for both primary as well as add-on card holders
  • Annual fees of the credit card for both primary as well as add-on card holders
  • Cash advance fee
  • Any service charge applied on transactions
  • Interest-free grace period (with illustrated examples)
  • Finance charges for both cash advances and revolving credit
  • Defaulter charges
  • Overdue interest charges
• Withdrawal limits:
  • Available credit limit
  • Actual credit limit
  • Cash withdrawal limit
• Information related to billing:
  • Mode of sending bill statements
  • Periodicity of bill statements
  • Method of payment
  • Resolving billing dispute methods
  • Complete postal address of the credit card issuing company
  • Customer care numbers and other grievance redressal services
• Defaulters:
  • Complete procedure including notice period for reporting a cardholder as a defaulter
  • Complete procedure for withdrawal of default report and the period within which the default report would be withdrawn after settlement of dues
  • Recovery procedure in case of default
  • Recovery of dues in case of death/permanent in capacitance of cardholder
  • Available insurance cover, if any, for cardholders and date of activation of policy including nomination details
• Revocation or termination of credit card membership:
  • Detailed procedure to surrender the credit card by cardholder
  • Link to website for credit card closure
  • Card holder's contact details to initiate closure
  • Detailed procedure of credit card closure if unused for more than a year
• Theft/ Lost/ Misuse of credit card:
  • Detailed procedure that needs to be followed in case the credit card is misused, lost or stolen
  • Mode of intimation to card holder in case of lost/theft/misuse of credit card
  • Credit card holder's liability in case of lost/theft/misuse of credit card
  • Website link, SMS, phone banking, e-mail, IVR, a dedicated toll-free helpline, reporting to home branch, etc. for reporting unauthorised transactions and initiating blocking of card
• Compensation framework and grievance redressal:
  • Escalation process and grievance redressal
  • Timeframe to address grievances
  • Detailed framework to compensate for unsuccessful/failed transactions, delay in the redressal of grievance, delay in the closing of account/blocking of lost or stolen cards, etc.
  • Contact particulars of card-issuer - 24-hour call centres, email-ids, helpline, other important telephone numbers
• Disclosure: Any type of information related to the credit card or card holder to be disclosed without or with cardholder's approval

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