From no hidden charges to insurance on credit card frauds and lost cards, here are RBI’s new guidelines for credit and debit cards

With the increasing adoption of credit cards in India, the Indian Central Bank, Reserve Bank of India (RBI) has announced a new set of guidelines to protect consumers from fraud and hidden charges, among others.In his new guidelines, central bankers have a long list of guidelines, rules, and punishment for banks and credit card publishers. It is necessary to indicate that this new guideline also includes a debit card, but the most important new addition is for credit cards.This can be reflected considering that credit cards have exploded in popularity after the Pandemic Covid-19 – Total outstanding credit cards in December 2019 reached 55 million, which has now increased to almost 72 million at the end of February 2022.It is almost 30% growth, and one of the motivations behind the acquisition of Axis Bank on Indian Citi retail assets, including a profitable credit card business.

Key highlights of RBI’s guidelines for credit and debit cards

The broad idea of the RBI guidelines is to further improve consumer protection, especially in fraud cases, theft, unauthorized use, and more.

Here are the key highlights for guidelines related to credit cards:

No hidden charges on credit cards issued free of charge.
Card issuers can now consider an insurance cover for liabilities arising out of lost credit cards, or credit card frauds. For this, the issuer will have to obtain explicit permission from the card holder.
Will require a one-time password to activate a credit card that has not been activated within 30 days from the date of issuance. This will help cover scenarios where an unauthorised person intercepts cards before their delivery to the customer.
Credit information of the card holders shall not be reported to any credit bureaus like Cibil, CRIF, Experian, etc., before the activation of the card.
Ensure complete transparency in the conversion of credit card transactions into equated monthly instalments (EMI) by clearly mentioning the amount of principal, interest, discount and charges, if any.
EMI conversion with interest shall not be disguised as no-cost or zero-interest EMI.
In case of rejection of a credit card application, the issuer shall convey in writing the reason for such rejection.
Closure requests for an existing credit card shall be honoured within seven working days. Failure to do so shall result in a penalty of ₹500 per day of delay, payable to the customer.
Closure of credit cards if not used for a period of one year, with a 30-day notice to the card holder.
Any changes in charges related to the credit card shall be intimated 30 days prior to their implementation.