RBI’s new directives to banks regarding credit cards, benefits customers
These directives will be effective six months from the date of the circular
Hyderabad: The RBI has issued new guidelines to enhance credit card services for consumers. The central bank has directed card networks authorized with banks and non-banks that issue credit cards to inform its consumers of the decision regarding the network that is being used for a customer's card.
The RBI in its circular dated Mar 6, 2024, has said, “On a review, it is observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers.”
Therefore, under the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), the RBI, believing it necessary and beneficial for the payment system and public interest, issued the following directives:
- Card issuers are prohibited from entering into agreements that prevent the consumers from using other card networks' services.
- Card issuers must offer their eligible customers a choice of multiple card networks at the time of card issuance. This choice can also be provided to existing cardholders at their next renewal.
For clarity, the following definitions have been used:
- Authorized card networks: American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India–Rupay, and Visa Worldwide Pte. Limited.
- Both card issuers and networks must adhere to these requirements in existing agreements upon amendment or renewal, as well as in new agreements.
- These directives do not apply to credit card issuers with 10 lakh or fewer active cards.
- Card issuers who issue credit cards on their own authorized network are exempt from this circular's scope.
These directives will be effective six months from the date of this circular.
