As credit card usage continues to soar in India, it has become an essential financial tool for many individuals. However, with the increasing usage of credit cards, there is a need to ensure that customers are protected from fraudulent activities and are encouraged to use credit cards responsibly. To address this concern, the Reserve Bank of India has implemented various guidelines for credit card companies.
These guidelines regulate and enforce responsible card usage to safeguard customers’ interests. In this article, we will delve into the latest RBI guidelines for credit cards and examine how credit card companies come up with products like the Kotak Dream Different Credit Card to promote responsible credit card use.
RBI Guidelines for Credit Card Issuers in India
Credit cards are a widely used financial tool in India. As a result, the Reserve Bank of India has implemented guidelines for their issuance to ensure customers are protected and encouraged to use them responsibly. Here are some of the latest RBI guidelines for credit card issuers in India:
- Co-branded Credit Cards
Banks are not required to seek approval from the RBI to issue co-branded credit cards. However, Urban Cooperative Banks (UCBs) cannot give credit cards through tie-ups with non-bank entities.
- Explicit Written Consent
As per RBI rules, explicit written consent is required for all credit cards issued by a card issuer. Alternative digital modes with multi-factor authentication can also be used with prior approval from the RBI’s Department of Regulations.
- Issuance of Unsolicited Facilities
Credit card issuers cannot unilaterally upgrade credit cards or increase credit limits without explicit consent from the customer.
- Reporting to Credit Information Companies (CICs)
Card issuers cannot report any credit information about a new credit card account to CICs before the card is activated. If such information is provided, the card issuer must inform the customer.
- Disclosure of Important Terms and Conditions
Credit card issuers must provide a one-page critical fact statement and all the Most Important Terms and Conditions (MITC) for the credit card. This includes fees, charges, withdrawals, credit limits, and more.
- Provisions Regarding Telemarketers
Credit card issuers must ensure that telemarketers who promote the card comply with Telecom Regulatory Authority of India (TRAI) regulations and guidelines on Unsolicited Commercial Communications – National Customer Preference Register (NCPR). Telemarketers can only contact customers between 10:00 AM to 07:00 PM.
These RBI guidelines ensure that cards like the Kotak Dream Different Credit Card safeguard customer interests and promote responsible credit card use.
Guidelines for Credit Cards – Closure, Interest Rates, Billing, and Conduct
- Meeting customer requests for credit card closure
As per RBI guidelines, if a customer requests the closure of their credit card account, it must be fulfilled within seven days. Any delay would attract a penalty of Rs. 500 per day until the account is closed. The card issuer must provide multiple channels for submitting the closure request, including a helpline, email, IVR, website links, internet banking, and mobile apps. If a customer hasn’t used their credit card for over a year, the issuer can close it after notifying the cardholder and receiving no response within 30 days.
- Justifiable interest rates
RBI guidelines require issuers to set interest rates justifiably, considering the cost incurred and the expected return on investment. Furthermore, issuers must inform customers about the consequences of paying only the minimum amount due. They may report a credit card account to CICs or levy charges only if the version is past due for over three days. Before issuing a credit card, issuers must mention all orders, as no hidden costs apply.
- Credit card billing and payment
Card issuers must not delay dispatching bills and must provide customers with a fortnight to make payments. Additionally, RBI now allows cardholders to modify the billing cycle of their credit card to suit their convenience, recognizing that issuers do not have a standard billing cycle for all credit cards issued.
- Conduct towards customers
As per RBI guidelines, any form of intimidation or harassment of a customer during debt collection is not permissible. Card issuers must follow proper conduct towards their customers during debt collection.
According to the RBI guidelines, credit card companies play a vital role in enforcing responsible credit card use. These guidelines aim to protect customers’ interests and ensure fair practices by credit card issuers. Customers need to be aware of their rights and responsibilities while using cards like an 811 credit card for making the right calls.
By adhering to the guidelines set by the RBI, credit card companies can help build trust with their customers and promote responsible credit card use. Overall, it is a collaborative effort between customers and credit card companies that ensure the responsible use of credit cards.