RBI gives more time to adhere to card rules

The new rules pertaining to credit cards and debit cards were supposed to go live on 01st July. However, with banks and other payment stakeholders asking for more time to get their systems in place, the RBI has decided to offer another window of 3 months for the implementation of the new credit and debit card norms.

Now the new norms will be applicable only from 01st October 2022 instead of 01st July 2022. These pertain to specific provisions of the master directions it issued on issuance of debit and credit cards by RBI.

In its circular as an addendum to the Master circular, the RBI has just mentioned that considering various representations received from the industry stakeholders, it was decided to extend the timeline for implementation of certain provisions of the master circular.

Let us look at what exactly are the stipulations in the master circular, wherein the banks and other stake holders will get more time to implement the changes.

1. As per the master circular issued by the RBI, all card issuers had to mandatorily seek one-time password (OTP)-based consent from the cardholder before activating a credit card. However, this is only applicable in cases wherein the same was not activated by the customer for more than 30 days from the date of issuance.

2. The master circular also stipulated that if no consent was granted by the customer, the card-issuers will have to mandatorily close the credit card account.

This will have to be done within seven working days and should entail no cost to the consumer. For this provision also, the RBI has extended the deadline for implementation by 3 months. 

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3. One more stipulation in the master circular was that the credit card companies had to ensure that the credit limit sanctioned and advised to the cardholder was not breached at any point of time and under any circumstances. However, the only exception to that rule was if the explicit consent from the cardholder had been taken for the same.
 

4. One more important provision that gets postponed to October 01st is all terms and conditions, including the minimum amount due, shall be stipulated as part of the credit card contract.

Also, the card issuer has to ensure that there was no negative amortization. More importantly, the unpaid charges shall not be capitalized for charging interest. 

5. It must be noted that other than the above provisions explicitly mentioned by the RBI, all the other provisions of the master direction would remain unchanged and would be effective from the 01st of July 2022. 

For the banks and the card issuers, this comes as a relief as most of the card companies were not prepared with the technological updates required to be able to start the new system. Some of them are cumbersome.

However, the RBI and the government have decided not to extent the deadline beyond 01st of October. These measures are likely to go a long way in reducing misuse of cards and also helps keep  tab on family members. 

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