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How credit cardholders will benefit from new RBI rules in 2022

How credit cardholders will be benefitting from new RBI rules

The Reserve Bank of India (RBI) has directed card companies not to issue unsolicited credit cards or upgrade an existing card without the customer’s explicit consent. The RBI stated in its master directions on credit and debit card issuance that “the issue of unsolicited cards/up-gradation is strictly prohibited.” These guidelines will be maintained from on July 1, 2022, onwards.

How new RBI rules will benefit credit cardholders, is explained in points, below.

How credit cardholders will benefit from new RBI rules

1) Card issuers must include a one-page Key Fact Statement with the credit card application that contains important information about the card, such as the rate of interest and the number of charges. If a credit card application is rejected, the card issuer must provide the specific reason(s) for the rejection in writing.

2) Card issuers may consider introducing, at the request of customers, an insurance cover to cover liabilities arising from lost cards, card fraud, and so on. In cases where card issuers offer insurance coverage to their cardholders through partnerships with insurance companies, the card issuers must obtain explicit consent in writing or digitally from the cardholders, along with the details of the nominee/s.

3)Card-issuers must obtain One Time Password (OTP)-based consent from the cardholder before activating a credit card that has been inactive for more than 30 days from the date of issuance.

If no consent is obtained for card activation, card issuers must close the credit card account without charge to the customer within seven working days of seeking confirmation from the customer. In the case of a renewed or replaced card, the closure of an inactive card is subject to the cardholder’s payment of all outstanding balances.rbi has issued new rules regarding credit cards cardholder get increased  benefit nchr | Credit Card को लेकर RBI ने जारी किए नए नियम, अब कार्डहोल्डर  को मिलेगा बढ़ा फायदा | Hindi

4)Unsolicited card/upgrade distribution is strictly prohibited. If an unsolicited card is issued/an existing card is upgraded and activated without the recipient’s explicit consent and the latter is billed for it, the card-issuer must not only reverse the charges immediately but also pay a penalty without demur to the recipient equal to twice the value of the charges reversed.

Furthermore, the person in whose name the card is issued may approach the RBI Ombudsman, who will determine the amount of compensation payable by the card-issuer to the recipient of the unsolicited card by the Ombudsman Scheme, i.e., for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him/her.

5) There have been reports of unsolicited/applied-for cards being misused before reaching the people whose names they were issued. It is emphasized that any loss resulting from the misuse of such unsolicited cards is solely the responsibility of the card issuer, and the person in whose name the card was issued is not liable for the same.

RBI guidelines on credit and debit cards to help customers from misselling  - The Hindu BusinessLine

The Reserve Bank of India (RBI) is India’s central bank and the regulatory body, in-charge of overseeing the Indian banking system. It is owned by the Ministry of Finance, Government of India. It is in charge of issuing and supplying the Indian rupee. It also oversees the country’s main payment systems and works to promote the country’s economic development.

Bharatiya Reserve Bank Note Mudran is one of the RBI’s specialized divisions that prints and mints Indian banknotes and coins. The Reserve Bank of India established the National Payments Corporation of India as one of its specialized divisions to regulate India’s payment and settlement systems.

The governor; four deputy governors; two finance ministry representatives (usually the Economic Affairs Secretary and the Financial Services Secretary); ten government-nominated directors; and four directors who represent local boards for Mumbai, Kolkata, Chennai, and Delhi make up the RBI’s 21-member central board of directors.

Each of these local boards has five members who represent regional interests as well as co-operative and indigenous bank interests.

RBI's new rules for credit, debit cards: All you need to know

It is a bank that is a member of the Asian Clearing Union. The bank is also active in promoting financial inclusion policy, serving as a key member of the Alliance for Financial Inclusion (AFI). The bank is frequently referred to as ‘Mint Street.’

Continue reading to learn about the top regulations provided by this directive and how credit cardholders can benefit from them.

  1. No Unsolicited Credit Card Issuance/Upgrade

If a card is issued or upgraded without the cardholder’s consent and the cardholder is charged, the issuer is required to reverse the charges and pay a penalty equal to twice the amount of the charges. The card issuer now requires the applicant’s written consent before issuing a credit card. If an unsolicited/applied-for card is misused, the card issuer is liable for any losses incurred as a result of the misuse.

RBI's new credit and debit card rules to be effective from 1st October 2020  – Check details | The Financial Express

  1. Penalty for Making Unrequested Loans/Credit Available

If the credit card holder is offered unrequested loans or other credit facilities, the card issuer must not only withdraw the facility but also pay a penalty.

 

  1. Credit Card Application Process Transparency

At the time of card application, credit card applicants will now receive a one-page key fact statement with important details such as interest rate and other applicable charges. Furthermore, if an application is denied, the card issuer is required to explain the reason for the rejection in writing to the applicant.

RBI announces new rules on issue of credit, debit cards: All you need to  know

  1. Insurance Benefits at the Customer’s Discretion Card issuers will now be able to offer insurance benefits on credit cards only after receiving written approval from the cardholder. Furthermore, all information about the insurance coverage will be included on credit card statements. This will save users from having to pay hidden fees instead of insurance coverage.

 

  1. There will be no updates to credit bureaus until the card is activated.

Credit card companies must now report information to Credit Information Companies (CICs) only after the card has been activated. Multiple card inquiries will not hurt the cardholder’s credit score as a result of this change. Every change made to the CIC will now be communicated to the cardholder. In addition, issuers cannot declare a cardholder a “defaulter” without first providing him or her with a seven-day notice.

  1. Credit Card Closure with No Hassle

Any credit card cancellation request must now be resolved within seven working days (provided there is no outstanding balance). If the card issuer does not complete the closure process within seven working days, the customer will be charged a penalty of Rs. 500 per day of delay until the account is closed.

 

  1. Resolving Complaints

Credit card customer service should not contact customers after 10:00 a.m. and before 7:00 p.m. Furthermore, all telemarketers, who deal with credit card customers, must be well-versed in the Telecom Regulatory Authority of India’s guidelines/regulations. This will result in better telemarketer behavior and, ultimately, better customer service.





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