RBI guidelines: The Reserve Bank of India (RBI) on Wednesday issued new guidelines aimed at providing more options and flexibility for credit card customers. The central bank said card issuers must allow provide an option to their eligible customers to choose from multiple card networks at the time of issue.
It is pertinent to mention that at present, the card issued to a customer is decided by the card issuer (bank/non-bank) and is linked to the arrangements that the card issuers have with card networks in terms of their bilateral agreements.
“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,” RBI said in a circular.
What are new directives?
- Card issuers shall not enter into any arrangement or agreement with card networks that restrains them from availing the services of other card networks.
- Card issuers shall provide an option to their eligible customers to choose from multiple card networks at the time of issue.
- In case of existing cardholders, this option will be provided at the time of their next card renewal.
The RBI defined authorised card networks as American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte Ltd, National Payments Corporation of India–Rupay, and Visa Worldwide Pte Ltd.
Card issuers and card networks are mandated to adhere to the new requirements in both existing agreements at the time of amendment or renewal and in fresh agreements executed, the RBI said.
Who all are exempted?
The RBI clarified that the directives do not apply to credit card issuers with fewer than 10 lakh active cards. “The directions at 3(b) above shall not be applicable to credit card issuers with number of active cards issued by them being 10 lakh or less in number,” the RBI said.
Additionally, issuers who issue credit cards on their own authorised card network are exempt from the applicability of the circular.
When will it come into effect?
The new guidelines regarding customer choice at the time of issuance will come into effect six months from the date of this circular.
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