The Reserve Bank of India (“RBI”) had vide its Master Direction - Credit Card and Debit Card – Issuance and Conduct Directions, 2022 dated April 21, 2022 (“Master Direction”), specified certain directions for conduct relating to credit, debit and co-branded cards offered by banks operating in India. Paragraph 1(b) of the Master Direction provides that provisions of the Master Direction shall be effective from July 1, 2022.
After considering various representations received from the industry stakeholders, the RBI has now, vide its Notification dated June 21, 2022 (“Notification”), decided to extend the timeline for implementation of the following provisions of the Master Direction to October 01, 2022:
a) Paragraph 6(a)(vi) - Card-issuers shall seek One Time Password (OTP) based consent from the cardholder for activating a credit card, if the same has not been activated by the customer for more than 30 days from the date of issuance. If no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from date of seeking confirmation from the customer.
b) Paragraph 6(b)(v) - Card-issuers shall ensure that the credit limit as sanctioned and advised to the cardholder is not breached at any point in time without seeking explicit consent from the cardholder.
c) Paragraph 9(b)(ii) - The unpaid charges/levies/taxes shall not be capitalized for charging/compounding of interest.
Impact of the above is that credit card issuers would have a few more months to implement the above provisions relating to conduct of the credit card business. Till then, card issuers will not have to (i) seek OTP from the cardholder for activating a credit card after 30 days from the date of issuance or (ii) seek explicit consent from the cardholder before allowing the card’s credit limit to be breached.
The Notification also states that the stipulated timeline for implementation of rest of the provisions of the Master Direction such as those relating to customer acquisition for credit card business, closure of credit cards, billing, reporting to credit information companies, issue of debit cards and issue of co-branded cards, would remain unchanged. So, these provisions would come into effect from July 1, 2022.
Please find a copy of the Notification, here and a copy of the Master Direction, here.
This update has been contributed by Smriti Tripathi (Senior Assoicate).
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