Executive Summary:
This circular from the Reserve Bank of India amends the Master Direction on Credit Card and Debit Card Issuance and Conduct Directions, 2022. The amendments, effective from March 07, 2024, address various aspects of card issuance and usage, including business credit cards, closure of cards, reporting past due accounts, billing cycles, and co-branding arrangements. The circular updates the Master Direction to reflect these changes and repeals certain previous circulars/paragraphs.
Key Points / Main Content:
* **Business Credit Cards:**
* Issuers can provide business credit cards (including charge and corporate cards) to businesses/individuals and must monitor end-use of funds.
* Issuers can provide business credit cards together with add-on cards.
* **Card Closure:**
* Failure to close a card within seven working days results in a penalty of ₹500 per day of delay, payable to the cardholder if there are no outstanding dues.
* **Billing and Payments:**
* Issuers must warn cardholders about the implications of paying only the minimum amount due, specifying that the interest-free period is suspended if any previous balance is outstanding.
* Billing statements must specify the level of unpaid amount at which the interest-free credit period benefits would not be available to cardholders.
* **Reporting and Penal Charges:**
* Credit card accounts should be reported as 'past due' or levied penal charges only after being 'past due' for more than three days, computed from the payment due date.
* Penal charges should be levied only on the outstanding amount after the due date.
* **Billing Cycle:**
* Cardholders shall be provided a one-time option to modify the billing cycle of the credit card as per their convenience.
* **Default Reporting to Credit Information Companies (CICs):**
* Issuers must adhere to a board-approved procedure and provide a seven-day notice before reporting a default to a CIC.
* If the customer settles dues after being reported as a defaulter, the card issuer shall update the status with CIC within 30 days from the date of settlement.
* **Debit Cards:**
* Banks cannot issue debit cards to cash credit/loan account holders, except for overdraft facilities with Pradhan Mantri Jan Dhan Yojana accounts or Kisan Credit Cards.
* **Form Factors:**
* Issuers may provide form factors in place of/in addition to a plastic debit/credit card such as wearables, after obtaining explicit consent from the customer.
* Banks shall provide options for disabling or blocking the form factor.
* Banks shall submit a detailed report to the Department of Regulation, Reserve Bank of India, prior to the issuance of any such form factors.
* **Co-branded Cards:**
* Co-branded cards must clearly indicate that they are issued under a co-branding arrangement.
* The co-branding partner cannot market the card as its own product.
* The co-branding partner (CBP) shall not have access to information relating to transactions undertaken through the co-branded card, except for being the initial point of contact in case of grievances.
* Prior approval shall not be required by the banks including NBFCs, which desire to enter into a cobranding arrangement for issue of credit cards with a cardissuer.
* **Unsolicited Cards:**
* Issuers cannot dispatch unsolicited cards, except for renewals where the cardholder has the option to decline. Replacement cards for blocked cards require explicit consent.
* **Grievance Redressal:**
* Issuers are liable to compensate for time, expenses, financial loss, and mental anguish due to their fault if grievances are not redressed in time.
* If a complainant does not get satisfactory response from the card issuer within a maximum period of one month from the date of lodging the complaint, he/she will have the option to approach the Office of the RBI Ombudsman under Integrated Ombudsman Scheme for redressal of his/her grievances.
* **Customer Information:**
* Issuers must obtain explicit consent before sharing customer information with other entities, clearly explaining the implications of the disclosure clause and adherence to extant legal framework on data protection.
* **Outsourcing:**
* Cardissuers shall ensure adherence to the Master Direction Managing Risks and Code of Conduct in Outsourcing of Financial Services, as amended from time to time and shall not share card data including transaction data of the cardholders with the outsourcing partners unless sharing of such data is essential to discharge the functions assigned to the latter.
* **New Definitions/Clarifications:**
* Total Amount Due is defined as the total amount net of credit received during the billing cycle.
* Interest shall be levied only on the outstanding amount, adjusted for payments/refunds/reversed transactions.
Impact Analysis:
* **Card Issuing Banks and NBFCs:**
* *Impact:* Affected by changes in rules related to business credit cards, card closures, reporting past due accounts, billing cycles, co-branding, unsolicited cards, customer information sharing, outsourcing, and grievance redressal.
* *Action Required:* Update policies and procedures to comply with the amended directions, ensuring systems are in place to monitor end-use of business credit card funds, process card closures efficiently, accurately report past due accounts, provide billing cycle flexibility, handle co-branding arrangements, and protect customer data. Communicate changes to staff and cardholders. Banks shall submit a detailed report to the Department of Regulation, Reserve Bank of India, prior to the issuance of any such form factors. Any bank that has already issued such product prior to the effective date of the Master Direction, shall submit a detailed report to Department of Regulation within 30 days from the effective date.
* **Cardholders:**
* *Impact:* Benefit from increased transparency in billing, options to modify billing cycles, and improved grievance redressal mechanisms. They are also affected by changes in how past due accounts are reported and penal charges are levied.
* *Action Required:* Understand their rights and responsibilities under the amended directions, including the implications of paying only the minimum amount due, the process for modifying billing cycles, and the procedures for reporting and resolving grievances.
* **Co-branding Partners:**
* *Impact:* Clarification of their role in co-branding arrangements, particularly regarding access to transaction data and marketing of co-branded cards.
* *Action Required:* Ensure compliance with the restrictions on marketing and data access. Review agreements with card issuers to align with the amended directions.
* **Credit Information Companies (CICs):**
* *Impact:* Impacted by the changes in the timelines for reporting and updating default status.
* *Action Required:* Update systems to reflect the new reporting timelines and ensure accurate and timely updates of cardholder information.
Key Entities Referenced
Reserve Bank of India: The central bank of India, responsible for regulating the banking sector and issuing currency.
Banking Regulation Act, 1949: An act of the Parliament of India to regulate banking companies in India.
Reserve Bank of India Act, 1934: An act to constitute Reserve Bank of India.
Master Direction Credit Card and Debit Card Issuance and Conduct Directions, 2022: A set of guidelines issued by the Reserve Bank of India governing the issuance and conduct of credit and debit cards in India.
Banks and Non-Banking Financial Companies: Entities regulated by the Reserve Bank of India that issue credit and debit cards.
Pradhan Mantri Jan Dhan Yojana: A national mission for financial inclusion to ensure access to financial services, namely banking/ savings & deposit accounts, remittance, credit, insurance, pension in an affordable manner
Credit Information Companies: Companies that collect and provide credit information on borrowers.
RBI Ombudsman: A grievance redressal mechanism provided by the Reserve Bank of India for customers of banks and other financial institutions.
भारतीय ररजर्व बैंक
_____________RESERVE BANK OF INDIA_____________
www.rbi.org.in
RBI/2023-24/132
DOR.RAUG.AUT.REC.No.81/24.01.041/2023-24 March 07, 2024
The Chairperson / Managing Director / Chief Executive Officer
Banks and Non-Banking Financial Companies
Madam / Sir,
Amendment to the Master Direction - Credit Card and Debit Card – Issuance
and Conduct Directions, 2022
In exercise of the powers conferred by Section 35A of the Banking Regulation Act,
1949 and Chapter IIIB of the Reserve Bank of India Act, 1934, the Reserve Bank of
India being satisfied that it is necessary and expedient in the public interest to do so,
hereby, amends certain provisions issued vide Master Direction
DoR.AUT.REC.No.27/24.01.041/2022-23 dated April 21, 2022 on ‘Credit Card and
Debit Card – Issuance and Conduct Directions, 2022’.
2. The amended provisions of the Master Direction are enclosed in the Annex to this
circular. Frequently Asked Questions relating to the provisions contained in the Master
Direction are placed under FAQ Section on the website and as an Appendix to the
Master Direction.
3. Commencement
The amended provisions contained in this circular shall come into effect from March
07, 2024. The captioned Master Direction is hereby updated to reflect the changes
effected by the below amendments.
4. Applicability
a) Instructions relating to credit cards shall apply to all credit card issuing Banks
and Non-Banking Financial Companies (NBFCs).
b) Instructions relating to debit cards shall apply to every bank operating in India.
(Manoranjan Padhy)
Chief General ManagerAnnex
I. Amendment to the existing provisions of the Master Direction (MD)
Para Existing Provision Amended Provision
of
MD
7(c) Card-issuers may issue business Card-issuers may issue business
credit cards to business credit cards to business
entities/individuals for business entities/individuals for business
expenses. The business credit expenses. The business credit cards
cards may also be issued as charge may also be issued as charge cards,
cards, corporate credit cards or by corporate credit cards or by linking a
linking a credit facility such as credit facility such as overdraft/cash
overdraft/cash credit provided for credit provided for business purpose
business purpose as per the terms as per the terms and conditions
and conditions stipulated for the stipulated for the facility concerned.
facility concerned. Corporate credit The card-issuers shall put in place an
cards can be issued together with effective mechanism to monitor end
add-on cards wherever required. use of funds. Business credit cards
can be issued together with add-on
cards wherever required.
8(a) Failure on the part of the card- Failure on the part of the card-issuers
issuers to complete the process of to complete the process of closure
closure within seven working days within seven working days shall result
shall result in a penalty of ₹500 per in a penalty of ₹500 per calendar day
day of delay payable to the of delay payable to the cardholder, till
cardholder, till the closure of the the closure of the account provided
account provided there is no there is no outstanding in the account.
outstanding in the account.
9(b)(ii Card-issuers shall inform the Card-issuers shall inform the
i)
cardholders of the implications of cardholders of the implications of
paying only ‘the minimum amount paying only ‘the minimum amount
due’. A legend/warning to the effect due’. A legend/warning to the effect
1that “Making only the minimum that “Making only the minimum
payment every month would result payment every month would result in
in the repayment stretching over the repayment stretching over
months/years with consequential months/years with consequential
compounded interest payment on compounded interest payment on your
your outstanding balance" shall be outstanding balance" shall be
prominently displayed in all the prominently displayed in all the billing
billing statements to caution the statements to caution the cardholders
cardholders about the pitfalls in about the pitfalls in paying only the
paying only the minimum amount minimum amount due. The MITC shall
due. The MITC shall specifically specifically explain that the ‘interest-
explain that the ‘interest-free credit free credit period’ is suspended if any
period’ is suspended if any balance balance of the previous month’s bill is
of the previous month’s bill is outstanding.
outstanding. The card-issuers shall
specify in the billing statement, the
level of unpaid amount of the bill i.e.,
part payment beyond ‘minimum
amount due’, at which the interest-
free credit period benefits would not
be available to cardholders.
9(b)( Card-issuers shall report a credit Card-issuers shall report a credit card
v)
card account as 'past due' to credit account as 'past due' to credit
information companies (CICs) or information companies (CICs) or levy
levy penal charges, viz. late penal charges, viz. late payment
payment charges and other related charges and other related charges, if
charges, if any, only when a credit any, only when a credit card account
card account remains 'past due' for remains 'past due' for more than three
more than three days. The number days. The number of 'days past due'
of 'days past due' and late payment and late payment charges shall,
charges shall, however, be however, be computed from the
computed from the payment due payment due date mentioned in the
date mentioned in the credit card credit card statement, as specified
2statement, as specified under the under the regulatory instructions on
regulatory instructions on ‘Prudential norms on Income
‘Prudential norms on Income Recognition, Asset Classification and
Recognition, Asset Classification Provisioning pertaining to Advances’
and Provisioning pertaining to amended from time to time. Late
Advances’ amended from time to payment charges and other related
time. Penal interest, late payment charges shall be levied, only on the
charges and other related charges outstanding amount after the due date,
shall be levied only on the and not on the total amount due.
outstanding amount after the due
date and not on the total amount.
10(d) Card-issuers do not follow a Card-issuers do not follow a standard
1
standard billing cycle for all credit billing cycle for all credit cards issued.
cards issued. In order to provide In order to provide flexibility in this
flexibility in this regard, cardholders regard, cardholders shall be provided
shall be provided a one-time option option to modify the billing cycle of the
to modify the billing cycle of the credit card at least once, as per the
credit card as per their convenience. cardholders’ convenience.
12(b) Before reporting default status of a Before reporting default status of a
credit cardholder to a Credit credit cardholder to a Credit
Information Company, the card- Information Company (CIC), the card-
issuers shall ensure that they issuers shall ensure that they adhere
adhere to a procedure, duly to the procedure, approved by their
approved by their Board, including Board, and intimate the cardholder
issuing of a seven-day notice period prior to reporting of the status. In the
to such cardholder about the event the customer settles his/her
intention to report him/her as dues after having been reported as
defaulter to the Credit Information defaulter, the card-issuer shall update
Company. In the event the customer the status with CIC within 30 days from
settles his/her dues after having the date of settlement. Card-issuers
been reported as defaulter, the shall be particularly careful in the case
card-issuer shall update the status of cards where there are pending
1 New provisions have been added under Para 10 of the Master Direction, therefore, para number of this provision has
changed to 10(f).
3within 30 days from the date of disputes. The disclosure/release of
settlement. Card-issuers shall be information, particularly about the
particularly careful in the case of default, shall be made only after the
cards where there are pending dispute is settled. In all cases, a well
disputes. The disclosure/release of laid down procedure shall be
information, particularly about the transparently followed and be made a
default, shall be made only after the part of MITC.
dispute is settled. In all cases, a well
laid down procedure shall be
transparently followed and be made
a part of MITC.
14(c) No bank shall issue debit cards to No bank shall issue debit cards to cash
cash credit/loan account holders. credit/loan accounts. However, it will
However, it will not preclude the not preclude the banks from linking the
banks from linking the overdraft overdraft facility provided along with
facility provided along with Pradhan Pradhan Mantri Jan Dhan Yojana
Mantri Jan Dhan Yojana accounts accounts or Kisan Credit Card
with a debit card. accounts with a debit card.
152 Other Form Factors CHAPTER – IV
(a) Scheduled Commercial Banks 16. Issue of Form Factor
(other than RRBs) may issue other (a) Card-issuers may issue other form
form factors in place of a plastic factors in place of/in addition to a
debit card such as wearables after plastic debit/credit card such as
obtaining explicit consent from the wearables, after obtaining explicit
customer. consent from the customer.
(b) Form factors issued in place of a (b) Form factors shall be subject to all
debit card shall be subject to the the specific and general guidelines
specific and general guidelines applicable to the respective cards.
applicable to debit cards. (c) Card-issuers shall provide options
(c) Banks shall provide options for for disabling or blocking the form factor
disabling or blocking the form factor in line with the instructions issued by
through mobile banking, internet the Reserve Bank from time to time.
2 The para has been shifted to a separate Chapter IV of the Master Direction.
4banking, SMS, IVR or any other
mode.
(d) Banks shall submit a detailed
report to the Department of
Regulation, Reserve Bank of India,
prior to the issuance of any such
form factors. Any bank that has
already issued such product prior to
the effective date of the Master
Direction, shall submit a detailed
report to Department of Regulation
within 30 days from the effective
date.
17(b) The co-branded credit/debit card The co-branded card shall explicitly
shall explicitly indicate that the card indicate that the card has been issued
has been issued under a co- under a co-branding arrangement. The
branding arrangement. The co- co-branding partner shall not
branding partner shall not advertise/market the co-branded card
advertise/market the co-branded as its own product. In all
card as its own product. In all marketing/advertising material, the
marketing/advertising material, the name of the card-issuer shall be
name of the card-issuer shall be clearly shown.
clearly shown.
21(b) The co-branding partner shall not The co-branding partner (CBP) shall
have access to information relating not have access to information relating
to transactions undertaken through to transactions undertaken through the
the co-branded card. Post issuance co-branded card. Post issuance of the
of the card, the co-branding partner card, the CBP shall not be involved in
shall not be involved in any of the any of the processes or the controls
processes or the controls relating to relating to the co-branded card except
the co-branded card except for for being the initial point of contact in
being the initial point of contact in case of grievances. However, for the
case of grievances. purpose of cardholder’s convenience,
5card transaction related data may be
drawn directly from the card-issuer’s
system in an encrypted form and
displayed in the CBP platform with
robust security. The information
displayed through the CBP’s platform
shall be visible only to the cardholder
and shall neither be accessed nor be
stored by the CBP.
22 Co-branding arrangement Co-branding with card-issuers
between banks and NBFCs for Prior approval shall not be required by
Credit Cards the banks (all banks including
NBFCs, which desire to enter into a Payments Banks, State Co-operative
co-branding arrangement for issue Banks and District Central Co-
of credit cards with a card-issuer, operative Banks) and NBFCs
shall also be guided by the registered with the Reserve Bank
Guidelines on issue of Co-Branded (NBFCs – ICC, HFC, Factor, MFI, and
Credit Cards contained in the IFC) to become a co-branding partner
respective Master Directions of card-issuers. The role of the co-
applicable to NBFCs, as amended branding partner shall be as per the
from time to time. conditions stipulated under para 21.
23(g) No card-issuer shall dispatch a card No card-issuer shall dispatch a card to
3
to a customer unsolicited, except in a customer unsolicited. In case of
the case where the card is a renewal of an existing card, the
replacement/renewal of a card cardholder shall be provided an option
already held by the customer. In to decline the same if he/she wants to
case a card is blocked at the request do so before dispatching the renewed
of the customer, replacement card card. Further, in case a card is blocked
in lieu of the blocked card shall be at the request of the cardholder,
issued with the explicit consent of replacement card in lieu of the blocked
the customer. Further, card-issuer card shall be issued with the explicit
shall obtain explicit consent of the consent of the cardholder.
3 A new provision has been added under Para 23 of the Master Direction, therefore, para number of this provision has
changed to 23(h).
6cardholder prior to the renewal of an
existing card.
26(c) Card-issuers shall be liable to Card-issuers shall be liable to
compensate the complainant for the compensate the complainant for the
loss of his/her time, expenses, loss of his/her time, expenses,
financial loss as well as for the financial loss as well as for the
harassment and mental anguish harassment and mental anguish
suffered by him/her for the fault of suffered by him/her for the fault of the
the card-issuer and where the card-issuer and where the grievance
grievance has not been redressed in has not been redressed in time. If a
time. If a complainant does not get complainant does not get satisfactory
satisfactory response from the card- response from the card-issuer within a
issuer within a maximum period of maximum period of 30 days from the
one month from the date of lodging date of lodging the complaint, he/she
the complaint, he/she will have the will have the option to approach the
option to approach the Office of the Office of the RBI Ombudsman under
concerned RBI Ombudsman for Integrated Ombudsman Scheme for
redressal of his/her grievance/s. redressal of his/her grievance/s.
27(a) Card-issuers shall not reveal any Card-issuers shall not reveal any
information relating to customers information relating to customers
obtained at the time of opening the obtained at the time of opening the
account or issuing the card to any account or issuing the card to any
other person or organization without other person or organization without
obtaining their explicit consent, with obtaining their explicit consent, with
regard to the purpose/s for which regard to the purpose/s for which the
the information will be used and the information will be used and the
organizations with whom the organizations with whom the
information will be shared. Card- information will be shared. Card-
issuers shall ensure strict issuers shall ensure strict compliance
compliance to the extant legal to the extant legal framework on data
framework on data protection. protection. Further, in case where the
Further, in case where the customers give explicit consent for
customers give explicit consent for sharing the information provided by
7sharing the information with other them with other agencies, card-issuers
agencies, card-issuers shall shall clearly state and explain to the
explicitly state and explain clearly to customer the full meaning/implications
the customer the full of the disclosure clause. The
meaning/implications of the information sought from customers
disclosure clause. The information shall not be of such nature which will
sought from customers shall not be violate the provisions of law relating to
of such nature which will violate the maintenance of secrecy in the
provisions of law relating to transactions. The card-issuers shall be
maintenance of secrecy in the solely responsible for the correctness
transactions. The card-issuers shall or otherwise of the data provided for
be solely responsible for the the purpose.
correctness or otherwise of the data
provided for the purpose.
27(c) Card-issuers, which were granted Card-issuers, which were granted
specific approvals for issue of co- specific approvals for issuance of co-
branded debit cards in the past, are branded cards in the past, are advised
advised to ensure that the co- to ensure that the co-branding
branding arrangement is in arrangement is in conformity with the
conformity with the instructions instructions issued under Chapter V
issued under Chapter IV above. In above. In case, the co-branding
case, the co-branding arrangement arrangement is between two banks,
is between two banks, the card the card issuing bank shall ensure
issuing bank shall ensure compliance with the relevant
compliance with the relevant instructions.
instructions.
28 Card-issuers shall ensure Card-issuers shall ensure adherence
adherence to the guidelines on to the Master Direction
“Managing Risks and Code of DoS.CO.CSITEG/SEC.1/31.01.015/2
Conduct in Outsourcing of Financial 023-24 dated April 10, 2023 on
Services” as amended from time to ‘Outsourcing of Information
time. Technology Services’ and guidelines
on Managing Risks and Code of
8Conduct in Outsourcing of Financial
Services’, as amended from time to
time. Further, the card-issuers shall
not share card data (including
transaction data) of the cardholders
with the outsourcing partners unless
sharing of such data is essential to
discharge the functions assigned to
the latter. In case of sharing of any
data as stated above, explicit consent
from the cardholder shall be obtained.
It shall also be ensured that the
storage and the ownership of card data
remains with the card-issuer.
II. New provisions added in the MD
The following provisions have been added:
i. Para 3(a)(xxi) - Total Amount Due is the total amount (net of credit received
during the billing cycle, if any) payable by the cardholder as per the credit card
statement generated at the end of a billing cycle.
ii. Para 9(b)(vi) - Interest shall be levied only on the outstanding amount, adjusted
for payments/refunds/reversed transactions.
iii. Para 10(c) - Card-issuers shall provide the list of payment modes authorised by
them for making payment towards the credit card dues, in their websites and
billing statements. Further, card-issuers shall advise cardholders to exercise due
caution and refrain from making payments through modes other than those
authorised by them.
iv. Para 10(e) - Any debit to the credit card account shall be done as per the
authentication framework prescribed by the Reserve Bank from time to time, and
not through any other mode/instrument.
v. Para 10(i) - For business credit cards wherein the liability rests fully with the
corporate or business entity (principal account holder), timeframe provided for
9payment of dues and adjustment of refunds may be as agreed between the card-
issuer and the principal account holder.
vi. Para 23(d) - In case card-issuers, at their discretion, decide to
block/deactivate/suspend a debit or credit card, it shall be ensured that a standard
operating procedure is followed as approved by their Board. Further, it shall also
be ensured that blocking/deactivating/suspending a card or withdrawal of benefits
available on any card is immediately intimated to the cardholder along with
reasons thereof through electronic means (SMS, email, etc.) and other available
modes.
III. Repeal of circular/paragraph
The following circular/paragraph stands repealed with the issuance of these directions:
Circular/paragraph Date Subject
RPCD.CO.RF.BC.No.2/07.06.00/ September Approval for Co-branded
2005-06 17, 2005 Domestic Credit Card Business
DCBR.CO.BPD.(SCB).No.1/13.0 April 30, First Bi-monthly Monetary Policy
5.000/2014-15 2015 Statement 2015-16 – Issue of
Credit Cards by Scheduled
Urban Cooperative Banks
Paragraph 60 and Annex XVII of October Issue of Co-branded Credit
the Master Direction – Reserve 19, 2023 Cards
Bank of India (Non-Banking
Financial Company– Scale Based
Regulation) Directions, 2023
10