In April 2022, the Reserve Bank of India announced new regulations related to the issuance and conduct of credit cards and debit cards. While most of these regulations came into effect from 1st July 2022, RBI had postponed the implementation of certain rules till 1st October 2022.
Here are the regulations that will be effective from 1st October.
- OTP-based Card Activation
If a cardholder does not activate his/her card within 30 days of card issuance, the issuer will require OTP-based consent to activate the card. If the cardholder does not provide consent for activation, the card issuer shall close the card account within 7 working days from requesting consent. Please note that this is not applicable on cards that are renewed or replaced.
- Credit Limit Revision
As per the new rules, the card issuer cannot revise the credit limit without bringing it to the notice of the customer. In case the limit on a credit card is to be increased, it can be done only after the cardholder’s approval. Also, in case the limit is decreased by the issuer, it must be communicated to the cardholder.
- Computation of Interest
RBI has instructed card issuers to make certain changes in the computation of interest charges on credit cards. RBI says, “The unpaid charges/levies/taxes shall not be capitalized for charging/compounding of interest.” Currently, additional charges such as late payment, finance charges, etc. are included while calculating the carry forward amount. However, as per the revised regulations, no compounding is allowed on these charges.
Debit Card and Credit Card Tokenisation
In addition to the above rules, the Card-on-File (CoF) tokenization norms will also come into effect from 1st October 2022. CoF Tokenisation refers to the replacement of actual card details with a code/token, which is unique for a combination of cards, token requestor and device. In simpler terms, if you opt for tokenisation of your debit and credit cards, your 16-digit card number will be replaced with a token and this unique value will be shared with the merchant, instead of your actual card details.
This step has been taken to improve the safety and security of your credit cards and debit cards while making online transactions. As per reports, several merchants have already complied with the regulation.
Read in Detail: Debit, Credit Card Tokenisation from October 1
Regulations already effective from 1st July 2022
- Credit card issuers cannot provide a new credit card or upgrade an existing credit card without the customer’s consent in writing.
- Card closure requests raised by consumers must be fulfilled within 7 working days.
- If a cardholder has not used his card for more than a year, the card issuer must initiate the process of card closure after seeking confirmation from the cardholder.
- In case the issuer rejects a credit card application, the reason for such rejection must be communicated to the consumer in writing.
- Credit Card issuers should provide customers with a ‘one-time’ option to modify their billing cycle.
Continue Reading: New Credit Card Rules Effective from July 1