The Reserve Bank of India (RBI) has issued new guidelines for the issuance of credit and debit card in the year 2022. These new guidelines will come into effect from July 1, 2022. These guidelines apply to banks excluding payment banks, state co-operative banks, and district central co-operative banks. Also, all NBFCs operating in India must follow the new guidelines for card issuance.

Below mentioned are the guidelines for debit cards as per RBI's circular:

  • Banks are instructed to develop a comprehensive debit card issuance policy with the approval of their Boards and issue debit cards to their customers in accordance with this policy. Prior approval from the Reserve Bank of India is not necessary for banks wishing to issue debit cards to their customers.

  • Debit cards will only be issued to customers who have Savings Bank/Current Accounts.

  • No debit card will be issued by a bank to cash credit/loan account holders. However, it will not prevent the banks from linking the overdraft facility provided with Pradhan Mantri Jan Dhan Yojana accounts with a debit card.

  • Banks will not force a customer to use a debit card facility and will not link the issuance of a debit card to the availability of any other banking facility.

  • SCBs may issue other form features in replacement of a plastic debit card such as wearables after obtaining explicit approval from the customer.

  • The debit card replacement forms will be subjected to the specific and standard guidelines applicable to debit cards.

  • Banks will provide options to disable or block the form factor through mobile banking, internet banking, SMS, IVR, or any other mode.

  • Banks will 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 a product prior to the effective date of the Master Direction, shall have to submit a detailed report to the Department of Regulation within 30 days from the effective date.

  • The banks shall review their performance/issuance of debit cards every half year. The review shall include, inter-alia, an analysis of card usage including long-term unused cards and their risks involved.

Issue of credit & debit cards in India -

Card issuers in India are the banks that have the power to issue debit or credit cards and NBFCs that are permitted by the RBI to issue credit cards.
A credit card is a physical or virtual payment tool that contains a means of identification, issued with a pre-approved credit limit, which can be used to purchase goods and services or draw cash payments, subject to prescribed terms and conditions.

For credit card business, scheduled commercial banks (SCBs) other than Regional Rural Banks (RRBs) with a total net worth of ?100 crore and above are now allowed to do credit card business either independently or through a merger arrangement with other card-issuing banks/NBFCs with the approval of their Boards. In order to establish various subsidiaries of credit card companies, these banks will need prior approval from the Reserve Bank of India.
Meanwhile, RRBs are allowed to issue credit cards in partnership with their sponsor bank or other banks.

In order to issue credit cards, the issuers are instructed to provide a one-page Key Fact Statement along with the credit card application that contains the important features of the card such as interest rate, and quantum of charges, among others. In case a credit card application is rejected, the card issuer shall indicate in writing the particular reason/s which have led to the rejection of the application.

Further, RBI directs that card issuers can consider introducing, at customers' choice, an insurance cover to take care of the debts arising from lost cards, card frauds, etc. For those who offer card issuance in partnership with insurance companies, the card issuers need to get explicit permission in writing or in digital mode from the cardholders along with the details of the nominee/s.

To ensure the protection of the card, issuers are instructed to seek One Time Password (OTP) permission from the cardholder for activating a credit card if the same has not been activated within 30 days by the customer from the date of issue. If no authorization is received for activating the card, card issuers will close the credit card account at any cost to the customer within 7 working days from the date of seeking customer confirmation. For a renewed or replaced card, the non-activated card closure will be subjected to payment of all dues by the cardholder.

No card issuer shall report any credit information related to a new credit card account to Credit Information Companies before the card becomes active. Any credit information which is related to inactivated credit cards that are already reported to these companies, then it shall be withdrawn immediately within 30 days from the effective date of these directions.

Conclusion –

All the Card issuers in India which are the banks that have the power to issue debit or credit cards and NBFCs that are permitted by the RBI to issue credit cards, now have to follow the new guidelines issued by the Reserve Bank of India.


Priya Goel
Graduate in B.A LLB (Hons) from GGSIP University

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