The Reserve Bank of India (RBI) has almost overhauled credit card rules, making it more friendly for the users and preventing the tricks by the banks.
Here are ten significant changes to new credit card rules that will take effect on July 1, 2022:
- When determining the interest rate on credit card dues, card issuers are directed to follow the Reserve Bank of India's instructions on the interest rate on advances, as amended from time to time. Interest on credit cards must be justified in light of the costs incurred and the amount of return that the card issuer could reasonably expect. As part of their Board-approved policy, card issuers must set an interest rate ceiling for credit cards that is comparable to that of other unsecured loans, including processing and other fees.
- Card issuers are responsible for ensuring that incorrect bills are not generated and issued to cardholders. If a cardholder objects to a bill, the card issuer must provide an explanation and, where applicable, documentary evidence to the cardholder within 30 days of the complaint date. Transactions that the cardholder disputes as "fraud" will not be charged until the dispute is resolved.
- Credit cardholders may not be offered unsolicited loans or other credit facilities without their explicit consent. If an unsolicited credit facility is extended without the cardholder's written/explicit consent and the latter objects, the card-issuer will not only withdraw the facility but also be liable to pay any penalty that the RBI Ombudsman deems appropriate if contacted.
- Credit card issuers may not upgrade credit cards or increase credit limits unilaterally. Whenever there are/are any changes to the terms and conditions, the cardholder's explicit consent is required. In the event that the credit limit is reduced, the card issuer must notify the cardholder.
- In their debt collection efforts, card issuers/agents shall not use intimidation or harassment of any kind, whether verbal or physical, against any person, including acts intended to humiliate publicly or intrude upon the privacy of credit cardholders' family members, referees, or friends, making threatening and anonymous calls, or making false and misleading representations.
- Customers' information should only be disclosed to DSAs/DMAs/recovery agents to the extent necessary for them to perform their duties. The card issuer will not release any personal information provided by the cardholder that is not required for recovery. During the marketing of credit card products, the card issuer must ensure that the DSAs/DMAs/recovery agents do not transfer or misuse any customer information.
- According to RBI guidelines, any request to close a credit card must be honoured by the credit card issuer within seven working days, subject to the cardholder paying all outstanding debts. If the card issuer fails to process the cancellation of a credit card within seven working days, the customer should be charged a penalty of ₹500 per day of delay until the account is closed, provided there are no outstanding balances on the account.
- Charge changes may be made only with prospective effect and at least one month's notice. If a cardholder wishes to surrender his or her card due to a change in charges that is to his or her disadvantage, he or she may do so without incurring any additional fees, provided that all dues have been paid.
- There will be no hidden costs associated with issuing free credit cards.
- For all credit cards issued, card issuers do not follow a standard billing cycle. In order to provide flexibility in this regard, cardholders will be given a one-time option to change the credit card's billing cycle to their liking.
- Card issuers must obtain the cardholder's explicit consent before adjusting credit amounts above a cut-off of one per cent of the credit limit or ₹5,000, whichever is less, arising from the refund/failed/reversed transactions or similar transactions against the credit limit for which the cardholder has already made payment. Within seven days of the credit transaction, the consent must be obtained via e-mail or SMS. If the cardholder does not consent or respond, the card issuers must reverse the credit transaction to the cardholder's bank account.