RBI Directs Card Issuers to Provide More Choice to Customers in Credit Card Services
In a recent move, the Reserve Bank of India (RBI) has issued directives to card issuers, emphasizing the importance of offering customers more choices and flexibility in the issuance and usage of credit cards. The central bank observed that certain arrangements between card networks and issuers were limiting the options available to customers, prompting the need for these new guidelines.
Table of Contents
Key Directives:
- No Restrictive Agreements: Card issuers are prohibited from entering into agreements that restrict them from availing services from other card networks. This directive aims to foster healthy competition and ensure that card issuers have the freedom to explore various options.
- Choice for Eligible Customers: Card issuers must provide eligible customers with the option to choose from multiple card networks at the time of card issuance. This step ensures that customers have a say in selecting the card network that best aligns with their preferences and needs.
- Option for Existing Cardholders: Existing cardholders will be given the choice to select from multiple card networks at the time of their next card renewal. This provision aims to extend the opportunity for choice to customers who are already using credit cards.
Authorized Card Networks:
As per the RBI directive, the following card networks are considered authorized:
- American Express Banking Corp.
- Diners Club International Ltd.
- MasterCard Asia/Pacific Pte. Ltd.
- National Payments Corporation of India–Rupay
- Visa Worldwide Pte. Limited
Exemptions:
The new guidelines do not apply to credit card issuers with fewer than 10 lakh active cards, providing certain exemptions based on the scale of operations.
Implementation Timeline:
The directive pertaining to customer choice at the time of issuance will come into effect six months from the date of this circular, as specified by the RBI. This timeline allows card issuers to align their practices with the new guidelines and ensures a smooth transition.
These RBI directives aim to enhance competition in the credit card sector, giving customers more control over their choices. By prohibiting restrictive agreements and promoting flexibility, the central bank seeks to create a more dynamic and consumer-centric credit card ecosystem in India. The industry now awaits the implementation of these guidelines, which are poised to reshape the landscape of credit card services in the country.
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