The Reserve Bank of India, in its master directions on credit card and debit card issuance, said the issue of unsolicited cards/upgradation is strictly prohibited.

It asked card companies not to issue unsolicited credit cards or upgrade an existing card without the explicit consent of the customer, failing which they will have to pay double the billed amount as penalty.

It also asked card issuers and third-party agents not to resort to intimidation or harassment during recovery of dues from customers.

These directions will be effective from July 1, 2022.

Key points:

• Scheduled Commercial Banks (SCBs) other than Regional Rural Banks (RRBs) with net worth of Rs 100 crore and above are permitted to undertake credit card business either independently or in tie-up arrangement with other card issuing banks/NBFCs with the approval of their Boards.

• SCBs (excluding Small Finance Banks and Regional Rural Banks) desirous of setting up separate subsidiaries for undertaking credit card business shall require prior approval of the Reserve Bank.

• Non-Banking Financial Companies (NBFC) registered with the Reserve Bank shall not undertake credit card business without prior approval of the RBI. 

• In case an unsolicited card is issued or an existing card upgraded and activated without the explicit consent of the recipient, the card issuer will have to reverse the charges and pay a penalty double the billed amount.

• The person in whose name the card is issued can approach the RBI Ombudsman who would determine the amount of compensation payable by the card-issuer to the recipient of the unsolicited card as per the provisions of the Ombudsman Scheme, for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him/her.

• The RBI asked card issuers to put in place a grievance redressal mechanism and publicise it widely.

• Card issuers shall ensure that their call centre staff are trained adequately to competently handle and escalate a complaint, if necessary.

• Card issuers will be liable to compensate the complainant for the loss of his/her time, expenses, financial loss as well as for the harassment and mental anguish suffered for the fault of the card issuer and where the grievance has not been 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 concerned RBI Ombudsman for redressal of grievances.

• With regard to recovery of dues from customers, the RBI has asked the issuers to ensure that they and their agents adhere to the fair practices code for lenders.

• In particular, with regard to appointment of third-party agencies for debt collection, the card-issuers shall ensure that their agents refrain from actions that could damage their integrity and reputation and observe strict customer confidentiality.

• With regard to issuance of debit cards, RBI said banks should not force a customer to avail debit card facility and should not link issuance of debit card to availment of any other service from the bank.

• A co-branded credit/debit card shall explicitly indicate that it has been issued under a co-branding arrangement.

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