BENGALURU: From now on, card issuers cannot share card data including transaction data of the cardholders with the outsourcing partners without explicit consent from the cardholder. Earlier there were guidelines on the same, but the Reserve Bank of India has now amended the Master Direction on Credit Card and Debit Cards, advising card issuers to ensure that the storage and the ownership of card data remains with them.
It has also asked the card issuers to put in place an effective mechanism to monitor end use of funds. The move will help card holders as they can ensure that their card issuers do not share data without their consent.
The amended provisions have come into effect from March 07, 2024. The new rules stipulate that in case where the customers give explicit consent for sharing the information provided by them with other agencies, card issuers shall clearly state and explain to the customer the full meaning or implications of the disclosure clause.
The RBI has also released FAQs in which it says that card issuers are prohibited from issuing unsolicited credit cards and are required to seek prior and explicit consent from the customer before issuing a card. However, if the customer receives an unsolicited card, he/she should refrain from activating or providing consent for activation of the card through OTP or any other means.
If no consent is received for activating the card, the card-issuer is required to close the credit card account without any cost to the customer within seven working days from the date of seeking confirmation from the customer and shall also inform the customer that the credit card account has been closed, the central bank said.
It also added that card issuers should not levy interest on the unpaid taxes, levies or any other charges.
Modify billing cycle date
Card issuers do not follow a standard billing cycle for all credit cards issued. In order to provide flexibility in this regard, the RBI said, that the card holders should be provided with an option to choose any date as the starting or closing day of the billing cycle at least once.
Further, card-issuers may provide the option to modify the billing cycle through multiple channels such as helpline, dedicated e-mail-id, Interactive Voice Response (IVR), internet banking, mobile-application and any other modes.
To caution the cardholders about the pitfalls in paying only the minimum amount due, the amendment to the existing provisions of the Master Direction (MD) also says that card issuers should inform the cardholders of the implications of paying only ‘the minimum amount due’. A legend/warning to the effect that ‘Making only the minimum payment every month would result in the repayment stretching over months/years with consequential compounded interest payment on outstanding balance’ shall be prominently displayed in all the billing statements.
The MITC (Most Important Terms and Conditions) shall specifically explain that the ‘interest-free credit period’ is suspended if any balance of the previous month’s bill is outstanding, the new rules said. Card issuers can issue business credit cards to business entities/individuals for business expenses. The RBI clarified that the business credit cards may also be issued as charge cards, corporate credit cards or by linking a credit facility such as overdraft/cash credit provided for business purpose as per the terms and conditions stipulated for the facility concerned.
This comes after the banking regulator ordered restraining commercial transactions routed through intermediaries by a card network. Also, the Reserve Bank said it did not prescribe any requirement for insurance cover on debit or credit cards. However, in case a card issuer or a card payment network provides an insurance cover, complimentary or chargeable with the consent of the cardholder, the card-issuer shall ensure that the relevant nomination details are recorded by the insurance company and the availability of insurance is included, along with other information, in every statement.
Complaints against issuers?
Customers can approach the card issuer concerned for any redressal. However, if the issuer does not respond within 30 days or rejects the complaint, the customer can lodge a complaint with the Ombudsman, Reserve Bank through online at https://cms.rbi.org.in or physical complaint can be sent to RBI, Sector -17, Chandigarh.