RBI tightens NPA rule on credit card dues

By: | Updated: July 17, 2015 12:17 AM

Labelling a credit card customer as a non-performing asset just became more easier for banks with the Reserve Bank of India...

Labelling a credit card customer as a non-performing asset just became more easier for banks with the Reserve Bank of India tightening norms on dues.

The RBI has asked banks to consider the due date on which the customer is supposed to pay the minimum amount towards credit card dues while calculating the 90-day period beyond which the customer will be considered an NPA if there is no payment made.

“To bring in greater credit discipline as also to provide operational flexibility to credit card issuers, it has been decided that, with effect from the date of this circular, ‘past due’ status of a credit card account for the purpose of asset classification would be reckoned from the payment due date mentioned in the monthly credit card statement,” the central bank said in a notification on Thursday.

Earlier, banks took the date of the next billing statement while calculating the 90-day period.

Typically, the gap between two credit card statements is a month.However, for levying penal charges, the banks can stick to the current practice of doing so when the customer fails to make payment within three days of the due date, the RBI added.

The RBI said these measures would ensure greater ‘credit discipline’ among borrowers. Credit card issuances have risen sharply in recent times with the increase in online shopping thanks to e-commerce boom.

According to RBI data, banks issued more than 1,78,000 credit cards in April and the outstanding credit cards issued went up to 2.12 crore. As of May end, credit card outstanding amounted to R32,400 crore, a growth of 23% year-on-year.

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