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10 things to know about new credit card rules to be effective from July 1, 2022

There have been instances where unsolicited cards have been misused before reaching the persons in whose names these have been issued.

credit card rules, Unsolicited Credit Card, debit cards, Reserve Bank of India, Ombudsman
Card-issuers may use other digital modes with multifactor authentication to obtain explicit customer consent.

Credit Card Rules: Using credit cards and debit cards could become more secure than before. Many people get unsolicited cards which they did not apply for or sometimes the cards get upgraded without an explicit consent by them. The new credit card rules aim to reduce such concerns and make usage of cards more fruitful.

Reserve Bank of India (Credit Card and Debit Card – Issuance and Conduct) Directions, 2022 have been issued which will be effective from July 01, 2022. The directions clearly state the steps that need to be taken by the card issuers to avoid people receiving unsolicited Credit Cards. An Unsolicited Credit Card is a credit card issued without a specific written or digital request.

Here are ten things to know about the new credit card rules.

1. The issue of unsolicited cards or upgradation is strictly prohibited. In case, an unsolicited card is issued or an existing card upgraded and activated without the explicit consent of the recipient and the latter is billed for the same, the card-issuer shall not only reverse the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed.

2. The person in whose name the card is issued can also 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, i.e., for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him/her.

3. The consent for the cards issued or the other products/services offered along with the card shall be explicit and shall not be implied. In other words, the written consent of the applicant shall be required before issuing a credit card. Alternatively, card-issuers may use other digital modes with multifactor authentication to obtain explicit customer consent. Such alternative digital modes, if any used by the card-issuer, shall be communicated to the Department of Regulation, Reserve Bank of India.

4. There have been instances where unsolicited/applied-for cards have been misused before reaching the persons in whose names these have been issued. It is emphasised that any loss arising out of misuse of such unsolicited cards shall be the responsibility of the card-issuer only and the person in whose name the card has been issued shall not be held responsible for the same.

5. Card-issuers shall seek One Time Password (OTP) based consent from the cardholder for activating a credit card, if the same has not been activated by the customer for more than 30 days from the date of issuance. If no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from date of seeking confirmation from the customer. In case of a renewed or replaced card, the closure of an inactivated card shall be subject to payment of all dues by the cardholder.

6. Card-issuers shall provide a one-page Key Fact Statement along with the credit card application containing the important aspects of the card such as rate of interest, quantum of charges, among others. In case of rejection of a credit card application, the card-issuer shall convey in writing the specific reason which led to the rejection of the application.

7. The Most Important Terms and Conditions (MITC) should be highlighted and sent separately to the customers, at the acceptance stage (welcome kit) and in important subsequent communications. The MITC shall be provided to the customer at the time of onboarding and each time, a condition is modified with notice to the customer.

8. Card-issuers may consider introducing, at the option of the customers, an insurance cover to take care of the liabilities arising out of lost cards, card frauds, etc. In cases where the card-issuers are offering any insurance cover to their cardholders, in tie-up with insurance companies, the card-issuers shall obtain explicit consent in writing or in digital mode from the cardholders along with the details of nominees.

9. No card-issuer shall report any credit information relating to a new credit card account to Credit Information Companies prior to activation of the card. Any credit information relating to such inactivated credit cards already reported to Credit Information Companies shall be withdrawn immediately; under no circumstances it shall take more than 30 days from the effective date of these directions.

10. Card-issuers shall ensure that the telemarketers they engage, comply with directions issued by the Telecom Regulatory Authority of India (TRAI) from time to time. The card-issuer’s representatives shall contact the customers only between 10:00 hrs and 19:00 hrs.

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