Credit Cards and Debit Cards

As of October 1, 2022

In April 2022, the Reserve Bank of India released new regulations for issuing and using credit cards and debit cards. Although the RBI postponed the implementation of certain of these regulations until October 1, 2022, most of this legislation took effect on July 1, 2022.
Below is a list of the regulations that go effective on October 1.

Activating a card with an OTP

The issuer will require the cardholder’s OTP-based permission to activate the card if it is not activated within 30 days of the issue. If the cardholder refuses to allow activation, the card issuer must cancel the card account within seven business days of obtaining authorization. Please note that this does not apply to cards that have been renewed or replaced.

Changing Credit Limits

The card issuer is not permitted to alter the credit limit without first notifying the customer under the new legislation. Only with the cardholder’s permission may the credit card limit be increased. Additionally, if the issuer decreases the limit, the cardholder must be notified.

Examination of Interest

The RBI has provided card issuers guidelines to change how interest is computed on credit cards. According to RBI, unpaid fees and taxes are not to be capitalized to charge or compound interest. While calculating the forward carry amount, additional charges like late payments and interest costs are considered. However, compounding is not authorized on these fees in compliance with the revised regulations.

Debit and credit card tokenization.

Along with the rules mentioned above, the Card-on-File (CoF) tokenization standards will go into force on October 1, 2022. The process of substituting actual card information with a code or token unique to a particular set of cards, token requestors, and devices is known as COF Tokenization. For example, if you choose to tokenize your debit and credit cards, a unique value will be put in place of your 16-digit card number. This value, not your actual card information, will be given to the merchant.

By taking this action, the security and safety of using your credit and debit cards for online purchases have been increased. In addition, numerous retailers have reportedly already complied with the rule.

Starting October 1, debit and credit cards will be tokenized.

As of July 1, 2022, regulations are already in effect.

  • Credit card companies are not allowed to give out new credit cards or change the information on an existing card without the explicit written permission of the client.
  • Card closure requests from customers must be handled within seven business days.
  • If a card hasn’t been used for more than a year, the card issuer must begin canceling the account after acquiring the cardholder’s consent.
  • If a person applies for a credit card and is turned down, the credit card issuer must inform them in writing.
  • Credit card companies believe customers should have a “one-time” choice to alter their billing cycle.

Get 90% Discount on Brokerage Now! Open Demat Account