RBI's New Guideline On Credit Card; Directs Banks To Allow Customers To Choose From Multiple Card Networks

RBI has come up with new guidelines on credit card, asking banks to give them options to choose from multiple card networks at the time of issue.

New Delhi: The Reserve Bank of India (RBI) on Wednesday came up with new guidelines on credit cards. RBI has directed banks that they must provide availability of choice for customers to choose from multiple card networks at the time of issue.

RBI has said that Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.

The central bank has also added that card issuers shall provide an option to their eligible customers to choose from multiple card networks at the time of issue. For existing cardholders, this option may be provided at the time of the next renewal, RBI said.

The directions above shall not be applicable to credit card issuers with number of active cards issued by them being 10 lakh or less in number. The directions shall be effective six months from the date of this circular, RBI added.

"The authorised card networks tie-up with banks / non-banks for issuance of credit cards. The choice of network for a card issued to a customer is decided by the card issuer (bank / non-bank) and is linked to the arrangements that the card issuers have with card networks in terms of their bilateral agreements. On a review, it is observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers," said the RBI circular.

RBI has, for the purpose of these directions, defined authorised card networks as American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/ Pacific Pte. Ltd., National Payments Corporation of India–Rupay, and Visa Worldwide Pte. Limited.

RBI has said that Card issuers and card networks shall ensure adherence to the above requirements in existing agreements at the time of amendment or renewal thereof, and fresh agreements executed. The central bank further added that card issuers who issue credit cards on their own authorised card network are excluded from the applicability of the circular.