RBI announces new guidelines for the issuance and usage of credit cards; check details

The Reserve Bank of India (RBI), on Wednesday, issued directions on tie-up of authorised card networks with banks and non-banks for issuance of credit cards. The RBI said that upon reviewing it was observed that some arrangements between card networks and card issuers are not conducive to the availability of choice for customers. The choice of network for a card issued is decided by the card issuer and is linked to the arrangements that these card-issuers have with card networks.

The central bank, directed the following in the “interest of payment system and public interest”:

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

b) 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.

The RBI said that authorised card networks include American Express, Diners Club, MasterCard, National Payments Corporation of India - Rupay, and Visa. 

The central bank directed card issuers and card networks to adhere to the abovementioned requirements in existing agreements or renewals as well as fresh agreements. 

The direction to provide customers options to choose from multiple card networks at the time of issue will not be applicable to credit card issuers with less than 10 lakh active cards issued. It will be effective six months from the date of the circular.

It also said that the rules do not apply to credit cards issued on the authorised card network.