RBI NBFC Debit Credit Card guidelines: Non-Banking Financial Corporations can now issue 'plastic money'
RBI NBFC debit and credit card guidelines further state that the directions will be applied to all banks excluding payment banks, state co-operative banks, and district central co-operative banks.Author : Malkit Singh
In a key development, the Reserve Bank of India (RBI) on Friday issued multiple guidelines in the form of master directions and allowed the NBFC (Non-Banking Financial Corportaions) for issuance of credit and debit cards this year. RBI's guidelines allowing the NBFC of India to issue credit and debit card will come into effect from July 1, 2022. RBI NBFC debit and credit card guidelines further state that the directions will be applied to all banks excluding payment banks, state co-operative banks, and district central co-operative banks.
Furthermore, NBFC debit and credit issuance guidelines state that the Non-Banking Financial Corporations have to follow the Central Bank's directions. As per Financial Express, a company's board would also need to give its nod for the issuance and conduct of credit cards, and an audit Committee also needs to be set up to review their credit card operations on a half-yearly basis. Additionally, KYC norms as issued by RBI from time to time, also need to be strictly adhered to in respect of all cards issued, including the co-branded cards.
RBI NBFC Credit and Debit Card guidelines
As per the guidelines issued by the RBI, Scheduled Commercial Banks (SCBs) with net worth of Rs 100 crore and above are permitted to decide credit card business either independently or in a tie-up arrangement with other card-issuing banks/NBFCs with the approval of their Boards. SCBs that want to set up separate subsidiaries for undertaking credit card business shall require prior approval of the Reserve Bank of India.
It is pertinent to mention here that an NBFC registered with the RBI shall not undertake credit card business without prior approval of the central bank. A company will require a Certificate of Registration, apart from specific permission to enter into this business, the pre-requisite for which is a minimum net owned fund of Rs 100 crore, and subject to such terms and conditions as the Reserve Bank may specify in this regard from time to time. Without obtaining prior approval from the RBI, NBFCs shall not issue debit cards and credit cards.
NBFC debit and credit card guidelines
Coming to the standards NBFC has to maintain for its customer if they are issuing credit or debit card are:
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/s which led to the rejection of the application.
Issuing unsolicited credit cards or unsolicited upgrades is strictly prohibited. In case, an unsolicited card is issued/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. In case a loss arises out of misuse of such unsolicited cards, it shall be the responsibility of the card-issuer only and not of the person in whose name the card has been issued.
Card-issuers shall ensure that the telemarketers they engage, comply with regulations on the subject issued by the telecom regulator from time to time while adhering to guidelines issued on “Unsolicited Commercial Communications – National Customer Preference Register ”. The card-issuer’s representatives shall contact the customers only between 10:00 hrs and 19:00 hrs.