Banks will pay Rs 500 every day if the card is not closed within a week

The Reserve Bank of India has recently changed the rules regarding credit and debit cards, including those relating to the closing of credit cards. The central bank has issued general guidelines on the issuance and operation of credit and debit cards. The provisions relating thereto under the Reserve Bank of India (Credit Card and Debit Card – Issuance and Conduct) Guidelines, 2022 will come into force from 1st July this year.

“In exercising the powers conferred by Sections 35A and 56 of the Banking Regulation Act 1949 and Chapter IIIB of the Reserve Bank of India Act 1934, the Reserve Bank of India being satisfied that it is necessary and expedient in the public interest to do so, hereby issues the instructions hereinafter specified,” the RBI said in a statement dated Thursday, April 21.

The provisions of these instructions relating to credit cards shall apply to all scheduled banks (excluding payment banks, state cooperative banks and central district cooperative banks) and to all non-banking financial companies (NBFC) operating in India, he said.

When it comes to closing the credit card, the RBI has recommended a host of directions in its mandate. “Any request to close a credit card must be honored within seven business days by the credit card issuer, subject to payment of all dues by the cardholder,” the central bank said. .

Following the closure of the credit card, the cardholder must be notified immediately of the closure via email, SMS, etc., the RBI said in its guidelines. “Cardholders will have the ability to submit a credit card account closure request through multiple channels such as helpline, dedicated email ID, interactive voice response (IVR), prominent link on the website, online banking, mobile app or any other mode,” he said.

Further, the RBI has made it clear that the card issuer should not insist on sending a close request by post or any other means that may cause a delay in receiving the request.

“Failure on the part of the card issuers to complete the closing process within seven working days will result in a penalty of Rs 500 per day of delay payable to the customer, until the account is closed provided there is no has no outstanding balance in the account,” the RBI said.

“Following the closure of the credit card account, any available credit balance on the credit card accounts will be transferred to the cardholder’s bank account. Card issuers must obtain the cardholder’s bank account details, if this is not available with them,” he said.

If a credit card has not been used for a period of more than one year, the process of closing the card will be initiated after notifying the cardholder. In the absence of a response from the cardholder within 30 days, the card account is closed by the card issuer, subject to payment of all fees by the cardholder.

Card account closure information must also be updated accordingly with the credit reporting company(ies) within 30 days, the central bank said in its instructions.

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