The Reserve Bank of India (RBI), with a move aimed at empowering credit card customers, unveiled fresh guidelines on Wednesday, March 6th, 2024, introducing more options and flexibility in the credit card issuance process.
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What does the RBI say?
According to the New Directives of RBI, Card Issuers are now required to offer eligible customers the liberty to select from multiple card networks during card issuance and card issuers cannot agree with the card networks that restrain them from access to services provided by their other card networks.
Reserve Bank’s Observation
The RBI directives come after its observation that prevailing arrangements between card networks and issuers were restricting choices for customers, thereby necessitating measures to enhance consumer autonomy. It is important to note that the new guidelines extend this freedom of choice to existing cardholders and enable them to exercise this option during the renewal of their cards.
While explaining the rationale behind the move, the RBI focused on its commitment to fostering an environment where customers wield greater influence in the selection and utilisation of credit cards.
Moreover. The card issuers and networks are obligated to comply with this new requirement in both existing agreements particularly during amendments or renewals and in fresh agreements going forward.
RBI clarification
Clarifying the position, the RBI outlined authorized card networks, including American Express Banking Corp, Diners Club International, MasterCard Asia/Pacific, National Payments Corporation of India–Rupay, and Visa Worldwide.
However, the RBI has given exemption from these directives to certain credit card issuers with less than 10,00,000 active cards. Moreover, issuers who issue credit cards on their authorized card networks are exempt from the circular’s applicability.
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Interestingly, these rules were to be effective since October 2023. However, the RBI has extended the timeline by 6 months, considering that some players were not fully compliant with the directives.
