Earlier in April 2022, the RBI announced new credit card rules that will be effective from Oct 1, 2022. The issuance of credit cards has seen a massive uplift in the last couple of years, with 73.6 million credit cards issued as of March 2022. This is an 18.7% year-on-year growth.
While this growth spells good news in terms of increasing credit for the masses, the RBI has also been proactive in ensuring the credit card rules in India in terms of access and usage are tight and keeping instances of fraud, cybercrime, and theft as low as possible.
The RBI rules for credit cards comprise 3 main components pertaining to issuance, usage, and interest rates levied on them.
The issuers of credit cards need to seek an OTP from the cardholder if the card hasn’t been activated for more than 30 days from the date it was issued. If the cardholder declines the request to activate their credit card, the card issuer has to cancel the card without charging any interest within seven working days.
There have been instances where the card has been activated without consent, and interest has been charged without the cardholder's knowledge. By getting consent, this problem will be mitigated.
One of the new credit card rules states that card issuers cannot revise the credit limit without bringing it to the customer's notice. If the credit limit has to be increased, it can only be done after the cardholder’s approval, and if the credit limit is decreased, then the same needs to be informed to the holder.
RBI’s new rules for credit cards have instructed changes in calculating the interest. The RBI states, “The unpaid charges/levies/taxes shall not be capitalised for charging/compounding of interest.”
It means additional charges such as late payment fees, finance charges, and more included earlier while calculating the carry forward amount - compounding on these charges will not be allowed as per the new regulations.
The RBI has made it mandatory for all debit and credit card data stored online, at the point-of-sale and in-app transactions, to be replaced by unique tokens. You’d probably see this in your shopping sites where a notification is sent to you that all your card details will not be removed from the merchant's database.
If you opt for tokenization of your debit or credit card, then your 16-digit card number will be replaced by a token number which will be shared with the merchant instead of your card details.
This step will ensure more safety and security of your credit cards while transacting online.
These new credit card rules are expected to enhance the privacy and security of credit card transactions online. The cardholder will have more control over the use of their credit cards which will improve the overall experience.
And talking of good financial experience, the Fi app is also a safe and secure platform where you can keep track of all your finances and manage your money better and safer.
The new credit card rules will apply as of October 1, 2022.