If you are a credit card holder then this news is for you. The Reserve Bank Of India (RBI) has shared new guidelines and a set of rules in the context of Credit Cards. As per the new instructions of RBI, card issuers should not enter into any arrangement with card networks that prevents them from availing services of other card networks. In a new set of rules in terms of credit cards, the RBI also asked card issuers to create a new option for eligible customers which allows them to choose options from multiple card networks. Scroll down to know more.
What Are RBI’s Latest Directives
As we mentioned above, two major directives have been shared by the RBI
1. Card issuers shall not enter into any agreement or arrangement with card networks that restrain them from availing the services of other card networks
2. Card issuers shall provide an option to their eligible customers to choose from numerous card networks at the time of issue.
However, the current cardholders would not be able to take advantage of new guidelines. The option will be given or available to use after the renewal of their cards. The Central Bank of India made this statement after noting that certain current agreements between card networks and issuers do not support customers’ access to a variety of options.
Motives Behind The New Directives
Many of the existing cardholders are keen to know the motive behind the new directives of RBI. According to the Central Bank of India, through the new set of rules, the bank is focusing on bringing flexibility and more choice for customers in the issuance and usage of credit cards.
The RBI states that the purpose of adding new options is to provide more choices to new cardholders. RBI said that adding some arrangements between card issuers and networks will act as the creation of new choices. Earlier, the options were limited but now the arrangements will help the existing and new customers to take more benefits. We have already shared the new RBI guidelines and still those who are getting confused regarding it. We want to make it clear that the existing holders will get the chance to avail the new option after the renewal. Till then, the option is the same.
As per RBI press release, “The authorised card networks tie-up with banks/ non-banks for issuance of credit cards. The choice of network for a card issued to a customer is decided by the card issuer (bank/ non-bank) and is linked to the arrangements that the card issuers have with card networks in terms of their bilateral agreements.” Moreover, the directives of RBI define authorized card networks as National Payments Corporation of India-Rupay, American Express Banking Corp., Visa Worldwide Pte. Limited, Diners Club International Ltd., and MasterCard Asia/Pacific Pte. Ltd. Apart from this, the new directives of RBI do not apply to credit card issuers with fewer than 10 lakh cards that are currently working or in service. The RBI said that the latest set of rules for Credit Cards will come into effect 6 months from the date of this circular.