The use of credit cards is increasing rapidly in India. A credit card has become one of the major necessities of an individual. Therefore, to protect its customers, the Reserve Bank of India has introduced RBI guidelines for credit cards. Moreover, the official authority keeps updating the guidelines as required. In this article, let us have a look at the latest RBI guidelines for credit cards.
Objectives
The objective is to increase flow of credit to individuals for entrepreneurial activity in the non-farm sector provided through the General Credit Card.
Eligibility
All non-farm entrepreneurial credit extended to individuals, which is eligible for classification under the priority sector guidelines.
Coverage
The scheme shall cover the entire country.
Nature of financial accommodation
Any credit facility extended under the Scheme would include both working capital and term loan requirements of entrepreneurs. The GCC, preferably, may be issued as a Smart card / Debit card (Biometric smart card compatible for use in the ATMs / Hand held Swipe Machines and capable of storing adequate information on entrepreneur’s identity, assets and credit profile etc.). Wherever the accounts are not digitized, the GCC may be issued as a card/pass book or a credit card cum pass book incorporating the name, address, photograph of the holder, particulars of borrowing limit, validity period etc. for the time being which will serve both as an identity card as well as facilitate recording of the transactions on an ongoing basis.
Quantum of credit limit
There will be no ceiling on the loan amount as long as the loan is for the purpose of non-farm entrepreneurial activity and is otherwise eligible for classification as priority sector. The limits should be fixed on the basis of risk assessment on a case to case basis.
Security
Security norms will be applicable as per Reserve Bank guidelines on collateral free lending for micro and small units issued from time to time.
Rate of Interest
To be decided by banks in terms of their Board approved policies within the overall guidelines issued by Reserve Bank on interest rates from time to time.
Who can issue cards
As per RBI, most Scheduled Commercial Banks (SCBs) with a net worth of Rs. 100 crores can issue credit cards. However, the exception is Regional Rural Banks (RRBs) as it needs to collaborate with other banks to do so. Moreover, Urban Cooperative Banks (UCBs) with a net worth of more than Rs. 100 crores can issue cards subject to certain guidelines. NBFCs registered with the RBI with a minimum net owned fund of Rs. 100 crores can issue credit cards, but they should have a Certificate of Registration and permission to enter the business.
Issue of Co-branded cards
Banks do not require RBI’s approval to issue co-branded credit cards. UCBs cannot issue credit cards in tie-ups with other non-bank entities.
Reporting to credit information companies
In this guideline, card issuers cannot report any credit information about a new credit card account to Credit Information Companies (CICs) before the card is activated. In case any such information is provided to CIC, the card issuer will be required to inform the customer.
Other important rules for issuing credit cards
In this guideline, the credit card issuer needs to provide a one-page key fact statement. The issuer also needs to provide all the Most Important Terms and Conditions (MITC). The details are fees, charges, withdrawals, credit limits, etc.
| Official Website | Apply |
