Thursday, December 1

New Credit Card Rules Effective from Oct 1, 2022

The Reserve Bank of India issued new rules for the issue and use of credit cards and debit cards in April 2022. The majority of these laws went into effect on July 1, 2022, although the RBI delayed the execution of certain of these regulations until October 1, 2022. The rules that take effect on October 1 are listed below. These major regulations are been implemented by banking institutions around India and effects can be seen in full by the end of the year.

According to the new regulations, the card issuer cannot change the credit limit without informing the customer first. If a credit card limit needs to be raised, it can only be done with the cardholder’s consent. Additionally, the cardholder must be informed if the issuer lowers the limit.

Card Activision is OTP-based

If a cardholder doesn’t activate their card within 30 days of it being issued, the issuer will need the cardholder’s OTP-based consent to do so. The card issuer must terminate the card account within 7 working days of asking for consent if the cardholder refuses to permit activation. Please be aware that this does not apply to renewed or replaced cards.

Computation of Interest

The RBI has given card issuers instructions on what changes to make to the way interest is calculated on credit cards. According to RBI, unpaid fees and taxes are not to be capitalized to charge or compound interest. Currently, extra fees like late payments and interest costs are taken into account when determining the carry-forward amount. However, no compounding is permitted on these fees in accordance with the updated regulations.

Tokenization of Credit and Debit Cards

The Card-on-File (CoF) tokenization standards will also take effect on October 1st, 2022, in addition to the previous regulations. CoF Tokenization is the process of replacing actual card information with a code or token that is specific to a certain set of cards, token clients, and devices. 

If you choose to tokenize your credit and debit cards, your 16-digit card number will be substituted with a token, and this unique value, rather than your actual card information, will be shared with the store. This measure has been taken to increase the security and safety of using your credit and debit cards for online purchases. According to reports, several retailers already have complied with the law.

Regulations in effect since July 2022

  1. Without the client’s express written authorization, credit card issuers are not permitted to issue a new card or update an existing credit card.
  2. Consumer requests for card closure must be processed within 7 business days.
  3. After getting approval from the cardholder, the card issuer must start the process of closing the card if it hasn’t been used for more than a year.
  4. If an application for a credit card is rejected by the issuer, the customer must be given written notice of the denial.
  5. Customers should have a “one-time” option to change their billing cycle, according to credit card issuers.

Conclusion

RBI is continuously taking viable steps to ensure safety of banking customers around the nation. These regulations work in the same direction to empower customers to have more say what happens of their and how to maximise returns on their funds. Banks have to ensure that these regulations are timely and properly implemented and known for their customers as soon as possible. The above-mentioned steps are already been implemented by major banking institutions in India and RBI expects see them in function in full by the end of this year.

If you are like most people, you probably have a hard time keeping track of all your bills and payments. You may even struggle to remember when each bill is due. This can lead to late payments, which can damage your credit score. Wishfin is a great Credit card app that can help you keep track of your bills and payments. With Wishfin, you can set up reminders for each bill so that you never miss a payment again. You can also see all of your bills in one place, so you can easily keep track of what is due when.