In a recent development, the Reserve Bank of India (RBI) has mandated a significant shift in the credit card landscape. Effective September 6, 2024, the central bank’s directive aims to break exclusive contracts between card issuers and networks. This ensures customers have the freedom to choose their preferred payment network.
RBI’s Investigative Insights
The RBI’s decision resulted from a comprehensive review, exposing agreements limiting consumer choices. This prompted the RBI to advocate for an open, customer-centric credit card issuance approach. The central bank stressed the need for enhanced flexibility in consumer options. The intervention aims to improve the overall credit card experience.
RBI’s Instruction – Choice At Cardholder’s Fingertips
Traditionally, users had limited influence over their credit card network provider, with issuers making unilateral decisions. However, the RBI’s recent guidelines instruct card issuers to empower customers by offering them the option to choose from multiple card networks during the application process. Existing cardholders will also have this choice at the time of renewal.
September 6, 2024: The Dawn Of New RBI Credit Card Rules
The RBI’s circular, effective from September 6, 2024, marks a pivotal moment in credit card dynamics. This proactive step is set to revolutionize the issuance of credit cards in India. It fosters healthy competition among networks and prioritizes efficiency in the public interest and payment system.
Exclusions And Inclusions
While the directive encompasses most credit card issuers, it does not apply to those with 10 lakh or fewer active cards. Credit card issuers operating through their approved card network are exempt from these guidelines. This nuanced approach ensures that smaller issuers are not unduly burdened, promoting a balanced and practical implementation of the new rules.
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