The Reserve Bank of India, in its latest notification, has provided guidelines regarding arrangements with card networks for the issuance of credit cards.
The Reserve Bank of India (RBI) has laid out revised directives for card networks on issuing credit cards to customers
The Reserve Bank of India, in its latest notification, has provided guidelines regarding arrangements with card networks for the issuance of credit cards.
The central bank has observed that certain arrangements between card networks and card issuers do not promote customer choice. In accordance with the powers granted under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007, the Reserve Bank of India has issued certain directives.
Firstly, card issuers should not enter into any arrangement or agreement with card networks that restrains them from availing the services of other card networks.
Secondly, the issuers have to provide an option to their eligible customers to choose from multiple card networks at the time of issue. For existing cardholders, this option can be provided at the time of the next renewal.
The authorised card networks are American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/ Pacific Pte. Ltd., National Payments Corporation of India–Rupay and Visa Worldwide Pte. Limited.
The central bank stated that card issuers and card networks must ensure compliance with the conditions in both existing agreements upon amendment or renewal and in newly executed agreements.
RBI clarified that the directives will not apply to credit card issuers with the number of active cards issued by them being 10 lakh or less.
Also, card issuers who issue cards on their own authorized networks are exempt from the applicability of the circular.