The Reserve Bank of India (RBI) warned credit card issuers on Thursday not to issue unsolicited credit cards or upgrade an existing card without the customer's informed authorization, or face a penalty of double the invoiced amount.
It also requested that card issuers and third-party agents refrain from using intimidation or harassment to collect debts from customers. "The issue of unsolicited cards/upgradation is strictly forbidden," the RBI stated in its master directives on credit and debit card issuance. These guidelines will take effect on July 1, 2022.
It goes on to say that if an unsolicited card is issued or an existing card is updated and activated without the recipient's explicit agreement, the card issuer will be required to reverse the charges and pay a penalty equal to twice the amount incurred.
Commercial banks with a net worth of over 100 crore rupees can engage in credit card operations either alone or in association with other card issuing banks/non-banking financial organisations, according to the master directives (NBFC).
Regional rural banks (RRBs) can also issue credit cards in partnership with their sponsor bank or other financial institutions. "In addition, the person in whose name the card is issued can approach the RBI Ombudsman, who will determine the amount of compensation payable by the card-issuer to the recipient of the unsolicited card, as per the provisions of the Ombudsman Scheme, for loss of complainant's time, expenses incurred, harassment and mental anguish suffered," RBI said.
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