RBI Introduces New Rules for Credit Cards to Offer More Choices to Customers: In a move aimed at enhancing consumer options, the Reserve Bank of India (RBI) issued a fresh directive on Wednesday, prohibiting credit card issuers—both banks and non-banking entities—from engaging in agreements with specific card networks like American Express, MasterCard Asia, Diners Club, and Rupay that limit their ability to utilize services from other card networks.
Under the new order, card issuers are mandated to present eligible customers with the opportunity to select from various card networks during the issuance process. For existing cardholders, this choice must be made available at the time of their next renewal. The RBI emphasized that this directive will come into effect six months from the date of the circular's issuance.
Furthermore, the RBI highlighted that both card issuers and networks must ensure compliance with these stipulations in existing agreements upon amendment or renewal, as well as in newly executed contracts.
Explaining the rationale behind the move, the RBI stated that a review indicated certain arrangements between card networks and issuers that limited consumer choice, prompting the regulatory action in the interest of the public.
However, it's important to note that these regulations won't apply to credit card issuers with an active card base of 10 lakh or fewer, nor to issuers who operate on their own authorized card network.
This latest development from the RBI underscores the ongoing efforts to foster a more competitive and consumer-friendly environment within the credit card industry, ultimately aiming to empower customers with greater freedom of choice.
