The Reserve Bank of India (RBI) has issued new guidelines on credit cards, directing card issuers to honour closure requests within seven working days or pay ₹500 per day to customers for the delay.

The new rules, which will be applicable to all banks and non-banking financial companies (NBFCs), come into effect from July 01, 2022.

"Any request for closure of a credit card shall be honoured within seven working days by the credit card-issuer, subject to payment of all dues by the cardholder. Subsequent to the closure of credit card, the cardholder shall be immediately notified about the closure through email, SMS, etc," the banking regulator says.

Cardholders shall be provided option to submit request for closure of credit card account through multiple channels such as helpline, dedicated e-mail-id, Interactive Voice Response (IVR), prominently visible link on the website, internet banking, mobile-app or any other mode, RBI says, adding that the card-issuer shall not insist on sending a closure request through post or any other means which may result in the delay of receipt of the request.

"Failure on the part of the card-issuers to complete the process of closure within seven working days shall result in a penalty of ₹500 per day of delay payable to the customer, till the closure of the account provided there is no outstanding in the account," it added.

If a credit card has not been used for a period of more than one year, the process to close the card shall be initiated after intimating the cardholder, the central bank says. "If no reply is received from the cardholder within a period of 30 days, the card account shall be closed by the card-issuer, subject to payment of all dues by the cardholder."

To protect customers, RBI said unsolicited loans or other credit facilities should not be offered to credit cardholders without seeking explicit consent. "In case an unsolicited credit facility is extended without the written/explicit consent of the cardholder and the latter objects to the same, the card-issuer shall not only withdraw the facility, but also be liable to pay such penalty as may be considered appropriate by the RBI Ombudsman, if approached," the guidelines say.

On interest rates, the central bank says card-issuers will also prescribe an interest rate ceiling, which will be in line with other unsecured loans, including processing and other charges, as part of their board-approved policy.

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Pay ₹500 per day to customers if card closure request not honoured: RBI to banks