: RBI prohibits issuance of unsolicited cards #FinanceIndia #StockMarketNEWS #Business Press Trust of India Mumbai The Reserve Bank on Thursday asked card companies not to issue unsolicited credit

@StockMarketNEWS Mon 25 Apr, 2022

Posted in: #FinanceIndia #StockMarketNEWS #Business

RBI prohibits issuance of unsolicited cards #FinanceIndia #StockMarketNEWS #Business
Press Trust of India

Mumbai

The Reserve Bank on Thursday asked card companies not to issue unsolicited credit cards or upgrade an existing card without the explicit consent of the customer, failing which they will have to pay double the billed amountas penalty.

It also asked card issuers and third-party agents not to resort to intimidation or harassment during recovery of dues from customers.

In its master directions on credit card and debit card issuance, the RBI said “the issue of unsolicited cards/upgradation isstrictly prohibited???.

These directions will be effective from July 1, 2022.

It further said in case an unsolicited card is issued or an existing card upgraded and activated without the explicit consent of the recipient, the card issuer will have to reverse the charges and pay a penalty double the billed amount.

According to the master directions, commercial banks with net worth of over `100 crore can undertake credit card business either independently or in tie-up arrangement with other card issuing banks/NBFCs.

Regional rural banks (RRBs) are also permitted to issue credit cards in collaboration with their sponsor bank or other banks.

“In addition, the person in whose name the card is issued can also approach the RBI Ombudsman who would 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 by him/her,??? the centralbank said.

The RBI further said non-banking financial companies (NBFCs) shall not undertake credit card business without its prior approval.

“Without obtaining prior approval from the Reserve Bank, NBFCs shall not issue debit cards, credit cards, charge cards, or similar products virtuallyor physically. ???

With regard to recovery of dues from customers, the RBI has asked the issuers to ensure that they and their agents adhere to the fair practices code for lenders.

In particular, with regard to appointment of third-party agencies for debt collection, the card-issuers shall ensure that their agents refrain from actions that could damage their integrity and reputation and observe strict customer confidentiality, it added.

“Card-issuers/their agents shall not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the credit cardholders’ family members, referees and friends, making threatening and anonymous calls or making false and misleading representations,??? it said.