New credit card closure rules effective from 1st July

The Reserve Bank of India (RBI) has issued new rules pertaining to credit and debit card issuance for the card issuers. Among the changes were the new rules regarding closure of credit cards.
 
Banks have to honour requests for closure of a credit cards, immediately notifying the customer of the closure through email, SMS. Customers have to be given multiple channels such as helpline, dedicated email-id, Interactive Voice Response (IVR), prominently visible link on the website, internet banking, mobile-app or any other mode to close their cards and cannot insist on any channel. 
 
"Failure on the part of the card-issuers to complete the process of closure within seven working days shall result in a penalty of Rs 500 per day of delay payable to the customer, till the closure of the account provided there is no outstanding in the account,’ stated the RBI.
 
The provisions relating to credit cards under the RBI (Credit Card and Debit Card - Issuance and Conduct) Directions, 2022 shall apply to every Scheduled Bank (excluding Payments Banks, State Co-operative Banks and District Central Cooperative Banks) and all Non-Banking Financial Companies (NBFCs) operating in India. The new directions will be effective from 1 July 2022.
 
Credit card closure within seven days 
 
According to the master direction, the credit card issuer must honour any request to close a credit card within seven working days, subject to the cardholder paying all dues. 
 
Immediate intimation of closure of the account 
 
Immediately following the closure of a credit card, the cardholder shall be notified of the closure via email, SMS, or other means. 
 
Closure of credit card accounts through multiple channels 
 
Now, cardholders can request the closure of their credit card account using a variety of channels, including a helpline, dedicated e-mail address, Interactive Voice Response (IVR), a clearly visible link on the website, internet banking, mobile banking, or any other means. 
 
Note that if a bank or NBFC fails to close an account within seven working days, a penalty of RS 500 per day of delay will be charged until the account is closed, assuming no outstanding funds. 
 
According to the master directions, “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 Rs500 per day of delay payable to the customer, till the closure of the account provided there is no outstanding in the account”
 
Banks can close the credit card if not used for over one year 
 
If a credit card has not been used for more than a year, the cardholder will be notified and the procedure to terminate the card will be initiated. If the cardholder does not respond within 30 days, the card account will be cancelled by the card-issuer, subject to the cardholder's payment of any dues.
 
Within 30 days, the information on the closure of the card account must be updated with the Credit Information Company. 
 
Credit balance available to be transferred to cardholder’s bank account 
 
If there is any credit amount remaining in cardholders accounts after the account is closed will be transferred to the cardholder's bank account. If the cardholder's bank account information is not available to them, card issuers must obtain it.
 

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Changes in Our Business Model
 
 
25th Sept 2020
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • We will have to suspend the restructuring tool.
 
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
 
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder