The Reserve Bank of India (RBI) has changed the norms for the issuance of credit cards, and regarding the same, the banking regulator has released a notification today (March 6, 2024).

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The notification said that the authorised card networks tie up with banks/non-banks for the issuance of credit cards. The choice of network for a card issued to a customer is decided by the card issuer (bank or non-bank) and is linked to the arrangements that the card issuers have with card networks in terms of their bilateral agreements.

However, the RBI said the customer will now have to be provided with multiple options concerning the card network. The release further noted that on a review, it is observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers. So, in exercise of the power conferred under Section 18 read with Section 10(2) of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007), the RBI being satisfied that it is necessary and expedient, in the interest of the payment system and public interest, directs as under:

Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.

Card issuers shall provide an option to their eligible customers to choose from multiple card networks at the time of issue.  For existing cardholders, this option may be provided at the time of the next renewal.

Further, it notified that the condition to offer customers with multiple credit card network shall not apply to credit card issuers with number of active cards issued by them being 10 lakh or less in number.

The card issuers who issue credit cards on their own authorised card network are excluded from the applicability of the circular, the RBI release said.  Additionally, the new directions will have to come into effect in six months from today.

The directive has been issued as banks and NBFCs take on to issue cards backed by networks considering the benefits to them.