Non-banking financial companies (NBFCs) can now issue credit cards but will need to get prior permission from the Reserve Bank of India (RBI) before they can start.

The pre-requisite for this is a minimum net-owned fund of Rs 100 crore and subject to such terms and conditions as the RBI may specify in this regard from time to time.

Scheduled Commercial Banks (SCBs) other than Regional Rural Banks (RRBs) with net worth of Rs 100 crore and above are permitted to undertake credit card business either independently or in tie-up arrangement with other card issuing banks/NBFCs with the approval of their boards.

SCBs (excluding Small Finance Banks and Regional Rural Banks) desirous of setting up separate subsidiaries for undertaking credit card business shall require prior approval of the Reserve Bank.

RBI has asked card-issuers to provide a one-page Key Fact Statement along with the credit card application containing the important aspects of the card such as rate of interest, and quantum of charges, among others. In case of rejection of a credit card application, the card issuer has to convey in writing the reason that led to rejection.

RBI has also suggested an insurance cover to take care of the liabilities arising out of lost cards, card frauds, etc in consultation with the customers. For those offering card issuance in tie-up with insurance companies, the card issuers are required to obtain explicit consent in writing or digital mode from the cardholders along with the details of the nominees.

To ensure protection of the card, the issuers are directed to seek OTP-based (One Time Password) consent from the cardholder for activating a credit card if the same has not been activated by the customer for more than 30 days from the date of issuance, RBI said.

If no consent is received for activating the card, card issuers shall close the credit card account without any cost to the customer within seven working days from the date of seeking confirmation from the customer.

For a renewed or replaced card, the closure of an inactivated card shall be subject to payment of all dues by the cardholder.

RBI has also asked the card issuers not to share any information about the customers to the Credit Information Bueaux before the activation of the card.

No card issuer shall report any credit information relating to a new credit card account to Credit Information Companies before activation of the card. Any credit information relating to such inactivated credit cards already reported to these companies, then it shall be withdrawn immediately and it shall not take more than 30 days from the effective date of these directions.

Among the underwriting standards, card issuers are required to ensure complete transparency in the conversion of credit card transactions to Equated Monthly Instalments (EMIs) by clearly indicating the principal, interest, and upfront discount provided by the merchant/card-issuer (to make it no cost), before the conversion. These details should also reflect in the credit card bills. The same shall also be separately indicated in the credit card bill/statement. EMI conversion with an interest component should not be camouflaged as zero-interest or as a no-cost EMI.