Credit card consumer protection laws: 6 key RBI rules you should know

If you are a frequent user of credit cards or planning to get a credit card, you might face a situation where your consumer rights might be violated. Hence, it becomes important for you to know about various credit card rules to protect your rights.

The Reserve Bank of India (RBI) has mandated many rules and regulations to protect the interests of credit card users. These rules will protect you from instances of fraud, violation of privacy, data leakage, etc. Check out six important credit card rules by RBI aimed to protect a credit card user.

1. Interest rate

The RBI has mandated that the interest rates on credit cards must be transparent and reasonable. Banks and NBFCs are not allowed to charge exorbitant interest rates and hidden fees. Banks are required to determine a ceiling rate for interest and other charges. However, they can charge differential interest rates according to the credit card user’s payment history and must be transparent about it.

2. Accurate billing

Banks and NBFCs should make sure that the credit card statements must be generated on time and in a fair manner. Credit card users can ask for a justification from the issuers if they receive a wrong bill. In such a case, the credit card issuer will be required to provide an explanation for the inaccurate bill. They may also be asked to provide documentary evidence too. Banks and NBFCs will be given 60 days to resolve the issue. RBI has advised issuers to provide online credit card statements to avoid delayed billing.

3. Credit card debt collection process

According to RBI guidelines, banks and NBFCs must collect debt in a fair manner and not compromise the quality of customer service. Even if they outsource debt collection, they must ensure that the third party does not resort to unfair practices and maintains confidentiality of the customer’s records, respects customer privacy, and adheres to fair practices in debt collection. Banks and NBFCs cannot use violence, intimidation or threats for debt collection.

4. Privacy concerns

Banks and NBFCs are not allowed to issue unsolicited cards to customers without their consent to protect privacy, according to RBI guidelines. In case an unsolicited card is issued without a consent, the issuer will have to reverse the action and will be required to pay a penalty, which is twice the value of the charges reversed. RBI offers a similar protection for existing credit card users as well.

If a bank or NBFC wants to upgrade a credit card, they must first inform the user and explain the terms and conditions to them. They can upgrade or increase credit limit only with the consent of a user.

According to the RBI, banks and NBFCs should adhere to the Do Not Call Registry (DNCR). It is a list of contacts of credit card users who have not given their permission to receive marketing messages or calls from banks or NBFCs. This measure aims to protect the privacy of a credit card user.

5. Protecting identity and confidentiality

Protecting the identity and confidentiality of a card user is RBI’s topmost priority. Therefore, banks and NBFCs are not allowed to reveal information users have available to them from the time of opening the account or issuing the credit card without obtaining specific consent from the user. Credit card issuers cannot use the information of a user for marketing purposes. Additionally, banks and NBFCs can term a card user as a defaulter by informing them first. Once a credit card user has been informed, they will be given a notice period to pay their bills.

6. Reporting fraud

If your credit card has been used fraudulently, you must report it to your issuer immediately. You will not be held responsible for fraud if you inform your issuer within three working days. However, you might be held responsible for fraud if it happens due to your negligence orif the delay in reporting is more than seven working days as per your bank’s approved policy.

In conclusion, RBI mandates certain norms to protect the rights of a user. As a credit card user, you must be aware of the rules and regulations that protect your rights as a consumer. If any of your rights are violated, these rules come as a handy remedy to address your concerns.