Enhancing Consumer Protection And Regulation: The Recent Amendments To The Master Direction ' Credit Card And Debit Card ' Issuance And Conduct Directions, 2022

• Published date: 02 April 2024
• Subject Matter: Finance and Banking, Consumer Protection, Financial Services, Dodd-Frank, Consumer Protection Act
• Law Firm: NovoJuris Legal
• Author: Mr Namrata Dubey and Anshi Mishra

The Reserve Bank of India ("RBI") has recently issued an amendment to the Master Direction - Credit Card and Debit Card - Issuance and Conduct Directions, 2022 ("CC Directions"). This amendment, effective from March 7, 2024, is applicable on all credit card issuing banks and Non-Banking Financial Companies ("NBFCs") and aims to improve regulations surrounding credit card issuance and conduct in India. More specifically, the amendment to the CC Directions is primarily aimed at (i) enhancing customer control, (ii) promoting transparency, (iii) streamlining processes, and (iv) data protection.

The major amendments brought into the CC Directions are discussed below:

Relevant clause from CC Directions	Rationale behind the amendment
7(c)	The amendment requires the card issuers to put in place effective mechanisms to monitor end use of funds. However, it is unclear if the end use monitoring is specific to "business cards" or includes "personal cards" as well.
8(a)	The amended CC Directions have brought in clarity by specifying that a penalty of ₹500 shall be levied on a per calendar day basis, regardless of it being a working day or not, on the card issuers who fail to complete the card closure process within seven working days.
9(b)(iii)	The amended CC Directions do not include the requirement to specify the level of unpaid amount beyond the minimum amount due at which the interest-free credit period benefits would not be available.
9(b)(v)	The amended CC Directions removes the term "Penal Interest" from the later part of the provision. This deletion can either imply that the "Late Payment and other related payment" are in themselves the "penal charges" to be levied on the outstanding amount and not on the total amount payable by the card holders. However, this specific deletion of "penal charges" without explanation leaves room for interpretation wherein companies may end up levying penal charges on the total amount due and not just the outstanding balance claiming removal of limitation.
10(d)	The amended CC Directions now permit customers to modify their billing cycle at least once. This change also benefits card issuers, as it allows them to make their cards more appealing to customers who may now modify their billing cycle more than once.
12(b)	The amended CC Directions have eliminated the previous requirement for a 7-day advance notification. It now permits card issuers to decide the appropriate duration for informing the...