What changed
RBI issued a comprehensive circular on July 13, 2007, providing specific guidelines for UCBs to issue ATM-cum-Debit Cards. The circular prohibits offline debit cards and tie-ups with non-bank entities, and mandates half-yearly board reviews and reporting to RBI.
What it means for you
UCBs must now follow a structured framework for issuing ATM-cum-Debit Cards, including Board approval, KYC compliance, and security measures. They cannot issue offline debit cards or partner with non-bank entities for card issuance. Regular half-yearly reviews and reports to RBI are required, increasing compliance burden but ensuring better risk management.
What you must do
- Obtain Board approval before issuing ATM-cum-Debit Cards, adhering to Annex I guidelines.
- Ensure no offline debit cards are issued and no tie-ups with non-bank entities for card issuance.
- Submit half-yearly reports to RBI (DPSS and Regional Office) by end of March and September, as per Annex II.
- Maintain internal records for tracing operations and rectifying errors, considering limitation laws.
- Provide customers with written transaction records and a 24/7 loss/theft notification mechanism.
Who it affects
All Primary (Urban) Co-operative Banks (UCBs), Board of Directors of UCBs, Compliance and risk management teams of UCBs, Customers holding savings/current/fixed deposit accounts with built-in liquidity features (excluding cash credit/loan account holders)
Can UCBs issue offline debit cards under these guidelines?
No, the circular explicitly states that issuance of offline debit cards is not permitted.
Are UCBs allowed to partner with non-bank entities for ATM-cum-Debit Cards?
No, UCBs cannot issue ATM-cum-Debit Cards in tie-up with other non-bank entities.
What is the reporting frequency for these cards to RBI?
UCBs must submit a half-yearly report to RBI's Department of Payment and Settlement Systems and the concerned Regional Office, at the end of March and September every year.