What changed
Previously, cash withdrawal using plastic cards was limited to ATMs. RBI now permitted debit card holders to withdraw up to Rs 1,000 per day at merchant establishments designated by banks, with or without a purchase.
What it means for you
Banks can offer a new customer convenience feature, potentially increasing debit card usage and merchant footfall. However, they must conduct due diligence on merchants, implement customer redressal mechanisms, and obtain board approval plus RBI permission under the Banking Regulation Act.
What you must do
- Get board approval for the cash-at-POS product, including risk assessment and mitigation measures.
- Designate merchant establishments after due diligence for offering this facility.
- Set up a proper customer complaint redressal mechanism, covered under the Banking Ombudsman Scheme.
- Obtain one-time RBI permission under Section 23 of the Banking Regulation Act, 1949, enclosing board note/approval.
Who it affects
All scheduled commercial banks issuing debit cards, System providers (Visa, MasterCard, American Express), Merchant establishments designated by banks, Debit card holders in India
What is the maximum cash withdrawal limit per day at POS?
The limit is Rs 1,000 per day per card, as per the circular.
Is a purchase mandatory to withdraw cash at POS?
No, the facility is available irrespective of whether the cardholder makes a purchase or not.
What regulatory approvals are needed for banks?
Banks need board approval and one-time permission from RBI's Department of Banking Operations and Development under Section 23 of the Banking Regulation Act, 1949.