What changed
RBI amended the Master Direction on Credit Card and Debit Card – Issuance and Conduct Directions, 2022, effective March 7, 2024. For business credit cards, issuers must now put in place an effective mechanism to monitor end use of funds. The penalty for failing to close a card account within seven working days is now ₹500 per calendar day of delay, not per working day. Also, billing statements must specify the level of unpaid amount beyond the minimum amount due at which the interest-free credit period is suspended.
What it means for you
Banks and NBFCs issuing business credit cards must strengthen their monitoring systems to track how funds are used, reducing the risk of diversion. The shift to calendar-day penalty for closure delays increases the financial disincentive for slow processing, protecting cardholders. Clearer disclosure on billing statements about the loss of interest-free period will help customers avoid costly debt traps, potentially reducing defaults.
What you must do
- Implement or upgrade end-use monitoring mechanisms for all business credit card transactions.
- Update card closure processes to ensure completion within 7 working days to avoid ₹500 per calendar day penalty.
- Revise billing statement templates to include the unpaid amount threshold where interest-free period is lost.
- Train customer service and compliance teams on the new calendar-day penalty calculation.
- Review and update MITC (Most Important Terms and Conditions) documents to reflect the new disclosure requirements.
Who it affects
All banks issuing credit cards, All NBFCs issuing credit cards, Every bank operating in India (for debit card instructions), Cardholders with business credit cards, Compliance and operations teams of card issuers
What is the new penalty for delayed card closure?
If a card issuer fails to close a card account within seven working days of request, they must pay ₹500 per calendar day of delay to the cardholder, provided there is no outstanding balance.
Do these changes apply to debit cards as well?
The amendment applies to credit card instructions for all banks and NBFCs, and debit card instructions for all banks. The specific changes on end-use monitoring and closure penalties are for credit cards.
When do these amended provisions take effect?
The amended provisions came into effect from March 7, 2024, the date of the circular.