RBI Circular on Debit Credit Card Selection: RBI has said in a circular that card issuing banks will henceforth have to issue credit from more than one network provider and provide customers with an option to select one of several card networks.
The Reserve Bank of India proposes that card network providers such as Bank MasterCard, Visa and American Express cannot enter into special arrangements that restrict competition and prevent consumers from choosing the type of card. For this, the RBI has said in a written circular that card issuing banks will now have to issue cards from more than one provider and offer customers an option to choose one of the card networks. This new RBI proposal is intended to apply to banks issuing prepaid cards, debit or credit cards as well as non-banking financial companies.
RBI has released this draft on its website.
RBI issued a draft circular for the same. It was said that the arrangement for issuing cards to the customers is still not as per the convenience of the customers. Card network banks and non-banking financial institutions or card issuing processes are not customer friendly. Along with putting a hold on an agreement between these institutions, further changes have also been incorporated in the draft circular issued by the RBI.
Which includes the following.
Any bank or financial institution that issues cards to customers must give freedom to customers to choose their preferred network. Customers can make their decision in this regard at the time of card issuance or any time in between.
Card issuers have to facilitate the issuance of cards in more than one network.
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The Central Bank invited suggestions
This proposal issued by RBI can be implemented in October. Stakeholder suggestions are invited before implementing it. Anyone who wants to submit their suggestions to RBI in this regard can do so by August 4.
After the implementation of this RBI draft, customers will get an opportunity to choose the card network of their choice and at the same time the competition among card issuing organizations will also increase. The effect will be that all the organizations will also try to provide better service to the customers. Currently American Express, Diners Club, Mastercard, Visa, RuPay card network are operating in India.