RBI Proposes New Rules For Debit, Credit, And Prepaid Cards In Draft Circular
The Reserve Bank of India (RBI) has released a draft circular outlining proposed changes to the issuance of debit, credit, and prepaid cards. Seeking public feedback until 4 August, the RBI intends to implement the new rules starting from 1 October. The regulations will apply to both banks and non-banking financial companies (NBFCs), according to a media report.
The draft circular suggests that debit or credit cards should not be limited to a specific network and should be usable on any network. Banks should ensure that customers have the option to choose cards from multiple issuers. Furthermore, customers should have the flexibility to change the card issuer at any time. These rules would be applicable to both new and existing cards. The RBI also proposed that exclusive agreements between card-issuing banks and networks should be prohibited.
Shares of SBI Card, HDFC Bank, and ICICI Bank witnessed varied movements as the RBI aims to provide customers with a choice of card network. The RBI intends to promote a cost-effective and non-dominant payment system, facilitating smoother transactions between merchants and card issuers. Additionally, the focus is on creating an inclusive card network infrastructure, discouraging exclusive partnerships between card issuers and networks.
Leading companies such as Mastercard, Visa, American Express, Diners Club, and Rupay are key players in the card issuance market. Rupay dominates the debit card segment, accounting for 65 per cent of all debit cards issued in India, with approximately 700 million Rupay cards in circulation. Visa and Mastercard hold a significant market share in the credit card segment, while Rupay's presence in this segment is relatively low.
The RBI's proposed changes aim to enhance customer choice, promote competition, and create a more inclusive and cost-effective payment ecosystem. The draft circular seeks to establish a level playing field for all stakeholders in the card industry.
