RBI mulls limit on multiple card spend

If the Reserve Bank of India has its way, you could soon lose the facility of having multiple credit cards with a combined credit limit far in excess of your repayment capacity.

In its draft guidelines on credit card operations, RBI today said banks and non banking finance companies (NBFCs) have to set a maximum credit card limit for an individual customer.

The credit card limit set will be irrespective of the number of cards a customer holds. These draft guidelines will also be applicable to banks' subsidiaries, such as SBI cards.

"As holding several credit cards enhances the total credit available to any consumer, banks / NBFCs may fix maximum credit limit having regard to the means of the customer," said the RBI in its draft guidelines on credit card operations.

Banks will also have to resolve customer complaints within 60 days if the draft guidelines are accepted. In addition to this, the regulator has suggested that the card issuing bank / NBFC should constitute grievance redressal machinery within the bank / NBFC and give wide publicity about it through electronic and print media.

The regulator has also suggested that credit cards should not be issued to persons including students and others with no independent financial means. Add-on cards may be issued with the clear understanding that the liability will be that of the principal card holder.

If the recommendations are accepted, card issuers will, henceforth, have to dispatch bills ensuring that the the customer has sufficient number of days (at least 10 days) for making payment before the interest starts getting charged.

To ensure customer convenience, the RBI has recommended that banks / NBFCs should put up detailed quarterly analysis of credit card related complaints to their top management.

It has recommended that card issuers should quote annualised percentage rates (APR) on card products (separately for retail purchase and for cash advance, if different). The method of calculation of APR should be given with a couple of examples for better comprehension, it added.

In case of issuance of wrong bills, the RBI has suggested that the bank / NBFC should provide explanation and documentary evidence without delay to the customer, within a maximum period of a fortnight, with a spirit to amicably redress the grievances of the customer.

To obviate frequent complaints of delayed billing, credit card issuing bank would consider providing bills and statements online, with suitable security built.

To ensure right to privacy, the regulator has suggested that on activation of an unsolicited card without the consent of the recipient and the latter is billed for the same, the card issuing bank / NBFC would not only have to reverse the charges forthwith, but also pay a penalty without demur to the recipient amounting to twice the value of the charges reversed.

Further the RBI has also suggested that banks and NBFCs would have to maintain a do not call list.