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Reserve Bank tightens norms for issue of debit cards

Special Correspondent
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The Reserve Bank of India (RBI) on Wednesday stipulated that debit cards would be issued to customers having Savings Bank and Current Accounts but not to cash credit or loan account holders.

Banks may issue only online debit cards, including co-branded debit cards where there is an immediate debit to the customers’ account, and where straight through processing is involved, RBI said.

“Banks are, henceforth, not permitted to issue offline-debit cards. Banks which are now issuing offline debit cards may conduct a review of their offline debit card operations and discontinue operations of such cards within a period of six months from the date of this circular,” RBI said in a notification to all banks.

Banks were also asked to ensure that customers were duly informed regarding switching over to online debit cards. However, till such time as offline cards were phased out, the outstanding balances / unspent balances stored on the cards would be subject to computation of reserve requirements.

“No bank shall despatch a card to a customer unsolicited, except in the case where the card is a replacement for a card already held by the customer,” it added.

Each bank shall make available to the cardholders in writing, a set of contractual terms and conditions governing the issue and use of such a card. These terms shall maintain a fair balance between the interests of the parties concerned and shall be expressed clearly.

“The terms shall specify that the bank shall be responsible for direct losses incurred by a cardholder due to a system malfunction directly within the bank’s control.” However, the RBI said that banks would not be held liable for any loss caused by a technical breakdown of the payment system if the breakdown of the system was recognisable for the cardholder by a message on the display of the device or otherwise known. The responsibility of the bank for the non-execution or defective execution of the transaction is limited to the principal sum and the loss of interest subject to the provisions of the law governing the terms.

With a view to reducing the instances of misuse of lost/stolen cards, the apex bank asked banks to issue cards with photographs of the cardholder or any other advanced methods that may evolve from time to time.

Banks should undertake review of their operations/issue of debit cards on half-yearly basis. The review would include, inter-alia, card usage analysis, including cards not used for long durations due to their inherent risks.

Banks were asked to ensure to put in place an effective mechanism for redressal of customer complaints. “The name, designation, address and contact number of important executives as well as the grievance redressal officer of the bank may be displayed on the website.”

Further, the RBI said that there should be a system of acknowledging customers’ complaints for follow-up, such as complaint number / docket number.


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