1. The central idea behind these 3 rules is the protection of the cardholder. Since banks have been criticized for using practices that seem predatory in nature, RBI has tried to curb the activities that don’t take customers’ needs into account. The new rules try to make sure that the voice of the consumer is heard and his/her needs are met. They basically safeguard the cardholders. Credit Card issuers will have to get OTP-based consent for card activation from now on. If a cardholder has not activated their credit card for more than 30 days after issuance, the bank will have to get One Time Password (OTP) based consent before activating the card. However, if the customer declines, the card issuer must close the account without any cost to the customer, and that too within 7 working days.
  2. The banks will have to obtain express permission before increasing the credit limit of a customer. This rule also puts an emphasis on the cardholder’s consent. Credit card issuers will be required to get the customer’s express approval before increasing the credit limit. Earlier the cardholders just got a message whenever their credit limit increased, but from now, their permission will be needed before the issuer increases the sanctioned credit limit.
  3. The new credit card rules make it mandatory for the card issuer to specify the terms and conditions for payment, including minimum payment. This will prevent amortization (an accounting technique used to lower the book value of a loan over a set period of time). Also, the banks will not be able to capitalize unpaid levies, charges/taxes for the purpose of charging or compounding interest.

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