New Delhi, Mar 6: The Reserve Bank of India (RBI) has issued a directive aimed at enhancing consumer choice and competition in the credit card market.
In a circular released on Wednesday, the RBI mandated that card issuers must provide their eligible customers with the option to choose from multiple card networks at the time of issuance or renewal.
According to a press release, the central bank prohibited card issuers from entering into agreements with card networks that restrict them from availing the services of other card networks.
The directive addresses concerns raised about restrictive practices prevalent in the credit card industry.
The RBI identified arrangements between card issuers and card networks that limit customer choice as detrimental to the availability of options in the market.
By taking decisive steps to promote consumer choice and fair competition, the RBI aims to foster a more dynamic and inclusive financial ecosystem.
Key highlights of the RBI directive include the requirement for card issuers to offer eligible customers the choice of selecting from multiple card networks at the time of issuance or renewal of credit cards.
This provision seeks to empower consumers by providing them with greater flexibility and control over their financial products.
Additionally, the RBI has banned card issuers from entering into agreements with card networks that restrain them from availing the services of other card networks, aiming to promote fair competition and prevent anti-competitive practices.
The directive provides definitions for authorized card networks, including American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India-Rupay, and Visa Worldwide Pte. Limited.
Certain exemptions have been outlined as well, including an exemption for credit card issuers with a smaller customer base of 10 lakh or fewer active cards.
The implementation timeline for the directive is set to be six months from the date of issuance of the circular, allowing card issuers and card networks sufficient time to comply with the new requirements.
The directive underscores the RBI's commitment to promoting transparency, choice, and competition in the credit card market, with a focus on creating a more consumer-friendly financial ecosystem.
With the issuance of this directive, the RBI reaffirms its role as a proactive regulator dedicated to safeguarding the interests of consumers and promoting a competitive and resilient financial system. (Agencies)
