The Reserve Bank of India (RBI) on Thursday (March 7) announced some changes to the Master Direction on Credit and Debit Cards. The amended provisions make it mandatory for card issuers to monitor the end use of cards.

“Card-issuers may issue business credit cards to business entities/individuals for business expenses. The business credit cards may also be issued as charge cards, corporate credit cards or by linking a credit facility such as overdraft/cash credit provided for business purpose as per the terms and conditions stipulated for the facility concerned,” the RBI said in an official notification.

“The card-issuers shall put in place an effective mechanism to monitor the end use of funds. Business credit cards can be issued together with add-on cards wherever required,” it added.

As per the notification, for the purpose of convenience of cardholders, card transaction-related data may be drawn directly from the card issuer’s system in an encrypted form and displayed on co-branding partner platform with robust security.

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Further, RBI said that no bank shall issue debit cards to cash credit/loan accounts. “However, it will not preclude the banks from linking the overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana accounts or Kisan Credit Card accounts with a debit card.”

The central bank also said that co-branding partner (CBP) will not have access to information related to the transaction which is displayed in a co-branding platform. After issuance, CBP will not be involved in any processes except being the initial point of contact in case of grievances.

The revised master direction also stated that card-issuers shall not share the card data of cardholders with outsourcing partners unless sharing of such data is mandatory for discharge.

“Card-issuers shall not reveal any information relating to customers obtained at the time of opening the account or issuing the card to any other person or organization without obtaining their explicit consent, with regard to the purpose/s for which the information will be used and the organizations with whom the information will be shared,” the RBI said.

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For any sharing of the data, explicit consent from the cardholders shall be obtained. It shall also be ensured that the storage and ownership of card data remains with card-issuers, the Reserve Bank said.

“Card-issuers shall ensure strict compliance to the extant legal framework on data protection. Further, in case where the customers give explicit consent for sharing the information provided by them with other agencies, card-issuers shall clearly state and explain to the customer the full meaning/implications of the disclosure clause,” RBI said.

Apart from the above some other provisions in the amended master direction are following:

• Total amount due is total amount payable by cardholders.
• Interest to be levied only on the outstanding amount after all the adjustments like refunds and reversed transactions.
• Card issuers should provide a list of payment modes and advise cardholders to refrain from making payments that are not authorized by them.
• For business credit cards, payment terms, and refund adjustments are to be agreed upon between the card issuer and the corporate entity, which holds full liability.
• Issuers must follow approved procedures when blocking/deactivating/suspending cards. They must promptly inform cardholders via electronic means of such actions and reasons.

The revised regulations will be implemented with immediate effect.