The biggest confusion that has been making rounds in the fintech world is whether or not NBFCs can issue credit and debit cards in India. If this question is bothering you as well, you are in the right place. In this post, we will clear all the doubts regarding the issuance of cards by NBFCs in the country. Keep reading!
Can NBFCs Issue Cards in India?
Non-banking Financial Companies (NBFCs) that are RBI registered can issue credit and debit cards to their customers only after receiving prior approval from the Reserve Bank of India. This statement was released by the central bank of India while offering card approval directions to fintech in India.
The bank further stated that it has been constantly receiving requests from various NBFCs in India for permission to issue smart cards, debit cards, stored value cards, value-added cards, and so on.
Regarding the credit card business, any company or firm including an NBFC wanting to participate in this activity needs to possess a registration certificate, besides RBI approval to carry out this business operation, the Central Bank of India mentioned in its Master Direction 2022.
Moreover, other terms and conditions an NBFC in India needs to meet to engage in this activity is, a minimum owned fund of Rs. 100 Crore along with other T&C mentioned by the RBI. Know more about NBFCs.
Other Standards Credit Card Issuers Are Required to Maintain
Apart from the above-mentioned guidelines, the credit card issuers are required to provide a one-one Key Fact Statement with the credit card application that shall contain the important details about the card such as quantum of charges, rate of interest, limit, and so on. Moreover, if by any chance the credit card application is rejected by the issuer, then he shall provide in writing the specific reasons behind this rejection. Below are some other standards NBFCs shall meet:
- In case any customer is provided with an unsolicited upgrade or even an unsolicited credit or debit card, it should be noted that it is strictly prohibited by the RBI. Moreover, if an existing card upgrade has been provided or an unsolicited card has been issued without informing the recipient and the letter is billed without his consent, then the card issuer should not only reverse these charges but also pay a penalty worth twice the value of the charges it reversed.
- If any loss occurs due to misuse of these types of unsolicited cards, then the card issuer will be responsible along with the person to whom such card is issued.
- Lastly, the card issuers shall strictly make sure that the telemarketers they collaborate with, must comply with the regulations and the guidelines regarding the “Unsolicited Commercial Communications and National Customer Preference Register”.
- The credit/debit card issuers or their representatives should only contact their customers between 10:00 am to 7:00 pm.
Confidentiality Norms For NBFCs in India – Explained
Non-banking Financial Companies that are engaging in card issuing services must not reveal their customer’s information they obtained at the time of issuing a card or opening an account, to any other person or company without their consent. Regarding the co-branding arrangement, the third-party entity is not allowed to access or view any personal details of the customers as well as their accounts which may violate the secrecy obligations of the card issuer.
This was all about NBFCs and their approval for issuing credit/debit cards in India. They can engage in such operations only after receiving approval from the RBI. We hope this question is clear to you now.