Banks have to honour requests for closure of a credit cards, immediately notifying the customer of the closure through email, SMS, etc. Customers have to be given multiple channels such as helpline, dedicated email-id, Interactive Voice Response (IVR), prominently visible link on the website, internet banking, mobile-app or any other mode to close their cards and cannot insist on any channel. “Failure on the part of the card-issuers to complete the process of closure within seven working days shall result in a penalty of Rs 500 per day of delay payable to the customer, till the closure of the account provided there is no outstanding in the account,’ stated the RBI.
The provisions relating to credit cards under the RBI (Credit Card and Debit Card – Issuance and Conduct) Directions, 2022 shall apply to every Scheduled Bank (excluding Payments Banks, State Co-operative Banks and District Central Cooperative Banks) and all Non-Banking Financial Companies (NBFCs) operating in India. The new directions will be effective from July 1, 2022.
Here is a closer look at the rules regarding closure of credit cards.
Credit card closure within seven days
According to the master direction, the credit card issuer must honor any request to close a credit card within seven working days, subject to the cardholder paying all dues.
Immediate intimation of closure of the account
Immediately following the closure of a credit card, the cardholder shall be notified of the closure via email, SMS, or other means.
Closure of credit card accounts through multiple channels
Now, cardholders can request the closure of their credit card account using a variety of channels, including a helpline, dedicated e-mail address, Interactive Voice Response (IVR), a clearly visible link on the website, internet banking, mobile banking, or any other means.
Note that if a bank or NBFC fails to close an account within seven working days, a penalty of RS 500 per day of delay will be charged until the account is closed, assuming no outstanding funds.
According to the master direction, “The card-issuer shall not insist on sending a closure request through post or any other means which may result in the delay of receipt of the request. Failure on the part of the card-issuers to complete the process of closure within seven working days shall result in a penalty of ?500 per day of delay payable to the customer, till the closure of the account provided there is no outstanding in the account”
Banks can close the credit card if not used for over one year
If a credit card has not been used for more than a year, the cardholder will be notified and the procedure to terminate the card will be initiated. If the cardholder does not respond within 30 days, the card account will be cancelled by the card-issuer, subject to the cardholder’s payment of any dues.
Within 30 days, the information on the closure of the card account must be updated with the Credit Information Company.
Credit balance available to be transferred to cardholder’s bank account
If there is any credit amount remaining in cardholders accounts after the account is closed will be transferred to the cardholder’s bank account. If the cardholder’s bank account information is not available to them, card issuers must obtain it.