A few banks have sought clarification from the Reserve Bank of India (RBI) over regulations mandating that they provide current credit card holders with an option of networks, including Rupay, Visa, and MasterCard.
The Reserve Bank published rules in March requiring card issuers to offer this choice at the time of issuance and renewal.
According to a senior bank official who spoke with ET, clarity has been sought on a number of topics, including whether or not existing customers should have a choice of networks available to them at the time of renewal.
Starting in September 2024, the RBI standards will be implemented.
He stated that one of the recommendations is that these guidelines apply prospectively and that any new credit card customer can select the preferred network. "Offering such choices during renewals will cause business disruptions, as existing cardholders were given offers based on their customer profiles, co-branding arrangements, and other pricing benefits," he said.
An additional bank executive stated that the Indian Banks' Association, or IBA, will be consulted on the issue.
He said that different credit card bundles are made based on financial models, and that "while some banks may have informally checked with the regulator, we are going to raise this issue at IBA for further deliberations and come up with a common strategy."
"There are long-term contracts with co-brand partners, so that also needs to be considered," he stated, adding that these factors may affect the fees and other costs for credit card customers.
The RBI stated in a circular from March that it has seen certain agreements between card issuers and networks that do not support customers' access to a variety of options. In light of this, the regulator instructed card issuers to refrain from entering into any contracts or agreements with card networks that would prevent them from using the services of other card networks and to give their eligible clients the choice of many card networks at the time of issuance.
"New users can already select the network of their choice. If a consumer is not happy, he can terminate the current account and select an alternative payment network, according to the executive who was cited above.
Only credit card issuers with more than 10 lakh active cards issued would be subject to the RBI standards; those that issue cards on their own approved card network are exempt.
