RBI permits bank to issue electronic cards for overdraft accounts

Apr 28, 2020 | by Avantis RegTech Legal Research Team

Finance & Taxation Compliance

The Reserve Bank of India (RBI) on April 23, 2020, has decided to permit banks to issue electronic cards to natural persons having Overdraft Accounts that are only in the nature of personal loan without any specific end-use restrictions. The card shall be issued for a period not exceeding the validity of the facility and shall be allowed to be used for domestic transactions only.

Further, adequate checks and balances shall be put in place to ensure that the usage of such cards is restricted to facilitate online or non-cash transactions. The restriction on cash transaction will not apply to overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts. Before launching it, the banks shall frame a Board approved policy on issuance of electronic cards, encompassing appropriate risk management, periodic review procedures, grievance redressal mechanism, etc.

The card shall be issued subject to instructions on terms and conditions, security, grievance redressal, confidentiality of customer information as applicable for debit cards and all other relevant instructions on card operations issued by the Reserve Bank.

[Notification No. DOR.FSD.BC.No.67/24.01.041/2019-20]


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