The Reserve Bank of India (RBI) has permitted scheduled commercial banks to issue electronic cards to customers having overdraft accounts that are only in the nature of personal loan without any specific end-use restrictions. The card can be issued for a period not exceeding the validity of the facility.
Banks, as per the RBI’s July 2015 directions, were permitted to issue debit cards to customers having bank/current accounts but not to cash credit/loan account holders. “…it has been 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 RBI said in a circular.
The banks should frame a Board approved policy on issuance of electronic cards before launching the product to the above-mentioned Overdraft Accounts, encompassing appropriate risk management, periodic review procedures, grievance redressal mechanism, etc. The restriction on cash transactions will not apply to the OD facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
It also asked the banks that prior to launching the product, they should frame a board approved policy on issuance of the electronic cards, encompassing appropriate risk management, periodic review procedures, grievance redressal mechanism, which will be subject to supervisory review.