RBI Rules for Credit Card Holders

What is the RBI rule for closing a credit card?

Paragraph 19 is blunt. Ask to close the card with no dues outstanding, and the issuer has seven working days. The penalty for delay is ₹500 per calendar day. It runs until the account is actually closed, and it is payable to you.

Two riders follow. Paragraph 20 gives the issuer 30 days to update the closure with the credit information companies. Paragraph 21 says any credit balance left on the card must go back to your bank account. Our credit card closure page covers the full sequence.

Can a bank send me a credit card I never asked for?

No. Paragraph 11(4) says issuing unsolicited cards is strictly prohibited. Say one arrives and you are charged for it. The issuer must reverse the charges. It must also pay you twice the value of what it reversed. The rule says this is payable “without demur”. The bank does not get to argue first.

What happens if I never activate the card?

Paragraph 11(6) is the rule most people should know and do not. Suppose a card sits unactivated for more than 30 days. The issuer must then get your OTP consent before it can activate it. No consent, and it must close the account within seven working days, free of cost. A card sitting in a drawer cannot quietly start billing an annual fee. That is the cleanest argument for a lifetime free credit card if you only want one for emergencies.

How long does a bank get to answer a billing dispute?

Thirty days. Under paragraph 25, when you protest a bill, the issuer must explain within a maximum of 30 days. The clock starts on the date of your complaint. If no answer comes, or it does not satisfy you, paragraph 85 sends you to the RBI Ombudsman.

Paragraph 24 covers the other half. Statements must reach you with “at least one fortnight” to pay before interest starts. A bank that mails late and charges interest anyway is in breach. If the dispute is a transaction you did not make, read credit card fraud instead. The liability rules there are different.

Can the bank raise my credit limit without asking?

Not unilaterally. Paragraph 34 requires explicit consent from the cardholder whenever there is any change in terms and conditions. A limit increase is a change in terms. Banks routinely offer these by SMS. Ignoring the SMS is a valid answer.

Refunds have their own rule, in paragraph 31. An issuer may want to park a refund on the card instead of sending it to you. Above a threshold, it must ask first. That threshold is one percent of your credit limit or ₹5,000, whichever is lower. No reply from you in seven days, and it must reverse the money to your bank account.

Can interest be charged on unpaid fees and GST?

No. Paragraph 23(2) says unpaid charges, levies and taxes shall not be capitalised for charging or compounding of interest. In plain terms: the 18% GST on your annual fee cannot itself become interest-bearing principal.

Paragraph 23(1) forces a disclosure most cards bury. The annualised percentage rate must be quoted separately for retail purchases, balance transfers and cash advances. It must appear “with equal prominence” as the annual fee. Paragraph 23(3) also puts a warning on every statement. Paying only the minimum due stretches repayment over months or years. Take that literally. Our credit card interest calculator shows what it costs.

What must the bank give me before I sign up?

Paragraph 11(1) requires a one-page Key Fact Statement with the application. It must carry the rate of interest and the quantum of charges. Paragraph 11(2) covers the Most Important Terms and Conditions. Those must be highlighted and sent separately. They go in the welcome kit and in later communications too.

Insurance is often bundled with a card. Paragraph 11(3) makes it optional. It needs your written or digital consent, plus nominee details. Paragraph 73 then requires the insurer’s name, address and phone number in every statement. If you cannot find them, you may not be covered.

How do I escalate when the bank ignores all this?

Complain to the issuer in writing first, and keep the reference number. Wait 30 days. Then file with the RBI Ombudsman, which paragraph 85 points you to. Quote the clause number. It changes the tone of the reply. One more rule helps here: under paragraph 11(9), the issuer’s representatives may only contact you between 10:00 and 19:00.