The Reserve Bank of India (RBI) in a circular dated April
21, 2022, said that Non-Banking Financial Companies (NBFCs) shall not undertake
credit card business without prior approval of the RBI.

RBI has said that any company, including a non-deposit
taking company, will need a Certificate of Registration, apart from specific permission
to enter into this business. It has also determined a prerequisite of a minimum
net-owned fund of Rs 100 crore, and other terms and conditions it may specify
in this regard.

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”Any company including a non-deposit-taking company
intending to engage in this activity shall require a Certificate of
Registration, apart from specific permission to enter into this business, the
pre-requisite for which is a minimum net owned fund of ₹100 crore,” the
circular read.

NBFCs cannot issue debit cards, credit cards, charge
cards, or similar products virtually or physically without obtaining prior
approval from the RBI.

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RBI said that the card issuers may be guided by the
instructions on the interest rate on advance issued. “Interest charged on
credit cards shall be justifiable having regard to the cost incurred and the
extent of return that could be reasonably expected by the card-issuer,” it
says.

According to their Board-approved policy, credit card
issuers will be required to prescribe an interest rate ceiling for credit cards
in line with other unsecured loans, including processing and other fees.

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Further, card issuers are required to inform upfront to
the credit cardholder of the methodology used to calculate finance charges,
with examples, especially in situations where only part of the outstanding
amount is paid by customers.

Bill and statements are required to be emailed or sent to
the customers for at least one fortnight to make their payments before the
interest is levied.

These directions will be effective from July 1, 2022.