RBI asks card issuers to put in place mechanism to monitor end use of funds

The amended provisions will come into effect immediately, the RBI said.

The Reserve Bank of India (RBI) on March 7 amended the Master Direction on Credit Card and Debit Cards, asking card issuers to put in place an effective mechanism to monitor end use of funds.

The amended provisions will come into effect immediately, the RBI said.

Further, the central bank said for the purpose of cardholder’s convenience, card transaction related data may be drawn directly from the card issuer’s system in an encrypted form and displayed in the co-branding partner (CBP) platform with robust security.

“The information displayed through the CBP’s platform shall be visible only to the cardholder and shall neither be accessed nor be stored by the CBP,” the RBI said.

In the amended master directions, the central bank also said the card-issuers shall not share card data (including transaction data) of the cardholders with the outsourcing partners unless sharing of such data is essential to discharge the functions assigned to the latter.

In case of sharing of any data as stated above, explicit consent from the cardholder shall be obtained. It shall also be ensured that the storage and the ownership of card data remains with the card-issuer, the reserve bank added.

On March 6, the RBI said card issuers should not enter into any arrangement with card networks that restrain them from availing the services of other card networks.

The card issuers need to provide an option to their eligible customers to choose from multiple card networks at the time of issue, the RBI said. For the existing cardholders, this option may be provided at the time of the next renewal, the RBI said.

This move comes after the RBI observed that some arrangements existing between card networks and card issuers are not conducive to the availability of choice for customers.

The central bank-listed authorised card networks are American Express Banking Corp, Diners Club International Ltd, MasterCard Asia/Pacific Pte Ltd, and National Payments Corporation of India–Rupay and Visa Worldwide Pte Limited.

The RBI said card issuers and card networks need to ensure the new rules are implemented in existing agreements at the time of amendment or renewal by executing fresh agreements, the RBI said.