Credit cards: RBI issuance rules, billing disputes, and cardholder rights

This page covers credit cards issued to retail individuals, self-employed professionals, and commercial entities by scheduled commercial banks, regional rural banks, urban co-operative banks, and authorised non-banking financial companies (NBFCs).

It covers personal consumer credit cards, co-branded commercial cards, and corporate credit cards. It does not cover pre-paid payment instruments (PPIs) such as closed-loop gift cards or standard debit cards tied directly to savings or current bank balances.

Credit card operations in India are regulated under the Reserve Bank of India (Credit Card and Debit Card – Issuance and Conduct) Directions, 2022, issued under Section 35A of the Banking Regulation Act, 1949, and Section 45L of the Reserve Bank of India Act, 1934.

The Directions establish clear statutory boundaries for card issuers:

1. Unsolicited cards and upgrades: Issuers cannot dispatch a credit card or upgrade credit limits without the customer's explicit written or digital consent. If an unsolicited card is issued and activated without consent, or charges are levied, the issuer must cancel the card immediately, reverse all charges, and pay a penalty amounting to twice the value of the charges reversed.
2. Closure within 7 days: Any request for credit card closure must be completed within 7 working days, provided all legitimate outstanding balances have been cleared. Failure to close the card within 7 working days makes the card-issuer liable to pay a fine of ₹500 per day of delay to the customer until full closure, provided there are no pending dues.
3. Dispute freeze: When a cardholder formally disputes a transaction in writing or via the customer portal within the prescribed time limit, the issuer must acknowledge the dispute, provide an explanation within 30 days, and cannot report the disputed balance as overdue or in default to credit bureaus (CIBIL, Experian, Equifax, CRIF High Mark) while the investigation remains pending.
4. Billing transparency: Card statements must clearly indicate the "Total Amount Due", the "Minimum Amount Due", and the specific date by which payment must be received. The statement must warn the cardholder in bold text that paying only the Minimum Amount Due will result in compounding interest charges on the remaining balance and new purchases.

When you receive a credit card, you are assigned a credit limit and a billing cycle (typically 30 days). At the end of the billing cycle, the bank generates a statement showing your transactions, any applicable annual or processing fees, the Total Amount Due, the Minimum Amount Due (usually 5% of the total balance plus applicable taxes and fees), and a payment due date (typically 15 to 25 days later).

If you pay the full Total Amount Due on or before the due date, you enjoy an interest-free grace period of up to 45 or 50 days, and no finance charges apply.

If you pay only the Minimum Amount Due, the interest-free grace period is extinguished immediately. Finance charges (ranging between 36% and 48% annualised APR) are calculated on a daily reducing balance from the date of each individual purchase, and all subsequent purchases incur interest immediately without any grace period until the entire card balance is cleared in full.

A frequent problem arises from unsolicited card issuance. Marketing agents often arrange delivery of pre-approved credit cards without the recipient's knowledge, and the bank subsequently levies annual membership fees or joining fees, followed by penal charges and late payment reports to credit bureaus when the fees go unpaid.

Another major area of friction is billing disputes following unauthorised online transactions or merchant double-swipes. Card issuers frequently reject chargeback requests summarily or continue assessing finance charges on disputed amounts, reporting the cardholder as a chronic defaulter to CIBIL while the dispute is theoretically under review.

Furthermore, third-party recovery agencies engaged by credit card departments routinely violate RBI telecalling norms, placing calls before 8:00 AM or after 7:00 PM, calling colleagues at the cardholder's office, or threatening to confiscate household assets for what is strictly an unsecured debt.

If you face unauthorised charges, an unsolicited credit card, or unaddressed billing errors:

1. For an unsolicited card, do not activate the card or share any OTP. Send an email immediately to the card-issuing bank demanding cancellation and citing Chapter II of the RBI Credit Card Directions, 2022.
2. For an unauthorised or fraudulent transaction, immediately block the card via the bank's mobile app or net banking portal, and lodge a formal dispute in writing within 3 days to limit your liability under RBI customer protection norms.
3. For card closure, clear all outstanding dues in full, download the zero-balance statement, and submit a closure request through the bank's mobile banking app, email, or net banking portal. Record the service request ticket number.
4. If the bank fails to close the card within 7 working days, calculate the delay. The bank is liable to pay you ₹500 per day of delay under paragraph 8 of the 2022 Master Direction.
5. If the dispute or closure is ignored for 30 days, file an online complaint with the RBI Ombudsman at cms.rbi.org.in, attaching copies of your written requests, ticket numbers, and billing statements.

The National Consumer Disputes Redressal Commission (NCDRC) and state consumer commissions have repeatedly ruled that debiting unauthorized card charges, issuing cards without written consent, or sending recovery agents to a customer's workplace constitutes an unfair trade practice and an actionable deficiency of banking service, mandating substantial compensation.

What should I do if a bank sends me a credit card I never applied for? Do not activate the card. Inform the bank immediately in writing to cancel it. If the bank charges any fee on this unsolicited card, they are legally required under RBI Directions to cancel the card, reverse the charges, and pay you a penalty equal to twice the charges reversed [1].

How quickly must a bank close my credit card when I ask? The bank must close your credit card within 7 working days of receiving your request, provided there are no outstanding dues. If they fail to do so, they must pay you ₹500 per day of delay until the card is closed [1].

Can a bank report me to CIBIL for an amount I have officially disputed? No. Under the RBI 2022 Master Direction, card issuers are explicitly prohibited from reporting a disputed transaction as a default to credit information companies while the dispute is under active investigation [1].

What happens if I only pay the Minimum Amount Due each month? Paying the Minimum Amount Due protects you from late payment fees, but interest charges (often 3% to 4% per month, equating to 36% to 48% per year) will be charged on the remaining balance and on all new purchases from the transaction date.

Can a credit card company send recovery agents to my office? No. Recovery agents cannot visit your workplace or contact your colleagues unless you have specifically designated your office as the contact address and are unavailable elsewhere. Recovery calls are strictly prohibited before 8:00 AM and after 7:00 PM.

• Credit score and reports — correcting wrongful credit card defaults on CIBIL.
• Recovery and harassment — telecalling restrictions and filing police complaints.
• Complaints and redressal — how to file on the CMS portal against card issuers.
• Before you borrow — understanding APR and hidden charges.