To be used only for non-cash transactions
MUMBAI: The Reserve Bank of India has allowed banks to issue electronic cards to persons having Overdraft Accounts that are in the nature of personal loan without any specific end-use restrictions.
Though the banks have been issuing debit cards to customers having Saving Bank/Current Accounts, banks never issued this ‘plastic card’ to cash credit/loan account holders
However, RBI said the cards can only be issued for a period not exceeding the validity of the facility and shall also be subject to the usual rights of the banks as lenders.
Moreover, the electronic card thus issued for Overdraft Accounts in the nature of personal loans should be restricted to domestic transactions only.
RBI said the banks need to see that adequate checks and balances are put in place to ensure that the usage of such cards is restricted to facilitate online/non-cash transactions.
“But the restriction on cash transaction will not apply to overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts,” the central bank circular clarified.
Prior to launching the product, the banks are required to frame a Board approved policy on issuance of electronic cards against Overdraft Accounts, encompassing appropriate risk management, periodic review procedures, grievance redressal mechanism, etc., which will be subject to supervisory review.
RBI added that the banks are required to make sure that these ‘cards’ are issued subject to instructions on terms and conditions, security, grievance redressal, confidentiality of customer information as applicable to debit cards.
