The Reserve Bank of India (RBI) has permitted scheduled commercial banks to issue electronic cards to customers having overdraft accounts that are only in the nature of personal loan without any specific end-use restrictions. The card can be issued for a period not exceeding the validity of the facility.
The electronic card for overdraft accounts should be allowed to be used for domestic transactions only, the central bank said.
Further, banks have to put in place adequate checks and balances to ensure that the usage of such cards is restricted to facilitate online/ non-cash transactions.
The restriction on cash transaction will not apply to overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
So far, banks were permitted to issue debit cards to customers having Saving Bank/Current Accounts but not to cash credit/loan account holders.
Prior to launching the product, the RBI said banks should frame a Board approved policy on issuance of electronic cards for overdraft account customers, encompassing appropriate risk management, periodic review procedures, grievance redressal mechanism, etc., which will be subject to supervisory review.
The electronic card should be issued subject to instructions on terms and conditions, security, grievance redressal, confidentiality of customer information as applicable for debit cards and all other relevant instructions on card operations issued by the Reserve Bank.
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