RBI allows banks to issue electronic cards for overdraft accounts
Banks, as per the central bank's July 2015 directions, were permitted to issue debit cards to customers having bank/current accounts but not to cash credit/loan account holders.
"...it has been decided to permit banks to issue electronic cards to natural persons having Overdraft Accounts that are only in the nature of personal loan without any specific end-use restrictions," the RBI said in a circular.
However, the card should be issued for a period not exceeding the validity of the facility and should also be subject to the usual rights of the banks as lenders.
The electronic card for overdraft accounts in the nature of personal loans should be allowed to be used for domestic transactions only, the RBI added.
"Further, adequate checks and balances shall be put in place to ensure that the usage of such cards is restricted to facilitate online/ non-cash transactions," it said.
The circular also added that the restriction on cash transaction will not apply to overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
It also asked the banks that prior to launching the product, they should frame a board approved policy on issuance of the electronic cards, encompassing appropriate risk management, periodic review procedures, grievance redressal mechanism, which will be subject to supervisory review. NKD MR