RBI’s New Guidelines On General Credit Card Scheme: All You Need To Know

The Reserve Bank of India (RBI) issued new guidelines on April 25, 2023, regarding the General Credit Card (GCC) Scheme.

What Is GCC & New Guidelines

All credit cards, such as Artisan Credit Card, Laghu Udyami Card, Swarojgar Credit Card, Weaver's Card, etc., catering to the non-farm entrepreneurial credit needs are covered by the General Credit Card scheme. So banks must report to RBI about such credits being extended.

The GCC scheme “shall henceforth be called General Credit Card (GCC) Facility”, RBI said in new guidelines. Each bank floats its own GCC scheme, which must be within RBI’s guidelines.

The terms and conditions of the GCC credit facilities should be as per the banks’ board-approved policies and the framework laid down by RBI, the central bank's new guidelines said.

For instance, Punjab National Bank (PNB) has fixed a need-based limit, with a maximum of Rs. 10 lakh, after reviewing the borrower’s credit needs and repaying capacity. PNB’s repayment period for a GCC credit is 12 months. All its branches extend the facility without collateral.

On the other hand, Federal Bank offers GCC credit based on household income, subject to a ceiling of 40 per cent of the annual income of the family members.

In the new guidelines, RBI said, “Individuals or entities sanctioned working capital facilities for non-farm entrepreneurial activities eligible for classification under the priority sector guidelines may be issued General Credit Cards.”

All RBI directions regarding credit cards are also applicable to GCCs. GCC shall be issued in the form of a credit card conforming to the stipulations in the already laid down master direction of the central bank, RBI said.

RBI Rules On Credit Cards

Card issuers shall prescribe an interest rate ceiling in line with other unsecured loans, including processing and other charges, in respect of credit cards as part of their board-approved policy.

In the case of card issuers’ interest rates, which vary based on the payment/default history of the cardholder, there shall be transparency in levying such differential interest rates, it said.

Card issuers shall report a credit card account as ‘past due’ to credit information companies (CICs) and levy penal charges, like late payment and other related charges, if any, when a credit card account remains ‘past due’ for more than three days. There shall not be any hidden charges while issuing credit cards free of charge.

Regarding the recovery of credit card dues, RBI said, “Card-issuers shall ensure that their agents (third-party agencies for debt collection) refrain from actions that could damage their integrity and reputation and observe strict customer confidentiality.”

“Card-issuers/their agents shall not resort to intimidation or harassment of any kind, either verbal or physical, including acts intended to humiliate publicly or intrude upon the privacy of the credit cardholders’ family members or friends,” RBI said.