Facility of Debit Cards to Loan Account – The Reserve Bank of India (RBI) has permitted all the Public Sector as well as private banks to issue electronic cards cum debit card to customers having overdraft loan accounts.
RBI has also specified that the category of loan eligible for this purpose is personal loan without any specific end-use restrictions.
This card can be issued for a period till the validity of the loan. So far, banks were permitted to issue debit cards to customers having Saving Bank/Current Accounts but not to cash credit/loan account holders.
The electronic card for overdraft loan accounts should be allowed to be used for domestic transactions only, the central bank said.
RBI has also advised to place a board approval policy in this regard. 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 redress mechanism, etc., and this will be subjected to supervisory review.
It is also added that 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.
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While issuing the debit cards to loan customers all the terms and conditions to be followed as stipulated by RBI in case of existing debit card holders.
The electronic card should be issued subject to security, grievance redress, confidentiality of customer information as applicable for debit cards and all other relevant instructions on card operations issued by the Reserve Bank.