RBI issues directions to card networks for issuance of credit card to customers

Current Context: The Reserve Bank of India (RBI) has issued directives to card networks for the issuance of credit cards to customers.

• The directives aim to ensure greater choice and flexibility for customers.
• Here are the key points:
• Card issuers shall not enter into any arrangement or agreement with card networks that restrain them from availing the services of other card networks.
• Card issuers shall provide an option to their eligible customers to choose from multiple card networks at the time of issue.
• For existing cardholders, this option may be provided at the time of the next renewal.
• The directive defines authorized card networks as American Express Banking Corp., Diners Club International Ltd., MasterCard Asia/Pacific Pte. Ltd., National Payments Corporation of India–Rupay, and Visa Worldwide Pte. Limited.
• Both card issuers and networks must adhere to these requirements in existing agreements, upon amendment or renewal, as well as in new agreements.
• These directions do not apply to credit card issuers with fewer than 10 lakh active cards.
• Issuers who issue credit cards on their own authorized card network are exempt from the circular’s applicability.
• The directive regarding customer choice at the time of issuance will come into effect six months from March 6, 2024.

Question:

Q.1 What is the main aim of the directives issued by the Reserve Bank of India (RBI) to card networks?
a. To increase the number of credit cards in circulation
b. To limit the number of credit cards a customer can have
c. To promote the use of a specific card network
d. To ensure greater choice and flexibility for customers