Now you get ‘Electronic Cards’ for your Overdraft Accounts

On Thursday (April 23, 2020) Reserve Bank of India permitted all scheduled commercial banks to issue electronic cards to natural persons having Overdraft Accounts.  The cards will be issued to accounts in the nature of personal loan without any specific end-use restrictions.  Hitherto, banks have been permitted to issue debit cards to customers having Saving Bank/Current Accounts but not to cash credit/loan account holders.  

The electronic card issued by the banks can be used only for domestic transactions and usage is restricted to facilitate online/ non-cash transactions. However, Cash transactions may be allowed to overdraft facility provided along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts. As per the RBI guidance, the validity period of the card shall not exceed the validity of the facility and shall also be subject to the usual rights of the banks as lenders.

The issuance of card to a borrower is subject to terms and conditions of the sanction, 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.

In this regard, Banks are asked to frame a Board approved policy on issuance of electronic cards to overdraft accounts of natural persons, covering appropriate risk management, periodic review procedures, grievance redressal mechanism, etc., before launching the product, which will be subject to supervisory review.