Banks Issuing Visa Credit Cards

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					RESERVE BANK OF INDIA
       www.rbi.org.in
    Developments in Payment and
            Settlement Systems

•   Introduction of MICR
•   Electronic Funds Transfer
      Retail EFT

      Electronic Clearing Services (ECS)

         Credit

         Debit

•   Real Time Gross Settlement (RTGS) System
•   Cheque Truncation System
RBI Payment System Vision
•   Mission Statement
•   Safety-Security-Soundness-Efficiency

•   Card system represent change from cash
    based system to a safer, more efficient and
    convenient system
Cards and Indian PS-2004-05


    Vol (crores)    Val (Rs crores)
Paper-112.46        110,47,052
EB - 42.02         109,57,341
Tot - 157.48       220,04,393
Cds - 36.20             77,120
Note –EB includes card
                       Card Systems
• Debit Cards (31.1 million)
• Credit Cards (12.2 million)
• SMART Cards (Few)
• Total Volume and Value
  Period           Volume (crores) Value (crore- Rs)
2002-03            14.57             26951
2003-04            18.55            35870
2004-05            36.20             77120
Growth in card payments
  Convenience of ATMs and POS terminals -
   debit cards
  Higher disposable incomes

  Retail boom– both in goods and services

  Higher merchant acceptability

  Growth in technology –new card products
                Issuance of Cards
•   Banks issue cards in affiliation to Visa,
    Mastercard etc
     44 banks issued cards as on July 2005

        37 banks issued Debit Cards

        23 banks issued Credit Cards

        1 banks issued SMART Cards

     Co-branded Cards

     Cards issued by non-banks
                         Legal Base
       Relationship between card companies
         and card issuing banks
•   Procedures
•   Guidelines
•   Terms and Conditions
    Relationship between card issuing banks
                 and cardholders
•    Terms and conditions of card issue and
    usage
•   Card issuing banks have own policies on
    disclosure, transparency, customer
    grievances redressal
•   Methods of working vary– foreign & new
    private banks more likely to outsource work- -
    marketing of card products and recovery/
    collection
•   Marketing techniques -foreign/ new private
    banks - more aggressive
           Regulatory Mechanism
      CREDIT CARDS
•   Banks with Networth of Rs.1000 million and above
•   Banks can issue by credit cards by themselves or in tie-up
    with another bank
•   No prior approval of the Central Bank is required
      The banks issuing need the approval of their Board

•   RBI has laid down broad guidelines
      Customer selection

      Sharing of information

      Fraud Control

      Transparency in fees

      Account processing
      Recovery of dues
•   DEBIT CARDS
•   Banks can issue on-line debit cards/ smart
    cards without prior RBI approval - Board
    approval adequate. Post issue reporting to
    RBI.
•   Off-line debit cards issue requires prior
    approval of RBI.
              Issues for Regulator
•   Commercial banks are subject to stringent
    regulation and supervision by the RBI
•   Complaints against card issuing banks
•    Unsolicited phone calls-marketing cards
•   Lack of transparency in terms &conditions
•   Unsolicited cards/ unauthorised activation
•   Wrong billing /delay in credit of payments
•   Harassment / coercion by recovery / collection
    agents
•   Divulging customer information/ misuse of info
                   Working Group
•   Members from major card-issuing banks,
    Indian Banks Association, and also
    consulted consumer organisation
•   Working Group submitted report in March
    2005.
•   TRANSPARENCY AND DISCLOSURE
•   CUSTOMER RIGHTS PROTECTION
•   CODE OF CONDUCT
RBI draft guidelines for cards

•     Issued on 28th June 2005
•     Incorporates WG recommendations
•     Addl guidelines-
•     Bks to have well documented guidelines &fair practices
      code
(a)   Cards for persons with independent financial means (add-
      ons exempted)
(b)   Maximum credit limit
(c)   Sufficient time for bill payment
(d)   Wrong billing complaint-bks to provide explanation and
      doc evidence
(e)   Complaints redressal machinery
                                    Frauds
•   Frauds in India mainly emanate from
      Account use

      Counterfeiting

      Stolen / lost cards

      Multiple imprints

      Fraud application

      Interception of cards sent by post / courier,
       cross-border use
•   Card frauds as a percentage of transactions
    varies approx. 0.1% to 0.3% in India
                                      Frauds
                                         …..contd

•   Banks in case of misuse of stolen / lost cards
    limit the cardholders liability to amount spent till
    the card issuing bank is informed about the theft /
    loss
•   Many countries limit the cardholders liability to a
    particular sum incase of theft / loss
•   Merchants rarely check the signatures of
    cardholders
•   Frauds could be substantially reduced by giving
    cardholders secret PIN to be punched before
    every transaction
•   Use of smart cards
•It is RBI’s endeavour to see that healthy
growth of the card payment industry in the
 country while at the same time ensuring
that payment risks are suitably mitigated,
customer interests protected and highest
standards of customer service maintained
Thank you

				
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