India’s credit card industry is in the midst of a regulatory overhaul as of 2025. With over 120 million credit card users and a steady rise in outstanding credit card borrowings, the Reserve Bank of India (RBI) has issued new regulations aimed at improving consumer protection, increasing transparency, and reducing irresponsible lending. These updated guidelines, which have been notified through circulars and master directions in the twilight of 2024-25 will affect how the banks, NBFCs and FinTechs issue, manage and recover credit card dues throughout the upcoming fiscal years.
Key RBI guidelines for Credit Card Issuers (2025)
1. Mandated OTP-based Consent for Card Issuance
- What’s changed:
- The Bank and NBFCs must obtain the explicit customer consent via an OTP based format before issuing any new credit card.
- Impact:
- This allows no more unsolicited credit cards to be available in the market, decreasing fraudulence and theft.
- This also ensures protection from Identity theft or unauthorized account openings.
2. Firm Timeline for Card Activation
- What’s Changed:
- If the card has not been activated after 30 days of the purchase, the issuer must obtain acknowledgement of the consumer.
- If the card is cleared, and not activated, then the issuer must cancel the card with no fees.
- Impact:
- This limits passive liabilities, as well as reduces the risk of abuse.
- Reduces the risk of consumers being caught by hidden fees with cards that are not used.
3. Clear Communication of Fees
- What’s Changed:
- Issuers must even more explicitly communicate on-boarding fees, on-boarding costs (joining fee, annual fee, interest rate, cash advance fee etc.) when on-boarding the consumer.
- If some conditions change on their card, consumers must be provided 30 days’ notice prior to the conditions changing to allow maximum transparency.
- Impact:
- Consumers have more visibility – less “hidden” costs, which ensures trust in the banking process.
- Consumers are better able to make decisions about pricing or cancelling cards when conditions change, ensuring complete control in their hands.
4. Improved Billing and Repayment Timelines
- What has changed:
- Billing statements must now provide for at least a 14-day repayment period from the date the bill was issued.
- You cannot charge interest on any transaction if you are paid in full by the due date.
- Impact:
- This will provide more reasonable repayment timelines and allow everyone the ease of repayment with less dissatisfaction.
- No more interest shock due to anomalies of time period (notice due) related to partial interest calculations.
Also read: Indians Are Switching to App-Based Credit Cards; Here’s Why You Should Too!
5. Explicit Consent for EMI Conversion
- What has changed:
- Issuers/credit card providers must now take explicit consent from cardholders (OTP or written/email) for any conversion of any transaction to EMI.
- Impact:
- No more auto-conversions, which led to unexpected interest charges in the past.
- EMI repayment structures are customer initiated, not bank initiated.
6. Rigid closing processes
- What has changed:
- Credit card accounts must close in 7 working days, unless the request is delayed and dues are settled.
- If delayed, card issuer will incur a ₹500 daily penalty.
- Impact:
- Stops issuers from each creating stories to delay.
- Provides easy exit for unhappy customers.
7. Credit Limit Increase Restrictions
- What is different:
- Disallow credit limit increases without customer signed or electronic approval; still enable card safety and shield against the possibility of identity theft;
- Notify cardholders of new credit limit; enable acceptance and rejection of credit limit increases.
- Impact:
- Allows the customer to manage their credit exposure.
- Lessens risk of over-borrowing and permits customers to manage a healthier portfolio as a whole.
8. Credit Reporting Requirements
- What’s changed:
- Issuers are required to report the use of all cards and payment of amounts on time to appropriate credit bureaus.
- Errors must be rectified in an orderly manner; all errors must be rectified within 30 days of complainant so that the banks can respond to all complaints accordingly.
- Impact:
- Can enhance credit scores and customers portfolios as a whole
- Allows consumers to dispute errors and rectify misinformation more easily without the adverse effects of the action.
9. Rewards and Offers Clarity
- What’s changed:
- Issuers must be clear in providing an expiration on credit card reward points, if applicable.
- To properly administer loyalty program notifications in a timely manner, should the terms of the loyalty program change, the issuer is required to notify the customer at a minimum 30 days prior to the changes.
- Impact:
- Consumers may be able to plan with more diligence for proper redemption.
- Less uncertainty or loss from active expiration of redemption schemes.
- Supplementary Guidelines on Fintech-Issued and Co-Branded Cards
10. Issuers is Legally Responsible for Co-Branded Cards
- In co-branded situations (e.g., co-branded cards such as Amazon ICICI, Flipkart Axis), the regulated entity (being a bank/NBFC), is solely responsible for the customer service and customer grievance redressal, directing customer-support and customer benefits simply to the concerned entities.
11. Digital First Credit Cards (Fintech-Issued)
- RBI has laid down direction to the regulated entity, supervise all “digital-first” (identified as per guideline) cards issued via a fintech company, should be compliant with bank level KYC, Data Safety Regulations, and directed marketing regulations as RBI has a direct stake in consumer and data safety.
Consumer Rights Strengthened Under New Guidelines
| Area | Old Practice | 2025 guidelines |
| Card Closure | Lengthy and opaque processes. | A 7-day closure or a fined penalty. |
| EMI conversions | Often automatic or hidden. | Mandated customer confirmation |
| Biling Clarity | Variable Grace periods offered. | 14-day minimum post-bill window |
| Credit Limit Changes | Often unsolicited | Consent-based |
| Card Activation | Card issued and left idle in some situations | Auto-closure after 30 days if not used. |
Advice for Consumers in the New Regulatory Environment
- Always check the welcome kit and fee schedule.
- Be a credit card user, not an abuser—it’s easy to fall into the trap of unsolicited offers.
- Look for changes in reward programs and potential fees.
- If you are unsure about a new card, use the cooling-off window wisely.
- Keep an eye on your credit report and make sure it is accurate.
Conclusion
The RBI’s 2025 credit card norms shift the consumer finance landscape of India significantly. The efforts to protect consumers, focus on transparency, require consent and create accountability are steps towards making the credit card landscape more secure and user friendly.
Written by Pranjal Data
