RBI ALLOWS BANKS TO ISSUE  ELECTRONIC  CARDS FOR OVERDRAFT ACCOUNTS

Reserve Bank of India  permitted to issue to issue   electronic cards to person having  overdraft  accounts that are only in the nature of  personal loan with any  specific end use restrictions.Banks, as per the central bank's  July 2015  directions,were permitted to issue debit cards customers  having bank/current accounts but not to cash credit/loan  account holders"....it has been deciced to permit banks to issue electronic cards  to natural persons having Overdraft Accounts that are only in the nature of ;personal loan without any specific  end use restriction," the RBI said in circular.

However  the card should be issued for a period not exceeding the validity of the facillity and should also be subject to the usual rigths of the banks as lenders.The electonic card for  overdraft accounts  in the nature of personal loans should be allowed to be used for domestic transaction only, the RBI added."Futher adequate checks and balances shall be put in place to ensure that the usage of such cards is restricted to faciliate online/non-cash transaction," it said. 

The circular also added that the restriction on cash transaction will not apply to overdraft  facility provided along with pradhan  mantri jan dhan yojana accounts.So far,banks were permitted to issue debit cards to customers having saving Bank/Current Accounts  but not to cash credit/loan accounts holders.

Prior to launching the product,the 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 redressal mechanism,etc., which will be subject to supervisory review.The electronic card should be issued subject to instructions on terms and conditions,security,grievance, redressal,confidenmtiality of customer information as applicable for dedit cards and all other relevant instructions on card operations issued by the Reserve Bank of India.