Banks allowed to issue debit, co-branded cards without RBI nod

The Reserve Bank of India (RBI) on Wednesday allowed banks to issue debit cards, including co-branded debit cards and  rupee denominated co-branded pre-paid cards without seeking prior approval of the RBI. The move has been announced with a view to obviate the need for banks to approach the RBI for every co-branding arrangement.

However, the issue should be as per the norms laid down by the RBI. In both the instances the RBI has asked banks to followed board approved policies. Strict compliance with Know Your Customer (KYC) norms, Anti-Money Laundering (AML) standards, Combating of Financing of Terrorism (CFT) and obligation of banks under PMLA, 2002 is a must, said the RBI.

The RBI also said that henceforth banks are not permitted to issue offline debit cards. "Banks which are presently issuing offline debit cards may conduct a review of their offline debit card operations and discontinue operations of such cards within a period of six months from the date of this circular," said the RBI.
 
The RBI also stressed that the confidentiality of the customers should be maintained in both the cases. Besides that the RBI also asked banks to comply with instructions laid down by Department of Payment and Settlement Systems of the RBI.

In the second-quarter review of the monetary policy held on October 30 the RBI had proposed to accord the general permission.