RBI tightens norms for credit card billing

A credit card may be treated as non preforming asset if the 'minimum amount due' has not been paid within 90 days from the due date

The Reserve Bank today asked banks to levy any late payment penalty on credit card customers, or report them to credit information companies, only if the payment has been due for more than three days.

For banks, RBI said they can treat a credit card as non preforming asset if the 'minimum amount due' has not been paid within 90 days from the due date.

To bring in greater credit discipline as also to provide operational flexibility to credit card issuers, RBI said the 'past due' status of a credit card account for the purpose of asset classification would be reckoned from the payment due date mentioned in the monthly credit card statement.

"Consequently, in case of banks, a credit card account will be treated as non-performing asset if the minimum amount due, as mentioned in the statement, is not paid fully within 90 days from the payment due date mentioned in the statement," RBI said in a notification.

It further asked banks to report a credit card account as 'past due' to credit information companies (CICs) or levy penal charges, such as late payment charges only when a credit card account remains 'past due' for more than three days.

The number of 'days past due' and late payment charges should be, however, computed from payment due date mentioned in the credit card statement, it added.

In credit card accounts, the amount spent is billed to the card users through a monthly statement with a definite due date for repayment.

Banks give an option to the card users to pay either the full amount or a fraction of it or a minimum amount on the due date and roll over the balance to the subsequent month's billing cycle.