- May 2014
- December 2013
Ruby Jacob, 13 Dec 2012
RBI's new guideline for issuing debit cards by banks forbids them from issuing offline debit cards. Banks that have issued offline debit cards to customers have six months time to discontinue operation of such cards.
What are offline debit cards?
Your debit card could be an online card or offline card. Online debit cards require card holder's verification through PIN each time it is used for transaction at a merchant's terminal. This makes them safer. Transaction through online debit card is also carried out faster since the amount is immediately debited to your bank account. Offline debit cards just need to be swiped in the merchant's machine and there you go! After this you are handed a sales draft which you sign and the merchant gets paid in 2-3 days time. Of course, since no PIN verification is required, anybody could use your offline debit card and have a blissful time shopping!
What's happening now?
Banks will stop issuing offline debit cards including co-branded debit cards that do not immediately debit to card holder's account. Co-branded cards are debit cards that have tie-up with another company. Within six month's time of RBI's notification dated 12 December 2012, offline debit cards will be phased out. Offline debit card customers will be switched over to online debit card. Banks will inform customers about it.
Banks have been asked to issue debit cards only to customers having saving account or current account but not to cash credit or loan account holders. From now banks can issue debit cards without seeking prior approval from the RBI. However they would have to seek RBI's approval if cash transaction is to be allowed at Points of Sale.
More safety features in debit cards
Banks may consider placing photograph of card holder on debit cards in order to prevent misuse of lost or stolen cards. The guidelines also make it clear that banks are responsible for loss to a card holder which was in direct control of the bank. However if the loss was due to a technical snag in the payment system, and the customer had been notified about it, for example through a display message the bank will not be held liable. The bank would have to pay maximum up to principal sum and loss of interest on the amount.