At present, banks can issue debit cards to customers with a savings account or a current account, but not to those with a loan account or a credit facility. The Reserve Bank of India (RBI) now permits banks to issue electronic cards to individuals with overdraft (OD) accounts for personal use.
Customers can use the electronic card only for domestic transactions. The cards will allow individuals to make online or non-cash transactions only. However, the restriction on cash transaction does not apply to the OD facility given along with Pradhan Mantri Jan Dhan Yojana (PMJDY) accounts.
The issue of electronic cards for personal loan accounts (OD accounts) and their end-use will be as per the rules and regulations framed by each bank. The cards will be allowed under terms and conditions similar to those applicable to debit cards. The card will be valid for the period of the loan given to the customer.
The RBI’s direction allows all banks to put in place policy for issue and use of electronic cards to their loan customers. Electronic cards will provide liquidity to loan account holders without approaching the banks for money transfers or cash withdrawals.
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I am a Chartered Accountant by profession. I specialise in personal taxes and corporate income tax matters. I am an avid reader and track developments in financial markets, economy and other market developments.