Enhancing Choice And Competition In Credit Card Issuance

Posted On - 25 April, 2024 • By - King Stubb & Kasiva


The recent regulatory interventions by the Reserve Bank of India (“RBI”) are aimed at revolutionizing the landscape of credit card issuance[1]. In response to growing concerns regarding limited choice and competition in the credit card market, the RBI has taken proactive steps to empower consumers and enhance the efficiency of payment systems. These measures are not only a testament to the RBI’s commitment to fostering a fair and competitive financial environment but also a reflection of its dedication to promoting consumer welfare and driving innovation in the banking sector. These regulatory directives represent a significant milestone in the journey towards creating a more dynamic and consumer-centric credit card ecosystem.


The recent regulatory measures taken by the Reserve Bank of India enhances choice and competition in the issuance of credit cards. In line with its mandate to ensure the efficiency and fairness of payment systems, the RBI has issued directives aimed at fostering a more competitive landscape for credit card issuance. Credit cards have become an integral part of modern-day financial transactions, offering convenience and flexibility to consumers worldwide. However, the choice of card network tied to a particular credit card has often been limited by arrangements between card issuers and networks. In some cases, these arrangements have restricted the availability of options for consumers, limiting competition and potentially inhibiting innovation in the credit card market.

Recognizing the need to address these concerns and promote a more competitive environment, the RBI has issued directives under the Payment and Settlement Systems Act, 2007. These directives mandate that card issuers, whether banks or non-banks, refrain from entering into agreements that restrict them from availing the services of other card networks. Additionally, card issuers are now required to provide eligible customers with the option to choose from multiple card networks at the time of issuance or renewal of their credit cards.

The RBI’s directives aim to empower consumers by offering them a wider array of choices when it comes to credit card networks. By promoting competition among card networks, these measures seek to incentivize innovation, improve service quality, and drive better value propositions for consumers. Moreover, the directives align with the RBI’s broader objective of fostering a robust and inclusive financial ecosystem that serves the interests of all stakeholders.

To ensure compliance with these directives, both card issuers and card networks are obligated to adhere to the requirements outlined by the RBI. This includes implementing the necessary changes in existing agreements and incorporating the provisions into new agreements going forward. However, it’s important to note that these directives do not apply to credit card issuers with a relatively smaller market share, thus ensuring a balanced regulatory approach that considers the varying dynamics of the market. Furthermore, the directives provide exemptions for card issuers who operate on their own authorized card networks, recognizing the distinct nature of their business models. This exemption acknowledges the role of such issuers in contributing to the diversity of options available to consumers, while still upholding the principles of competition and choice.


In conclusion, the RBI’s directives mark a significant step towards enhancing choice and competition in the credit card issuance market. By empowering consumers with the freedom to choose from multiple card networks, these measures aim to promote a more dynamic and consumer-centric ecosystem. Hence, these regulatory initiatives will ultimately benefit consumers by fostering innovation, driving down costs, and improving the overall quality of credit card services.

[1] https://rbi.org.in/Scripts/NotificationUser.aspx?Id=12619&Mode=0