Relaxing norms, the Reserve Bank of India on Thursday permitted banks to issue electronic cards to persons having overdraft accounts that are only in the nature of personal loan without any specific end-use restrictions.
Banks, as per the central bank’s July 2015 directions, werepermitted to issue debit cards to customers having bank/current accounts butnot to cash credit/loan account holders.
“…It has been decided to permit banks to issueelectronic cards to natural persons having Overdraft Accounts that are only inthe nature of personal loan without any specific end-use restrictions,”the RBI said in a circular.
However, the card should be issued for a period notexceeding the validity of the facility and should also be subject to the usualrights of the banks as lenders.
The electronic card for overdraft accounts in the nature ofpersonal loans should be allowed to be used for domestic transactions only, theRBI added.
“Further, adequate checks and balances shall be put inplace to ensure that the usage of such cards is restricted to facilitateonline/ non-cash transactions,” it said.
The circular also added that the restriction on cashtransaction will not apply to overdraft facility provided along withPradhanMantri Jan DhanYojana (PMJDY) accounts.