Setting the limits: Regulatory guidelines on credit card operations in India

The Reserve Bank of India (RBI) has been working on defining standards for governing the issuance and servicing of credit cards in India. In the recently announced guidelines, the RBI has attempted to protect the interest of consumers. These guidelines address the following areas:

Preventing Unsustainable Borrowing Levels

Given the large number of credit card issuers operating in the Indian market, there is a high possibility of individuals borrowing more than their repayment capacity. The RBI has asked issuers to keep in mind borrowing limits on other cards held by an applicant before deciding on new credit limits. While this is a noble thought, it may not be easy to implement in practice because of the lack of fully developed credit bureaus in India which can facilitate the exchange of credit limit information.