Relief for Credit Card Users, RBI Waives Overlimit Charges, Know the Details

With the rapidly increasing use of digital payments, the number of credit card users in India is steadily increasing. While credit card usage was once limited to major cities, it is now becoming common in smaller towns and cities as well. However, convenience comes with some risks. Sometimes, people inadvertently exceed their spending limits, resulting in significant overlimit charges. Keeping this problem in mind, the Reserve Bank of India has implemented stricter regulations for the benefit of customers.

According to RBI regulations, no bank can activate the overlimit feature without the customer’s explicit consent, nor can it impose an overlimit charge without permission.

Overlimit feature without consent

Under the new regulations, the bank or card issuing institution can only offer the overlimit feature if the customer has given explicit consent. This aims to protect customers from fraud and unwanted charges. If the customer does not authorize the overlimit feature, the bank will neither allow overlimit spending nor charge any fees.

The RBI has directed card issuers to provide customers with a system that allows them to manually activate or deactivate the overlimit feature. This feature will be available through internet banking, mobile apps, or other digital platforms. This will allow customers to better control their spending.

Banks will not be able to levy overlimit charges without authorization

Even if the customer has not authorized the overlimit feature and a transaction exceeds the limit due to a technical reason, the bank cannot levy overlimit fees. This rule is designed to protect customers from unnecessary financial burden.

How to Check the Overlimit Feature

Customers can check whether the overlimit feature is enabled by going to the Card Control or Manage Card section of their bank or card app. If the customer wishes to disable it, they can do so immediately. RBI regulations require this control feature for customers.

How the Overlimit Feature Works

Let’s say your credit card limit is ₹1 lakh. If the overlimit feature is enabled, you can spend more than the limit under certain circumstances. However, if the feature is disabled, the transaction will be rejected once the limit is exceeded. This system helps customers avoid falling into a debt trap.

What to do if an incorrect charge is applied?

If the bank has imposed an overlimit charge without your permission, the customer can first complain to the bank. If a resolution is not found, a complaint can be filed through the RBI’s complaint portal or with the Ombudsman. According to RBI regulations, customers may receive relief in such cases.