RBI Tightens Rules – Credit card usage has become an essential part of daily life, from online shopping to bill payments and travel. While cards offer convenience, many users often end up spending beyond their assigned limit without realising it. Traditionally, this led banks to impose heavy over-limit fees. However, this practice is now subject to strict regulation.
The Reserve Bank of India (RBI) has introduced tighter rules to protect cardholders from unexpected penalties. Under the new guidelines, banks may not process over-limit transactions—or charge any fee for them—without the customer’s explicit consent.
RBI Restricts Automatic Over-Limit Approvals
RBI has clarified that card issuers cannot automatically enable over-limit usage. If a cardholder wishes to spend beyond their credit limit, their explicit approval is mandatory. Without this consent, banks cannot process over-limit transactions nor charge for such attempts.
This move aims to give users more financial control while reducing fraudulent or accidental overspending.
Banks Must Provide a Transaction Control Feature
Under the new Rule, all card issuers must offer a dedicated transaction control feature on every platform, including:
- Internet banking
- Mobile banking
- Card applications
- Any other available digital service
This feature allows customers to toggle the “over-limit” option on or off at any time. The decision remains entirely in the cardholder’s hands.
No Charges If the Customer Has Not Enabled Over-Limit Usage
If a user has not enabled the over-limit option but accidentally crosses the limit, banks are barred from charging any fee. The transaction will either be declined, or no penalty will be applied. This protects customers from unnecessary financial burden.
Why did the RBI introduce this Rule?
RBI has stated that the objective of this change is to reduce fraud and enhance financial safety. Many users unknowingly exceed their limits and then face penalties. Under the new guidelines, banks can no longer take such actions without customers’ explicit permission. Customers Can Check or change the over-limit setting. Ing.
You can easily review your card settings by logging in to your bank’s mobile app or online banking portal. Under the Card Control or Card Management section, you will find an option labelled “Over-limit” or “Limit Control.”
Here, you can see whether the feature is enabled or disabled—and switch it off or on based on your preference.
Example: How Over-Limit Works
- Suppose your credit card limit is ₹1,00,000.
- If the over-limit feature is enabled, you may be able to spend up to ₹1,10,000.
- If the feature is disabled, any transaction above ₹1,00,000 will automatically fail.
Conclusion
RBI’s new rules provide cardholders with complete control over their credit card usage. By requiring explicit approval for over-limit spending, the central bank has eliminated unnecessary charges and enhanced customer safety. Card users can now manage their spending more confidently and avoid unexpected fees.