Under the Reserve Bank of India's Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022, banks face strict operational guardrails for credit card closures. According to reports from Mint, card issuers must complete closure within seven working days of receiving a valid request from the cardholder, subject to settlement of all outstanding dues. The central bank has established clear mandates that banks cannot force customers to visit physical branches or write physical letters, instead requiring accessible closure options across mobile apps, online banking, email, IVR, and SMS.
When banks fail to meet the 7-day turnaround deadline, they become liable for substantial penalties under RBI guidelines. As reported by Mint, the penalty structure involves ₹500 per day of delay, payable directly to the customer until the account is formally closed. This was demonstrated recently when a bank was directed to compensate a cardholder ₹3.21 lakh after sitting on an account closure request for months. The compensation was calculated using the RBI's mandated formula, with the bank paying the statutory penalty until the card was formally terminated.
The regulatory framework includes multiple safeguards for cardholders seeking closure. According to Mint, banks must immediately notify cardholders via SMS or email once the card is closed, and card issuers are mandated to give cardholders a 30-day window to redeem available reward points upon closure. The system requires cardholders to maintain a clear paper trail by ensuring outstanding balances read zero, avoiding informal verbal requests, and using net banking or official mobile banking apps for immutable date-stamped acknowledgements.
For cases where banks fail to comply with closure requests after the initial 7-day window, cardholders have established escalation channels. As reported by Mint, customers should write to the bank's Principal Nodal Officer citing the ticket number and RBI Master Direction clause after day eight. If the bank fails to resolve the issue or credit the ₹500-per-day penalty within 30 days of escalation, cardholders can file complaints on the RBI's Complaint Management System portal at cms.rbi.org.in.
