Is a Bank Account required for a Credit Card?
No. Its not mandatory for banks to issue credit cards for only those who have accounts with them. In fact, issuing unsolicited credit cards by banks was a big problem for customers in past.
RBI had issued its first comprehensive guidelines on November 21, 2005, as a sequel to an announcement made by RBI in Annual Policy Statement 2004-05. The guidelines were based upon the findings of the Working Group on Regulatory Mechanism for Cards, constituted by RBI in 2004-5. The full document is available on RBI site Here.
In summary, the Reserve Bank of India has directed the banks & Non Banking Finance Companies (NFBC’s) to have a well documented policy and folow Fair Practices Code for credit card operations. RBI asked the banks to assess the credit limits of the customers on the basis of self declaration and credit information. Apart from this RBI asked also mandated that the card issuing banks will be solely responsible for fulfilling all the KYC (Know your customer )requirements. The banks were clearly directed to fulfill the KYC requirements even in case where DSA’s & DMA’s (Direct Sales Agents and Direct Marketing Agents) solicited the business on their behalf.
Prior to this, In March 2005, the IBA (Indian banking Association) had released a Fair Practices Code for credit card operations.
In an effort to make the credit card business more transparent RBI directed the card issuers to quote annualized percentage rates (APRs) on card products and late payment charges and number of days.
The banks were given a time of 60 days for complaint redressal.
RBI said in this policy that, if an unsolicited card is issued and activated without the consent of the customer (recipient) and the customer is billed for the same, the bank shall not only reverse the charges but also pay penalty.
Further to the above developments, In July 2008, RBI took strict measures to the unsolicited cards issue. The RBI announced that the person in whose name the card is issued can also approach the Banking Ombudsman who would determine the amount of compensation payable by the bank to the recipient of the unsolicited credit card as per the provisions of the Banking Ombudsman Scheme, 2006 i.e. for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him.
From August 1, 2009, RBI took one more step to increase online security measures. It directed the banks to make additional authentication mandatory for credit/debit card online transactions. Now the banks have to issue a PIN code, called as Verified by Visa or MasterCard Secure Code, which will be known only to the customers. Customers have to use this second verification PIN code, apart from the Card Verification Value Number (CVV), for making purchases.
Coming back to your question, banks now issue credit cards to only their customers as a custom and to fulfill the RBI requirements and KYC requirements.
In summary, the Reserve Bank of India has directed the banks & Non Banking Finance Companies (NFBC’s) to have a well documented policy and folow Fair Practices Code for credit card operations. RBI asked the banks to assess the credit limits of the customers on the basis of self declaration and credit information. Apart from this RBI asked also mandated that the card issuing banks will be solely responsible for fulfilling all the KYC (Know your customer )requirements. The banks were clearly directed to fulfill the KYC requirements even in case where DSA’s & DMA’s (Direct Sales Agents and Direct Marketing Agents) solicited the business on their behalf.
Prior to this, In March 2005, the IBA (Indian banking Association) had released a Fair Practices Code for credit card operations.
In an effort to make the credit card business more transparent RBI directed the card issuers to quote annualized percentage rates (APRs) on card products and late payment charges and number of days.
The banks were given a time of 60 days for complaint redressal.
RBI said in this policy that, if an unsolicited card is issued and activated without the consent of the customer (recipient) and the customer is billed for the same, the bank shall not only reverse the charges but also pay penalty.
Further to the above developments, In July 2008, RBI took strict measures to the unsolicited cards issue. The RBI announced that the person in whose name the card is issued can also approach the Banking Ombudsman who would determine the amount of compensation payable by the bank to the recipient of the unsolicited credit card as per the provisions of the Banking Ombudsman Scheme, 2006 i.e. for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him.
From August 1, 2009, RBI took one more step to increase online security measures. It directed the banks to make additional authentication mandatory for credit/debit card online transactions. Now the banks have to issue a PIN code, called as Verified by Visa or MasterCard Secure Code, which will be known only to the customers. Customers have to use this second verification PIN code, apart from the Card Verification Value Number (CVV), for making purchases.
Coming back to your question, banks now issue credit cards to only their customers as a custom and to fulfill the RBI requirements and KYC requirements.
