A sharp decline has been recorded in the total number of active credit cards following a recent notification of the Reserve Bank of India.
The number dropped by 22.6 lakh from over 8 crore in July to nearly 7.8 crore credit cards in August, according to RBI data.
This trend has been largely attributed to the central bank's new guidelines, which direct issuers to deactivate the cards that have remained inactive for a year.
According to the RBI notification on the issuance of credit cards released in April, the banks will have to initiate the process to close the credit cards, which have not been used for more than a year, after intimating the cardholder.
If no reply is received from the cardholder within a period of 30 days, the card account shall be closed by the card issuer, subject to payment of all dues by the cardholder, the RBI guidelines mandate. These directions came into effect on July 1.
HDFC Bank and Axis Bank witnessed a significant drop in their net credit card additions in August. For HDFC Bank, the number of outstanding credit cards slumped by 8.47% to 1.6 crore in August from nearly 1.8 crore in the previous month. Axis Bank, meanwhile, witnessed its total number of credit cards falling from 99.3 lakh in July to 88.7 lakh in August, a 10.6% drop.
The RBI directions also state that the card issuer must ask for the One Time Password (OTP) from the customer to activate the card. If the card is not activated for over 30 days from the date of issuance, then the issuer shall close the credit card account without any cost to the customer.