The Reserve Bank of India (RBI) on Monday said that for corporate credit cards issued under the joint liability structure, overdue reporting and asset classification will be applicable only to the corporate entity.
In the new asset classification, provisioning, and income recognition directions, the RBI said, “…in cases of corporate credit cards issued under the joint liability structure, overdue reporting and asset classification actions shall be applicable only for the corporate.”
In the notification, the RBI has retained that card issuers shall report a credit card account as ‘past due’ to credit information companies (CICs) or levy penal charges, that is, late payment charges and other related charges, if any, only when a credit card account remains ‘past due’ for more than three days.
However, the number of ‘days past due’ and late payment charges shall be computed from the payment due date mentioned in the credit card statement, as specified under the Reserve Bank of India (Commercial Banks – Asset Classification, Provisioning and Income Recognition) Directions, 2026, as amended from time to time.
Late payment charges and other related charges shall be levied only on the outstanding amount after the due date, and not on the total amount due.
According to experts, a credit card is generally an unsecured loan; however, when it is included in a corporate loan and used for corporate purposes, it shall be classified under the corporate loan category and not the regular window.
“Earlier, some banks were reporting these credit cards under corporate exposure, whereas some banks were reporting them as a part of credit card exposure. This is a measure to standardise. Also, when it becomes a part of corporate exposure, then it reduces the capital consumption for banks,” said a credit card head at a mid-sized bank.
The RBI increased risk weights in the unsecured segment, including credit cards, to 150 per cent from 125 per cent in November 2023 due to increased delinquencies in the segment. The industry grew cautious over the rise in delinquencies, which led to a slowdown in card issuances. Credit card additions, which grew by 19 per cent YoY at the end of March 2024, saw only 8 per cent YoY growth at the end of March 2025.
Credit card spending in March surged to a three-month high of Rs 2.19 trillion on the back of year-end financial transactions, according to the latest data released by the Reserve Bank of India (RBI). In the financial year 2025-26 (FY26), spending rose by 11.98 per cent year-on-year (Y-o-Y) to Rs 23.62 trillion from nearly Rs 21.09 trillion in FY25.
Source link
#Corporate #credit #card #overdue #applicable #corporate #entity #RBI
