In a bid to discourage non-serious applicants, IDFC First Bank has introduced a new approach to its credit card issuance process. The bank now requires customers to pay an upfront joining fee before dispatching its premium Mayura and Ashva credit cards. This move aims to streamline the application process and ensure that only serious applicants proceed with the card issuance.

The Mayura credit card comes with a joining fee of ₹5999 plus GST (Goods and Services Tax), while the Ashva credit card requires an upfront payment of ₹2999 plus GST. These charges are non-refundable, meaning that once the fee is paid, it is not returned even if the applicant decides not to proceed with the card.

How Does IDFC First Bank Comply with RBI Guidelines?

Despite the upfront charges, IDFC First Bank has ensured that it remains compliant with the Reserve Bank of India’s (RBI) guidelines on credit card issuance. According to RBI’s regulations, banks are only allowed to levy charges once the credit card account is activated. However, IDFC First Bank has cleverly navigated around this by allowing cardholders to activate their credit cards online before the physical card is dispatched.

The bank's process involves a digital application where applicants must give explicit consent for the payment of the joining fee through an OTP (one-time password). The card can then be activated online via the bank's portal, and the physical card is dispatched only after the activation is successfully completed.

This approach ensures that the bank does not violate RBI guidelines, which state that card issuers must obtain explicit written or digital consent before issuing a credit card. The process also guarantees that charges are levied only after the applicant has activated the card, complying with the regulatory standards.

Why the Upfront Fee?

IDFC First Bank’s decision to charge an upfront fee is primarily aimed at addressing a recurring issue — non-activation of credit cards after the physical card is received by customers. In many cases, customers have received their credit cards but failed to activate them, causing delays and confusion. To combat this, the bank now seeks upfront payment of the joining fee, ensuring that applicants are committed to using the card.

The Role of OTP-Based Consent and Digital Activation

The process for activating a credit card with IDFC First Bank is entirely digital and OTP-based, allowing applicants to complete the activation process before receiving the physical card. This process ensures that applicants are serious about their credit card commitment, as the card is only dispatched after activation is confirmed.

According to RBI guidelines, card issuers are required to seek OTP-based consent if a customer fails to activate the credit card within 30 days of its issuance. However, with IDFC First Bank’s new system, applicants are providing consent and activating the card as part of the application process, circumventing potential delays or issues related to non-activation.

Explicit Consent in the Application Process

In line with RBI’s instructions, the bank has also emphasized the importance of obtaining explicit consent for the joining fee during the application process. By doing so, the customer is fully aware of the financial commitment involved in obtaining the credit card, ensuring transparency and accountability.

According to the RBI’s master circular on credit cards, card issuers must seek the applicant’s consent before issuing a card, which is why IDFC First Bank has integrated this process into the digital application flow. This process of consent is essential to ensure that applicants are well-informed about the charges and terms before proceeding with their credit card application.

What Happens If the Applicant Doesn’t Activate the Card?

In cases where an applicant does not activate the card within 30 days, the bank may seek OTP-based consent to continue with the card issuance process. This ensures that only customers who are truly interested in using the card are able to proceed.

If the applicant does not provide consent or fails to activate the card within the stipulated time, the credit card account is closed by the bank within seven days. This aligns with the RBI’s mandate to ensure that the card issuance process remains transparent and customer-friendly.

Conclusion: IDFC First Bank’s Strategic Move

IDFC First Bank’s new policy of charging an upfront joining fee for its Mayura and Ashva credit cards is a strategic move to discourage non-serious applicants and streamline the card issuance process. The bank’s commitment to following RBI guidelines ensures that the process remains compliant with regulations while addressing the issue of card activation delays.

With digital activation and explicit consent integrated into the process, customers can be assured that they are fully aware of the terms and conditions before receiving their cards. This move not only improves efficiency but also helps customers stay committed to their credit card usage, making the entire experience smoother for both the bank and the applicants.

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