Lockdown impact: Banks unable to send renewed debit, credit cards to customers

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RBI data shows that in the month of April 2015, the banking industry added 1.13 crore debit cards and over 1.7 lakh credit cards making it a total addition of nearly 1.15 crore cards. Even if 80 per cent of these accounts are active and had a validity period of five years, it would mean that nearly 90 lakh cards were due for renewal in April 2020. In the month of May 2015, over 60 lakh new cards were added and they would ideally come for renewal next month.

There has been a sharp rise in number of cards issued over the last five years. While in March 2015, there were 55.24 crore debit cards and 2.11 crore credit cards,RBI data shows that as of January 2020 there were 81.6 crore outstanding number of debit cards and 5.6 crore credit cards.

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“On an average, about 4-5 million cards across banks come up for renewal every month keeping 5 year validity in mind. If you extrapolate that for three months the number would be close to 1.5 crore cards and thus it will impact a large number of customers,” said a senior official with a leading payment network company. Bankers are demanding that while banking is an essential service, this aspect of physical delivery of cards should also be made an essential service.  “While some businesses like courier have been allowed post April 20, the situation on the ground is not exactly conducive for courier companies to deliver the cards to customers,” said a senior official with a private sector bank. He added while banks reached out to India Post for delivery related help, “India Post declined to do so.”

What are the options with customers? 

While banks can technically enhance the expiry period of the card issued by them, bankers say it is a tedious process. “We will have to do segregation according to customers and then process it both at our end and also get the merchant systems updated,” said an official with a bank.

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Among other options are cashless withdrawal and virtual cards. Sources say only handful of banks offer cashless withdrawal facility. Another option is the virtual card, but bankers say while virtual cards are used for e-transactions, there is a constraint on cash withdrawal which is the prime necessity in current times.

“By far, debit cards are the most convenient for a large number of people and if the renewed cards don’t reach the customer, it will cause inconvenience to millions,” said a banker. An option for customers in such a case would be to visit a branch and withdraw cash as per their needs. “Unavailability of courier services has affected not only delivery of cards but also many other banking operations. We are trying to ensure that customer inconvenience is minimised. The impact right now is limited since customers need cash only for essentials as other economic activities are shutdown,” a senior official with a public sector bank said.