The guidelines issued include criteria on the eligibility of customers to whom the cards can be issued, payment of interest on the balances transferred to the smart/debit cards, treatment of liability in respect of outstanding/unspent balances on the smart/debit cards, security aspects and other terms and conditions for the issue of these cards by the banks.

Although banks need not obtain prior approval of the RBI, the card issuing banks should review the operations of smart/debit cards on a half yearly basis. The RBI said in case of smart-cards having stored value (as in case of the off-line mode of operation of the smart-card), no interest need be paid on the balances transferred to smart cards while in debit-cards or on-line smart cards, the payment of interest should be inaccordance with the interest rate directives issued to banks from time to time under Sections 21 and 35A of the Banking Regulation Act (1949).

RBI further stated that "the outstanding balances/unspent balances stored on the smart/debit cards shall be subject to the computation for the purpose of maintenance of reserve requirements. This position will be computed on the basis of the balances appearing in the books of the bank as on the date of reporting".

On the issuance of debit cards, the Reserve Bank has also clarified that "Banks can issue on-line debit-cards to select customers with good financial standing even if they have maintained the accounts with the banks for less than six months". Banks can extend the smart and debit-cards facility to those having saving bank, current, and fixed deposit accounts with built-in liquidity features maintained by individuals, corporate bodies and firms.

However, smart and debit-card facility are not be extended to cash-credit and loan-account holders though bankscan issue on-line debit-cards against personal loan accounts. According to the guidelines, banks need not obtain the prior approval of RBI and details of smart/debit cards introduced may be advised to the central bank together with a copy each of the agenda note.

HDFC launches debit card
MUMBAI:HDFC Bank lauched its debit card intends to install 100 electronic data capture (EDC) terminals (EDCs) in Mumbai. The intention is give a boost to plastic-culture by increasing the number of acceptance outlets. Benificieries in this case will be HDFC Bank's debit-card holders, Visa International credit-card holders, and merchant outlets. Debit-cards will be on offer to HDFC Bank's six lakh strong retail customers at a cost of Rs 250 per card. If they use their debit-card within the first month of issuance, they get Rs 125 off. Debit-card holders can also use it for settling utility charges via media the bank's Automatic Teller Machines (ATMs). To incentivise its customers to use its debit-card, HDFCBank plans to offer a discount facility at select outlets.