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It is a common experience that when you want to get a new credit card, banks call you up to ten times a day. However, when you try to close or cancel that same card permanently, banks often drag their feet, offer various incentives to keep you on board, and make you run from pillar to post for weeks.

If you are currently facing this issue or plan to close your card in the future, you should definitely be aware of this strict and useful rule from the Reserve Bank of India (RBI). According to RBI regulations, if a bank fails to close your credit card on time, it is liable to pay you a penalty (compensation) of ₹500 per day out of its own pocket.

What is the RBI's '7-day' rule?
According to the RBI's 'Master Direction on Credit Cards' guidelines, if a customer submits a formal request to close their credit card, the bank or the card-issuing company is mandatorily required to close the card within 7 working days.

Furthermore, after closing the card, the bank must provide confirmation of the closure to the customer via SMS or registered email.

How can you claim the ₹500 daily compensation?
If the bank fails to close your card within 7 working days, the penalty clock starts ticking from the 8th day, and the bank is required to pay the customer compensation at the rate of ₹500 per day.

For instance, suppose you cleared all your dues and submitted a request to close your card on the 1st of the month. The bank was required to close the card by the 7th at the latest. However, due to negligence, the bank closed the card on the 12th—a delay of 5 days.
In this scenario, under RBI rules, the bank would be liable to pay you ₹2,500 (5 days x ₹500) as compensation. Two conditions must be met to receive compensation:
You will benefit from this rule only if you fulfill these conditions as a responsible customer:

1. There should be no outstanding bills, EMIs, or late fees on your card at the time of submitting the closure request. The 7-day rule applies only when the outstanding balance is zero.

2. Keep proof of when and how you submitted the closure request—such as the reference number (Reference/Service Request Number) or a screenshot of the email—safely with you.

What to do if the bank does not pay compensation?
If the bank takes longer than 7 days and refuses to pay the compensation of ₹500 per day, you can file an online complaint against the bank directly on the RBI’s Banking Ombudsman portal (cms.rbi.org.in) without the need for a lawyer or any fees. The RBI imposes heavy penalties on banks in such cases.

Disclaimer: This content has been sourced and edited from News18 Hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.