Debit Card Incentives, to be next marketing Mantra for Banks

            Debit Card Incentives, to be next marketing Mantra for Banks   

Now, the Cash Withdrawal from any ATM is free, Banks with smaller ATM Network, are beginning to feel the pinch of the inter-connect fee.  So, they are forced to explore new avenues, to keep the customers happy, and also continue to keep their costs low.

            As I have already said in my earlier Post http://prashantnepayments.blogspot.com/2009/03/all-atm-transactions-pan-india-to-be.html, 60% of the Cash drawn, is used in Locations, wherein Debit Cards are also accepted. 

            Hence, Banks have sought clarifications from Reserve Bank of India, whether prior approval of Reserve Bank of India, is required, for offering incentive schemes, to expand Debit Card usage.  Reserve Bank of India, DBOD(Department of Banking Operations and Development), has clarified that it’s prior approval is not required, as long as there are not of Lottery nature i.e: incentives  based on  chance. 

            It is pertinent to note, that Banks have sought this clarification, only after the introduction of the free cash withdrawals i.e after 01/04/2009. Indeed, Banks have responded quite fast, to the new reality, and quickly explored innovative tactics, to protect their bottom-line. 

            The relevant Reserve Bank of India, DBOD(Department of Banking Operations and Development)  Clarification is reproduced below

 

QUOTE 

April 20, 2009

Offering of Incentive Schemes by Banks to Promote Usage of Debit Cards

Query

A few banks have been approaching RBI seeking approval for offering incentive schemes to debit cards holders to promote debit card usage. Whether prior approval is required from RBI for offering such incentives schemes?

Response

There is no objection to banks offering incentives to promote debit card usage without prior approval of RBI provided no element of lottery or chance is involved in such incentive schemes.

DBOD Mail box clarification dt 20/04/2009

 

 UNQUOTE 

            This clarification is of recent nature, i.e 20^th April, 2009. Hence, Banks will be launching the Debit Card Usage Incentive Schemes, in the next couple of months. We have to wait and see which will be the First Bank, to utilize this clarification, and also the nature of the incentive schemes.

 Any guesses, folks.