This RBI Rule Cost a Bank ₹3.21 Lakh for Stalling on a Card Closure

Anyone who's tried to close a credit card in India knows the drill. You call, you get transferred to a retention specialist, they offer you a fee waiver you didn't ask for, and somehow the card is still open three weeks later. RBI's Master Direction on credit and debit card issuance put a hard number on this, and most cardholders have no idea it exists.

The core rule

What	Requirement
Time limit to close a card after your request	7 working days
Condition	All dues must be cleared, no outstanding balance
Penalty for delay	₹500 per day, paid to you, until the account is actually closed
Confirmation	Bank must notify you via email, SMS, or another channel immediately after closure
Channels the bank must offer for the request	Helpline, dedicated email, IVR, a visible link on the website, net banking, and the mobile app

The ₹500/day penalty is what gives this rule actual teeth. It's a running cost the bank owes you for every day past the seven-working-day window, for as long as your account carries no outstanding balance.

This isn't theoretical: banks have already paid out for it

This isn't just a rule sitting unused on paper. In one recent case, a Kotak Mahindra Bank customer requested closure on two credit cards after their limits were cut, and the bank simply kept the accounts open and charged annual fees on them anyway. The bank ignored the emails, then argued the request should have come by phone instead. After the customer took it to the RBI Banking Ombudsman, the bank ended up paying out ₹3.21 lakh, calculated as ₹500 a day across 321 days of delay on two cards. That's a real number, not a hypothetical one, and it's exactly the kind of stalling this rule was written to stop.

What counts as "starting the clock"

The seven working days start from when you formally submit the closure request through one of the required channels, not from the first time you mention it to customer support in passing. If the bank tries to steer you into a retention call, that call still counts once you've clearly asked for closure. It's still worth putting the request in writing too, by email or through the app, so you have a timestamped record if the delay drags on.

Cards that go quiet on their own: the dormancy rule

If you haven't touched a card in over a year, the issuer can close it, but not without telling you first. They have to notify you and wait 30 days for a response before shutting it down. So a card won't disappear without warning, but it also won't sit open forever just because you forgot it existed.

The flip side: unactivated cards

If a card gets issued but you never activate it within 30 days, the issuer now needs your explicit OTP-based consent before activating it. Ignore that consent request, and the bank has to close the account within seven working days, at no cost to you. The point is to stop banks from keeping unwanted, unactivated cards technically "live" on your credit file.

Tips to make closure go smoothly and protect your score

Clear the balance to zero before requesting closure. The seven-day clock and the ₹500/day penalty only kick in cleanly when there's no outstanding amount. Even a small pending balance, like a forgotten subscription charge, gives the bank a legitimate reason to stall.

Submit the request in writing, even if you also call. An email or an in-app request leaves a timestamped paper trail, which matters if you end up claiming the daily penalty or escalating the delay.

Ask for written confirmation of closure, not just a verbal assurance. The rule requires notification by email or SMS. If it doesn't arrive, follow up and ask for it directly, since that's your actual proof the account is closed, not just inactive.

Redeem your reward points before closing. If there are unused points sitting in the account, most issuers forfeit them on closure and won't remind you beforehand.

If a card's been dormant for months and you don't plan to use it, close it yourself instead of waiting out the bank's one-year dormancy process. Letting the bank initiate closure means you have less control over timing, and an old unused card sitting open still counts toward your credit utilization either way. Closing it on your own schedule is usually the cleaner move.

If the seven-day window gets blown, don't just let it go. You're owed ₹500 for every day of delay. Ask the bank for it in writing, and if they don't pay, escalate to the RBI Ombudsman using the steps below, the same route that got the Kotak customer their ₹3.21 lakh.

How to actually escalate to the RBI Ombudsman

Since July 2026, this runs under the Reserve Bank Integrated Ombudsman Scheme (RB-IOS), 2026. It's free, and there's no cap on the size of the dispute you can bring.

1. Complain to the bank first, in writing. You have to give the bank a chance to fix it before RBI will look at your case. Email or use the bank's grievance portal, and keep the acknowledgment.
2. Wait 30 days. If the bank doesn't reply, or replies and you're not satisfied, you can escalate.

3. File with the RBI Ombudsman. Three ways to do it, pick whichever is easiest:

   • Online through the CMS portal: cms.rbi.org.in
   • Email: crpc@rbi.org.in
   • Post: Centralised Receipt and Processing Centre, 4th Floor, RBI, Sector 17, Chandigarh 160017
   • Or call the toll-free helpline, 14448, if you want to talk it through first

4. File within the deadline. You get one year from the bank's final reply, or one year and 30 days if the bank never replied at all.

5. Track it. You'll get a complaint reference number the moment you file. Use it on the CMS portal to check status.
6. If you disagree with the outcome, you can appeal to RBI's Appellate Authority within 30 days of the decision.

For a stalled card closure specifically, attach your original closure request, the bank's acknowledgment (or lack of one), and a note of how many days have passed since the seven-working-day deadline, since that's what the Ombudsman uses to calculate what you're owed.