Delay In Credit Card Closure Leads To Rs 3.21 Lakh Payout; RBI Norms Explained

A customer has reportedly been paid a compensation of Rs 3.21 lakh due to a delay in processing a request for credit card closure, bringing attention to the regulatory safeguards around such services.

According to a social media post on Reddit, an individual (username: ruhaannnn) had requested that two credit cards with Kotak Mahindra Bank be closed in May 2025. The request came after the cards' credit limits were reduced to Rs 10,000. Although the customer mentioned that they had repeatedly sent emails regarding this, he alleged that the bank did not respond.

Closure Request Timeout

The bank allegedly retained the cards, which were later charged an annual fee of Rs 1,180 instead of closing them. The problem became apparent almost a year later, in April 2026, when the customer looked at his account and discovered the charge.

Upon his bringing up the issue, the bank replied that the cards had not been closed. The customer thereafter initiated another communication but failed to receive a response even after seven days. This made him take the complaint to the Banking Ombudsman of the Reserve Bank of India (RBI).

After the escalation, the bank representative approached the customer, saying that the request to close should be done via a call and not via email. The customer, on the other hand, insisted that he had already placed a written request and follow-ups.

He was later informed that he was being compensated with Rs 3,21,000 in his account.

Calculating the Compensation

The payout is within the regulations set by RBI regarding credit card operations. According to these rules, the card issuers are supposed to close a credit card account within seven working days of a request being received, as long as there are no outstanding dues.

In case the issuer does not meet this schedule, it has to pay Rs 500 per calendar day of default to the customer until the closure is completed.

The request in this case was made on May 23, 2025. According to the guidelines, the closure was to be done by June 1, 2025. It was, however, not done until April 18, 2026, with a delay of 321 days.

The penalty was computed as a daily Rs 500 per card since there were two cards involved. This led to a cumulative compensation of Rs 3,21,000, on 321 days of delay on two accounts.

Why is this Important for Customers?

The case highlights the financial implications of delays in service requests for issuers in accordance with current regulations. It also demonstrates the necessity to document communication and resort to escalation channels in case the problem is not resolved.

Before requesting for credit card closure, customers should make sure that their dues are cleared. Communication proofs should also be retained to assist in claims in case of disagreements.

While this claim is based on a social media post and has not been independently verified, the compensation amount and the way it was calculated align with the regulatory frameworks of credit card closure.