Bank delays credit card closure? Know your rights — Here's how to claim ₹500/day compensation

Closing an unused credit card should take minutes, but somehow, cardholders find themselves trapped in an endless loop of unhelpful customer service bots, persistent retention calls, and unfulfilled cancellation tickets.

Many simply give up, assuming an inactive card tucked away in a drawer is harmless. However, ignoring a languishing account can lead to surprise annual fees, sudden drops in credit score, and administrative headaches.

Under the Reserve Bank of India’s ( RBI ) guidelines, banks face strict deadlines to act, and failing to do so can result in substantial penalties paid directly to the consumer.

The severity of the mandate was realised recently when a bank was directed to compensate a cardholder ₹ 3.21 lakh after sitting on an account closure request for months.

The customer had cleared all outstanding dues and formally submitted a cancellation request. Despite multiple follow-ups, the bank failed to close the account, allowing the issue to fester for hundreds of days.

The compensation was calculated strictly using the RBI’s mandated formula: a statutory penalty of ₹ 500 per day of delay, paid to the customer until the card was formally terminated.

Therefore, for a consumer, knowing the rule helps turn a prolonged grievance into an enforceable claim against the lender.

Under the RBI’s Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022, the central bank laid down clear operational guardrails to stop banks from stalling account closures:

If you are looking to close a credit card , following a disciplined paper trail ensures you remain legally protected:

Arshdeep Kaur is a Senior Content Producer at Mint, where she reports and edits across national and international politics, business and culture‑adjacent trending stories for digital audience. With five years in the newsroom, she strives to balance the speed and rigor of fast‑moving news cycles and longer, context‑rich explainers. <br><br> Before joining LiveMint, Arshdeep served as a Senior Sub‑Editor at Business Standard and earlier as a Sub‑Editor at Asian News International (ANI). Her experience spans live news flows, enterprise features, and multi‑platform packaging. <br><br> At Mint, she regularly writes explainers, quick takes, and visuals‑led stories that are optimized for search and social, while maintaining the publication’s standards for accuracy and clarity. She collaborates closely with editors and the audience team to frame angles that resonate with readers in India and abroad, and to translate complex developments into accessible, high‑impact journalism. <br><br> Arshdeep's academic training underpins her interest towards policy and markets. She earned an MA in Economics from Panjab University and holds a Post‑Graduate Diploma in Broadcast Journalism from the India Today Media Institute (ITMI). This blend of economics and broadcast storytelling informs her coverage of public policy, elections, macro themes, and the consumer‑internet zeitgeist.