Deposit-Backed Credit Cards: How Secured Cards Work in India
Why in the news
Banks and fintechs began offering deposit-backed cards for first-time borrowers and underserved groups.
Key facts
- Collateral: a fixed deposit (FD); users are mainly those new to credit or with low scores.
- RBI view: classed as secured credit cards.
- On default, banks adjust dues from the FD.
| Example | Detail |
|---|---|
| FD | ₹50,000 at 6% |
| Card limit | ₹50,000 |
| Outcome | FD keeps earning, credit score builds, upgrade to unsecured possible after 12 months |
Exam angle
- Collateral: FD; reporting duty: credit bureaus.