Bank pays Rs 3.21 lakh compensation to customer for delay in credit card closure; know what RBI rules say

Credit cards can be a boon if used wisely and to do so you need to have a proper understanding of the rules & regulations that govern them. In case of any deficiency in service, whether it is applying for an increase in the credit limit or card closure, a customer who is aware of the guidelines can easily make a strong case against the card issuer.

In one such case, a credit card user won a substantial compensation from his bank after the private lender didn’t process his card closure requests in time. The customer had applied for the closure of his credit card after the card issuer Kotak Mahindra Bank reduced his limit from Rs 1 lakh to Rs 10,000.

The user narrated his ordeal in a Reddit post titled 'Got Rs 3.21 lakh compensation from Kotak Mahindra Bank for not closing my credit card'. This claim has not been verified by ET Wealth Online. He details how he received the Rs 3.21 lakh compensation from Kotak Mahindra Bank, all because the lender didn’t process his requests in time.

Credit card closure: Bank fails to comply, pays Rs 3.21 lakh compensation

"In May 2025, I emailed requesting closure of my two credit cards (Kotak Myntra & Kotak Mojo Platinum). Reason: the bank had reduced my credit limit from Rs 1,00,000 to Rs 10,000," the user (ruhaannnn) wrote in a Reddit post. The person further shared that they had sent two reminder emails to the bank but received no response.

Instead of closing the cards as per the user’s request, the bank levied an annual fee, which prompted the user to approach the higher authorities. This finally helped him win the Rs 3.21 lakh settlement amount.

How customer won Rs 3.21 lakh compensation

In April 2026, during an audit of their accounts, the user noticed a charge of Rs 1,180 (annual fee / final settlement). “When I raised this with the bank, I was told that the card was never closed," they posed on Reddit. The person sent another email to the bank, but received no response for 7 days.

“Then I escalated the complaint to the Banking Ombudsman. After that, the bank’s nodal officer called me and said, ‘It’s your mistake. Closure requests are not accepted via email, you should have called.’,” the user shared.

However, they had already submitted a written closure request, sent follow-ups, and yet got no response from Kotak Mahindra Bank.

Just when it looked like the case would go nowhere cold, the user said they received a message stating that a compensation of Rs 3,21,000 had been deposited in their bank.


ET Wealth Online reached out to Kotak Mahindra Bank to understand their side of the story. However, we are yet to received a comment on this.

Do you get paid in case of delay in credit card closure?

As per the Reserve Bank of India, any failure on the part of the card-issuers to complete the process of closure within 7 working days shall result in a penalty of Rs 500 per calendar day of delay payable to the cardholder, till the closure of the account provided there is no outstanding in the account.

In this case, the user had raised the issue of May 23, 2025. As per the rules, the card should have been closed by June 1, 2025 (7 working days). However, since the bank failed to comply, the user received compensation for the period from June 1, 2025 to April 18, 2026, i.e. for 321 days.

Also, because the user had raised the closure request for 2 cards, his compensation amount was Rs 321,000 [Rs 500 (per day) X 2 (cards) X 321 days].

What do Kotak Mahindra Bank rules say on delay in card closure?

In such a case, the bank will complete any request for a credit card closure within 7 working days, provided that the customer has paid all the dues. “If the process of card closure is not completed within this time, the Bank will pay the Customer a penalty of Rs 500 per calendar day of delay until the Credit Card is closed provided there is no outstanding due,” the rules state.