How a credit limit is set, changed and enforced: RBI and MITC rules
Updated 30 Oct 2026 · by SwipeWise editorial team · how we write
A credit limit is set by the issuer, not by a published formula. What is public is the rulebook around it: what RBI obliges issuers to do, and what each issuer’s Most Important Terms and Conditions (MITC) say. This guide uses only those documents. No issuer discloses its scoring model, so none of them explains why one applicant gets a given figure.
What RBI requires
The RBI page we could open is the 2022 Master Direction on credit and debit cards (updated to 7 March 2024). RBI has also issued “Commercial Banks – Credit Cards and Debit Cards: Issuance and Conduct Directions, 2025”, dated 28 November 2025; we could read it only as reproduced on TaxGuru, and it carries the same limit provisions. The 2022 paragraph numbers are given in brackets.
- How the limit is assessed. Because holding several cards “enhances the total credit available to any consumer”, issuers must assess the limit “taking into consideration all the limits enjoyed by the cardholder from other entities”, using self-declaration or Credit Information Company data, “as per the board approved policy” (2022 para 6(b)(ii)).
- No breach without consent. The sanctioned limit must not be breached “at any point in time without seeking explicit consent from the cardholder” (6(b)(v)). The FAQs add that over-limit use needs prior explicit consent, that the cardholder must be able to switch it on or off through the issuer’s app or website, and that without consent “no overlimit can either be provided or overlimit charges be levied”.
- What counts towards the limit. Interest and other charges or fees are not to be counted when computing limit usage or levying over-limit charges (FAQ, repeated in the 2025 text).
- No unilateral increase. Issuers “shall not unilaterally upgrade credit cards and enhance credit limits”; explicit consent is needed for any change in terms. For a reduction, the issuer “shall intimate the same to the cardholder” (11(b)). The 2025 text defines an upgrade to include “an increase in the credit or cash limit”.
- What the MITC must show. The term-sheet must list credit limit, available credit limit and cash withdrawal limit under “Drawal Limits” (para 30).
What issuers publish
| Issuer | Document | What it says |
|---|---|---|
| HDFC Bank | MITC (English) | Limits are communicated at card delivery and in monthly statements. Cash limit: “40% of the Credit Limit” (not for the Paytm digital card). “Add-on Cardmembers share the same limit as the primary cardholders.” The bank may decrease a limit under its internal criteria and “will immediately inform including the reason thereof”; an increase can be sought by writing in with income documents. Over-limit charge: 2.5% of the over-limit amount, minimum ₹550, “basis explicit consent”. Not offered on some cards, such as the Paytm HDFC Bank Digital Credit Card. |
| SBI Card | MITC (English) | Limits are communicated at delivery and in every statement; add-on holders “share the same limits”. Cash limit is “a part of the overall Credit Limit”, shown on the statement. Across several SBI cards the limit “may be shared”, as approved by SBI Card. Over-limit fee: 2.5% of the excess or ₹600, whichever is higher, once per billing cycle, subject to “customer consent”; consent on one card enables it on all cards under the same account. |
| ICICI Bank | MITC | Limits are communicated at delivery and in statements. Cash limit is a subset: “10% of the credit limit up to a maximum of ₹20,000” for the first 180 days, after which it is at the bank’s discretion. With several cards, spends are allowed only up to the aggregate limit, defined as “the maximum limit across all the credit cards”. Only enhancements are effected “along with consent of the Card Member”. Over-limit fee: 2.5% of the excess, minimum ₹550, except on two Emeralde cards. |
| Axis Bank | MITC | Limit is in the welcome letter and statements. Add-on holders share the primary limit, and a change to the primary limit “shall automatically apply” to them. Where a customer holds several Axis cards, the limit is shared; the MITC’s example is ₹1,00,000 across two cards, where ₹90,000 spent on Card A leaves ₹10,000 available on either card. An increase offer carries a validity period and needs “explicit customer consent”; processing takes 3 working days. Cash limit is “lower than the Credit Limit” and inside it. Over-limit fee: 2.5% of the excess, minimum ₹500, “explicit consent” collected. |
Worked example (illustrative figures)
The limit and spends below are invented. The percentages and minimums come from the MITCs above.
Assume a ₹1,00,000 limit and over-limit consent given.
- Cash limit. At HDFC’s 40%, the cash limit would be ₹40,000. Under ICICI’s first-180-days rule it would be 10% = ₹10,000.
- Spend ₹90,000. Utilisation is 90,000 / 1,00,000 = 90%. Available limit is ₹10,000 (the same arithmetic as Axis’s own example).
- Spend ₹1,08,000 in total. Over-limit amount is ₹8,000, with fees and interest excluded as RBI requires. Utilisation is 108%.
- Fee. 2.5% of ₹8,000 = ₹200. That is below every issuer’s floor, so the minimum applies: ₹500 (Axis), ₹550 (HDFC, ICICI) or ₹600 (SBI Card). Each MITC also lists GST on charges separately, which is not added here.
- Minimum amount due. HDFC and ICICI MITCs add the over-limit amount to the minimum due. HDFC’s own illustration: with a ₹40,000 limit and ₹45,899.71 due, the over-limit amount is ₹5,899.71, which exceeds the computed minimum of ₹3,778.65, so the minimum due becomes ₹5,899.71.
For how utilisation feeds a score, see credit utilisation and CIBIL score. The calculator is for rewards, not limits.
What to check
- Whether the over-limit facility exists for your card and whether it is currently switched on or off in your issuer’s app (RBI requires the option).
- The over-limit fee and its minimum in the MITC’s schedule of charges. HDFC and ICICI exempt specific cards.
- Whether your limit is shared across your cards of that bank, and how add-on cards fit in. See add-on credit cards explained.
- The cash limit and whether it is stated as a percentage.
- Whether an increase is offered with a consent step. The MITCs differ in how much they say; how to read a credit card MITC covers where the clauses sit.
Limits of this guide
- Only four issuers’ MITCs were read, and each issuer has many card variants with their own exceptions.
- The HDFC and SBI Card clauses on increases and over-limit use read as issuer discretion; the exact consent mechanism is not described in those excerpts.
- The 2025 Directions were read as reproduced by TaxGuru, not from the RBI notification itself.
- Nothing here states how any issuer arrives at a particular limit.
Sources
All accessed 2026-10-30.
- RBI, Master Direction on Credit Card and Debit Card (Issuance and Conduct), 2022, updated 7 March 2024 and FAQs. Supports assessment of limits, explicit consent, no unilateral increase, MITC contents, over-limit FAQs.
- RBI Credit Cards and Debit Cards: Issuance and Conduct Directions, 2025 (28 November 2025), text as reproduced on TaxGuru. Supports the continued provisions and the upgrade definition.
- HDFC Bank MITC. Supports cash limit, add-on sharing, over-limit charge and the minimum-due illustration.
- SBI Card MITC. Supports shared limit, cash limit and over-limit fee.
- ICICI Bank MITC. Supports aggregate limit, cash limit, consent for enhancements and over-limit fee.
- Axis Bank MITC. Supports limit sharing example, consent-based enhancement and over-limit fee.
Try it with your own numbers. Open the calculator