Question: I received a new credit card in the mail 40 days ago but never activated it or used it because I was travelling. Yesterday, I received an SMS stating the card account has been permanently closed by the bank. Are they legally allowed to close an inactive credit card account so quickly without my explicit instruction to do so?
Answer: Yes. Under the RBI's Master Direction on Credit Card and Debit Card Operations, if a credit card is not activated by the customer within 30 days from the date of issuance, the card-issuer must seek OTP-based consent for activation. If no consent is received, the issuer is legally mandated to close the credit card account without any cost to the customer within seven working days.

Supporting evidence:
title: rbi.org.in/BS_ViewMasDirections.aspx
quote: Card-issuers shall seek One Time Password (OTP) based consent from the cardholder for activating a credit card, if the same has not been activated by the customer for more than 30 days from the date of issuance If no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from date of seeking confirmation from the customer
context: ns of the Ombudsman Scheme, i.e., for loss of complainant’s time, expenses incurred, harassment and mental anguish suffered by him/her. v. There have been instances where unsolicited/applied-for cards have been misused before reaching the persons in whose names these have been issued. It is emphasised that any loss arising out of misuse of such unsolicited cards shall be the responsibility of the card-issuer only and the person in whose name the card has been issued shall not be held responsible for the same. vi. Card-issuers shall seek One Time Password (OTP) based consent from the cardholder for activating a credit card, if the same has not been activated by the customer for more than 30 days from the date of issuance. If no consent is received for activating the card, card-issuers shall close the credit card account without any cost to the customer within seven working days from date of seeking confirmation from the customer. In case of a renewed or replaced card, the closure of an inactivated card shall be subject to payment of all dues by the cardholder. vii. No card-issuer shall report any credit information relating to a new credit card account to Credit Information Companies prior to activation of the card. Any credit information relating to such inactivated credit cards already reported to Credit Information Companies shall be withdrawn immediately; under no circumstances it shall take more than 30 days from the effective date of these directions. viii. The consent for the cards issued or the other products/services offered along with the card shall be explicit and shall not be implied. In other words, the written consent of the applicant shall be required before issuing a credit card. Alternatively, card-issuers may use other digital modes with multifactor authentication to obtain explicit customer consent.

Such alternative digital modes, if any used by the card-issuer, shall be communicated to the Department of Regulation, Reserve Bank of India. ix. Card-issuers shall ensure that the telemarketers they engage, comply with directions/regulations on the subject issued by the Telecom Regulatory Authority of India (TRAI) from time to time while adhering to guidelines issued on “Unsolicited Commercial Communications – National Customer Preference Register (NCPR)”. The card-issuer’s representatives shall contact the customers only between 10:00 hrs and 19:00 hrs. x. The decision-making power for issue of credit card to a customer shall remain only wi