FD amount locked in SBM and consumer has to pay again for credit card payment

Niyo SBM credit card asks for FD with SBM for an amount equivalent to usage of credit card for the month.
Credit card bill is generated and consumer is asked to pay the credit card bill. He vacant use FD amount which was deposited to secure the credit card outstanding.
I don’t understand the logic of it.
When credit card amount is secured before hand by way of FD created with bank why the same FD should not be redeemed to pay the credit card bill when it is due and make the credit card limit back to amount of FD left over.
For eg if one spends 10 lakh rupee through Niyo SBM credit card, he has to make FD of 10 lakh with the bank and when the credit card statement is issued, he has to pay 10 lakh more and bank will keep the FD of 10 lakh which we cannot redeem.
Only option of redemption is we have to close the FD’s, get a lower interest rate, close the current card and apply for a new one with charges of 249+ GST.
Consumer has already secured the credit card exposure through FD made with the bank. He should have the right to pay the credit card dues by redeeming those FD’s.
Bank should not rather cannot force consumer to pay again and utilise the money deposits under FD even if consumer does not want to do so.

Hey Rakesh @rgarg0607!

Thank you for sharing your thoughts on the Niyo SBM credit card structure. We understand your concerns and would like to provide a detailed explanation.

The Niyo Global Credit Card by SBM operates on a secured model, where the credit limit is determined by the fixed deposit (FD) made with the bank. This FD has a 1-year tenure with a 7% interest rate upon maturity.

In your situation with a 10 lakh rupee credit card bill, it’s important to know you have flexibility in how much you deposit in the Fixed Deposit (FD). You don’t have to deposit the full amount; creating an FD for a smaller sum, such as 1 lakh, lets you handle immediate payments, quickly restore your credit limit by paying the bill instantly, and make future payments.

Previously, the Niyo Global Credit Card featured the ‘Custom Pay’ top-up option, allowing payments beyond the FD without generating an additional bill. Unfortunately, this feature is no longer available, and now additional FDs are required to extend the credit limit.

Recognizing the need for more flexibility, we are actively collaborating with SBM bank to introduce an option for partial FD withdrawals, giving users greater control over their finances.

Understanding that the current structure may not align with everyone’s preferences, we are excited to announce the upcoming launch of an unsecured credit card. This new offering, expected in the first quarter of 2024, will provide users with a more flexible credit solution.

We appreciate your feedback and are committed to enhancing our offerings to better meet the diverse needs of our users. Thank you for your patience and understanding as we work towards providing a more comprehensive and user-friendly credit card experience.