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Scramble Amongst Shadow Banks For Credit score Card Licences Possible



Scramble Amongst Shadow Banks For Credit score Card Licences Possible


The newest Reserve Financial institution of India (RBI) determination permitting non-banking finance corporations (NBFCs) to supply bank cards with no banking associate might spark a scramble for these licences, although only some are anticipated to make the reduce.

On Thursday, the RBI mentioned in a grasp round {that a} non-deposit taking firm trying to difficulty playing cards would require a certificates of registration from the regulator and minimal net-owned funds of 100 crore.

Many non-banking finance corporations (NBFCs) will likely be , mentioned Vijay Jasuja, director of PNB Playing cards.

“Bank cards are a profitable enterprise, returns are excessive, and the Indian market is under-penetrated. There will likely be many corporations which can apply. That mentioned, present NBFCs won’t be able then to take care of the cardboard relationship with their banking companions. They’ve to decide on both one,” he added.

To date, the central financial institution has allowed solely two NBFCs to difficulty bank cards with out banking companions: SBI Playing cards and BoB Playing cards.

Analysts imagine the most important beneficiary of the change will likely be Bajaj Finserv Ltd, which already points a sequence of co-branded bank cards in partnership with RBL Financial institution.


As of December 2021, the Bajaj Finserv-RBL co-branded bank card base stood at 2.59 million. In 2021, Bajaj Finserv prolonged its RBL partnership by one other 5 years until 2026.

“RBI will now be extra open to granting licences to numerous massive gamers, and NBFCs like Bajaj Finance, who’ve a tie-up with RBL Financial institution at the moment, might apply, thereby growing aggressive depth,” a Macquarie report mentioned on Friday.

“The interpretation is that RBI will likely be extra open for a liberal bank card licensing regime and will likely be high-quality with NBFCs retaining danger on the stability sheet,” it added.

“The Reserve Financial institution of India’s latest pointers to permit NBFCs to difficulty bank cards after prior approval from the central financial institution is a welcome step. It is going to present a possibility to serve credit-worthy people utilizing new-age information analytics, that are being leveraged exponentially by NBFC corporations like ours,” mentioned Abhay Bhutada, managing director of Poonawalla Fincorp Ltd (beforehand Magma Fincorp).

Individually, the Reserve Financial institution additionally mentioned data referring to income sharing between the card-issuer (financial institution) and the co-branding associate entity (NBFC) must be indicated to the cardholder and likewise displayed on the web site of the cardboard issuer.

Some business gamers discover this irrational.

“Buyer is getting ‘X’ profit; why ought to he trouble concerning the revenue-sharing association between the companions is past understanding. I don’t suppose it has any which means. What profit will the shopper get?” a senior business govt mentioned.


The Reserve Financial institution round additionally acknowledged that the co-branding associate wouldn’t have entry to data referring to transactions undertaken by way of the co-branded card.

“Submit issuance of the cardboard, the co-branding associate, shall not be concerned in any of the processes or the controls referring to the co-branded card apart from being the preliminary level of contact in case of grievances,” the Reserve Financial institution added.

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The post Scramble Amongst Shadow Banks For Credit score Card Licences Possible appeared first on India Express Online.

Source: Around the Globe

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