Banks are optimistic about their credit card business and believe that the new rules by the Reserve Bank of India (RBI) on credit and debit cards won’t impact their business.
The rules indicate that large NBFCs with a minimum net owned fund of ₹100 crore may be able to enter the business with prior approval from the RBI.
“Credit card business of banks won’t be impacted given the huge potential of the market. Banks will continue to have the first-mover advantage and can also continue to participate with NBFCs and fintech for such cards,” said a banker.
The Master Direction – Credit Card and Debit Card – Issuance and Conduct Directions, 2022, given by the RBI last week, has enthused NBFCs. Some of these lenders had recently drawn in with the RBI to allow them to engage in the credit card business all alone.
For co-branded cards, the RBI plays said that the part of the co-branding partner entity under the tie-up arrangement should be limited to marketing and distribution of the cards and giving access to the cardholder for the goods and services that are offered. The co-branding partner would have access to information relating to transactions undertaken through the co-branded card.