The Reserve Bank of India (RBI) is not currently considering allowing non-banking financial companies (NBFCs) to issue credit cards, according to a CNBC TV-18 report. He added that “the issue of allowing NBFCs to issue credit cards is not on the table at this time.”
It comes amid reports that the RBI may allow solid non-banking financial firms to issue credit cards. In a notification in July 2004, the RBI said, “NBFCs are not permitted to engage in credit card business without the prior approval of the Reserve Bank of India. However, we have received requests from NBFC for authorization to issue debit cards, stored value cards, chip cards, value added cards, etc.
Currently, NBFCs distribute the credit cards of the banks with which they have ties.
According to an April 21 RBI regulation, “Without the nod of the RBI, NBFCs shall not issue debit, credit, etc. cards.” This has stoked hopes that the central bank will eventually agree to requests from NBFCs to issue their own credit cards.
In a note released on Monday, brokerage firm Jefferies pointed out that an in-house credit card program can help Bajaj Finance expand into deeper markets. India’s largest non-bank lender by market capitalization has a network of 3,500 branches, relationships with over 1,40,000 merchants and a customer base of nearly 60 million.
Jefferies also pointed out that if Bajaj Finance manages to cross-sell even 20-40% to its customer base, it can make a profit of between Rs 900 crore and Rs 1,700 crore in three years. The profit figure is 5-10% of the company’s projected profit for FY25.
In June, the Reserve Bank of India also allowed credit cards to be linked to the Unified Payments Interface (UPI), which will allow more people to make payments using the platform. popular. Until now, only debit cards connected to savings bank accounts and current accounts were allowed to connect to the UPI platform.
Currently, UPI payments are free, while credit card companies generally rely on the merchant discount rate (MDR), which is charged on each use to make merchant payments as a source of revenue.
The central bank is also changing credit card rules from October 1. According to the RBI website, “Tokenization refers to replacing the actual card details with an alternative code called the ‘token’, which must be unique for a combination of card, token applicant (i.e. i.e. the entity that accepts the customer’s request for tokenization of a card and transmits it to the card network to issue a corresponding token) and device (hereinafter referred to as “identified device”)”. Customers transacting online have already received notifications to register or tokenize their card by October 1, which means the deadline is September 30.
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