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NBFCs worth over Rs 100 crore can apply to start credit card biz

MUMBAI: In a move that opens the door for non-banking finance companies (NBFCs) to issue credit cards, the Reserve Bank of India set a Rs 100-crore net worth requirement for finance companies issuing cards. The central bank also said that finance companies will need the regulator’s prior permission before getting into the cards business.
The RBI on Thursday issued its master direction on credit and debit cards in which it included NBFCs as card issuers. The move will enable large finance companies to seek permission to issue their credit cards. Bajaj Finance is a large credit card issuer but the cards that carry its name are co-branded cards issued by RBL Bank.
“Financially sound and well managed Scheduled Urban Cooperative Banks (UCBs) with a minimum net worth of Rs 100 crore which are CBS enabled may issue Credit Cards subject to conditions,” the circular said. The new rules also enable banks to issue cards in different form factors including wearables.
Hitherto the regulations permitted finance companies to issue only co-branded cards where the credit limits would be with the bank but the finance companies would get some revenue for distributing the bank’s products. SBI Card, a subsidiary of State Bank of India is the only non-banking company to have received permission to issue cards. The cards are reckoned as those of SBI in RBI’s data dissemination.
American Express is another standalone card issuer. However, Amex has had to obtain a full-fledged banking licence to get into the cards business in India.

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