The Reserve Bank of India has recently issued a circular stating that the finance technology players and non-bank lenders engaged in the business of credit cards will have to take fresh approval from the RBI to continue with these business operations. With fresh curbs imposed, the business operations of the banks will be affected. The Reserve Bank of India is planning to make strict norms for the credit card business as it is concerned about data sharing and customer consent.
According to the report, the NBFCs shall get a transition period to apply and approval. And if the company does not meet the criteria to run the credit card business, a time will be given to it for winding down the operation.
The circular issued by the central bank states that NBFCs are not allowed to issue debit or credit cards, physically or virtually without taking approval from the RBI. It is mandatory for the interested NBFCs to obtain a certificate of registration, along with specific permission to enter into the credit card business. These companies will also require minimum net-owned funds of Rs 100 crore.
Commenting on the co-branded cards, RBI said that the co-branding partner entity under the tie-up agreement should be restricted to marketing and distribution of the cards and providing access to the cardholder for the goods and services that are offered. The co-branding partner will not be given access to information relating to transactions undertaken through the co-branded card.
