Federal Bank, South Indian Bank Stop Onboarding Customers In Co-Branded Credit Cards

South Indian Bank Ltd. and Federal Bank Ltd. have stopped onboarding any fresh customers for their co-branded credit cards, according to exchange filings on Wednesday.

In the filing, South Indian Bank said that this step has been taken until it fully complies with regulatory guidelines. However, it will continue serving existing customers who hold co-branded credit cards issued by the banks.

It is to comply with the Reserve Bank of India's amendments to master directions on credit cards and debit cards. These amendments came on March 7 via a circular.

The bank also said that the same was also directed by an RBI letter dated March 12.

Federal Bank, too, has stopped onboarding new customers for the same reason. It, however, said that it will seek regulatory clearance prior to the resumption of new issuance.

Of all the credit cards, South Indian Bank has a co-branded one with the State Bank of India. It comes in two variants—South Indian Bank SimplySAVE SBI Card and the South Indian Bank SBI Platinum Card.

Federal Bank has its own co-branded credit cards with OneCard, Scapia Technology Pvt. Ltd., and FI Brand Pvt. Ltd.

According to the RBI's amended rules for co-branded credit cards, the card shall explicitly indicate that it has been issued under such an arrangement. In all marketing/advertising material too, the name of the card issuer would be clearly shown.

This information would be shown on the co-branding partner's platform, only to the cardholder.

Apart from other rules, the card issuers are advised to ensure that all the co-branding arrangements are in conformity with the instructions.