RBI Raises Concerns On RBL Bank-Bajaj Finserv Co-Branded Credit Card
The regulator has granted a one-year extension to the partnership against the two years sought by the non-bank lender.
Reserve Bank of India has raised supervisory concerns against the co-branded credit cards issued by RBL Bank Ltd. in partnership with Bajaj Finserv, according to two people in the know.
The regulator has granted a one-year extension to the partnership against the two years sought by the non-bank lender, the people said on the condition of anonymity.
Typically, a bank does not need to seek special regulatory clearance before issuing a co-branded card. In 2021, RBL Bank extended the partnership by five years on its part, the first person quoted above said.
However, non-banks entering such card arrangements are required to seek an approval from the regulator every two years. So while the RBI gave its nod for two years in 2021, it has now extended the partnership by only one year.
This follows regulatory concerns the RBI raised in the matter and these need to be resolved before Bajaj Finserv can seek another extension, the first person said.
Currently, the Bajaj Finserv co-branded cards account for a sizeable portion of RBL Bank's credit card issuances. As of Sept. 30, Bajaj Finserv's co-branded credit card portfolio stood at 38.2 lakh. RBL Bank's credit card portfolio stood at over 48 lakh cards.
The non-bank has a co-branded arrangement with RBL Bank and DBS Bank, with the former accounting for most of these cards. RBL Bank is in the process of reducing the concentration of these co-branded cards in its existing portfolio, the first person said.
RBL Bank has also employed over 2,000 people to increase direct acquisition of credit card customers, the person added.
On Nov. 15, the banking regulator had barred Bajaj Finance from extended loans under some of its digital lending products including eCOM and InstaEMI cards. The RBI cited Bajaj Finance's non-adherence with the regulator's digital lending norms.
