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Cobranded credit cards: RBI ups scrutiny on credit cards

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The Reserve Bank of India’s strict scrutiny of cobranded credit cards – a sector that has seen strong growth recently – in recent times is aimed at preventing backdoor entry into the highly regulated credit card industry, people aware of the situation told ET.

The central bank wants to strengthen regulations on cobranded credit cards, they said.

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“This is not the first time the regulator has called out data sharing between cobranding partners… It wants brands to just be sourcing channels or marketing channels for cobranded cards and not to be used by unregulated companies as a backdoor entry into the highly regulated credit card sector,” said the founder of a fintech startup that operates in this space.

Non-banking finance companies (NBFCs) have been seeking regulatory nod for credit card issuance for years but the regulator only allows a handful of banks to issue these cards, the person pointed out.

The RBI wants cobranded cards to grow, but wants to ensure the growth happens in a regulated fashion, the founder added.

Also read | After UPI, now credit cards overtake debit card transactions

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In a directive issued on March 7, the central bank told all cobranded card issuers to prominently carry the name of the issuing bank. It has also asked the cobranding partner not to have access to any transaction information of the customer using the card.In another circular issued on March 6, the RBI barred banks from entering into exclusive arrangements with card networks like Visa, American Express, and Mastercard with the objective of providing customers with multiple card network options.

Last month, the central bank had restricted business and commercial payments through credit cards. B2B vendor payments through credit cards were amounting to Rs 30,000 crore per month, almost 20% of the total credit card spends, according to industry estimates. It has come to a halt now.

Almost every large brand offers a credit card to its customers through cobranding arrangements.

ET reported on January 12 that Swiggy has already issued around 120,000 HDFC Bank cards and Tata Neu has issued around a million of them. ICICI Bank has issued more than 4.7 million cards through Amazon Pay, as of December 2023.

For context: ICICI Bank has overall 16 million cards and HDFC Bank has around 20 million cards issued, RBI data shows.

Currently the total number of credit cards in the country stands at 99.5 million, up from 70 million in January 2022. The credit card outstanding has shot up to Rs 2.5 lakh crore compared to Rs 1.5 lakh crore a year back.

“The regulator is concerned around the end use of credit cards, be it corporate use cases or retail use cases… That is why you see all these regulatory actions taking place,” said the startup founder quoted above. “As of now, B2B payments have been stopped and the sector is awaiting further instructions.”

The restrictions on credit card business come after the central bank recently tightened scrutiny of the digital lending and the payments aggregator space.


The Reserve Bank of India’s strict scrutiny of cobranded credit cards – a sector that has seen strong growth recently – in recent times is aimed at preventing backdoor entry into the highly regulated credit card industry, people aware of the situation told ET.

The central bank wants to strengthen regulations on cobranded credit cards, they said.

Elevate Your Tech Prowess with High-Value Skill Courses

Offering College Course Website
IIM Lucknow IIML Executive Programme in FinTech, Banking & Applied Risk Management Visit
MIT MIT Technology Leadership and Innovation Visit
Indian School of Business ISB Product Management Visit

“This is not the first time the regulator has called out data sharing between cobranding partners… It wants brands to just be sourcing channels or marketing channels for cobranded cards and not to be used by unregulated companies as a backdoor entry into the highly regulated credit card sector,” said the founder of a fintech startup that operates in this space.

Non-banking finance companies (NBFCs) have been seeking regulatory nod for credit card issuance for years but the regulator only allows a handful of banks to issue these cards, the person pointed out.

The RBI wants cobranded cards to grow, but wants to ensure the growth happens in a regulated fashion, the founder added.

Also read | After UPI, now credit cards overtake debit card transactions

Discover the stories of your interest


In a directive issued on March 7, the central bank told all cobranded card issuers to prominently carry the name of the issuing bank. It has also asked the cobranding partner not to have access to any transaction information of the customer using the card.In another circular issued on March 6, the RBI barred banks from entering into exclusive arrangements with card networks like Visa, American Express, and Mastercard with the objective of providing customers with multiple card network options.

Last month, the central bank had restricted business and commercial payments through credit cards. B2B vendor payments through credit cards were amounting to Rs 30,000 crore per month, almost 20% of the total credit card spends, according to industry estimates. It has come to a halt now.

Almost every large brand offers a credit card to its customers through cobranding arrangements.

ET reported on January 12 that Swiggy has already issued around 120,000 HDFC Bank cards and Tata Neu has issued around a million of them. ICICI Bank has issued more than 4.7 million cards through Amazon Pay, as of December 2023.

For context: ICICI Bank has overall 16 million cards and HDFC Bank has around 20 million cards issued, RBI data shows.

Currently the total number of credit cards in the country stands at 99.5 million, up from 70 million in January 2022. The credit card outstanding has shot up to Rs 2.5 lakh crore compared to Rs 1.5 lakh crore a year back.

“The regulator is concerned around the end use of credit cards, be it corporate use cases or retail use cases… That is why you see all these regulatory actions taking place,” said the startup founder quoted above. “As of now, B2B payments have been stopped and the sector is awaiting further instructions.”

The restrictions on credit card business come after the central bank recently tightened scrutiny of the digital lending and the payments aggregator space.

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