CURRENT AFFAIRS
CURRENT AFFAIRS
Description
The Reserve Bank of India (RBI) has issued notifications to Federal Bank and South Indian Bank, instructing them to stop issuing new co-branded credit cards. The two banks notified the stock markets about the news.
Compliance With The Regulatory Guidelines
South Indian Bank noted that the regulatory action is consistent with the rules established by the RBI on March 7th. The bank will not accept new customers for co-branded credit cards until it is fully compliant with the regulatory rules.
Existing Offers And Services
Both Federal Bank and South Indian Bank have stated that they will continue to issue credit cards to new and current customers in the non-co-branded market. Furthermore, they will continue to serve current co-branded cardholders.
Co-branded Tie-Ups
Federal Bank has three co-branded partnerships with OneCard, including a travel card with Scapia and another with the neo bank Fi. Aside from co-branded agreements, the bank provides three main credit card options: Celesta, Imperio, and Signet.
South Indian Bank only provides a co-branded credit card through OneCard.
The banks made no more remarks on the matter at the time of publishing.
Common Link: OneCard
According to market sources, OneCard, a co-branded metal card issuer, is likely to serve as the two banks' common link. OneCard has partnerships with six issuers, including Federal Bank and South Indian Bank.
RBI's Guidelines For Co-Branded Cards
The RBI's March 7th amendments require co-branded cards to explicitly state that they were issued under a co-branding arrangement. Furthermore, the co-branding partner is not permitted to advertise or market the co-branded card as its own product, and the card issuer's name must be prominently displayed in all marketing and promotional materials.
The RBI's efforts aim to ensure transparency and compliance with regulatory norms in the co-branded credit card category, thereby protecting consumer interests and upholding the financial system's integrity.
Furthermore, the co-branding partner is not entitled to access information relating to transactions done using the co-branded card and should not be involved in any post-issuance processes or controls, other than serving as the first point of contact for grievances.
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