Reserve Bank of India is having discussions with some Non-Banking Financial Companies (NBFC) over the possibility of giving them permission to issue credit cards to users on standalone basis. The information was released by a report made by Business Standard. Currently, NBFCs can only issue co-branded credit cards in partnership with banks.
RBI issued a circular 18 years ago on July 7, 2004 which said that any company (including a non-deposit taking company) intending to issue credit cards must have certificate of registration and specific permission to do the business. The pre-requisite for such companies would be a minimum net owned fund of Rs 100 crore. The circular said that RBI may issue terms and conditions from time to time in this matter. The circular did not ban NBFCs to issue credit cards.
Also read:
Alert! Credit Card Charges To Increase; Price Comparisons Here
According to experts credit landscape of the country has evolved too much and it is the right time for authorities to give attention to it. The circular released in 2004 is being read again along with ‘Report of the Working Group on Digital Lending through Online Platforms and Mobile Apps’
According to the observations made by report nearly 44% of fintech funding went to digital funding startups in 2020. The sector has been showing a positive growth and the investors are positive to lend money to new players in digital lending market. The report also said that lines of credits and digital credit cards should be allowed for operations without any license for financial inclusion NITI Ayog and Mastercard did a joint study in 2021 that showed that 20-30% of credit lending is done by NBFC.
Currently only two NBFC, SBI Card and BoB Card, are allowed to issue credit cards. Both the NBFCs run in a state ruled space. NBFCs like Tata Capital, Reliance Capital and Bajaj Finance have approached RBI seeking permission to issue credit cards on standalone basis while using VISA network.
