The Reserve Bank of India (RBI) on Wednesday (March 14, 2024) stopped the Federal Bank and South Indian Bank from issuing new co-branded credit cards to customers. The reason behind this RBI decision is issues in regulatory scrutiny.
South Indian Bank informed the stock exchanges that it will not onboard new customers for its co-branded credit cards until full compliance with regulatory requirements.
The Federal Bank also informed the stock exchanges that it is rectifying deficiencies. The bank will await regulatory approval before issuing new cards.
The banks will, however, continue to issue non-branded credit cards to customers. Further, they will continue to serve existing customers of their co-branded credit cards.
The bank is in the process of rectifying the areas that are deficient . It will seek regulatory approval before issuing a new card, Federal Bank told the exchanges.
Similarly, South Indian Bank said that until regulatory criteria are met, it will not accept new customers for its co-branded credit cards.
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Recently, RBI amended the Master Direction on Credit Card and Debit Cards. The central bank has instructed card issuers to establish an effective mechanism for monitoring the end use of funds.
In the updated guidelines, the central bank allows card transaction data to be securely extracted from the card issuer’s system and displayed on the CBP platform for cardholders’ convenience.
The RBI stated that information displayed through the CBP’s platform should only be visible to the cardholder. Such information and should not be accessed or stored by the CBP.
Customers will now have the option to choose from multiple card networks. Existing customers will have this option at the time of renewal said by RBI.
