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Credit card approval to NBFCs not on RBI mind at the moment

Sources told CNBC-TV18 that the matter is “not on the table” at present

September 20, 2022 / 09:58 AM IST
A host of fintechs with an NBFC licence such as Slice, Uni and LazyPay are issuing prepaid cards through tie-ups with banks. For players like these, an RBI nod to issue credit cards will help expand their offerings (Representative Image)

A host of fintechs with an NBFC licence such as Slice, Uni and LazyPay are issuing prepaid cards through tie-ups with banks. For players like these, an RBI nod to issue credit cards will help expand their offerings (Representative Image)

The Reserve Bank of India (RBI) is at this time “not looking” at clearance to non-banking financial companies (NBFCs) to issue credit cards, sources close to the central bank told CNBC-TV18 on September 20.

“The matter of allowing NBFCs to issue credit cards not on the table right now,” one of the sources said.

NBFCs now distribute credit cards of banks they have tie-ups with, instead of issuing their own cards.

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Earlier in February, sources had told Moneycontrol that the RBI was likely to allow some NBFCs to issue credit cards, but with stringent conditions that would limit the number of companies to only those with a strong balance sheet.

India is a market with low credit-card penetration of 3-4 percent. Banks also focus on the so-called prime or super-prime customers, making a large pool of Indians ineligible for these credit lines, which NBFCs and fintech start-ups are looking to tap.

So far, only two NBFCs — SBI Card and BoB card, both in the state-run space — issue credit cards.

At the end of November 2021, there were 67 million credit cards, compared to 934 million debit cards, which is to be seen against the nearly 550 million customers who have credit bureau histories, the latest RBI Monthly Bulletin of January 2022 said.

Notably, a host of fintechs with an NBFC licence such as Slice, Uni and LazyPay are issuing prepaid cards through tie-ups with banks. For players like these, an RBI nod to issue credit cards will help expand their offerings.

Also Read | Credit cards a good carrot for NBFCs amid tightening regulation (MC Pro)

NBFCs do not appear to be too keen to launch their credit cards and prefer to focus on conventional lending products though the central bank has allowed them to do so.

In master guidelines issued in April, the RBI had said NBFCs with minimum net-owned funds of Rs 100 crore can launch their branded credit cards, provided they have regulatory approval. As of August, large NBFCs, including Bajaj Finance, L&T Finance, M&M Finance and Shriram Transport Finance, were yet to move in that direction.
Moneycontrol News
first published: Sep 20, 2022 09:58 am
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