Federal Bank and South Indian Bank have stopped issuing new co-branded credit cards after the Reserve Bank of India (RBI) asked the lenders to refrain from onboarding new customers for such cards. Both lenders will continue to service existing customers.
“Pursuant to a letter from Reserve Bank of India, dated March 12, 2024, we have stopped issuance of new co-branded credit cards,” Federal Bank said in filing with the BSE. “The bank is in the process of rectifying the areas that are deficient and will seek regulatory clearance prior to resumption of new issuance,” it added.
The bank continues to offer credit cards to new and existing customers in the non-co-branded segment and will also continue to service existing customers who currently hold co-branded credit cards issued by the bank.
The central bank on March 7, amended the master direction on credit card and debit cards and asked issuers to establish a robust system for monitoring the end use of funds.
“Bank shall not on-board any fresh customers in our co-branded credit cards until the bank fully complies with the regulatory guidelines issued in this regard,” said South Indian Bank in a filing. “The bank would, however, continue to service the existing customers who hold co-branded credit cards issued by the bank,” it added.
According to the revised guidelines regarding co-branded credit cards, it is mandatory for the card to explicitly state its issuance under such collaboration. Additionally, the name of the card issuer must be prominently displayed in all marketing and advertising materials. This disclosure will be exclusively visible to the cardholder on the co-branding partner’s platform. Card issuers are instructed to verify that all co-branding agreements adhere to the directives.