Federal Bank expects to submit its plan to the Reserve Bank of India (RBI) in the next few days, detailing the corrective actions the bank has taken in response to concerns raised by the banking regulator about its co-branded cards. The private lender does not expect any significant impact of RBI’s action on its fee income due to RBI’s order to issue new co-branded cards, according to Shalini Warrier, executive director, Federal Bank.
“We are in the process of working through the details of what RBI has asked us to look at,” Warrier told analysts in earnings call. “We have worked through most of the details that need to be done. In the next few days, we will be going back to RBI and presenting our plan, indicating where the corrections have been made,” she added.
Last month, the RBI had asked Federal Bank and South Indian Bank to stop issuing new co-branded credit cards due to regulatory deficiencies. Federal Bank has three co-branded credit cards – Federal Onecard, Federal Scapia, Federal FI.
“We do not expect too much of an implication either on the balance sheet or on the fee income. We will be going back to RBI and if all goes well, I am sure they will bless our resumption very shortly,” she added.
Federal Bank’s gross advances through credit cards increased to Rs 3,060 crore at the end of March quarter, registering year-on-year growth of 106%.
The corrective measure does not mean the bank will end its partnership with co-branded card partners.
“I don’t believe either the regulator wants us to stop partnerships or we are looking at that direction,” said Shyam Srinivasan managing director & CEO, Federal Bank.
Talking about his successor, he said that the bank is in the advanced process of sending list of candidates to the central bank which include the names of external and internal candidates. The bank will send the candidate names to the RBI within weeks, he added.