Banks Take Action on Co-Branded Credit Cards Amid RBI Guidelines

14 Mar 2024 , 01:37 PM

Federal Bank and South Indian Bank announced actions regarding co-branded credit cards on March 13, based on regulatory guidance from the Reserve Bank of India (RBI) received on March 12.

Federal Bank ceased issuing new co-branded credit cards and is rectifying deficiencies to fully comply with regulatory guidelines before resuming issuance.

South Indian Bank halted onboarding new customers for co-branded credit cards until full compliance with regulatory directives is achieved. Both banks will continue offering credit cards to new and existing customers in the non-co-branded segment.

Existing customers holding co-branded credit cards issued by the banks will continue to be serviced.

The RBI amended the Master Direction on Credit Card and Debit Cards on March 7, emphasizing the need for effective monitoring of fund use by card issuers.

Card transaction data may be securely accessed from card issuers’ systems and displayed on co-branding partner platforms for cardholders’ convenience, with stringent security measures in place.

The amended directives prohibit card issuers from sharing cardholder data with outsourcing partners unless essential for their designated functions.

On March 6, the RBI prohibited card issuers from entering into arrangements with card networks restricting them from utilizing the services of other networks.

Card issuers are required to offer eligible customers the option to choose from multiple card networks at issuance or during renewal for existing cardholders.

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