SIB, Federal Bank stop issuing co-branded credit cards

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Two Kerala-based lenders — South Indian Bank and Federal Bank – have stopped issuing new co-branded cards, following an advisory by the Reserve Bank of India.

In exchange filing, South Indian Bank said that it will not take on new customers for their co-branded credit cards till it fully complies with the RBI directive. However, the bank said the cards already issued will be serviced and will face no problems. The South Indian Bank has co-branded credit cards in partnership with State Bank of India (SBI), which is available in two variants SimplySAVE and Platinum, and OneCard.

On March 7, the RBI had released a Master Direction on “Amendment to the Master Direction — Credit Card and Debit Card — Issuance and Conduct Directions, 2022. According to the notification, co-branded cards should explicitly indicate that the card has been issued under a co-branding arrangement with clear mention of the card-issuer.” “The co-branding partner shall not advertise/market the co-branded card as its own product. In all marketing/ advertising material, the name of the card-issuer shall be clearly shown,” the amended directions noted.

In a separate exchange filing, Federal Bank informed the exchanges that after receiving a letter from the RBI it has stopped issuance of new co-branded credit cards due to regulatory deficiencies. It said the bank is rectifying the areas of concern.

Federal Bank has three co-branded tie-ups with OneCard, a travel card with Scapia and the third with neo bank Fi.

Co-branded credit cards have seen significant growth in recent years, with most banks entering into arrangements with merchants and fintech companies. As of January, the number of credit cards in circulation reached 99 million, up from 97.9 million in December 2023, according to media reports.