The Reserve Bank of India (RBI) is not looking to allow non-bank lenders to issue credit cards, sources close to the central bank told CNBC TV-18, adding that the "issue is not on the table right now." Speculations have been rife that the RBI may allow strong non-banking financial companies (NBFCs) to issue credit cards.
An April 21 regulation from the RBI states, "Without RBI nod, NBFCs shall not issue debit, credit cards etc." This fanned hopes that the central bank may end up entertaining requests from NBFCs to issue their own credit cards.
Currently, NBFCs only distribute credit cards of banks with whom they have formal tie-ups.
For example, Bajaj Finance procures credit card customers for clients like RBL Bank and DBS Bank and has over 3 million customers for the same.
In a note on Monday, Brokerage firm Jefferies highlighted that an in-house credit card program can help Bajaj Finance expand into deeper markets. India's largest non-bank lender by market capitalization has a network of 3,500 branches, relationships with over 1,40,000 merchants and a customer base of nearly 60 million.
Jefferies also highlighted that if Bajaj Finance manages to achieve even 20-40 percent cross-sell to its client base, it can make a profit of anywhere between Rs 900 crore and Rs 1,700 crore within three years. The profit figure is 5-10 percent of the company's projected profit for FY25.
Shares of Bajaj Finance and RBL Bank, both gained in the early minutes of trade. Bajaj Finance is up 1.5 percent while RBL Bank has opened with gains of 2 percent.