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RBL Bank ties up with Visa after RBI bars Mastercard, says new card issuances may be impacted

RBI’s regulatory action leaves Visa and RuPay as the only active issuers of debit and credit cards in the country.

July 16, 2021 / 10:56 AM IST
RBL Bank requires customers to maintain a balance between Rs 3 crore and Rs 5 crore to avail the highest rate - 6.5 percent for its Digital Savings Account. An interest rate of 4.75 percent is offered to customers with upto Rs 1 lakh balance and 6 percent interest rate for a customer who maintains a balance between Rs 1 lakh to 10 lakh.

RBL Bank requires customers to maintain a balance between Rs 3 crore and Rs 5 crore to avail the highest rate - 6.5 percent for its Digital Savings Account. An interest rate of 4.75 percent is offered to customers with upto Rs 1 lakh balance and 6 percent interest rate for a customer who maintains a balance between Rs 1 lakh to 10 lakh.

 
 
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RBL Bank said on 15 July it has tied up with card network Visa Worldwide to issue fresh credit cards after the Reserve Bank of India (RBI) jhad barred Mastercard Asia/Pacific from issuing new cards in India.

RBL Bank currently issues credit cards on the Mastercard network only.

“RBL Bank Limited has entered into an agreement with Visa Worldwide Pte. Limited yesterday to issue credit cards enabled on the Visa payment network. RBL Bank expects to start issuance of credit cards on the Visa payment network post the technology integration which is expected to take 8 to 10 weeks,” the bank said in a notification to the stock exchanges.

RBI bars Mastercard: 8 key questions answered

In the meantime, RBL Bank’s current run rate of approximately one lakh new credit card issuances per month could potentially be impacted till such time that there is clarity from the regulator on issuing new credit cards on the Mastercard network or till the technical integration with Visa is complete.

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As of date, RBL Bank has three million credit card customers and is the fifth largest credit card issuer in the country with roughly five percent market share, the bank said.

On July 14, the RBI said it had taken supervisory action against Mastercard, citing non-compliance with the directions on Storage of Payment System Data. In April, the regulator had barred on similar grounds American Express Banking Corp. (Amex) and Diners Club International from on-boarding new domestic customers on to their card networks from 1 May. The two sets of regulatory action leave Visa and the National Payments Corporation of India-owned RuPay as the only active issuers of new cards in India.

In a report dated 15 July, Nomura said that among credit card issuers including co-brand partners, RBL Bank, Yes Bank and Bajaj Finserv are the most impacted, as their entire card schemes are allied with Mastercard. HDFC Bank has 60 percent of its card schemes tied to Mastercard, Amex and

Diners Club, while for Axis Bank and ICICI Bank, this is about 35-36 percent.  "That said, we don’t know the individual card schemes’ contribution to overall profitability of the issuers to assess the potential impact," Nomura analysts said in the report.

In response to queries from Moneycontrol, a Yes Bank spokesperson said that the RBI restriction on Mastercard will not impact the bank's existing customers. "YES BANK Debit cards are also available on VISA/Rupay platforms and will have no impact on new cards issuance. For new Credit card issuance, the Bank is evaluating migration to other platforms for seamless transition,” the spokesperson said over email.

Bajaj Finance declined to comment as it is currently in a silent period.

The actions against the three companies relate to non-compliance with an RBI circular dated April 6, 2018. The circular mandated all payment system providers to ensure that within a period of six months the entire data relating to payment systems operated by them is stored in a system only in India.
Shritama Bose
first published: Jul 15, 2021 09:48 am

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