Federal Bank, South Indian Bank stop new co-branded card issuance

Federal Bank and South Indian Bank have said that they have stopped issuing co-branded credit cards following regulatory changes in credit card rules.

The Reserve Bank of India has made amendments in master direction for credit and debit card issuance and conduct rules.

Federal Bank has three co-branded credit cards with partnerships with OneCard Scapia Technology Pvt. Ltd and FI Brand Pvt Ltd, targeting mostly the new generation customers. The bank on Wednesday said it is in the process of rectifying the areas that are deficient and will seek regulatory clearance prior to resumption of new issuance.

"Pursuant to a letter from Reserve Bank of India, dated March 12, 2024, we have stopped issuance of new co-branded credit cards," the private sector lender said in a regulatory filing.

At the end of December last year, Federal Bank's gross advances through credit cards stood at Rs 2778 crore, which was 153% higher than the year-ago business position. Co-branded credit cards contributed about three-fourth of it.

"The bank shall not on-board any fresh customers in our co-branded credit cards until the bank fully complies with the regulatory guidelines issued in this regard," South Indian Bank said.

Both Federal Bank and South Indian Bank said they would continue to service the existing customers who currently hold co-branded credit cards issued by them.