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NBFCs can’t undertake credit card biz without prior approval: RBI


The Reserve Bank of India in a circular dated April 21, 2022, said that Nonbank financial companies (NBFCs) shall not undertake credit card business without prior approval of the RBI.

”Any company including a non-deposit-taking company intending to engage in this activity shall require a Certificate of Registration, apart from specific permission to enter into this business, the pre-requisite for which is a minimum net owned fund of ₹100 crore,” the circular read.

NBFCs will not be able to issue debit cards, credit cards, charge cards, or similar products virtually or physically without obtaining prior approval from the RBI.

On interest rate charges, RBI has said that the card issuers may be guided by the instructions on the interest rate on advances issued. “Interest charged on credit cards shall be justifiable having regard to the cost incurred and the extent of return that could be reasonably expected by the card-issuer,” it says.

Card issuers will be required to prescribe an interest rate ceiling in line with other unsecured loans, including processing and other charges, in respect of credit cards as part of their Board approved policy.

Further, the card issuers have been asked to indicate upfront to the credit cardholder, the methodology of calculation of finance charges with illustrative examples, particularly in situations where only a part of the amount outstanding is paid by the customer.



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