Updated March 14th, 2024 at 10:22 IST

Federal Bank falls over 5% after RBI stops bank from issuing co-branded credit cards

Federal Bank assures existing customers that it will continue to service those who currently hold co-branded credit cards issued by the bank.

Reported by: Business Desk
Federal Bank | Image:Republic
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Federal Bank shares dip: Federal Bank shares plummeted over 5 per cent to an intraday low of Rs 139.80 per share on Thursday after the Reserve Bank of India's (RBI) directive to halt the issuance of co-branded credit cards. In response to a letter from the RBI dated March 12, 2024, the Federal Bank stated that it has ceased the issuance of new co-branded credit cards until rectifications are made to address identified deficiencies.

The bank assured investors that it is actively working to remedy these areas and will seek regulatory clearance before resuming the issuance of new cards.

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Non-co-branded card operations

In a statement, Federal Bank stressed its focus on serving both new and existing customers. While the issuance of new co-branded credit cards has been temporarily halted, the bank will continue to offer credit cards in the non-co-branded segment.

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Additionally, Federal Bank assures existing customers that it will continue to service those who currently hold co-branded credit cards issued by the bank.

South Indian Bank’s regulatory trouble

Similarly, South Indian Bank has notified the stock exchanges of its decision to suspend the enrolment of new customers for its co-branded products until all regulatory requirements are met. Both banks have said that they will maintain services for existing customers holding co-branded credit cards.

The popularity of co-branded credit cards has surged in recent times, with many banks forming partnerships with merchants and fintech firms. As of January, the total number of credit cards in circulation rose to 99 million, marking an increase from 97.9 million recorded in December 2023.

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Published March 14th, 2024 at 10:22 IST