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Enable NBFCs To Issue Credit Cards – A Two-Fold Advantage

According to RBI’s statistics, in November 2018, over 1 billion cards were issued in India. Only 40 million of the outstanding cards are credit cards, whereas there are approximately 400+ million consumer credit records with the bureau, according to estimates. Clearly, the credit cards market is significantly under-penetrated. One of the reasons is the constrained universe of issuers that currently only comprises of banks (on the automatic route). NBFCs are practically constrained from the credit card market on account of high access barriers, both for the issuance of general credit cards and co-branded cards. Furthermore, they are altogether foreclosed from issuing variants of other cards like charge cards, debit cards, and stored value cards.

This article will first point out the bottlenecks inhibiting NBFCs from accessing the credit card market as issuer from a general as well as a co-branded vantage point. Enabling NBFCs will have the two-fold advantages of deepening digital payments and facilitating the crea ...

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