Issuance of fresh cards by five private banks to be impacted due to ban on Mastercard by RBI, says report
New Delhi: As many as five private sector banks, including Axis Bank, Yes Bank, and IndusInd Bank, are to be impacted by the Reserve Bank of India's decision to ban Mastercard from issuing new cards for not complying with local data storage guidelines, according to a report. HDFC Bank would also have been affected by this decision but the lender is already facing restrictions by the RBI on issuance of new cards (debit, credit or prepaid). Besides these five banks, Bajaj Finserve and SBI Card may face problems as they were also issuing cards of this payment gateway.
So, in all, as per the report of global bokerage firm Nomura, seven financial institutions would not be able to issue new card as they sourced significant number from Marstercard.
The issuance of new cards through another payment gateway would take 2-3 months because it involves technology integration and other modalities. "Among credit card issuers including co-brand partners, RBL Bank, Yes Bank and Bajaj Finserv lending are most impacted, in our view, as their entire card schemes are allied with Mastercard," the report said.
As per the report, RBL Bank, Yes Bank and Bajaj Finserv were fully dependent on Mastercard for card issuance while dependence of IndusInd Bank, ICICI Bank and Axis Bank varied from 35 per cent to 40 per cent.
Card-issuing arm of State Bank of India, SBI Card, has only 10 per cent of their card tied up to the banned Mastercard. On the other hand, Kotak Mahindra Bank's card portfolio is entirely allied to Visa and hence won't face any issues.
Amid the development, RBL Bank on Thursday said it has entered into an agreement with Visa Worldwide to start issuance of credit cards on the Visa platform. The bank will be able to issue the new cards after technology integration which is expected to take 8-10 weeks.
The RBI barred Mastercard Asia/Pacific Pte Ltd from on-boarding new customers across all its card products from July 22, 2021, as it failed to comply with data storage norms.
