DBOD.No. FSC.BC.50/24.01.011/98

June 2, 1998
Jyestha 12, 1920 (Saka)

All Scheduled Commercial Banks

Dear Sir,

Entry of banks into domestic credit card business

In terms of Circular DBOD No. BP(FSC) BC. 144/C.469-89 dated 30 June 1989, banks were advised that if they desire to enter domestic credit card business, it would be preferable that they have a suitable tie-up arrangement with one of the banks which might have already introduced credit cards and that such proposals should be forwarded to RBI for approval. The position has been reviewed and it has been decided to allow banks freedom to undertake credit card business either independently or in tie-up arrangement with other card issuing banks. The credit card business should be conducted on sound lines and with the approval of the bank's Board. Banks need not henceforth, forward such proposals to RBI for prior approval. Banks desirous of setting up a separate subsidiary for undertaking credit card business would, however, require RBI's prior approval.

2. Consequently, banks need not henceforth forward to the RBI Reviews/Reports on credit card business as required in terms of our circular DBOD FSC. BC. 152/24.01.011/97-98 dated 9 December 1997. Banks should, however, continue to place the above Review/Report before their Board of Directors/Managing Committee of the Board as indicated in our circular DBOD No. BP. BC. 121/21.03.038/96 dated 23 September 1996.

Yours faithfully,

(Chitra Chandramouliswaran)

General Manager