RBI / 2004-2005 / 22
DNBS (PD) C.C. No. 41 / 10.27 / 2004-05
July 7, 2004
To
All Non-Banking Financial Companies (NBFCs)
including Residuary Non-Banking Companies (RNBCs)
Dear Sir,
Issue of credit card
NBFCs are not allowed to undertake credit card
business without prior approval of Reserve Bank of India. However, we have been
receiving requests from NBFCs for permission to issue debit cards, stored value
cards, smart cards, value added cards, etc. In this connection, we advise that
the issue of such cards have a characteristic akin to demand deposits as they
are payable at the convenience of the card holders and acceptance of deposits
payable on demand which is a banking function. The issue of such cards is, therefore,
violative of the extant NBFC Directions. RBI has advised banks that they should
not issue smart / debit cards in tie-up with any other non-bank entities (cf.
DBOD.NO.FSC.BC.106
/ 24.01.019 / 2003-04 dated June 30, 2004).
2. In regard to credit card business, it
is clarified that any company including a non-deposit taking company intending
to engage in this activity requires 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 Rs.100 crore and subject to such terms and conditions
as the Bank may specify in this behalf from time to time.
Yours faithfully,
Sd/-
( O. P. Aggarwal )
Chief General Manager-in-Charge
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