Banks get time till March 2022 to implement lockable cassettes swap system for ATMs, BFSI News, ET BFSI

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MUMBAI: The Reserve Bank has extended the deadline till March 2022 for banks to use only lockable cassettes for replenishing cash in ATMs.

Currently, most of the ATMs (automated teller machines) are replenished by way of open cash top-up or by loading cash in the machines on the spot.

To do away with the current system, the Reserve Bank of India (RBI) had asked banks to ensure that lockable cassettes are swapped at the time of cash replenishment in the ATMs.

Following representations received from banks citing difficulties in moving towards the lockable cassettes system, RBI has decided to extend the deadline for its implementation till March next year, according to a notification issued on Wednesday.

In April 2018, the apex bank had asked banks to consider using lockable cassettes in their ATMs which shall be swapped at the time of cash replenishment. It was to be implemented in a phased manner covering at least one-third ATMs operated by the banks every year, such that all ATMs achieve cassette swap by March 31, 2021.

“In this regard, representations have been received from Indian Banks’ Association on behalf of various banks expressing difficulties in meeting this timeline. Accordingly, it has been decided to extend the timeline for implementation of cassette swap in all ATMs till March 31, 2022,” RBI said.

Banks have also been asked to monitor progress and make the required course correction at the end of every quarter and report status to the RBI.

The recommendation to switch to lockable cassettes in ATMs was based on report of Committee on Currency Movement that was set up by the central bank.

At the end of May, there were 1,10,623 ATMs on site of banks and 1,04,031 of site-ATMs in the country.



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5 Alpha Stocks That Have Given Multibagger Returns Of Over 500-1000% in the Past Year

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5 Stocks That Have Given Multibagger Returns Of Over 500-1000% In The Past Year

Stock Name 1-year Return in % 3-Year Return in % LTP (July14)
Tanla Solutions 1101.74 2150.91 946.10
Adani Enterp. 808.49 1414.47 1,402.05
CG Power & Indu. 772.88 34.70 75.50
Intellect Design 513.52 263.11 710.65

Adani Total Gas

500.39 1121.83 881.25

Tanla Solutions

Tanla Solutions

Tanla Platforms Limited, formerly Tanla Solutions Ltd, is an Indian cloud communications firm situated in Hyderabad. In the cloud communications area, the company offers value-added services. Tanla has offices in eleven cities throughout the world, including Singapore, London, Colombo, and Dubai. The company is listed on the BSE and NSE in India.

Over a three-year period, the stock gave a fantastic return of 2150.91 percent, compared to 96.3 percent for the Nifty IT index. The company has grown its income by 28.59 percent, in the past three years. Tanla Platforms’ PE ratio is 81.08, which is expensive and pricey in comparison. The current ratio of Tanla Platforms is 2.29. Tanla Platforms’ current year dividend is Rs 0 with a yield of 0.21 percent.

Adani Enterprise

Adani Enterprise

According to Adani Group Chairman Gautam Adani, the Adani Group has taken over management control of the Mumbai International Airport from the GVK Group.

Adani Enterprises Ltd. was founded in 1993 and its share price presently is 1401.45. Its current market capitalization stands at Rs 154132.88 Cr. In the latest quarter, the company has reported Gross Sales of Rs. 133587.3 Cr and Total Income of Rs.137506.5 Cr.

For the past three years, the company has shown a good profit growth of 23.24 percent. The corporation manages its cash flow well, with a CFO/PAT ratio of 2.48. The company has a high EV/EBITDA ratio of 112.18. The stock gained 976.87 percent over three years, compared to 41.72 percent for the Nifty 100. In the past year, the stock performed well and gave a return of 808%.

CG Power and Industrial

CG Power and Industrial

CG Power and Industrial Solutions founded in 1937, is a Small Cap business in the Electric/Electronics sector with a market cap of Rs 10,101.89 crore. Stock generated 34.7 percent over three years, compared to 50.6 percent for the Nifty Midcap 100. The promoters’ share of the company has increased by 53.24 percent in the last six months. The company’s financials aren’t stellar, yet the stock has returned a whopping 772 percent in the last year. Over the last three years, the company has had a dismal ROCE of -19.60 percent. With a coverage ratio of -5.78, the company has a low interest coverage ratio.

Intellect Design

Intellect Design

Intellect Design Arena develops financial technology that assists banks in leading enterprises to success and growth. Intellect Design’s PE ratio is 45.87, which is high and overvalued in comparison. Only 4.49 percent of trading sessions in the last six years had intraday drops of more than 5%. The stock made 263.11% during the last three years, compared to 50.6 percent for the Nifty Midcap 100.

Adani Total Gas

Adani Total Gas

Only 7.96 percent of trading sessions in the last two years had more than 5% intraday gains. Adani Total Gas Ltd., founded in 2005, is a Large Cap business in the Gas & Petroleum industry with a market cap of Rs 96,920.76 crore.

In the last five years, the company has maintained effective average operating margins of 28.63 percent. The ROA of Adani Total Gas is 16.54 percent, which is a positive sign for future performance; however, greater levels are usually preferable. Adani Total Gas offers a greater return on investment (ROI) of 27.50 percent.

Disclaimer

Disclaimer

Stock market investment is subject to risk associated with the stock markets and hence investors need to be very careful. Neither the author, the brokerage, nor Greynium Information Technologies Pvt Ltd would be responsible for losses incurred based on buying into the stocks based on the above article.



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BharatPe to spread PoS business to 80 cities

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Merchant-focused fintech BharatPe plans to triple its point of sale (PoS) business, BharatSwipe, and targets $6 billion in annualised transaction processed value (TPV) by the end of this fiscal year.

“We will be expanding our reach in the PoS business to 80 cities and deploy three lakh machines by the end of 2021-22. Additionally, we are exploring strategic partnerships with banks, financial institutions and brands with the objective of enhancing customer experience on our PoS devices,” said Suhail Sameer, Group President, BharatPe.

Fintech continues to garner highest seed funding after a pandemic-hit 2020

“BharatPe, which is now the number three player in the private PoS category, will also ramp up its reach by five times,” the company said in a statement on Thursday, adding that it plans to ramp up brand partnerships and offer consumer credit to drive further value in the PoS business.

BharatSwipe was launched in the second half of 2020 and contributes 20 per cent to the overall payments TPV of the company.

Fintech will be the silver bullet for growth in 2021

At present, there are over one lakh BharatSwipe machines installed across 16 cities in the country, which facilitate transactions exceeding ₹1,400 crore every month.

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Mastercard ban gives opportunity to RuPay, digital credit card firms, BFSI News, ET BFSI

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The ban on Mastercard for onboarding new customers by the Reserve Bank of India is set to hit new card issuances in the country, and give an opportunity to other players like Visa and RuPay to raise their market share.

Indian banks may see card spends and new card issuance take a beating after the RBI ban on Mastercard.

Mastercard’s has a one-third share of the Indian card market where Visa is the biggest player. The ban may also impact credit card spends, which are already down due to the Covid pandemic.

Banks have been swift to move on with RBL announcing a partnership with Visa just a day after the ban on Mastercard.

Digital credit card companies that use multiple tech innovations and do not rely on Visa, Mastercard rails are also likely to gain. They use UPI, which is said to have a larger acceptance for both P2P and P2M payments.

RuPay cards

India’s indigenous payment network RuPay has cornered a significant market share in the domestic card market since its launch. As of November 30, 2020, RuPay’s market share has increased to more than 60 per cent of total cards issued, from merely 17 per cent market share in 2017, according to RBI data.

As of November 2020, around 603.6-million RuPay cards have been issued by nearly 1,158 banks. But a majority of these are debit cards and only 970,000 are credit cards.

The number of debit cards issued in the country between 2010-11 and 2019-20 increased from 227.8 million to 828.6 million, of which around 300 million were RuPay debit cards issued to basic savings bank deposit account holders.

On the other hand, during the same period, the number of credit cards issued also increased from 18 million to 57.7 million.

The value of transactions for debit cards is lower than credit cards. In credit cards, Visa and Mastercard are at the top with the value of total credit card transactions in PoS system being much higher than the value of all debit card transactions. The government has also been pushing banks to focus more on RuPay cards and provide them as the first option to customers.

With this ban, RuPay can target high-value credit card transactions, which are dominated by Visa and Mastercard.

The Mastercard ban

In a major supervisory action, the Reserve Bank on Wednesday indefinitely barred the US-based Mastercard from issuing new credit, debit and prepaid cards with effect from July 22 for its failure to comply with data storage norms.

Mastercard, a major card issuing entity in the country, is the third company to have been barred by RBI from acquiring new customers after American Express Banking Corp and Diners Club International over data storage issue.

In a statement, Mastercard said it is disappointed with the stance taken by RBI.

The RBI, however, clarified that its supervisory action will not impact the services of the existing customers of Mastercard in the country.

Announcing the ban on Mastercard, RBI said, “notwithstanding lapse of considerable time and adequate opportunities being given, the entity has been found to be non-compliant with the directions on Storage of Payment System Data“.

Mastercard is a payment system operator authorised to operate a card network in the country under the Payment and Settlement Systems Act, 2007 (PSS Act).

In terms of RBI’s circular on Storage of Payment System Data on April 6, 2018, all system providers were directed to ensure that within a period of six months the entire data relating to payment systems is stored only in India.



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Microfinance sector hit as defaults surge in pandemic, BFSI News, ET BFSI

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MUMBAI: Small loan specialists in India that typically cater to people without bank accounts are facing a jump in pandemic-related defaults that could force some of them out of business, industry experts warn.

Loans overdue by 30 days are expected to reach 14-16% of all so-called microfinance loans in the immediate aftermath of the second Covid-19 wave sweeping India, said Krishnan Sitaraman, senior director at credit rating agency CRISIL.

That’s higher than 6-7% in March, before the second wave took hold, and also above the 11.7% reached in March 2017 after demonetisation drive – an attempt to boost digital transactions and crack down on undeclared money that also hit microfinance lenders hard.

“Older loans that were taken in 2019 or early 2020 are at a higher risk of defaults and they form about 60-65% of the loan book for lenders,” said Harsh Shrivastava, former head of the Microfinance Institutions Network, an association representing the sector in India.

Rahul Johri, chair of Vector Finance, a microfinance firm that provides loans to small enterprises, said many support measures brought in by the government had only helped larger institutions, while smaller players had struggled.

“It has become an existential issue for several small and mid-sized microfinance institutions as the business has been severely impacted and collections are down,” said Johri.

Loan collection efficiency across the total loan pool has fallen to about 70% from a peak of nearly 95% in March, analysts say, indicating a potential build-up in stress.

The gross loan portfolio of India’s microfinance lenders stood at 2.6 trillion rupees ($35 billion) as of March 31, according to CRISIL.

Bumpy road ahead

Despite the short-term challenges, some remain bullish on the sector and expect it to bounce back if an anticipated third wave of Covid-19 infections in India is not so severe.

“About 55% of the market is still untapped which means there is a huge market opportunity … so things will look up soon,” said Johri.

But for now, many smaller microfinance firms are struggling.

Such companies, typically with loan books of less than Rs 500 crore ($67 million), have also seen their cost of funds rise by 100-150 basis points as banks and companies have become less willing to lend to them, said one industry executive, speaking on condition of anonymity.

Some microfinance firms have had to scale back capital raising plans due to tepid interest from investors, said the heads of two firms that have been looking to raise funds.

As smaller players falter, some have stopped paying salaries, or incentives to employees in recent months, they added, asking not to be identified due to the sensitivity of the matter.

“We are now only getting basic salaries, incentives have completely stopped in the last few months as collections are down,” said a collection agent at one microfinance lender in eastern India.



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How RBI’s current a/c norms have put smaller banks at a disadvantage, BFSI News, ET BFSI

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The Reserve Bank of India‘s (RBI) insistence on companies opening current accounts with banks is among the factors that have helped large lenders such as HDFC Bank, ICICI Bank and SBI raise their shares of the competitive corporate banking market in 2020, according to a report.

Apart from the RBI rules, the government’s mega merger to reduce the number of state-owned banks has also helped in the trend, rating agency Crisil said on Wednesday in the report.

In mid-2020, the RBI had come up with the circular that specified which bank can open a current account for a borrower, in order to check any misuse through multiple current accounts.

A fourth of the large and medium corporates said they were banking with at least one among ICICI Bank, Axis Bank and HDFC Bank as against 17 per cent in 2016, it said adding that the private sector banks have grown at over 25 per cent per year.

In most of the four-year period, SBI defended its market-leading penetration levels but in 2020, the lender expanded its footprint. Now, nearly a third of corporates do business with the largest lender and 30 per cent name it as their cash management provider.

The RBI circular

In its August 6, 2020, circular, the regulator had mandated that no bank shall open current accounts for customers who have availed credit facilities in the form of CC/OD from the banking system, and all transactions shall be routed through the CC/OD account. The RBI moved was targeted to ensure greater discipline and transparency in the way large borrowers move funds.

It had said that in case where a bank’s exposure to a borrower was less than 10% of the banking system’s exposure to that borrower, debits to the CC/OD account can only be for credit to the CC/OD account of that borrower with a bank that has 10% or more of the exposure of the banking system to that borrower.

“Several trends have contributed to the pick-up in market penetration among the leading banks, including the ‘mega merger’ of the country’s public sector banks and the Reserve Bank of India’s ‘circular on current accounts’, which essentially rules that banks can only open current accounts for companies to whom they are also major credit providers, the report said.

Consolidation

It said the pressures exerted by the pandemic will accelerate the consolidation of the Indian corporate banking industry, as the market’s biggest banks prove themselves best-positioned to help large- and middle-market companies overcome crisis disruptions.

“When the pandemic sent the country into lockdown last year, companies needed immediate assistance from banks, at first to ensure financial stability, and then to keep businesses running,” says Gaurav Arora, head of Asia at Coalition Greenwich, part of Crisil, said.

The 2021 ‘Coalition Greenwich’ research study mentioned State Bank of India, along with leading private sector banks Axis Bank and HDFC Bank, and foreign banks Citi and HSBC, as companies’ top sources of support during the crisis.

The report said that even before the start of the global pandemic, India’s corporate banking market was on a consolidation path, driven by decisive steps by regulators to solidify the country’s banking sector, and the rapid evolution and growth of the leading private banks.



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These Stocks Are A Buy, Says India’s Top Research Backed Brokerage

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L&T Technology Services

A stock that is on the buy list of Motilal Oswal is L&T Technology Services. The brokerage house sees the firm as a key beneficiary of growing tech adoption in ER&D, which should grow by 2 times that of IT Services over FY18-23E. L&T Technology Services reported a good set of quarterly numbers. Revenue rose 4.2% QoQ (est. 2.8%) to $205.7 million in 1QFY22. In constant currency, revenue grew 4.3% QoQ, but was flat YoY. The company won six deals with a TCV of over $10 million. This includes two over $25 million deals in 1QFY22.

“With a strong demand commentary across industries and key regions, and capability to deliver services during the lockdown, L&T Technology Services should not see a meaningful disruption in the business. We bake in 18.6% revenue growth for FY22E, partially on account of a favorable base. Moreover, with Digital at 53% of revenue, it should also benefit from 18% growth in Digital ER&D spends over this period. We have built in 18%/33% revenue/EBIT CAGR over FY21-23E. We value the stock at 31x FY23E EPS and maintain our “buy” rating,” the brokerage house has said.

Infosys

Infosys

According to the brokerage house, Infosys reported strong broad based growth of 4.8% QoQ constant currency, beating its own estimates of 3.9%. Motilal Oswal also expects Infosys USD revenue growth guidance to 14-16% CC YoY from 12-14%.

We have cut our FY22E/FY23E EPS estimate by 3.2%/1.6% to encompass margin pressure due to ongoing supply crunch in the industry and expected increase in travel expenses. We continue to view Infosys as a key beneficiary of a recovery in IT spends in FY22, given its capabilities around Cloud and Digital transformation. We value Infosys at 27x FY23E EPS and reiterate our Buy rating,” the brokerage firm has said.

Infosys: Solid financial performance for the June quarter

Infosys: Solid financial performance for the June quarter

Infosys saw revenues in constant current terms rising by 16.9% YoY and 4.8% QoQ. Reported revenues at $3,782 million, saw a growth of 21.2% YoY. Digital revenues at 53.9% of total revenues, YoY CC was up 42.1%. Operating margins at 23.7%, saw an increase of 1.0% YoY and decline of 0.8% QoQ.

“Our clients continue to be supportive of the multiple initiatives we have undertaken; they value the delivery commitments we have met even during these extraordinary times”, said Pravin Rao, Chief Operating Officer, Infosys. “As the demand for digital talent explodes, rising attrition in the industry poses a near-term challenge. We plan to meet this demand by expanding our hiring program of college graduates for FY 22 to 35,000 globally”, he added.

Broking firm, Motilal Oswal has recommended to buy the stock with an upside target of 13% from the current levels.

Disclaimer

Disclaimer

Stock market investment is subject to risk associated with the stock markets and hence investors need to be very careful. Neither the author, nor the brokerage, nor Greynium Information Technologies Pvt Ltd would be responsible for losses incurred based on a decision to buy into the stocks based on the above article. The stocks are picked from the brokerage report of Motilal Oswal. Stock indices are currently at lifetime highs and hence investors needs to be cautious.



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NPS Swavalamban Subscribers Can Now Make Premature Exit With Entire Accumulated Pension Corpus: Check How

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Investment

oi-Vipul Das

|

For Indian residents who work in the unorganized sector and are between the ages of 18 and 60, NPS – Swavalamban fund provides a monthly income after they reach retirement age. NPS – Swavalamban generates returns by investing a part of contributions in the equity market. Under NPS – Swavalamban, up to 55 percent of the capital is allocated in government securities and up to 40 percent in corporate bonds. At the age of 60, the NPS – Swavalamban account can be closed.

Swavalamban Subscribers with accumulated pension corpus of less than Rs 1 lakh with the exception of the government contribution and associated returns and who are not eligible to transfer to Atal Pension Yojana (APY) can now prefer to prematurely exit the scheme and receive a full lump sum payment of their accumulated pension wealth under the new rules. It’s important to remember that subscribers of the NPS Swavalamban scheme between the ages of 18 and 40 were offered the alternative of migrating to the Atal Pension Yojana, which guarantees a minimum pension to members.

Swavalamban subscribers over the age of 40 who are unable to migrate to APY can stay in the Swavalamban scheme until they reach the retirement point of 60. So let’s now talk about the new rules for premature exit of NPS Lite Swavalamban subscribers, according to PFRDA.

New Premature Exit Rules For NPS Lite Swavalamban Subscribers

New Premature Exit Rules For NPS Lite Swavalamban Subscribers

According to the recent PFRDA announcement, Swavalamban Subscribers whose cumulative pension wealth does not surpass Rs 1 lakh and who are not eligible to switch to Atal Pension Yojana (APY) can elect to prematurely exit with lump-sum payment under the 6th Amendment of Exit Regulations. For a minimum of twenty-five years, regardless of whether they receive GoI co-contribution under Swavalamban, the above said eligible subscribers are not mandated or required to stay in the Swavalamban scheme for a minimum of twenty-five years. That being said, if those eligible subscribers took full advantage of the GoI’s co-contribution, it can be withdrawn along with the returns made from the corpus at the time of their exit.

Premature withdrawal amount and claim procedure

Premature withdrawal amount and claim procedure

After subtracting the Government’s co-contribution, if any, and the returns thereon, the cumulative corpus of those Swavalamban Subscribers shall be determined, according to PFRDA. According to the notification the regulatory has clearly stated that “a Swavalamban subscriber who is aged 43 years (who could not be migrated to APY) has a corpus of Rs 1,04,000 in his Swavalamban PRAN and out of which, GoI’s co-contribution and returns constitute Rs 4500. The subscriber shall be eligible for premature exit since the accumulated corpus in the PRAN would be Rs 99500( Rs 104000-Rs 4500=Rs 99500).” Swavalamban Subscribers who meet the aforementioned conditions and wish to exit early can lodge withdrawal applications to the respective POPs/Aggregators.

Withdrawal rule in case of death of the subscriber

Withdrawal rule in case of death of the subscriber

In the event of demise. the whole corpus will be handed to the nominee/legal heirs. The nominee/legal successor should address the aggregator with the relevant documents such as the death certificate of the subscriber, identity proof of the nominee, and so on. The nominee is eligible to get a lump sum payment equal to 100 percent of the NPS pension fund. The nominee can subscribe to the NPS individually after satisfying the necessary KYC standards if he or she chooses to stay in NPS Lite Swavalamban.

Story first published: Thursday, July 15, 2021, 12:00 [IST]



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Restriction on Mastercard: Co-branded cards, exclusive bank-tie ups to get impacted

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Lenders such as Yes Bank and RBL Bank with exclusive tie-ups with Mastercard will now have to look for new partners, which could translate into an advantage for RuPay and Visa. Further, co-branded cards with Mastercard will also be impacted.

Private sector lender RBL Bank on Thursday said it has entered into an agreement with Visa on July 14 to issue credit cards enabled on the Visa payment network.

“RBL Bank expects to start issuance of credit cards on the Visa payment network post the technology integration which is expected to take eight to 10 weeks,” it said in a stock exchange filing.

Data storage issue: RBI stops MasterCard from adding new customers

Changing equations

Meanwhile, the bank’s current run rate of about 1 lakh new credit card issuances per month could potentially be impacted till such time that there is clarity from the regulator on issuing new credit cards on the Mastercard network or till the technical integration with Visa is complete, RBL Bank further said.

RBL Bank currently issues credit cards on the Mastercard network only. It has about 30 lakh credit card customers and is the fifth largest credit card issuer in the country with nearly five per cent market share.

A report by ICICI Securities said that RBL Bank and Yes Bank issue only cards with Mastercard. Other lenders like Axis Bank, Kotak Mahindra Bank and Citi have atleast two tie ups – with Mastercard and Visa.

Meanwhile, State Bank of India and HDFC Bank have tied up with more payment networks.

“The issuance of co-branded cards with Mastercard will also stop due to the RBI restriction. If a particular Mastercard co-branded credit card has high contribution to the overall mix of a credit card player, it will have a higher impact on the issuer’s business growth,” the report noted.

HDFC Bank has three co-branded cards with Mastercard, while SBI has two such cards.

The RBI on July 14 took supervisory action against Mastercard and barred it from acquiring new customers (debit, credit or prepaid) from July 22 for not complying with data localisation requirements.

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RBL Bank’s credit card issuance rate to be impacted post RBI’s Mastercard ban

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RBL Bank on Thursday said its credit card issuance rate will be impacted post the Reserve Bank barring Mastercard Asia Pacific from onboarding new credit, debit and prepaid cards customers with effect from July 22 as it failed to comply with data storage norms.

RBL Bank, which currently issues credit cards on the Mastercard network only, said it has entered into an agreement with Visa Worldwide on Wednesday to issue credit cards enabled on the Visa payment network. “Our bank’s current run rate of approximately 1,00,000 new credit card issuances per month could potentially be impacted till such time that there is clarity from the regulator on issuing new credit cards on the Mastercard network or till the technical integration with Visa is complete,” RBL Bank said in a regulatory filing.

Technology integration

The bank expects to start issuance of credit cards on the Visa payment network post the technology integration which is expected to take 8-10 weeks. It said the company awaits further information from Mastercard on RBI’s supervisory action. “The debit and prepaid cards issued by the bank are already enabled on other payment networks in addition to the Mastercard network,” RBL Bank said.

Also read: Co-branded cards, exclusive bank tie ups to get impacted

It said, as of date, it has approximately 3 million credit card customers and is the fifth largest credit card issuer in the country with approximately 5 per cent market share.

Reserve Bank of India (RBI) imposed restrictions on Wednesday on Mastercard Asia/Pacific (Mastercard) from on-boarding new domestic customers (debit, credit or prepaid) onto its card network from July 22, 2021. The supervisory action will not impact existing customers of Mastercard.

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