Co-branded cards: Federal Bank to update RBI on corrective measures

Srinivasan rules out severing partnership with fintechs

CL Jose

KOCHI: A Federal Bank top official said corrective measures with regard to the co-branded credit cards, discontinued on the directive from the Reserve Bank of India (RBI), are under way, and within a few days a top team from the bank will meet with RBI officials in order to present the action plan to the regulator.

It was in March, the Reserve Bank of India (RBI) asked Federal Bank to suspend issuing new co-branded credit cards, thanks to the new regulatory changes.

Federal Bank has three co-branded credit cards Federal Bank OneCard, Federal Bank Scapia and Federal FI

RBI had instructed another Kerala-based bank, South Indian Bank (SIB), too to discontinue the issue of new co-branded credit cards.

The RBI has beefed up the scrutiny of partnerships between banks and fintechs, especially in the case of co-branded credit cards.

RBI had explained that the regulator wants to ensure that these entities are compliant with the standards set by the RBI. This is being done with an eye on the protection of consumer interests.

Talking to analysts, the chief executive officer (CEO) &MD of the bank, Shyam Srinivasan, dismissed reports appeared in certain section of the media that the bank was lax about letting somebody else take the bank’s data.

“Unfortunately whatever is written about this issue are all based on conjectures and not full facts,” he added. He acknowledged that there has to be some firewalling that has to be done and additional controls that have to be put in place as regards these co-branded credit cards.

Srinivasan rebuffed the rumours that the bank is weighing the option of shutting down certain partnerships with the fintechs. He clarified that such actions would only be taken if instructed by the regulator.

Performance

This is the last full-year performance the current CEO, Shyam Srinivasan has overseen. The bank that earned a fourth quarter (Q4) net profit of Rs908.30 crore, has witnessed the highest ever quarterly net interest income (NII) of Rs2195.11 crore, whereas its total business grew to Rs4,61,937.36 crore as of March end, 2024.

New CEO & MD

Rumours are rife that Srinivasan will be replaced by K.V.S. Manian, who recently resigned as the joint MD of Kotak Mahindra Bank, as Federal Bank’s new CEO & MD.

What stoked the rumour is the fact that in his resignation letter, Manian had said that he would pursue other opportunities in the financial services sector. However, Srinvasan was non-committal in his response to a query raised by an analyst as to who will succeed him as the new CEO& MD.