Bajaj Finance prepares for entry into credit cards business

Nearly four months after the Reserve Bank of India opened the doors for non-banking finance companies to enter the credit card space, Bajaj Finance may be the first to seek the regulator’s go-ahead to begin this new line of business.

While the exact timeline for the launch isn’t clear yet, it is gathered that within 1–2 months of RBI’s approval, Bajaj Finance may roll out its in-house credit cards. A certificate of registration is equivalent to obtaining a license to engage in the business, while the guidelines published on April 22 also require NBFCs to seek specific permission to enter the business from the RBI.

Obtaining regulatory clearances may take 3–6 months. “The target is to launch the card in the March quarter of FY23,” said a person aware of the matter.

Bajaj Finance has a longstanding partnership with RBL Bank and forged a tie-up with DBS Bank India in June 2022 for co-branded credit cards. People aware of the developments say these partnerships weren’t seen as adequate to cater to the company’s existing customer base, which stood at around 60 million as on June 30, 2022. The number of co-branded credit cards in force stood at 2.96 million , or less than five percent of its customer base. “Bajaj Finance has decided to venture into the credit card business organically to bridge this gap,” said a source aware of the matter.

However, it is learned that Bajaj Finance will remain committed to its partnerships with RBL Bank and DBS India. “The company will honor these partnerships and has no intention to terminate its tie-ups with the two banks,” said the person quoted above.

Emails sent to the company seeking confirmation on the development remained unanswered until press time.

Bajaj Finance is the market leader in the consumer lending space. Its assets under management stood at Rs 2.04 lakh crore as on June 30, 2022. However, lately, banks such as HDFC Bank and IDFC First Bank have become aggressive in this segment and are penetrating the consumer lending business through their credit cards channel. Bajaj Finance’s decision to enter the credit card business on its own is also triggered by the need to counter competition from banks and ringfence its customer base.

Published on

August 18, 2022

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