RBL Bank, Bajaj Finance to discontinue co-branded credit card issuance; here is what this means for investors and cardholders

Following the development, shares of RBL Bank traded 2.6% lower at 11:15 am at ₹151 apiece on the NSE, while Bajaj Finance was trading marginally lower at ₹6,557.

What does this mean for customers?

RBL-BFL co-brand cards will continue to serve existing customers and will operate without any change.

Cardholders will continue to use their cards on the same terms and conditions as at the time of the issuance of such cards. In addition, cardholders will enjoy the same benefits, rewards, offers, etc. associated with their existing cards. Upon expiry of existing cards, the new cards will be issued under the name of RBL Bank alone.

RBL Bank will continue to service the existing portfolio of approximately 3.4 million cobrand credit cards issued under this partnership while ensuring seamless support and customer satisfaction across all its service channels.

Who will be most impacted?

As per the latest investor presentation for Q2FY25, the RBL Bank credit card business stood strong. The total number of cards in force for the bank stood at 5.12 million, 12% higher than the previous year's 4.71 million in August 2023. The overall spending on the cards also jumped 15% YoY to ₹7,332 crore during the same period, much higher than the industry average of 13% YoY.

The co-branded card businesses with Bajaj Finance were the major contributors to the RBL Bank credit card business, contributing 41.1% to the overall credit card business. Thus, discontinuing new cards with Bajaj Finance is likely to have a greater impact on RBL Bank compared to Bajaj Finance.

To mitigate the impact RBL Bank also gradually discontinued the issuance of RBL-BFL co-branded credit cards in the last 18 months. As a part of this strategy, the bank minimised the issuance from 1,26,000 cards in September last year to 37,000 cards in September 2024.

However, the bank plans to diversify its portfolio of partners to new NBFCs like Mahindra & Mahindra Finance Limited and TVS Finance Limited, as well as consumer brands like IOC and IRCTC.