News | Bajaj Finance Faces Regulatory Scrutiny Over Co-Branded Credit Card Operations

Bajaj Finance Faces Regulatory Scrutiny Over Co-Branded Credit Card Operations

News

03 April 2025

2 min read

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The Reserve Bank of India (RBI) has issued a letter of displeasure to Bajaj Finance concerning its co-branded credit card operations. According to reports, the RBI highlighted the company's failure to proactively identify operational gaps and vulnerabilities, which could pose significant risks to customers.

The central bank criticized Bajaj Finance's reactive approach and inadequate internal controls. It also disputed the company's claim that its role was limited to customer solicitation, asserting instead that Bajaj Finance plays an integral part in the co-branding arrangement and has access to sensitive customer data. The RBI emphasized that the company cannot absolve itself of responsibilities toward partner banks and customers.

In response to regulatory directives, Bajaj Finance has decided to exit the co-branded credit card business. The company ended its eight-year partnership with RBL Bank and its more recent tie-up with DBS Bank India. This move follows the RBI's April 2022 guidelines, which restricted co-brand partners' roles to distribution only, limiting their involvement in collections and other critical activities.

Market reactions have been notable. Shares of Bajaj Finance experienced a decline, trading at ₹8,595, down 0.86% from the previous close of ₹8,669.25. The company's market capitalization stands at ₹5.37 lakh crore.

These developments underscore the importance of robust internal controls and proactive risk management in financial operations. Bajaj Finance's decision to halt its co-branded credit card business reflects a strategic shift in response to evolving regulatory expectations.