RBL Bank pulls plug on Bajaj Finance partnership

RBL Bank has pulled the plug on its eight year old co-branded credit card partnership with Bajaj Finance citing “significant changes” in synergies with the non banking company. The bank will stop issuance of new co-branded credit cards under this partnership which currently constitute more 30% of its credit card issuances.

“Eighteen months ago we undertook a diversification of our credit card sourcing increasing the scale from our branches and also added new partners. With these new sources, the scale of our cards sourced from Bajaj will come down which does not fit into their strategy. So, we mutually agreed to end this partnership,” said Bikram Yadav, head credit cards at RBL Bank.

RBL Bank had 51.74 lakh outstanding credit cards as of October. Under the partnership with Bajaj Finance which started in 2016, the bank used to source new customers. The partnership was a significant engine with the bank sourcing as high as 75% of its credit cards issued through this partnership in 2020. It was also as high as 48% at the end of June this year and has since come down to 30%, Yadav said.

In a notice to the stock exchanges, RBL Bank said it will continue to service the existing portfolio of approximately 3.4 million credit cards issued under this partnership. Over the last one year cards issued through this channel has reduced 37,000 per month from 1.26 lakh per month in September 2023.

The bank has also started new partnerships with Mahindra & Mahindra Finance, TVS Finance, Indian Oil Corp and IRCTC. Yadav said the bank is also cautious on adding new credit card customers and has tightened its customer selection criteria in light of heightened risks from unsecured loans.

“We expect a growth of 10% to 12% from cards which is lower than the 18% to 20% we saw last year because we have tightened selection criteria,” Yadav said. The bank also expects its branch and 3000 filed executives to play a bigger role in sourcing new card customers in the future, he said.