Tuesday, February 19, 2008

RBI to draft regulations for credit card cos

Speaking to the reporters on the sidelines of a CII-organized conference the Reserve Bank of India Deputy Governor V Leeladhar said Reserve Bank of India plans to draft regulations for companies affianced in the credit card business and have a proposal to make it compulsory for all players to register themselves with central bank prior to operating as issuers. He said, "The regulations will have to be drawn out...They (companies) have to register.”

Currently, major credit card providers in the country like Visa and Master Card are operating in affiliation with banks.

Leeladhar added yet, the banking regulator has not set any time-frame for the proposal.

"This is a new area we will have to look at," he said. Leeladhar said Parliament has recently passed the Payment and Settlement Act, 2007, whereas the regulatory framework for implementing the law is currently being worked out.

Leeladhar added that the Act will give more powers to the apex bank in the payment and settlement matters, including in those related to credit cards.

As per industry sources, non-banking financial companies (NBFCs), who are not affiliated with banks, currently are not being allowed to engage in the credit card business.

The apex bank's proposed guidelines are expected to open the way for more companies, including NBFCs, to enter the fast growing business.

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