Consumers are likely to see banks launching more prepaid and co-branded cards carrying offers in the coming days after the Reserve Bank of India (RBI) relaxed regulatory norms. Banks will now not require approval from the banking regulator every time they launch these products.
"There will be more prepaid and co branded cards hitting the market going forward," said Amit Sethi, co-chairman, Prepaid International Forum, India chapter. "It will lead to expansion of market for these products in India."
The banking sector regulator on Tuesday accorded a general permission to banks for the issue of co-branded debit card and prepaid card, which till now had to be cleared by the RBI.
A prepaid card is a payment card, which looks like any normal credit or debit card that is loaded with money. A co-branded card is issued through a partnership between a bank and another company. These cards often come with a variety of incentives, such as discounts or rebates of various types.
The launch of the new co- branded cards also means more offers for customers.
"All co-branded (cards) have to have some value proposition otherwise customers will not use such cards," said a senior banker who heads card portfolio in a public sector bank.
There will be more instances of banks and companies joining hands to launch co-branded debit cards.
"Banks will now be aggressive in designing new products and searching for partners to launch co-branded cards," said the banker.
Initially, the banks are expected to launch co-branded debit cards in retail sector as maximum spending is by individuals in malls and stores and it also offers chance for banks to acquire new customers.
Though the usage of co-branded cards is low in India but companies and banks are increasingly issuing these cards to retain the clients. Usage of prepaid card is also gaining momentum as they offer convenience and safety to consumers.