Sbi Card Rallies 4% As Macquarie Says Banks Will Benefit From Tighter Regulations On Fintechs

Financial services group Macquarie in a report said that the Reserve Bank of India’s (RBI) tougher regulations for fintech companies will be advantageous to banks.

“We believe this regulation could significantly impact the fintechs involved in this business and would be advantageous to banks, as they can further accelerate card acquisition with less competition,” said Macquarie.

The news propelled SBI Cards higher by more than 4 percent in early trade on Tuesday when the benchmark Nifty 50 was up 1.5 percent.

RBI Governor Shaktikanta Das on Friday while addressing an event in Mumbai had rejected plans for digital-only banks.

“At the moment, there is no proposal as such because we feel existing banks and NBFCs can adopt more technology to capitalise on the opportunities which new technologies offer. At this moment, we don’t intend to set up what may be called neobanks because we feel existing architecture is sufficient to enable existing players to leverage the innovations,” Das had said.

RBI has been coming down heavily on fintechs and has been advocating tighter regulations over the past several months. Macquarie believes that the message is clear that fintechs will increasingly be regulated more.

Who could it impact?

Macquarie believes that the RBI circular could impact players like Slice, Unicards, etc., who have been adding a lot of customers through this route.

“Some of the new generation players were adding close to 200–300k cards using PPI (Prepaid Payment Instruments) licenses and loading the wallets of consumers using credit lines from NBFCs, banks, etc.,” reads the report, adding that the main purpose of a PPI license is to act as a payment instrument and not as a credit instrument.