RBL Bank shares skidded about 5% on Monday to Rs 147.55 on BSE after the private lender, along with Bajaj Finance, mutually decided to end their eight-year long partnership for co-branded credit cards.
The private lender said in a statement on Friday that it would continue to service the existing portfolio of nearly 3.4 million co-branded credit cards under its partnership with Bajaj Finance, even as its dependance on the partnership tumbled to 37,000 this September, compared to 1.26 lakh in September last year. Upon the renewal of these co-branded cards, customers would only be issued an RBL Bank-branded credit card, the private lender added.
RBL Bank had shared that Bajaj Finance has intimated its decision to exit from the co-branded card distribution business, adding that Bajaj Finance is exiting this business category altogether. The bank would manage the portfolio independently with a tail spend-based fees to be shared for some time with Bajaj Finance.
This partnership for co-branded credit cards between the two companies was announced in November 2016, with the first card launched by the March quarter of financial year 2017. The two firms discussed the nuances of the co-brand partnership and concluded that the synergies had undergone a major change over a period of time, and hence the decision was taken to mutually terminate the partnership.
Brokerage firm Motilal Oswal said the end of partnership between RBL Bank and Bajaj Finance would also imply that Bajaj Finance will potentially terminate its