Shares of SBI Cards & Payment Services and RBL Bank experienced a significant uptick following the Reserve Bank of India's (RBI) announcement of draft guidelines for a new credit risk capital framework. The proposed changes have sparked investor interest, particularly in these two financial institutions.

Key Highlights

• SBI Cards and RBL Bank shares rose up to 5% on the news
• RBI's draft guidelines propose reducing risk weight for 'transactor' category credit cards
• The changes could potentially free up capital for both companies

Proposed Changes and Their Impact

The RBI's draft guidelines suggest a reduction in risk weight for 'transactor' category credit cards from 125% to 100%. Transactors are credit card users who consistently pay their full balance by the due date, avoiding interest charges. This change could have significant implications for credit card issuers and banks with substantial credit card portfolios.

Impact on SBI Cards

SBI Cards & Payment Services stands to benefit considerably from these proposed changes:

• Total receivables: ₹56,607.00 crore
• Transactor users' share: 40% of total receivables
• Potential capital release: 450 basis points (as noted by Macquarie)

The company's significant exposure to transactor users positions it well to capitalize on the proposed risk weight reduction.

Impact on RBL Bank

RBL Bank also sees potential advantages from the proposed framework:

• Credit cards comprise 18% of RBL Bank's loan book
• Total assets under management: ₹21,499.00 crore
• Transactor share: 30% of assets under management

Given its substantial credit card portfolio, RBL Bank is poised to benefit from the proposed changes.

Market Response

The market reacted positively to the news:

• RBL Bank shares closed 4.9% higher at ₹287.00
• SBI Cards shares gained 1.8%, closing at ₹921.30

Conclusion

The RBI's proposed changes to the credit risk capital framework have been well-received by investors, particularly for companies with significant exposure to credit card businesses. While these are still draft guidelines, they signal a potential shift in the regulatory landscape that could benefit certain financial institutions. Investors and industry observers will be keenly watching for the final implementation of these guidelines and their impact on the financial sector.

SBI Cards , a leading credit card issuer in India, has announced significant changes to its transaction fee structure, set to take effect from November 1. The company is introducing new fees for certain education payments and wallet load transactions while maintaining its rewards program for select e-commerce platforms.

New Fees on Education Payments

SBI Card will implement a 1% fee on education payments made through third-party applications. However, the company has clarified that payments made directly to educational institutions via their official websites or point-of-sale (POS) machines will remain exempt from this fee. This move is likely to encourage cardholders to transact directly with educational institutions when possible.

Changes in Wallet Load Transactions

In addition to the education payment fees, SBI Card is introducing a 1% fee on all wallet load transactions exceeding ₹1,000. This new fee structure could impact customers who frequently use their credit cards to load digital wallets.

Continuation of Reward Points Program

Despite these new fees, SBI Card is maintaining its reward points program for shopping on Ajio and JioMart, which was launched in October. The program offers differentiated benefits based on the type of card:

This continuation of the rewards program for these specific e-commerce platforms suggests SBI Card's ongoing partnership with Reliance Retail's digital commerce initiatives.

Customer Protection Plan (CPP) Updates

SBI Card has also announced that all CPP customers were migrated to updated plan variants with revised features and prices, effective September 16. While specific details of these changes were not provided, customers should review their updated plans to understand any modifications to their benefits or pricing.

These policy changes reflect SBI Card's efforts to adjust its fee structure in specific transaction categories while maintaining attractive rewards for certain retail partnerships. Cardholders are advised to review these changes and consider how they might impact their credit card usage, particularly for education payments and wallet transactions.