The Reserve Bank of India (RBI) has sent a letter of displeasure to Bajaj Finance regarding its co-branded credit card operations, confirmed a report by CNBC TV18. The RBI communication, citing its earlier letter dated Jan 31 and the company’s response on Feb 22, said that the company has failed to proactively identify operational gaps and vulnerabilities. The letter also flagged significant risks to customers.
The RBI letter, as informed by sources to CNBC TV18, also criticised Bajaj Finance for reactive approach and lack of adequate internal controls. The communication from the central bank also contested the company’s claim that its role was limited to customer solicitation, instead it asserted that Bajaj Finance has an integral role in the co-branding arrangement and also has access to sensitive customer data.
Furthermore, the RBI letter also argued that the company cannot absolve itself of responsibilities to partner banks and customers.
In the letter, the RBI has given following directions:
– Bajaj Finance must monitor and ensure adherence to timelines.
– Must seek independent validation through external audit, with prior RBI approval.
– Audit must cover data security measures & IT / IS / Cyber Security controls.
– Must obtain explicit approvals from Department of Supervision, RBI if it intends to re-engage in co branding arrangements.
Bajaj Finance had earlier said that it will cease incremental sourcing of co-branded credit cards with RBL Bank and DBS Bank. It had, however, maintained that existing card holders will continue to receive services from respective banks as usual.
Shares of Bajaj Finance dropped by 1.2 per cent at 11:00 am to a trading price of Rs 8,564.35.
