RBI sends ‘letter of displeasure’ to Bajaj Finance on Co-branded Credit Cards

The Reserve Bank of India (RBI) has sent a “letter of displeasure to Bajaj Finance in connection with its co-branded credit cards, as reported.

The RBI letter stated that Bajaj Finance did not proactively identify data leakage gaps and vulnerabilities, posing a considerable risk to clients. According to the RBI letter, Bajaj Finance failed to maintain internal controls and processes for its clients.

Sources said that the RBI communication indicates a reactive attitude and a lack of maintaining effective internal controls. The letter also challenges Bajaj Finance’s assertion that its activity was restricted to consumer solicitation.

The RBI has also claimed that Bajaj Finance cannot free itself of responsibility to its partner banks and clients and that it has an internal involvement in co-branding agreements and access to sensitive customer data.

The RBI letter additionally directs:

• Bajaj Finance must monitor and guarantee adherence to timeframes.
• Must seek independent confirmation through an external audit, with prior RBI permission.
• Audit must address data security measures and IT/IS/cybersecurity procedures.
• Obtain express authorisation from the Department of Supervision, RBI, if it plans to re-engage in co-branding arrangements.

Bajaj Finance announced at the end of the December quarter that it would discontinue incremental sourcing of co-branded credit cards with RBL Bank and DBS Bank, but current cardholders will continue to get services from their respective banks as usual.

Bajaj Finance has failed to reply to media enquiries.

Bajaj Finance shares were traded 1.1% lower at Rs.8,574. The stock recently reached a fresh high of Rs.9,260.