SBM Bank India, a subsidiary of State Bank of Mauritius, has stopped all commercial credit cards that it offers with its partnered fintech companies, following a directive from the Reserve Bank of India (RBI) to update the 'know your customer' (KYC) details.
The block was implemented from 31 March and affected all major fintechs partnered with SBM India, including M2P, Karbon, EnKash and KODO. Customers were suddenly unable to use their credit cards and the bank and its card fintech partners have asked customers to update KYC to avoid blockages.
A bank spokesperson said that meeting regulatory requirements was a top priority and that periodic checks and monitoring were conducted at the client level.
SBM Bank India has been a major player in India's fintech ecosystem, supporting over 40 such companies with partnerships on payments, credit and investment. However, it has been under regulatory scrutiny due to governance issues identified in an RBI audit. The RBI has also tightened regulations on lenders' outsourcing arrangements with fintechs and other third parties.
The sudden block on credit cards has caused some customers to express dissatisfaction with the lack of notice given to update their KYC details. The RBI's directive to update KYC details for corporate customers is part of its efforts to strengthen financial security and prevent fraud in the banking system. By ensuring that banks have the most up-to-date information about their customers, the RBI hopes to prevent money laundering, terrorist financing, and other financial crimes.
However, the sudden block on credit cards has caused inconvenience to customers and raised questions about the effectiveness of the RBI's regulatory approach.