The Reserve Bank of India's (RBI) move to bar Mastercard from onboarding any customers in India could significantly impact some banks more than others, Nomura said in a report on Thursday.
The Japanese research and brokerage house stated that among credit card issuers, Yes Bank Ltd, RBL Bank Ltd, and Bajaj Finserv Ltd., are likely to be most impacted.
"Their entire card schemes are allied with Mastercard," Nomura said. Around 60% of HDFC Bank Ltd.'s card schemes are tied to Mastercard, Diners, and Amex, whereas for ICICI Bank Ltd., and Axis Bank Ltd., this is 35-36%.
The card portfolio of Kotak Mahindra Bank is totally allied with Visa and hence won't face any problems. Nomura, however, noted in the report that the contribution of individual card schemes to entire profitability is not known.
Meanwhile, banks have begun signing up Visa to replace Mastercard linkages. The RBL Bank said on Thursday that it has forged a tie-up with the payments company to issue credit cards to its customers. However, the technology integration may take 8-10 weeks.
Nomura further said two of the fastest growing credit cards in the market are the ICICI Bank-Amazon card and the Axis-Flipkart card.
These card schemes, the research house said, are 14% and 15% of outstanding cards for ICICI Bank and Axis Bank, respectively.
Where Amazon-ICICI card is allied to Visa, the Flipkart-Axis card is allied to Mastercard, and thus is a probable medium-term risk, should the current status-quo continue, Nomura said.
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