The American Express Bank gets the green signal from RBI to retain its credit card and travel business in India.
The Reserve Bank of India (RBI) has issued a restricted banking license to American Express Bank (Amex) to conduct credit card and travel-related businesses in India.
With the getting of license the floor is cleared for the merger of Amex’s banking businesses in India with that of Standard Chartered (StanChart) Bank as part of an $860-million global deal. This is the first time that such license has been issued by the apex bank.
StanChart is taking hold of American Express Bank (AEBL), a wholly-owned subsidiary of American Express Company that is present in 47 countries, excluding the travel and credit card business.
Amex was interested to start American Express credit card and travel business in India by transferring it to a non-banking finance company (NBFC). But this did not find support from the RBI as the regulator was not comfortable with an NBFC without a bank as a partner issuing credit cards. Amex then approached the banking regulator with a suggestion that it be issued a restricted banking license to conduct credit card and travel-related businesses.
“The RBI only gives one banking license. It is up to the bank what line of business it chooses to pursue or enter. Amex wants to continue with the credit card and travel business,’’ said a banking source.
Responding to Business Standard’s email query, Amex’s spokesperson said, ``We see tremendous opportunity in India and intend to continue growing our payments business and maintain significant operations in the market. We are currently working to obtain the appropriate regulatory approvals.’’
Amex has organized a meeting of its shareholders on February 28 in New York to consider and approve the scheme of merger with or without modification of the Indian undertaking of the company with the Indian undertaking of StanChart. Once the scheme is approved, the merger will be going to the RBI and other authorities for the subsequent approval.