On Wednesday, 17th August, the RBI floated a discussion paper and sought advice for a comprehensive evaluation of rules and procedures for levying charges in different payment systems to access and analyse their impact on growth and efficiency.
This has led to a 5% plummet in SBI Cards shares as fears loom around merchant discount rates on credit card transactions being regulated by the RBI.
On the Bombay Stock Exchange (BSE), the shares dipped by 5.8 per cent to an intraday low of Rs 942.90 apiece. On the National Stock Exchange (NSE), SBI Cards shares plunged to Rs 943.10 apiece intraday, down 5.7 per cent.
The merchants are charged a fee by digital payment service providers to process debit and credit transactions. With respect to credit card payments, the rate is currently unregulated and fixed by the two parties dealing.
Analysts say credit card pay payments are the most profitable products offered by banks, thus risk of being regulated is always high.
“There is no specific stance from the regulator at this point and hence, the overhang on MDR (merchant discount rates) would continue for a few more quarters,” said Kotak Institutional Equities in a report.
However, the brokerage has not tweaked its investment thesis towards SBI Cards and awaits final guidelines on the merchant discount rate charges.