Co-Branded Credit Card for NBFCs: How the Model Works
Last reviewed: November 2026
A co-branded credit card for NBFCs is, in most cases, a credit card issued by a bank or an RBI-approved card issuer that carries the NBFC's brand as co-branding partner. The issuer approves, issues and services the card, while the NBFC markets it to its own customers and earns a share of the economics.
This guide is for CEOs, Heads of Product and Heads of Partnerships at NBFCs and HFCs. It covers when an NBFC can issue cards itself, how co-branding works under RBI's 2025 card directions, and what an NBFC should build and avoid.
Key Takeaways
- An NBFC needs RBI's prior approval and a minimum net owned fund (NOF) of ₹100 crore to issue credit cards itself.
- An RBI-registered NBFC does not need prior approval to be a co-branding partner, but its role is limited to marketing and distribution.
- The co-branding partner cannot access card transaction data and cannot decide who gets a card.
- The issuer is liable for the partner's acts, so expect tight rules on branding, offers and revenue-sharing disclosure.
Why Is a Co-Branded Card a Leadership Decision?
A co-branded card is a leadership decision because it changes the NBFC's customer relationship, revenue model and regulatory perimeter at the same time. It also depends on a partner bank the NBFC does not control.
For many NBFCs, a card keeps the brand in the customer's wallet between loans. That can support repeat borrowing and loyalty.
The business case for a co-branded credit card for NBFCs rests on distribution, not on lending margin. The NBFC earns from sourcing and revenue sharing, while the issuer carries the card credit risk and the card operations.
That trade-off has to be explicit. If the NBFC's long-term goal is to own a card book, co-branding is a stepping stone, not the destination.
But the rules are strict. Under RBI's NBFC Credit Cards Issuance and Conduct Directions, 2025, an NBFC cannot issue credit cards without prior RBI approval, so most "NBFC card launches" are really co-branding partnerships with an issuer.
How Can an NBFC Get Into Credit Cards?
An NBFC can get into credit cards in two ways: as an issuer with RBI approval, or as a co-branding partner of an issuer. The two routes differ in capital, control and data.
| Route | Who Issues and Decides | Approval and Capital | NBFC's Role |
|---|---|---|---|
| NBFC as card issuer | The NBFC | Prior RBI approval; minimum NOF of ₹100 crore | Full issuer duties: credit, servicing, conduct, disclosures |
| NBFC as co-branding partner | A bank or approved issuer | No prior approval for the NBFC as partner | Marketing, distribution, access to its goods or services |
Commercial banks with a net worth of at least ₹100 crore can run credit card business on their own or in tie-up with other card-issuing banks or NBFCs, with Board approval. That is why the bank-issuer, NBFC-partner model is the usual starting point.
What Exactly Can the Co-Branding NBFC Do?
The co-branding partner's role is limited to marketing and distribution of the card and giving cardholders access to its goods or services. After issuance, it should not be involved in the issuer's processes or controls.
The partner cannot access card transaction information. Transaction data may appear on the partner's app only in encrypted form, drawn from the issuer's system, visible only to the cardholder and never stored by the partner.
How Do NBFCs Launch a Co-Branded Credit Card Programme?
NBFCs launch a co-branded credit card programme in six steps, starting with the regulatory route and ending with monitoring. Each step has a specific rule behind it.
- Choose the route: co-branding partner, or issuer with RBI approval.
- Select the issuer: a bank or approved issuer with the right card proposition and technology.
- Agree the arrangement: roles, revenue sharing, branding and data rules in a Board-approved framework.
- Design the proposition: rewards, offers and loyalty linked to the NBFC's customer base.
- Build partner-side journeys: sourcing, application hand-off and encrypted in-app display.
- Monitor and handle grievances: offers, complaints and partner conduct.
Step 1 and 2: Which Route and Which Issuer?
Most NBFCs start as co-branding partners, because issuing requires prior approval, ₹100 crore of NOF and full issuer operations. Choose an issuer whose underwriting appetite matches your customers.
Our guide to the card issuing and processing platform explains what sits on the issuer's side.
Step 3: What Must the Arrangement Cover?
The issuer must run due diligence on the partner, and where the partner is a financial entity, confirm it holds the regulatory approvals it needs. Revenue-sharing details must be disclosed to cardholders and on the issuer's website.
The card must state that it is co-branded and prominently carry the issuer's brand. The NBFC must not advertise the card as its own product.
Step 4: How Should the Proposition Be Designed?
Link rewards to what your customers already do with you, such as EMI repayments or partner merchants. A co-brand card loyalty optimization AI agent shows how reward design can be tuned to behaviour.
Remember that the issuer is liable for delays or non-delivery of offers the partner advertises. Agree every offer with the issuer before it goes live.
Step 5: What Should the NBFC Build?
Build the sourcing journey, the hand-off to the issuer's application and the in-app card view that shows issuer data in encrypted form. Decision-making on issuing a card stays only with the issuer.
Handle customer data in line with DPDP Act compliance for lenders, with explicit consent before sharing a lead with the issuer.
Step 6: How Are Grievances and Conduct Managed?
After issuance, the partner may act only as the initial point of contact for grievances and should route them to the issuer. Track offer fulfilment and complaints jointly, because both firms' reputations are on the card.
Agree in writing how fast the NBFC must pass a complaint to the issuer and how the customer is kept informed. A lost hand-off can quickly turn a simple query into a formal complaint.
Is your NBFC planning a card programme, and is it clear who issues, who decides and who owns the data?
Talk to Our Lending Technology Specialists
Visit Digiqt to see how Cards as a Service supports customised card, wallet and loyalty experiences.
How Does a Co-Branded Credit Card Work for a Real NBFC?
For a real NBFC, the co-branded model turns an existing customer base into card distribution without building issuer operations. This illustrative scenario uses assumed numbers for a consumer durables lender with 20 lakh customers.
The NBFC partners with a bank issuer and targets 2% of its base in year one, or 40,000 cards. The bank decides every application and sets every limit.
Assume 60% of issued cards are active, or 24,000 cards. At an assumed revenue share of ₹500 per active card a year, the NBFC earns about ₹1.2 crore, disclosed to cardholders and on the bank's website.
| Item | Co-Branding Partner | Issuer Route |
|---|---|---|
| RBI approval for the NBFC | Not required | Prior approval required |
| Capital prerequisite | None specific to cards | Minimum NOF of ₹100 crore |
| Credit decisions | Bank | NBFC |
| Transaction data | Not accessible to the NBFC | Held by the NBFC as issuer |
| Time to market | Depends on the bank | Approval plus full issuer build |
The lesson for leadership: co-branding is the faster route, but the NBFC gives up credit decisions and card data. Decide first whether distribution or ownership matters more.
Which Card Approach Fits Your NBFC?
The right card approach depends on your NOF, customer base and appetite to run issuer operations. Most NBFCs below the ₹100 crore NOF threshold, or without card operations, should start as co-branding partners.
| Situation | Recommended Approach |
|---|---|
| NOF below ₹100 crore | Co-branding partner with a bank issuer |
| Large base, no card operations | Co-branding partner; build loyalty and sourcing journeys |
| NOF above ₹100 crore, long-term card strategy | Seek RBI approval as issuer; build or buy card processing |
| Short-tenure credit needs | Consider other products, such as a credit line on UPI |
Is a Card Always the Right Product?
No. A card suits customers who spend often across many merchants; for others, a loan or credit line may serve better.
Review the use cases in AI agents in credit cards before committing to a card-only strategy.
Where Does Digiqt's Cards as a Service Fit?
Digiqt's Cards as a Service fits on the experience and loyalty side of a card programme. Its page describes a versatile card customised to your needs, with digital account and multi-wallet functionality.
The Cards as a Service page lists neobank use cases and a gifting and loyalty card solution for SMEs. Digiqt's card loyalty programme case study shows the loyalty side in practice.
The page does not describe credit card issuance, which stays with the licensed issuer. For lending products alongside the card, see Digiqt's lending platform.
Which Metrics Show the Card Programme Is Working?
Five metrics show whether a co-branded programme is working: sourcing conversion, issuer approval rate, activation rate, active card share and complaint rate. Agree them with the issuer at the start.
| Metric | Formula | What a Weak Number Signals |
|---|---|---|
| Sourcing conversion | Applications ÷ customers offered | Weak proposition or journey |
| Issuer approval rate | Cards issued ÷ applications | Poor targeting for the issuer's policy |
| Activation rate | Cards used within 30 days ÷ cards issued | Weak onboarding or rewards |
| Active card share | Active cards ÷ cards in force | Card not part of daily spending |
| Complaint rate | Complaints ÷ cards in force | Offer or servicing problems |
Which Mistakes Hurt NBFC Card Programmes?
Four mistakes hurt most NBFC card programmes, and most are about misunderstanding the partner role.
- Marketing the card as your own. RBI requires prominent issuer branding and bars the partner from presenting it as its own product.
- Planning analytics on card transactions. The co-branding partner cannot access transaction data.
- Promising offers alone. The issuer is liable for partner offers, so every offer needs its agreement.
- Ignoring your regulatory layer. Check where you sit under scale-based regulation for NBFCs before choosing a route.
What Is Changing Next?
RBI consolidated its card rules into entity-wise directions on 28 November 2025, and the commercial bank card directions show amendments effective 1 October 2026, including to the co-branding policy paragraph. Check the current text with your issuer before signing.
Expect issuers to tighten partner oversight, since they carry liability for partner acts. NBFCs that bring clean sourcing and clear consent will be the partners banks want.
Want to know whether your NBFC should partner or apply to issue?
Talk to Our Lending Technology Specialists
Visit Digiqt to see how Cards as a Service supports card customisation, digital wallets and loyalty for partner programmes.
