Banks’ assn seeks CCI probe into ‘cartelisation’ by card suppliers

NEW DELHI: The Indian Banks’ Association (IBA) has sought a probe by the Competition Commission into possible cartelisation among vendors providing chip-based debit and credit cards to banks.

IBA has received complaints of jacking up of card prices by various vendors, citing shortage of chips, and the hike in the prices is in a similar range, raising fears of cartelisation, sources said.

Following the complaints, IBA has written a letter to the Competition Commission of India (CCI) seeking a probe into the issue and has also intimated the finance ministry about the matter.

According to a senior bank official, last year, 4-5 large card vendors approached lenders saying that shortage of chip has led to an increase in the prices. So, all banks agreed for a rise in the prices of cards from Rs 35 to about Rs 42 per unit, the official added.

Three months ago, these vendors again approached the banks, saying the prices have further increased. However, only large private bank agreed for another Rs 10 increase as they feared that shortage could impact business, the official said.

The sources said the increased cost is being borne by the banks amid a surge in demand for cards in the past few months. Public sector banks did not agree to the card vendors’ demand for another hike in prices, which has second increase resulting in supply shortage and delay in some cases.

There is a thinking in some quarters that vendors are trying to take undue advantage of the situation as chip shortage is not so acute, a senior IBA official said.

Some state-owned banks are facing difficulties in issuing debit cards to new account holders under the Pradhan Mantri Jan Dhan Yojaya (PMJDY). There are about 46.56 crore beneficiaries under PMJDY with Rs 1.72 lakh crore account balance, as per the latest data available on the government website.

There were about 92.81 cr debit cards and about 8 crore credit cards at the end of July. Nearly, 20 lakh cards were issued in the current fiscal beginning April.