Amex gets limited licence for card, travel business

The Reserve Bank of India (RBI) has issued a restricted banking licence to American Express Bank (Amex) to conduct credit card and travel-related businesses in India.

This has cleared the deck 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 si the first time that such alicence has been issued.

StanChart is acquiring 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 wanted to retain its credit card and travel business in India by transferring it to a non-banking finance company (NBFC). This did not find favour with 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 licence to conduct credit card and travel-related businesses.

"The RBI only gives one banking licence. 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 convened a meeting of its shareholders on February 28 in New York to consider and approve the scheme of amalgamation with or without modification of the Indian undertaking of the company with the Indian undertaking of StanChart. Once approved, the amalgamation will be subject to the subsequent approval of the RBI and other authorities.