1st Non-Banking Finance Company to Receive RBI Nod to Enter into Co-Branding

Transcorp International is India’s first non-banking finance company to receive an RBI nod to enter into co-branding with banks. The non-banking finance company and the bank will jointly offer a full-service product suite of joint co-branded credit cards, debit cards, and merchant acquiring services to customers. As per the decision made by RBI in October 2012, banks are permitted to enter into arrangements with Non-Banking Finance Companies (NBFCs) having a minimum net worth of Rs. 500 crore for issuing co-branded credit cards. In this article, learn about Transcorp International Ltd, What is co-Branding, Facts about co-branding and What are the Advantages of Co-branding.

What is co-branding?

Co-branding is the deal between two brands to market and sell a product. Co-branding is one of the best ways for two brands to cross-promote each other’s products, especially under budget constraints. Co-branding is a marketing partnership between at least two different brands where each uses the other’s brand equity to create a new combined product or service.  Co-branding is a strategic collaboration between two or more well-established brands to launch a product that helps all the entities involved in the deal gain mutual benefits. A brand partner helps produce, distribute and promote products or services. 

Example of Co-Branding

For example, when you go shopping at Macy’s, you can buy American Express credit cards and other items. Another example would be Dell selling HP printers at its online store. It also allows for more exposure for a brand because two companies are promoting each other’s products and services simultaneously. Both companies should expect to see increased sales and profitability from their products over time from advertising on co-branded products. A co-brand partner allows its brand name to be used with little involvement in the details of production or distribution by providing some benefit such as competitive advantage, increased sales or profits, etc.

What are the Benefits of Co-Branding?

Co-branding is an arrangement in which two or more brands associate themselves with a single product or service. There are several advantages to co-branding:

• Increased awareness and reach
• Increased credibility
• Increased customer base. Co-branding can increase the potential market of a product or service by being positioned as a complementary offering to that of another brand, thereby attracting new customers.
• Increased sales and revenue
• Product development. By combining their resources, companies can extend their product range and venture into new markets. For example, if Tata were to collaborate with McDonald’s for a drink, it would be able to enter into the convenience drinks segment with better expertise in marketing and distribution than its competitors. Co-branding would result in increased synergy for both companies

With this partnership, IndusInd Bank and Transcorp International Ltd (TIL) will offer a full-service product suite of joint co-branded credit cards, debit cards, and merchant acquiring services to customers.

The cards are expected to be launched in 2019. Upon its launch, these products will help the bank expand its share in the credit card market by leveraging the wide acceptance of Transcorp International Ltd consumer durable finance.

Facts about Transcorp International co-branding

Transcorp International Ltd. (TIL) is a Mumbai-based Non-Banking Finance Company (NBFC) offering customised lending solutions to SMEs and MSMEs.

Non-Banking Finance Companies (NBFCs) are financial intermediaries that provide banking services but do not hold a banking licence. NBFCs are controlled by the Reserve Bank of India (RBI). The primary difference between a bank and an NBFC is that the latter cannot take demand deposits. The RBI has approved Transcorp International Ltd. (TIL) to co-brand credit cards in partnership with the State Bank of India (SBI), making it the first NBFC to receive such approval from the apex bank.

It has been offering retail loans for over two decades. TIL, a subsidiary of the Transcorp Group, is one of the top NBFCs in India that has been offering retail loans for over two decades. TIL, headquartered in Mumbai, has provided more than 1 million loans to individuals and businesses since its inception. It was incorporated with a vision to facilitate financial inclusion by helping individuals and enterprises meet their financial needs. Its core values are honesty, simplicity, and transparency. TIL’s strategies have always been customer-centric, and it continues to provide a superior experience to its customers through its best-in-class offerings like credit cards and home loans. These are the Main Facts about Co-branding.

Conclusion

As TIL becomes the first NBFC to co-brand a credit card for its customers, Transcorp’s nationwide expansion plans certainly seem well on track. Consumers will surely appreciate Transcorp International’s (TIL) focus on developing innovative retail banking products, and we can only expect that these products will drive more consumers to the TIL brand name. Investors should pay attention to NBFCs on the lookout for innovative payment products.