The new co-branded card comes weeks after American lender Citi launched a similar offering by tying up with payments major Paytm.

"We want to be the fastest co-branded credit card to reach the 1-million-mark. We should do 1 million in a year," executive vice-president for payments and cards Sanjeev Moghe told reporters. The bank has 6.17 million cards is use, making it the fourth largest issuer in the country.

The new card comes with a slew of benefits, including a 1.5% cash-back on every purchase, and up to 5% cash-back for merchant shopping, including on Flipkart and on its sister concerns like Myntra.

A Flipkart official present at the launch said this is not a via media to "circumvent" the regulations capping cash- backs for e-commerce companies.

A user will have to pay a joining fee of ₹500 and another ₹500 as annual fee for the card, which has a credit limit of ₹2 lakh. Analytics from Flipkart and Axis Bank will be used to identify credit worthiness of a person before giving him/her the card, officials said, adding the new card will be powered by Mastercard.

Mastercard's Porush Singh said a lot of "questions are unanswered" on the government move to do away with the merchant discount rate (MDR) and reserved his comments on the matter pending clarity in the matter.

Axis Bank managing director and chief executive Amitabh Chaudhry said with this offering, they want to take leadership in the payments arena but without compromising on risk.