The Hindu Business Line : LIC to foray into credit cards with GE Money

Contours of venture
LIC to hold 40 % stake; GE around 35%.
Capital base will be Rs 150 crore.
Joint venture agreement to be finalised by October.

Our Bureau

Mumbai, Sept. 6

Life Insurance Corporation of India, the largest life insurer in the country, will soon be offering credit cards.

The corporation has inked an agreement to create a credit card company with GE Money India, Corporation Bank, LIC Housing Finance Ltd and LIC Mutual Fund.

LIC will hold the largest stake in the new entity at 40 per cent, followed by GE Money at 30-35 per cent. While around 10 per cent stake will be sold to financial investors, the rest will be held by Corporation Bank, LIC Housing Finance and LIC Mutual Fund, said a senior LIC official.

The new entity will be set up with a capital base of Rs 150 crore, and the joint venture partners will finalise the agreement by end-October.

The company will be based in Delhi and will have Mr Hemant Bhargava as the CEO. A joint team is being put in place, with members from both LIC and GE Money.

LIC had engaged KPMG to study the prospects of entering the credit card market and identify joint venture partners.

A press release quoting Mr. T.S Vijayan, Chairman, LIC, said “We are excited to be taking our company to the next phase of growth with this new strategic joint venture. This partnership brings excellent management skills, credit card experience, and unparalleled distribution networks under one roof and we look forward to working with one another."

“We are aware that we are a late entrant in a very competitive credit card market. But we will stay true to the LIC brand name, and come out with credit cards that cater to all segments of the population,” said a senior LIC official. “So far, the focus was on finding the right partners”, he said. Although the name of the company is yet to be finalised, it will bear LIC’s name and may be called “LIC Credit Cards” or “LIC Card Services”, the official added.

Through this joint venture, LIC aims to offer its policyholders the facility to pay their premium with LIC’s own credit card.

“Not only will this provide added convenience and service to LIC customers, it will bring down transaction costs for LIC”, said the press release.

“Our marketing team will soon begin work on the credit card offerings,” said the senior official with LIC.

The new venture will use the extensive branch, ATM and sales distribution network of LIC and Corporation Bank. GE Money will provide its global and local expertise in credit cards, business management processes and technology-driven platforms

GE Money, a unit of General Electric Company, operates in over 55 countries and has 10 crore cards in force. GE Money is part of a strategic joint venture in SBI Cards.

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