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State Bank of India is yet to zero in on a replacement for GE Capital in the credit card joint venture SBI Card. The process of identifying a strategic partner to come in the place of GE Caps is underway and expected to be completed by September, Vijay Jasuja, Chief Executive Officer, SBI Card, said.
“The process is on. It may take 3-4 more month’s time. I think by September SBI will be in a position to identify a new partner,” Jasuja told BusinessLine when asked about the status of GE Cap’s proposed exit from the credit card joint venture.
It was for SBI, as a shareholder in the joint venture, to take a call on the way forward. Jasuja said that GE Capital was as on date very much a part of the joint venture and had not exited.
There is no urgency as GE’s global plan to exit from finance business had not impacted SBI Card’s operations, he said. “There is no great urgency (from both sides) as the credit card business is growing well including in terms of profits,” he said.
For the financial year ended March 31, 2016, SBI Card recorded a net profit of ₹271 crore and profit before tax of about ₹438 crore.
GE Capital had, in 1998, partnered with State Bank of India to float two joint venture companies, including SBI Cards for developing credit card business in India.
SBI Cards & Payment Services is the front end of the business focussing on marketing and distribution of credit cards. On the other hand, GE Capital Business Process Management Services takes care of technology and processing as a captive BPO unit. GE Capital owns 40 per cent in the former and 60 per cent in the latter.
SBI owns 60 per cent in SBI Cards and Payment Services and 40 per cent in the captive BPO unit.
SBI is currently exploring several options including buying out the 40 per cent stake of GE Capital in SBI Card. With General Electric announcing that bulk of the $500-billion financial behemoth (GE Capital) would be sold or spun off, there is a big question mark over the ownership pattern of the credit card joint venture companies in India.
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