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The Life Insurance Corporation Of India is all set to make it big again. India's credit card industry is on the verge of welcoming the public sector giant as a new member of the very vast family. According to CNBC- TV 18, LIC is set to forge an alliance with one of the world's biggest financial services company to launch credit cards.
According to sources, GE Capital services, the largest issuer of private label credit cards is said to have had talks with LIC for a joint venture into credit card business. Talks are still at a preliminary stage.
There is also news regarding LIC's latest three-way venture with a bank. LIC has shortlisted ICICI Bank, UTI Bank, HDFC Bank, Standard Chartered Bank and Visa as partners for this joint venture. Corporation Bank also might be roped in to ensure that Credit Card Company is not subsidiary.
GE is already in a partnership with the State Bank of India in credit cards. If things between GE and LIC finalize a strict code of conduct will be put in force to prevent violation of confidential information between the two companies.
Along with LIC, Stanchart, DBS and Barclays are also in the credit card race.
LIC has certain objectives behind this credit card venture. Their credit card business will help their policyholders and the agents will be able to utilize their time better by selling these credit cards. This will definitely cause brand enhancement. Senior officials of the company have claimed that credit card business will add value to their core activity of life insurance. LIC currently reaches to over 20 crore customers across the country.
For its new business strategy, the insurance company is targeting two crore credit card holders for its new business.
Although a number of MNC's are looking forward for a partnership with LIC they have been unsuccessful in convincing the latter that card business would prove beneficial for increase of insurance penetration. LIC is still to disclose its credit card strategy.
However, its mind boggling to review that though the potential for credit cards is tremendous in India, the proportion of total expenditure by them is one of the lowest in the world here. It seems like India is not very familiar with plastic money. While India registered plastic money worth $6 billion in 2006, Korea showed a spending of $136 billion by credit cards.
SBI Card CEO Roopam Asthana has commented that this very low level of penetration in India offers a lot of potential for credit card business. The drawing force behind a large number of financial institutions and companies like LIC is the 61% year-on-year growth in retail spending, the highest in the world.