LIC parts ways with GE Money from credit card JV

Banking Bureau
Posted: 2008-07-26 01:10:52+05:30 IST
Updated: Jul 26, 2008 at 0110 hrs IST

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Mumbai, Jul 25: After scrapping the memorandum of understanding (MoU) that it signed with GE Money for entering into the credit card business, Life Insurance Corporation (LIC) is in the process of finding a new partner for its proposed venture.

Even before the launch of its proposed credit cards business, the state-run life insurer, LIC, is reported to have parted ways with GE Money.

Though the exact reasons of the break up of the MoU is not known, sources point out that the move is taken by LIC as an afterthought.

However, when contacted by FE, TS Vijayan, chairman, LIC, declined to comment on the subject. Also, Vijayan did not specify the timeline for the launch of the credit cards business.

GE Money already has its tie-up with State Bank of India (SBI) for the credit cards business and the business has accumulated over Rs 150 crore as non-performing portfolio till 2007-08.

Hemant Bhargava, chief, LIC Credit Cards, was not available for comment.

Sources point out that LIC's sole intention of foraying into the credit card business is to enable premium payment of its policy holders numbering over 20 crore.

"For this purpose, LIC need not go for an exclusive joint venture. Rather, a co-branded card along with an existing card player will do," a top official of a prominent credit card company said.

B Sambamurthy, chairman & managing director of Corporation Bank, one of the stakeholders in LIC Credit Cards, said, "We already have our own credit card business, but we have reached an MoU with LIC only to have a marginal stake for investment purposes only." LIC Housing Finance is another company, which will have a stake in LIC Credit Cards. When contacted, RR Nair, director and chief executive of LIC Housing Finance, said, "Yes, we have reached at an MoU, but no further discussion has happened after that to decide about our stake in the LIC's forthcoming credit cards venture. However, as per its earlier plan, the company may be interested in having a minor stake of 5% in the business. While addressing the media in Mumbai in September last year, the LIC chairman had announced that the credit cards business of his company would be rolled out within a period of seven months.

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Comments

» WHY it happened ?

Posted by RK Singh on 2008-07-27 20:07:09.546292+05:30
After spending crores of public money, LIC has broken the contract. Reason is clear - Mr Bhargav, Chief Officer of LIC CARD DEPTTT was in Mumbai-- his deptt in DELHI--- for one full year. He comes to Delhi and contct is broken. It is wastage, irresponsibility and unaccountability. LIC is losing trust of people by such acts. People in LIC say Bhargav is never in one depttt till more than one year; before card, he was in MICRO INSURANCE till one year-- before that he was in Foreign deptt till one year, now after one year in card, he wants to go back to Bombay----very clear--- contract is broken. Will LIC punish him -- no question-- he has become ED by crookedness - one year in one post - BARBADI AND THEN KHISKO ! then new barbadi

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» Bhargav

Posted by Rakesh on 2008-07-27 20:12:48.650543+05:30
It can no be like this. More officers must be involved in such a top level act.

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» LIC's Bhargav is the culprit

Posted by SK Bhardwaj on 2008-07-27 13:31:09.671801+05:30
DO you know who has killed the company ? Bhargav Chief Officer of LIC card deptt. was enjoying in Bombay for last one year - now that he has joined in Delhi, he has killed the company. An example of innefficiency and corruption in public sector.

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LIC parts ways with GE Money from credit card JV

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