India's largest lender State Bank of India (SBI) has appointed consultants to find out the viability of the merger between two operating units of the SBI Card.
India’s largest lender State Bank of India (SBI) has appointed consultants to find out the viability of the merger between two operating units of the SBI Card. “SBI Card JV Board approved the appointment of consultants for conducting a study to examine the viability of considering and exploring the possibility of merging JV entities i.e. SBI Business Process Management Services Pvt Ltd (SBIBPMSL) with frontend Company i.e SBI Cards & Payment Service Pvt Ltd (SBICPSL),” SBI said in a letter to stock exchanges.
The merger is between the backend company SBIBPMSL and the frontend company SBICPSL. The decision to merge the two operating units came after the exit of foreign partner GE Capital. SBI Card is a joint venture between SBI and GE Capital. GE Capital exited SBI Card as part of the global business revamp.
SBICPSL focuses on the marketing and distribution of the credit cards while GE Capital Business Processes Management Services (GECBPMSL) used to handle the backend technology and processing needs of SBI Card.SBI Card manager last year said that it made no sense for SBI to run two businesses when it will own 74% stake in both companies.He said that there will be a significant overlap and so joint venture between the two will happen.
SBI launched SBI Card in in October 1998 and in December 2017, SBI and The Carlyle Group acquired GE Capital’s stake in the joint venture. SBI holds 74% while Carlyle holds 26% in the joint venture. Currently, the SBI has a consumer base of 5 million using its SBI Card services for payment of products and services.