LIC set to unveil its credit card on March 31

The Life Insurance Corp of India (LIC) is all set to enter the credit card business. The public sector insurance giant is going to launch its credit card on March 31, 2009.

T S Vijayan, chairman, LIC, said, “We will be launching LIC credit cards by the end of this financial year, that is, on March 31, 2009.”

LIC has tied up with Corporation Bank for its white-labelled credit cards. The bank will be the card issuer.

Corporation Bank’s chairman and managing director J M Garg said that although the credit card industry is facing slowdown, the lenders are confident of creating its own customer base. “LIC is a big brand and the number of LIC policy holders run into crores. Definitely, it will help us in establishing the new business,” he said.

Garg, however, said it will be a soft launch and once they have tested the market, the lenders would decide on customer target. Garg said most features of the card will be similar to existing cards, but they will vary in terms of credit and cash limit.

A senior LIC official added, “LIC has the database of 22-crore policy holders. We are entering into this business because there is a need. We would also offer facilities such as giving unsecured loans against the credit card or paying policy premiums through the credit card.”

K C Chakraborty, chairman of Punjab National Bank, which tied-up with LIC for bancassurance, said he did not want to predict the impact of LIC’s entry on the credit card market.

The credit card industry has been going through a rough patch of late due to rising default rates and falling customers.

According to recent Reserve Bank of India data, spending through credit cards dropped by 7.85 per cent to Rs 5,171.06 crore in January 2009, compared with Rs 5,611.38 crore during April 2008. However, year-on-year, spending through credit cards has gone up by 28 per cent.

Credit card dues went up by almost 70 per cent in the past one year. In December 2008, the total outstandings was Rs 29,359 crore against Rs 17,306 crore in the corresponding month of 2007.

The number of credit card users fell by 8.62 per cent to 25.87 million at the end of January this year, against 28.31 million at the start of the financial year. However, in April-January 07-08, the number of cards rose by 13.32 per cent.

LIC says it has a two-fold strategy for the card venture. The first one is to create more avenues for premium collections and sees credit cards as a very potent instrument for this.

Secondly, it visualises credit card as an instrument of providing total services to policyholders.

Source:mydigitalfc