An unlikely marriage, would you say! No really. It’s GE Money’s 35% and LIC’s 40% stake that will make a new credit card company. Both are giants, GE Money being one of the world’s leading credit card issuers.
And we all know LIC’s phenomenal reach. In fact many people, when they inquire if you’ve a life insurance policy, still ask, “Have you done LIC?”
So, will this mean a new war on plastic card penetration? You bet.
Back in early 90s I had my first card from Citibank, which was the numero uno at that time. There were of course others like Bobcard from Bank of Baroda, but their presence was negligible.
Then came Stanchart, and on the back of some deft marketing, it captured a slice of the market, though not overtly threatening to Citibank.
Things started changing rapidly after ICICI Bank entered the scene. Hard marketing in addition to branding with popular sales outlets saw ICICI Bank fast climbing the credit card popularity pole in a short time.
Today ICICI is the largest player in this sector and reportedly has more than 8 million card holders. SBI, also a late entrant, comes next but trails ICICI by more than half with about 3.5 million card holders.
The picture may change soon if only because both GE Money and LIC are too strong to reckon with. Notably, GE Money has alliance with SBI as well.
What is there for consumers?
Indian credit card issuers charge very high interest on outstanding amount from the card holders. The interest rates charged are believed to be much higher than those in most countries.
They also torture and harass people in case there is any problem with loans taken from them (see Torture cry by creditor).
Seen from that angle, the new venture between GE Money and LIC is welcome. Who knows an increase in competition may bring succor to the card holders!
[Collated from the news item, Titans in plastic push]