Insurance major Life Insurance Corporation of India (LIC) has reached an agreement with Corporation Bank to make its entry into the credit cards business in the country. LIC holds a 27 per cent stake in Corporation bank.
The development comes as a surprise owing to the fact that LIC had planned to partner with GE Money earlier. However, the pan did not materialize due to the failure of their partnership forcing LIC zero in on a PSU tie up. It is being rumoured that LIC had also weighed option to partner Canara Bank for the credit cards venture but decided against it later on. It is being said that the LIC’s foray into credit cards business comes in line with its strategy to leverage its large customer base and wide distribution network The new foray is, in fact, a shot at providing value added service to its huge customer base.
The new LIC-Corporation Bank credit card to be launched by the combine would be a white labeled, co-branded card and the product will be rolled out as a product from a separate wholly owned company called LIC Cards Services Ltd. The new company is said to look after all aspects of LIC’s credit card venture. Meanwhile, related buzz on theventure said that the Corporation Bank has not yet decided on the nature of the card, on whether it should be co-branded or independent. It has also not been decided on how much stake each of the companies would hold in the new venture.
According to LIC top brass, the insurance behemoth has already received the nod from the Central government to start this wholly owned venture. With the new company coming into force, LIC would be able to offer premium-payment facility to policyholders with their own credit cards. The new entity, LIC Cards Services Ltd, will leverage LIC and Corporation Bank’s strong brand and extensive branch, ATM, and sales distribution network to make the credit cards venture rolling without any hassles.
Meanwhile, confirming the alliance, Corporation Bank has said that the bank will extend its existing credit card facility to LIC by using both Visa and MasterCard.