The insurance leader Life Insurance Corporation of India on Monday jumped into the credit card business by launching its white-labelled credit card in collaboration with Karnataka based Corporation Bank to fetch the market, initially targeting its policyholders.
The term ‘white labelled’ is used where any product or service is produced by one company and marketed or branded by another.
Announcing its new venture, LIC said in a statement that it was going to enter in the credit card business by March 31. The credit card of LIC would be similar to other credit cards but varies in credit and cash limits. Moreover, it would also offer a value-added service like repaying the premium of insurance for its policy holders.
LIC is the biggest insurer with the database of 22-crore policy holders and through launching its credit card service, the company has approached a two-fold strategy: first, to create more options for premium collections as the credit card holder can pay the premium of insurance through it; and second, a potent instrument of providing total services to policyholders.
The card under the internationally valid Visa brand has been launched in two variants – Classic and Gold, in which credit and cash limit were different and vary from customer to customer according to their credit score, said Corporation Bank in a release that is offering the card on behalf of LIC.
For managing the card business, LIC has set up a sovereign company - LIC Credit Cards Services (LIC-CCS), LIC official said.
According to Reserve Bank of India (RBI)’s stats, at the end of January 2009, the spending through credit cards dropped by 7.85 percent to Rs 5,171.06 crore from Rs 5,611.38 crore during April 2008, while the number of credit card holders in India was dropped by 8.62 percent from 28.31 million in April 2008 to 25.87 million in January 2009.
However, year-on-year, spending through credit cards has gone up by 28 percent and dues on credit card were also gone up by almost 70 percent in last one year from Rs 29,359 crore in 2008 to Rs 17,306 crore in 2007.
Despite declining credit card business, LIC is confident to found a ground in huge Indian market on the basis of its large customer base, as LIC claims.
The card will be initially offered in Mumbai and Delhi, and will be distributed through premier policy agents, it added.
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