The insurance leader, Life Insurance Corporation of India (LIC) will soon roll out its credit card in the market. LIC Chairman, T S Vijayan said, "We will be launching LIC credit cards by the end of this financial year, that is, on March 31, 2009."
The credit card to be launched by the insurer is a white-labelled card in association with the Corporation Bank. The PSU bank is going to issue the card on the firm's behalf.
Despite of the slowdown in the credit card segment, the bank is 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," said J M Garg, Chairman and Managing Director of Corporation Bank.
An official from LIC said, "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."
However Garg said that initially they would test the market and thereafter decide on the customer target.
He further said this card would be similar to existing cards but will vary in terms of credit and cash limit.
The credit card space has been facing a slowdown and rising number of delinquencies in the recent past. The RBI's data claim that spending through credit cards decreased by 7.85% to Rs 5,171.06 crore in January 2009 as compared to Rs 5,611.38 crore during April 2008.
The number of credit card user has been dropped by 8.62% to 25.87 million at the end of January this year against 28.31 million at the start of the financial year in April. However the card issued during this period increased by 13.32%.
LIC confirms a two-fold strategy for introducing a credit card. Firstly the bank views credit card as a potent instrument for premium collections and secondly it is also seen as an instrument providing total services to policyholders.
Recently LIC has also tied up with Punjab National bank for allowing the bank's customers to reach out to a range of products offered by them.