SBI To Raise Stake In Credit Card Joint Venture To 74% By June-End
The decision on the remaining 26 percent stake has to be taken by General Electric.
The country's largest lender State Bank of India (SBI) on Tuesday said it will increase its stake in SBI Card to 74 percent by June end.
"There are a few regulatory issues that are being sorted out," SBI Chairman Arundhati Bhattacharya said at the launch of SBI Card Unnati in New Delhi.
The board of SBI has already given its approval to hike the bank's stake in its two credit card joint ventures with General Electric Company to 74 percent.
The bank has approval to infuse Rs 1,160 crore in the two joint ventures – SBI Cards and Payment Services Pvt Ltd. and GE Capital Business Processes Management Services Ltd. – through purchase of equity shares from GE Capital so as to increase the bank's stake in both the companies to 74 percent. The decision on the remaining 26 percent stake has to be taken by GE, Bhattacharya said.
"Within the next one month there should be finality on the remaining stake sale," she added.
The American company is looking to exit SBI Cards.
SBI currently holds 60 percent stake in SBI Card and 40 percent in GE Capital Business Processes Management. The balance is held by GE Capital in both ventures.
The nation's largest lender entered credit card business in 1998 by roping GE Capital India, the consumer finance arm of US-based GE Capital. As per the agreement between SBI and GE Capital at the time, a decision to exit the JV must be made on the basis of mutual understanding.
SBI Card, with 4.3 million users, said its latest offering 'Unnati' is targeted at all SBI customers, including Jan Dhan account holders throughout the country. The card, to be issued to person with balance of Rs 25,000, will be offered through network of 20,000 plus SBI branches.
"To encourage adoption of credit cards and facilitate expansion in the reach of digital payments, the SBI Card Unnati will be offered free, at zero annual fee, for four years," the SBI chairman said. It will cater to the credit card requirements of new users and especially those without any prior credit history, she added.
The card company expects 300 percent growth within a year, Bhattacharya said.