BackSBI, GE split credit card JV into two separate operations
SBI, GE split credit card JV into two separate operations
Premium
Mumbai: India’s largest lender State Bank of India (SBI) and GE Money, the Indian arm of General Electric Co., said they will split their credit card business into two separate ventures, with a chief executive officer in each venture “to enable a higher level of responsiveness to customer needs".
While the original SBI Cards and Payment Services Pvt. Ltd (SBI Cards) will focus on the marketing and distribution of SBI cards, another joint venture (JV), GE Capital Business Processes Management Services Pvt. Ltd, will handle technology and processing needs of the card business.
SBI has named Diwakar Gupta, a chief general manager at State Bank of Patiala, as the head of SBI Cards.
On 10 April, Mint first reported that SBI Cards—which had issued about 3.5 million credit cards—had posted a net loss of Rs186.61 crore in the quarter ended December, its first since 2003, wiping out a substantial portion of its net worth (equity and reserves). SBI and GE Money pumped in Rs200 crore in the quarter.
Mint had also reported that the CEO of the firm, Roopam Asthana, was on his way out. Asthana, the former head of the card division at HSBC, took over this assignment in 2004.
The non-performing assets (NPAs) of the card business were 16.28% as on 31 December, whereas the industry average is between 5% and 7%.
SBI and GE said in a statement that SBI Cards will now offer other consumer financial products, such as personal loans and credit insurance. The GE Capital arm will use its processing platforms to serve other providers as well.
A senior SBI official said with the new JV, the bank will now have better compliance norms and will have a stricter collection process in place.
“We will be stricter on the sourcing part and will try to bring the NPAs down. Card business as a whole is under pressure and we are no exception," the official said, who did not wish to be named.
Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away! Login Now!
