Life Insurance Corporation (LIC), the country’s largest life insurer, has finally decided to launch a white label credit card in association with Mangalore-based Corporation Bank, after its proposed joint venture with GE Money hit regulatory hurdles.
A white label credit card is one that is issued by an issuer (in this case Corporation Bank) and all the liabilities and assets are booked by the issuer, but the branding of the card is that of the marketing company (in this case LIC).
LIC was hoping that its 200 million policyholders would provide it a solid captive base to get into the highly competitive credit card business.
The Reserve Bank of India did not clear LIC’s proposal earlier as it did not want GE Money to be a LIC partner in addition to SBI Cards.
Also, the proposal did not have a bank as an active partner. Corporation Bank, which was to have a less than 10 per cent stake in the venture, was to be just an investment partner and not an active partner in running the business.
Such a model for credit cards has so far not succeeded in India. Tata Sons had launched a white label credit card called Tata Credit Card in association with SBI Cards a few years back, but it has not made much progress with just a couple of lakh cards issued to Tata group employees.
TS Vijayan, chairman of LIC, said that an announcement regarding credit card plans will be made within the next two weeks.
“The policyholders will not only be able to pay premiums through this card, but can also receive policy proceeds through the credit card account,” said DK Mehrotra, managing director, LIC.
Incidentally, LIC has a 26.32 per cent strategic stake in Corporation Bank.