BoI may launch credit card arm

Bank of India (BoI) will revamp its low key credit card operations to increase retail banking operations. It is exploring an option to set up a subsidiary for credit card biz and may rope in a partner with expertise in this area.

The Mumbai-based public sector bank started credit card operations almost 30 years ago but has just seven lakh credit cards. Till date it has focused on issuing debit cards for fear of defaults, a factor that the public sector banks try to avoid the most.

The bank want to reposition this (credit cards) business, and the consulting outfit KPMG has given its report on revamping. "We have options to develop it in-house, float a subsidiary and bring in a partner," BoI's Executive Director K R Kamath said. It expects to take a final decision during the current financial year.

Meanwhile, the bank has upped the business target for 2007-08 from Rs 2,50,000 crore to Rs 2,60,000 crore. "The bank has reorganised its branches into four categories "" resource centers, profit centres, priority sector centres and general banking units "" to focus on niche areas and avoid dissipation of efforts," its Managing Director T S Naraynasami said.

The credit is expected to grow at 24 per cent and the deposits are expected to grow at 20 per cent. The domestic business is expected to touch the Rs 2,10,000-crore mark while the global operations are expected to contribute Rs 50,000 crore in 2007-08.

In an effort to provide valued-added services to its high networth clients, the bank would start wealth management services at select centres over the next three months.

At present, it was training bank staff in product and services management for this activity, he said. To retain high-value customers through value-added services, it would offer family floater health insurance policy, he added.

This can be availed by self, spouse and two dependent children of up to 21 years. It would also provide incentives for increasing the usage of debit cards, he added.