Joint venture partners State Bank of India (SBI) and GE Money seem to have set their house in order after a brief period of strain over bad debt and losses at SBI Cards, the country's second largest card company.
The two partners on Wednesday not only decided to initiate steps to revamp SBI Cards, but also announced their intent to expand their relationship to cover personal loans and credit insurance.
SBI, which was unhappy with the poor working of SBI Cards, has appointed its senior executive, Diwakar Gupta, a chief general manager rank official, as the CEO of SBI Cards & Payment Services. Asthana, the present SBI Cards CEO, is a GE Money representative.
India's largest bank, on Wednesday in a statement, said the SBI Cards JV will continue to operate as it has since the partnership was formed under two separate JVs.
SBI and GE would maintain the same percentage of ownership in both the ventures. This was decided at the meeting between SBI Chairman O P Bhatt and GE Money Asia President and CEO Yoshiaki Fujimori.
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SBI Cards & Payment Services will focus on the marketing and distribution of SBI Cards. Another JV, GE Capital Business Processes Management Services, handles the technology and processing needs of the JV.
SBI Cards has not been doing well in the past couple of years. The cards business has suffered a loss of Rs 150 crore and was also facing problems from rising default in payments. SBI Cards has sold some 3.1 million cards so far. The card company had also topped the list of complaints from credit cardholders, with the banking ombudsman receiving 2,654 complaints against it.
GE Money's tie-up with Life Insurance Corporation of India (LIC) for cards had not gone down well with SBI. While SBI and GE Money have had a decade-long cards joint venture, the global giant in September 2007 joined hands with LIC for a similar venture.
Now under the new strategic initiative, SBI Cards will be better positioned to participate in the high-growth consumer financial services industry by offering other consumer financial products, such as personal loans and credit insurance, effectively expanding the scope of the JV, SBI said.