UTI Bank makes way into credit card mart

The third biggest private sector bank, UTI Bank, today entered the credit card race, where ICICI Bank has gone way ahead of competitors.

UTI Bank today launched its credit card operations with the unveiling of a suite of four cards "" Silver, Silver Plus, Gold and Gold Plus.

At the end of March 2006, ICICI Bank was leading the pack with five million credit cards issued, which is about 29 per cent of 17.50 million credit cards issued in India. The average spend on credit cards in India is around Rs 20,000.

In a statement, P J Nayak, chairman and managing director of UTI Bank, said "The launch of our credit cards serve to add a significant momentum to our growing portfolios of retail products. Unlike the various free cards in the market, our card comes at a fee. But given that we have a surfeit of attractive offers built into them, we are confident that our cards will appeal to the discerning consumers."

The bank has tied up with four airlines to offer its gold plus card holders a complimentary return voucher and the silver plus card holder a one way flight voucher across 29 destinations in the country.

It is offering free insurance cover of Rs 20 lakh for the gold cards customers and Rs 10 lakh for silver card holders.

"Credit cards would be a significant contributor to our fee income portfolio and within a month we will also come out with a platinum card," said Hemant Kaul, president retail banking at UTI Bank. Fee income constitutes as high as 27 per cent of UTI Bank's total revenues.

The silver and the gold card will not have any annual fee. The annual fees on the silver plus card is Rs 300 and on the gold plus is Rs 500.

After today's soft launch in Mumbai, the bank will spread out its credit cards business to 12 more cities by the end of September 2006 and to 50 cities by the end of the fiscal.

SBI Cards, State Bank of India's credit card subsidiary, is soon expected to surpass Citibank to occupy the number two position in terms of credit cards issued.

SBI Cards has reached a credit cards base of over 2.5 million from 1.3 million at the end of 2004. Citibank currently has a credit cards base of around 2.9 million, up from 2.2 million at the end of 2004.