The Hindu : LIC plans to launch credit card

Online edition of India's National Newspaper
Tuesday, Aug 12, 2003

Business

Business

LIC plans to launch credit card

By Our Staff Correspondent

KOLKATA AUG. 11. Life Insurance Corporation of India (LIC) is negotiating hard to launch the cheapest credit card. While active persuasion is on with Capital One of the U.S., the insurance giant has recently initiated talks with SBI Cards and Corporation Bank for the same.

Talking to media persons here today LIC Chairman, S. B. Mathur, said given the large customer base of LIC, the company was looking forward to launching credit cards without membership fee costing about 11 per cent per annum which was one third of the average rate of interest charged by the existing credit card issuers.

Referring to the recent Insurance Regulatory and Development Authority (IRDA) dictat to enhance the capital adequacy by 50 per cent over the initially declared value of Rs. 10,300 crores, he said while the company was expected to fulfil the initial guidelines, following finalisation of balance sheet for the last fiscal, negotiation was on to convince the IRDA to waive the rest.

In an effort to assure that the company has sufficient solvency, he said LIC had raised its holding in Government securities and real estate by Rs. 50,000 crores and Rs. 10,000 crores respectively.

Regarding its attempt to acquire controlling stake in UTI Bank from UTI-I, Mr. Mathur hinted that the company had shifted from its initial position. "We have expressed our interest and will abide by the judgment of the Union Government on the issue".

LIC at present holds 13.53 per cent stake in UTI Bank, followed by 7.45 per cent by GIC and associates. UTI-I holds the controlling stake with 33.54 per cent.

Targeting 2.87 crore new policies in the current fiscal, the company expects to earn Rs. 11600 crores from first premium income.

Hinting that its single premium policies had lost shine, he said income from such policies might drop. The growth target was pegged at 19-20 per cent.

Mr. Mathur, who launched special products today to be sold by UCO Bank under the bancassurance programme, said that 5 per cent of its first premium income was expected to come from bancassurance. Tie-ups were negotiated with almost all major banks for the same, excluding those having insurance arms or intending to have one.

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