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Anirban Nag
MUMBAI, October 19: Industrial Credit and Investment Corporation of India (ICICI) has called off talks with US credit-card major, Capital One, for a possible tie up in credit cards. The term-lending institution plans to go it alone and may look into the possibility of a domestic alliance later.
ICICI plans to launch its credit-card business in June 1999, thereby, becoming the first domestic financial institution to enter the fast-growing personal-business segment.
According to a senior ICICI official, talks with Capital One have been called off as the internal thinking in the institution was that it might be better to go it alone. "We might consider tie-ups with domestic companies at a later stage. Nothing has been finalised yet," the official said.
Capital One was one of the three credit-card companies shortlisted by the State Bank of India (SBI) for a possible tie-up in credit cards. GE Capital Services eventually bagged the deal. Amex was the other firm in the race for a tie-up with SBI.
The StateBank has floated two non-banking finance companies with GE Caps -- one for processing and the other for marketing of its credit-card business. SBI holds a majority stake in the marketing company, while GE Caps has a majority holding in the processing arm.
Sources said that ICICI will be pumping Rs 200-300 crore into the new venture. The term-lending institution will have an arrangement with its banking arm, ICICI Bank, which will market the card to customers through its branches. Besides, the card will also be marketed through the various branches of ICICI-Credit, the institution's hire purchase and leasing arm.
ICICI's foray into credit cards has been viewed as yet another step towards universal banking and a move to make the institution a one-stop financial intermidiary.
A separate credit-card department is likely to set up under ICICI senior general manager Shikha Sharma. "No new subsidiary will be floated for card operations like SBI," sources said. The department will fall under thepersonal-finance department that Sharma heads.
ICICI's personal-finance wing took off early this month with the launch of a car-finance scheme for Hyundai's Santro.
The department was set up recently after ICICI restructured its organisational set up, streamlining its operations under three heads-- major client group, mid-cap corporate group and personal-finance department. The recast follows recommendations of global consultancy firm Mckinsey & Co.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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