After lying low since its foray into the credit card business two years ago, Life Insurance Corporation (LIC) of India on Monday announced a tie-up with Axis Bank to offer co-branded credit cards to its policyholders and employees.
The insurance behemoth also has a similar arrangement with public sector lender Corporation Bank, through which it sells credit cards to its policyholders through a wholly-owned subsidiary, LIC Cards Services Limited.
According to insiders, LIC's decision to rope in another bank was a direct fall-out of Corporation Bank's limitation in scaling up business to the insurance behemoth's liking.
The insurer is also open to future tie-ups with other institutions to broad-base its card business.
The move has apparently made Corporation Bank jittery, since it is unsure how the existing tie-up would fit into LIC's picking order once it enters into an agreement with Axis Bank, which boasts of greater and efficiency in the credit card business.
Corporation Bank, on its part,
plans to approach LIC officials and sort out the matter.
"The only issue we were facing was scaling up. We would be meeting LIC officials soon and if there are any issues, we will sort them out," said Ramnath Pradeep, chairman and managing director, Corporation Bank.
The Karnataka-based bank has issued 30,000-35,000 credit cards to LIC policyholders, since the tie-up in 2009. LIC holds a stake of 26 per cent stake in Corporation Bank.
"Axis Bank would manage the card business and it would be available in three different platforms like gold and titanium. These would be targeted at high-end customers. The tie-up with Corporation Bank remains, but there are certain limitations to how much they could scale up. The tie-up with Axis Bank would give more options to our policyholders," said a senior LIC official.
The Visa branded credit card would be managed by Axis Bank and would have a photo of the cardholder and a signature digitally imprinted on it.
"It would be valid internationally and would facilitate policyholders to pay premiums from other places, thus saving on the bank charges," the official said.
The insurance behemoth also has a similar arrangement with public sector lender Corporation Bank, through which it sells credit cards to its policyholders through a wholly-owned subsidiary, LIC Cards Services Limited.