Initially the time period of the memorandum of understanding (MoU) between Life Insurance Corporation of India (LIC) and GE Money for a credit cards venture has expired but according to the sources of both the companies the deal is on course.
DEAL IS ON
· On September 6, 2007, LIC (40 per cent) had announced an MoU with GE Money India (35 per cent), Corporation Bank (5 per cent), LIC Housing Finance (4 per cent) and LIC Mutual Fund AMC (2 per cent) to create a new credit card company
· GE Money has a tie-up with State Bank of India and SBI Cards, their joint venture, is the second largest card company
· SBI was not too happy with the way the company was being run and had incurred losses of around Rs 150 crore last year
Hemant Bhargava, CEO, LIC Credit Cards Company said, "The initial MoU period is over, but the project is on. In one or two weeks, we may soon announce the launch of some aspects related to the credit cards company."
A senior LIC executive in an interview to Business Standard said there are some issues that are being thrashed out. "Till GE Money does not tell us that this venture is off, it is on."
When GE Money spokesperson was contacted, said, "Strategic partnerships have been a key pillar of GE Money's growth globally and in line with this strategy, partnerships will continue to be critical to our growth in India. GE Money continues to work closely with LIC to finalize its proposed joint venture and to ensure the future success of this partnership."
Meanwhile GE Money is having a tie-up with State Bank of India and SBI Cards, their joint venture, is the second largest card company. Whereas SBI was not too happy with the way the company was being run as it had incurred losses of around Rs 150 crore last year, executives of the country's largest bank were also irked at GE Money's decision to tie up with LIC.
But SBI and GE Money have put their differences aside for the betterment and have decided to extend their partnership. This has given rise to the theory that GE Money and LIC might put their deal on the backburner.
On September 6, 2007, LIC having 40% stake had announced a MoU with GE Money India with 35%, Corporation Bank with 5%, LIC Housing Finance with 4% and LIC Mutual Fund AMC with share of 2% to create a new credit card company that was to influence the strengths of each company.
Besides this the remaining 14 per cent stake is to be offered to financial investors. The parties had planned to finalize definitive agreements by the end of October 2007. The MoU was valid for 90 days.
However the officials of LIC and GE Money said in spite of the expiry of the MoU, they had held talks to ensure that the proposed credit card company is realized.