With the aim of expanding the reach of digital payments, the State Bank of India on Tuesday said that it will offer credit cards to every account holder who has a balance of Rs 20,000-25,000. The card will be offered through a network of 20,000 plus SBI branches.
The Bank will not go into customers' credit history and the card, which will be issued in the name of 'Unnati', will remain free for four years.
"Presently, lack of credit history has been a challenge in increasing the card penetration in the country. In such a scenario, this card is likely to facilitate in generation of credit history for new users, which will help bringing them into organised financial stream," SBI chairperson Arundhati Bhattacharya said.
"To encourage adoption of credit cards and facilitate expansion in the reach of digital payments, the SBI Card Unnati will be offered free, at zero annual fee, for four years," she further said.
Explaining the reasoning behind keeping the card free, SBI Cards CEO Vijay Jasuja said: "SBI has close to 30 crore customer accounts, including Jan Dhan Yojana. Post-demonetisation the balance amount in these accounts increased significantly. Many customers do not have credit history and are not eligible for cards. We want to bring about financial inclusion in terms of credit facility with this new product."
The Bank is also in the process of increasing its stake in SBI Card to 74 per cent. "Stake will be increased by first quarter of next financial year...there are few regulatory issue that is being sorted out," SBI chairperson said. SBI currently holds 60 per cent stake in SBICPSL and 40 per cent in GECBPMSL. The balance being held by GE Capital in both the ventures.
The SBI has approval to infuse Rs 1,160 crore in the two JVs - SBI Cards and Payment Services Pvt Ltd (SBICPSL) and GE Capital Business Processes Management Services Ltd (GECBPMSL)- through purchase of equity shares from GE Capital so as to increase the bank's stake in both the companies to 74 per cent. Asked about remaining 26 per cent stake, she said, the decision has to be taken by GE.
The nation's largest lender SBI entered credit card business in 1998 by roping GE Capital India, the consumer finance arm of US-based GE Capital. SBI Card, having 4.3 million user, said its latest offering 'Unnati' targeted at all SBI customers, including Jan Dhan account holders throughout the country.
(With inputs from PTI)