Sbi, Ge Caps To Seal Cards Venture Jan 27

The State Bank of India (SBI) and GE Capital will together invest

Rs 150 crore in their proposed credit cards business, with SBI contributing Rs 80 crore.

The joint venture, for which an MoU was signed on March 31 last year, is expected to be sealed January 27. The credit card will be launched as a State Bank Card and will be issued from July 1, the foundation day of the SBI.

There were differences over who will hold the majority in the venture, and it has now been decided to set up two companies, one focussing on distribution and the other on processing of cards. While Rs 50 crore will be used to fund the equity base of the processing company, the distribution company will have a capital base of Rs 100 crore.

 

Since SBI has the benefit of a large network, it will hold a higher stake in the distribution company. On the other hand, GE Capital, which has expertise in technology, will hold a higher stake in the processing company.

SBI will have 60 per cent in the distribution company and GE Caps the rest. The holding pattern will be reversed in the processing company.