SBI prudence against issue of free credit cards

by Hardeep Saini SEO

State Bank of India, has cautioned banks from issuing free credit-cards warning that the facility should be given against a fee to ensure that only those who value it get it.

“Don't push (free) cards for the sake of increasing numbers,” he said, adding that this being a high cost industry in terms of service, a fee will ensure that only those who value it will ask for it.

Co-branded card

He was speaking at the launch of a co-branded international credit card named SBI-Bank of Maharashtra Card promoted jointly by SBI Card and Payments Services Pvt Ltd and Bank of Maharashtra (BoM). The card is available in two variants, Platinum and Gold, with each offering distinct benefits.

Mr A.S. Bhattacharya, CMD, BoM, said that the partnership is an example of synergies derived by two partners coming together. He said, “We are happy that our bank is partnering with one of the largest credit-card issuers in the country. This strategic tie-up gives us the perfect platform to create a new benchmark in the credit-card industry.”

Pointing out that a payment system can add 1-2 per cent to the GDP, Mr Gupta said that robust payment network was necessary to fulfil the need to pay seamlessly across geographies and time zones. Currently, the SBI offered 1.6 products per customer, which should be three or more, he said.

Due diligence

The runaway carding without due diligence of risk taking abilities of clients in 2006-2008 had led to a lot of defaults during the downturn, Mr Gupta said, adding that the number of cards in India had touched 29 million at the height of the aggressive phase of selling. The number had dipped to 17.5 million after the downturn and was now closer to 20 million.

State Bank of India, has cautioned banks from issuing free credit-cards warning that the facility should be given against a fee to ensure that only those who value it get it.