SBI Cards, India's only independent credit card issuer, on Monday said it had registered a turnaround and seeks capital infusion from its promoters State Bank of India (SBI) and GE Capital.
“SBI Cards has become the only standalone card company in the country to register profits. The company has turned profitable in the current year as against our expectations of achieving breakeven in March quarter of 2011,” State Bank of India's Chairman, O. P. Bhatt, told reporters while launching SBI Platinum Card here. Mr. Bhatt declined to give the profit numbers as saying the profit figures are not still audited.
The spends on SBI Cards were up 30 per cent to Rs.570 crore in October and its market share on spends rose to 7.4 per cent from 6.2 per cent last year. The new users also went up by 40,000 to 2.6 million.
At its peak in early 2008, SBI Cards used to add between 70,000 to one lakh customers each month and total had also gone to 3.1 million. But the high growth resulted in losses for 2008 and 2009. “The major learnings from the losses were that we should never under-price risk and should not have a business model based on penalties,” SBI's Deputy Managing Director, Diwakar Gupta, said. The joint venture partners have pumped in Rs.700 crore in the business since 1998, Rs.450 crore of which was in the last three years, and are committed to put in more as per need, Mr. Gupta added.
The platinum card launched on Monday is a premium offering targeted at those with incomes of over Rs. 5 lakh per annum and carries a registration fee and annual fee of Rs. 2,999 with a host of benefits.