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SBI Cards, a standalone credit-card company, has decided to make a big foray into corporate cards this year, its Chief Executive Officer, Mr Kadambi Narahari, has said.
Corporate cards, which currently account for an insignificant share of the total business, will now be a new growth vertical for the company, Mr Narahari said.
“We see a big market out there for corporate cards. We are leveraging all the GE and SBI relationships to reach out to more corporates,” he said.
He pointed out that the cost of corporate cards servicing vis-à-vis retail cards is much lower. So far this year, SBI Cards has reached out to 250 corporates.
Focus on corporate cards could be in alignment with the SBI Cards’ changed business model of attracting customers who are more profitable to the company.
Mr Narahari however said that increased focus on corporate cards will not come at the cost of retail segments.
SBI Cards, which is the second largest issuer of new cards in the credit card industry, has a customer base of 2.2 million. Most of them are in the retail segment.
Mr Narahari also said that SBI Cards is planning to offer corporate cards to small and medium enterprises (SMEs), a segment often considered by lenders as riskier and less stable than mid-corporates and large companies.
The corporate card for SME will be in the nature of charge card and the outstanding will have to be fully squared-off at the end of the credit period.
No rollover will be allowed, but the SME card can be used for buying raw materials, paying electricity bills or even travel or entertainment of top executives.
Cash flow management
“Our corporate card is what is called as purchase card in other countries. It will be a good working capital solution for SMEs. That is how we will be positioning this card. SMEs can manage their cash flows much better with this card and meet their monthly needs,” Mr Sanjeev Jain, Chief Executive Officer, GE Capital Business Processes Management Services (GECBP), said.
GECBP handles the technology and processing needs of SBI Cards.
To secure itself against any defaults on corporate cards issued to SMEs, SBI Cards is in talks with SBI for an innovative arrangement.
SBI has been asked to see if it could allocate to SBI Cards a portion of the overall cash credit limit already granted to the SME, Mr Narahari said.
“So that when a corporate card is used by an SME, we have an ability to recover it as it is an allocated limit”, he said.
Mr Jain also said that SBI Cards has started offering personal cards to executives of its Corporate Card customers. Offers are also being launched for the corporate cards and these can be made use of by SBI personal card holders, he said.
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