Tata allying with SBI to unveil credit card
Business Standard — December 8, 2005

The Tata group is teaming up with the country's largest commercial bank, State Bank of India, to launch its credit card - christened Tata Card - by the end the financial year. This will be the group's second venture with SBI. Recently, its infotech arm Tata Consultancy Services joined hands with State Bank for the bank's software subsidiary. The card, which will be meant for the stakeholders of the group - employees, shareholders, dealers and customers and business associates - will dramatically change the dynamics of the 14-million credit card market.

A back-of-the envelop calculation suggests that the Tata Card could reach 2.5 million individuals initially if it is available to all the shareholders and the employees of the group. ICICI Bank now leads the credit card pack with 3.5 million cards, while Citibank has 2.85 million card holders. Sources said whether all the shareholders would be eligible for this card is not yet decided. However, the number of card holders would be "very large" as the card would be given to "all related to the group," they added. The group has 2.50 lakh employees. Its 32 listed companies have 20 lakh shareholders.

In addition, the group has got retail presence in gold, watches, automobiles and lifestyle shopping, among others, through Tanishq, Titan, Fastrack, Tata Motors and Westside. The sources said eventually the Tatas will float their own card. To start with, the SBI card will be distributed among the group employees and business associates under the Tata Card brand name and, eventually, the group will migrate to its own card. Till such time, SBI's payment system will be used and the bank will get its share of revenue on the usage of the card.

"It is a win-win situation for both Tata and SBI. The industrial group will get time to launch its own card and, meanwhile, SBI will earn revenue by lending its back office and card business logistics to the Tatas," said a senior banker.