Faced with competition from private insurance companies and in an effort to branch out to new areas to provide better services to its customers, Life Insurance Corporation of India is planning to launch credit cards that would charge extremely low interest.
"We are in talks with Master Card and Capital One to launch credit-cum-debit card and are currently negotiating processing fee and interest rates," a top LIC official said on Wednesday, adding, it could also be used as a smart card.
Refusing to give any time-frame for the launch, the official said the talks were at nascent stage and it was very difficult to comment on the details at present.
LIC, the official said, was particularly negotiating with the companies to charge a maximum 12 per cent interest from the card users as against 34 to 36 per cent charged by other companies in the business.
Asked why a company would agree to charge only 12 per cent interest against the prevailing rates of over 34 per cent, the official said any credit card company joining hands with LIC would get a huge data base from the corporation, which in itself was a big benefit.
The official said the card facility would be offered to a select group of policyholders and would make collection of premiums much easier.
"In addition, LIC card holders would be able to avail of ATM benefits of other banks without any extra cost. A person's deposit against a policy is likely to be treated as guarantee," he said.