Future gets RBI nod for credit card

From The Economic Times

MUMBAI: Even as Kishore Biyani's Future Capital Holdings (FCH) awaits approval from Sebi on its proposed initial public offering, the company has got the nod from RBI for its credit card venture.

The financial services arm of the Future group has tied up with the country's largest private sector bank - ICICI Bank - to launch Future Card, a credit-cum-loyalty card which will offer customers a slew of discounts and benefits across Future Group stores.

Customers will receive four loyalty points for every Rs 100 spent at Future group's retail stores, including Pantaloons, Central, Big Bazaar and Food Bazaar and one loyalty point for every Rs 200 spent outside the group's retail stores.

Apart from credit cards, FCH plans to offer home equity loans, money transfer services and distribute mutual funds, life and general insurance products. The financial services retail offerings is housed under Future Money and the management may look at the possibility of hiving this off into a separate entity. At present, Future Money, through its 60-odd outlets, provides consumer durables, furniture and personal loans.

Interestingly, the Future Group already has a co-branded credit card with ICICI Bank, named ICICI Bank Big Bazaar card. However, unlike the benefits of Future Card, this card can only be used at Big Bazaar outlets. FCH will give the 5 lakh-plus existing holders of ICICI Bank Big Bazaar card the option to migrate to Future Card.

According to the arrangement between ICICI Bank and FCH, the bank will determine the terms and conditions of the Future Card and will be responsible for collection and recovery of all charges and fees due from card customers while FCH will be responsible for marketing and distributing the credit card and for collecting applications from customers.

FCH will receive from ICICI Bank an acquisition fee of Rs 600 for every new credit card issued, with a provision for an annual escalation, and also receive incentive commissions based on a percentage of customer spends which are 0.7% for spends within Future Group formats and 0.2% for spends in other outlets.