Spanish-lender BBVA has formed a joint venture
with India-based Bank of Baroda to establish a credit card business
in India.
The venture is the latest in BBVA’s strategy
to enter new and emerging markets through building relationships
with regional institutions.
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Bank of Baroda is a state-owned bank in India
with more than 36m customers and has 3,100 branches across the
country.
When BBVA receives regulatory approval from
India and Spain, it will acquire a 51% stake in the existing credit
card unit of Bank of Baroda, Bobcards; a deal worth about €34m
($45m).
Bobcards has contracts with both Visa and
MasterCard.
The credit card unit plans to issue more than
5m credit cards in the next eight years, using new technology,
state-of-the-art risk management tools and models.
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By GlobalDataBBVA has about 50m card owners in Europe and Latin America.
Credit cards were introduced into the Indian
market in 1981, but penetration rates are still as low as 3
percent.
With a rapidly growing economy – GDP is
forecast to grow 8.5% next year – India isan attractive market for
the Spanish lender.
According to consultants KPMG, credit
card spending in India will grow at 20% over the next few
years.
