Mails sent to Bank of Baroda, Warburg Pincus, Westbridge and Gaza Capital did not elicit any response till the publication of this report. A spokesperson for TPG declined to comment.
BOB Cards had 1.57 million credit cards in circulation at the end of October, surpassing larger peers such as HDFC bank (16.54 million), ICICI (13.53 million) and State Bank Of India cards (15.16 million), central bank data showed.
In June, ET had reported CEO Shailendra Singh that parent Bank of Baroda (BoB) is looking for a strategic investor in the cards business as it seeks to capitalize on India’s growing credit culture and increasing penetration in smaller towns.
In FY22, BoB Financial narrowed the loss to Rs 10 crore as compared to the loss of Rs 43.1 crore reported in March 2020. Singh said the company expects to make a profit in the current financial year.
Gross NPAs have come down to 7.1% of loans, the lowest in four years.
The latest financial figures for the end of September are not available. BoB was the first company to receive a license to start a specialized credit card company in 1994. However, BoB faced stiff competition from private sector banks and banks. state Bank of India-(SBI) has SBI Card.
The bank is expected to sell up to 26% equity to fund its growth needs, said a person familiar with the company’s plans. “Some private equity funds are in talks but have no intention of selling more than 26%. This money will be used for the growth of the company,” said this person.
Speaking to ET in June, Singh had said that getting a strategic investor would help Bank of Baroda unlock some value in its subsidiary and also bring in some sourcing or technology experts.
Singh said the bank would also tap sales from over 8,500 branches across the country and channels open outside.
A recent PwC report states that the credit card industry in India has witnessed a compound annual growth rate (CAGR) of 20% over the past five years. The number of credit cards crossed 78 million in July 2022. Credit card spends crossed the Rs 1.3 lakh crore mark in October, the country’s biggest festival month.
With the emergence of e-commerce, the adoption of contactless payments and changes in the value proposition, the post-pandemic credit card space has changed significantly and continues to evolve.
In 2017, The Carlyle Group acquired 26% stake in SBI Card from GE Group for Rs 2,000 crore and later raised its stake to 74%. Carlyle has been making a partial exit since the listing of SBI Card in 2010.