LIC Credit CardsI

I was rather amused by this news when I saw it on CNBC. A search on Rediff tells the entire story. This in a business jargon is called diversification, when an organization intends to move away from its core business domain. I am not very happy with the news. Looking at the history of LIC, you will notice that

Starting as Indian enterprise with highly patriotic motives, insurance companies came into existence to carry the message of insurance and social security through insurance to various sectors of society. The Parliament of India passed the Life Insurance Corporation Act on the 19th of June 1956, and the Life Insurance Corporation of India was created on 1st September, 1956, with the objective of spreading life insurance much more widely and in particular to the rural areas with a view to reach all insurable persons in the country, providing them adequate financial cover at a reasonable cost.

So the basic idea behind LIC is more benign in nature. And somehow I have personally been very wary of credit card companies (Why I hate credit cards or How credit card companies make money) , because their sole aim is to earn money with little care for the customers. So I see this as an evil move for a benign company taking towards becoming a money minded business. This might look like a philosophical and biased logic, but I guess it indicates the threat seen by LIC from the private players. With a 77% share of market, it is till numero uno, but it is facing stiff competition from private players.

I see the credit card move as a step to fight back the competition. Undoubtedly LIC has a strong distribution network, but that is because the name provides a "TRUST" to any customer. The biggest reason is the sovereign guarantee by the government. So a customer wont care much about from whom the policy is being taken and just the LIC name is enough to bring that trust. That is the reason it is still the numero uno insurance provider even amongst the youth. And fortunately it has kept pace with the changing times by being up-to-date with its customer services. The only way I would love LIC credit card if I can gain the same TRUST as LIC Insurance provider. I already have sufferred a lot with the private credit card players and dont want to add the agony with another one, unless LIC can keep its original objectives intact with the credit card business

Conduct business with utmost economy and with the full realization that the moneys belong to the policyholders