The memorandum of understanding (MoU) between Life Insurance Corporation of India (LIC) and GE Money for a credit cards venture has expired, but both the companies have maintained that the deal is still on course.

On September 6, 2007, LIC (40 per cent) had announced a MoU with GE Money India (35 per cent), Corporation Bank (5 per cent), LIC Housing Finance (4 per cent) and LIC Mutual Fund AMC (2 per cent) to create a new credit card company that was to add to the strengths of each company. The remaining 14 per cent stake was to be offered to financial investors. The parties had aimed to finalise definitive agreements by the end of October 2007. The MoU was valid for 90 days.

“The initial MoU period is over, but the project is on. In one or two weeks, we may soon announce the launch of some aspects related to the credit cards company," said Hemant Bhargava, CEO, LIC Credit Cards Company.

A senior LIC executive added that there are some issues that are being sorted out. "Till GE Money does not tell us that this venture is off, it is on,” he added.

A GE Money spokesperson said, "Strategic partnerships have been a key pillar of GE Money's growth globally and in line with this strategy, partnerships will continue to be critical to our growth in India. GE Money continues to work closely with LIC to finalise its proposed joint venture and to ensure the future success of this partnership."

GE Money has a tie-up with State Bank of India and SBI Cards, their joint venture being the second largest card company. According to reports, while SBI was not too happy with the way the company was being run which had lead to SBI incurring losses of around Rs 150 crore last year; executives at the bank were also bothered at GE Money's decision to tie up with LIC.

But SBI and GE Money have put their differences aside and have decided to extend their partnership. They recently separated their credit card venture into two separate operations with the original SBI Cards and Payment Services Pvt. Ltd (SBI Cards) focussing on the marketing and distribution of SBI cards, whereas, the other joint venture (JV), GE Capital Business Processes Management Services Pvt. Ltd, will be in charge of handling technology and processing needs of the card business.

This has raised speculation over the deal between GE Money and LIC.