Federal Bank may foray into credit card business in 2015-16

Private lender Federal Bank may explore the possibility of entering into credit card business in 2015-16 as part of its diversification drive.

"We are looking at wealth management and credit card business. We will explore the possibility of entering into these two businesses not in the next fiscal but in 2015-16," Federal Bank Managing Director Shyam Srinivasan told PTI.

For credit card business, he said the bank would look for an alliance or acquisition.

It is to be noted that another private sector lender IndusInd Bank entered credit card business by acquiring Deutsche Bank card business in the country.

With the diversification of the business, the bank would be able to enhance its revenue stream and earn more fee-based business.

Srinivasan said the bank is also making efforts to reduce its non-performing assets or bad loans.

Federal Bank, a part of the consortium that had given loans to Kingfisher Airlines, has recovered Rs 10 crore till date.

"So far we have recovered Rs 10 crore from Kingfisher Airlines. We had an exposure of Rs 85 crore in the company," he said.

The consortium of 17 banks, led by State Bank of India (SBI), has an outstanding debt of about Rs 7,000 crore from the now-grounded carrier.

SBI has the maximum exposure, over Rs 1,600 crore, in the Vijay Mallya-led airline. It is followed by Punjab National Bank with Rs 800 crore, IDBI at Rs 800 crore, Bank of India at Rs 650 crore and Bank of Baroda Rs 550 crore.

Federal Bank's gross NPA came down to 2.83% at the end of the third quarter from 3.85% at the end of December 2012. During this period, its net NPA dropped to 0.86% from 0.92%.

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