Standard Chartered and SBI Card are competing to buy Barclays' India credit cards business, sources with direct knowledge of the matter said, as the British bank looks to reduce its exposure to unsecured lending in the country.
Barclays has about 200,000 card holders in India and the book value of the business is roughly 2 billion rupees ($42 million), the sources said on Tuesday, declining to be named as the information is not yet public.
Final bids for the Barclays credit cards business in India are expected early next month and the deal is likely to be closed in a month, they said, adding the deal value could be at a "small premium" to the book value.
Barclays put its India cards unit up for sale earlier this year as part of a restructuring of its business in the country.
"We are reviewing options for cards, a business which requires scale and we may be able to achieve that scale under new ownership," a Barclays India spokesman told Reuters, without giving details.
UK-based rival Standard Chartered, which has about 1.2 million card holders in India, and SBI Card, a joint venture between the country's top lender State Bank of India and GE Capital, declined to comment.
Barclays, which is set to cut about 3,000 jobs globally this year to reduce costs, said in July it had cut headcount in India as a result of merging the client relationship teams of its commercial and investment banking units.
Barclays Capital, the investment banking unit of the bank, and the company's commercial banking division, are combining the teams that will focus on servicing large corporate clients in India.
As part of the restructuring, the bank has also decided to focus only on "affluent clients" for retail banking and exit the credit card business, which is termed as unsecured business as the lending is not backed by any collateral.
"Barclays neither have the distribution network nor the volume for cards business in India because of which the appraisal and servicing becomes very difficult," said one of the sources.
Fewer than 18 million of India's 1.2 billion people use credit cards. In China, a country with a slightly higher population, more than 200 million credit cards were in use as of a year ago.
Indian consumers, on the whole, have not fully embraced the idea of using credit cards, preferring debit cards instead, with roughly 230 million in circulation.
In April, mid-sized IndusInd Bank bought the local card business of Deutsche Bank and said it expects the acquisition to boost net interest margin and profits.
Foreign banks lack the branch networks of local lenders like ICICI Bank and HDFC Bank , India's biggest card issuers, but tend to attract the most well-heeled customers in a country where incomes are rising fast as the economy grows.
London-based Standard Chartered, one of the biggest foreign banks in India, expects growth of 30-35 per cent in new customers this year, Shyamal Saxena, head of retail banking products, had said in July.