Spanish banking group BBVA and India-based Bank of Baroda (BoB) have signed a memorandum of understanding to form a joint venture in credit card business.

Upon regulatory approval, the agreement between both entities will allow BBVA to acquire a 51% stake in the existing credit card unit of Bank of Baroda, Bobcards, for a total consideration of EUR34m.

This joint venture marks BBVA’s first entry into the Indian retail banking market.

Through this joint venture, Bobcards aims to become a leading credit card player in the Indian market and plans to issue more than five million credit cards in the next eight years.

The completion of the joint venture is subject to the approval of regulatory authorities, including the Reserve Bank of India and the Bank of Spain.

BBVA Asia head Manuel Galatas said through this JV this investment by BBVA in the credit card business shows a long term commitment of the bank to the Indian market.

"BBVA has proven experience with retail banking and consumer finance franchises in developed and emerging markets. We can leverage this experience with Bank of Baroda’s network that exceeds 3,000 branch offices to further serve its customers that do not have a credit card yet.

"Our partnerships with Visa and MasterCard have been key elements in our strategy, and we will continue to leverage those relationships for this new venture," Galatas said.