MUMBAI - SBI Cards and Payment Services, the credit card arm of State Bank of India (SBI), aims to raise roughly 90 billion rupees ($1.25 billion) in an initial public offering, according to a source familiar with the matter, in a deal set to make a bumper profit for U.S private equity firm Carlyle Group.

SBI Cards is 74% owned by SBI, India's largest lender, while Carlyle Group owns the remaining 26%, a stake which it bought in 2017 from the lending arm of General Electric for about 20 billion rupees.

SBI will divest 4%, while Carlyle is set to sell a 10% stake as part of the IPO process, which will also include a sale of fresh equity worth 5 billion rupees, according to a draft prospectus published by the book runners of the deal.

SBI Cards, which filed the draft prospectus on Nov. 27, did not give valuation details, but based on the anticipated proceeds the IPO is likely to value Carlyle's 26% stake at close to seven times its 2017 purchase price, and rake in about 60 billion rupees from the 10% stake sale alone.

The IPO, which is still awaiting regulatory approval, is poised to be India's biggest this financial year.

SBI Cards is the second-largest credit card issuer in the country, with 9.4 million outstanding cards as of the end of September.

Kotak Mahindra Capital, Axis Capital, Bofa Securities, HSBC, Nomura and SBI Capital Markets are lead managers for the IPO.

State-run SBI, which listed its life insurance business in 2017, has been looking to sell non-core assets in a bid to raise capital.

($1 = 71.7700 Indian rupees)

(Reporting by Nupur Anand; Additional reporting by Chris Thomas; Editing by Elaine Hardcastle and Mark Potter) ((Nupur.Anand@thomsonreuters.com; +9122 68414388;))