Banking in India

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Structure of the organised banking sector in India. Number of banks are in brackets.
Banking in India originated in the last decades of the 18th century. The first banks were The
General Bank of India, which started in 1786, and Bank of Hindustan, which started in 1790;
both are now defunct. The oldest bank in existence in India is the State Bank of India, which
originated in the Bank of Calcutta in June 1806, which almost immediately became the Bank of
Bengal. This was one of the three presidency banks, the other two being the Bank of Bombay
and the Bank of Madras, all three of which were established under charters from the British East
India Company. For many years the Presidency banks acted as quasi-central banks, as did their
successors. The three banks merged in 1921 to form the Imperial Bank of India, which, upon
India's independence, became the State Bank of India
History

Indian merchants in Calcutta established the Union Bank in 1839, but it failed in 1848 as a
consequence of the economic crisis of 1848-49. The Allahabad Bank, established in 1865 and
still functioning today, is the oldest Joint Stock bank in India.(Joint Stock Bank: A company
that issues stock and requires shareholders to be held liable for the company's debt) It was not the
first though. That honor belongs to the Bank of Upper India, which was established in 1863, and
which survived until 1913, when it failed, with some of its assets and liabilities being transferred
to the Alliance Bank of Simla.

When the American Civil War stopped the supply of cotton to Lancashire from the Confederate
States, promoters opened banks to finance trading in Indian cotton. With large exposure to
speculative ventures, most of the banks opened in India during that period failed. The depositors
lost money and lost interest in keeping deposits with banks. Subsequently, banking in India
remained the exclusive domain of Europeans for next several decades until the beginning of the
20th century.

Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The Comptoire
d'Escompte de Paris opened a branch in Calcutta in 1860, and another in Bombay in 1862;
branches in Madras and Puducherry, then a French colony, followed. HSBC established itself in
Bengal in 1869. Calcutta was the most active trading port in India, mainly due to the trade of the
British Empire, and so became a banking center.

The first entirely Indian joint stock bank was the Oudh Commercial Bank, established in 1881 in
Faizabad. It failed in 1958. The next was the Punjab National Bank, established in Lahore in
1895, which has survived to the present and is now one of the largest banks in India.

Around the turn of the 20th Century, the Indian economy was passing through a relative period
of stability. Around five decades had elapsed since the Indian Mutiny, and the social, industrial
and other infrastructure had improved. Indians had established small banks, most of which
served particular ethnic and religious communities.
The presidency banks dominated banking in India but there were also some exchange banks and
a number of Indian joint stock banks. All these banks operated in different segments of the
economy. The exchange banks, mostly owned by Europeans, concentrated on financing foreign
trade. Indian joint stock banks were generally under capitalized and lacked the experience and
maturity to compete with the presidency and exchange banks. This segmentation let Lord Curzon
to observe, "In respect of banking it seems we are behind the times. We are like some old
fashioned sailing ship, divided by solid wooden bulkheads into separate and cumbersome
compartments."

The period between 1906 and 1911, saw the establishment of banks inspired by the Swadeshi
movement. The Swadeshi movement inspired local businessmen and political figures to found
banks of and for the Indian community. A number of banks established then have survived to the
present such as Bank of India, Corporation Bank, Indian Bank, Bank of Baroda, Canara Bank
and Central Bank of India.

The fervour of Swadeshi movement lead to establishing of many private banks in Dakshina
Kannada and Udupi district which were unified earlier and known by the name South Canara
( South Kanara ) district. Four nationalised banks started in this district and also a leading private
sector bank. Hence undivided Dakshina Kannada district is known as "Cradle of Indian
Banking".

During the First World War (1914-1918) through the end of the Second World War (1939-1945),
and two years thereafter until the independence of India were challenging for Indian banking.
The years of the First World War were turbulent, and it took its toll with banks simply collapsing
despite the Indian economy gaining indirect boost due to war-related economic activities. At
least 94 banks in India failed between 1913 and 1918 as indicated in the following table:
 Authorised capital
Number of banks Paid-up Capital
Years
that failed (Rs. Lakhs)
(Rs. Lakhs)
1913 12 274 35
1914 42 710 109
1915 11 56 5
1916 13 231 4
1917 9 76 25
1918 7 209 1

ICICI Bank Limited (the Bank) is a banking company engaged in providing a range of banking
and financial services, including commercial banking and treasury operations. It operates under
four segments: retail banking, wholesale banking, treasury and other banking. The Bank’s
subsidiaries include ICICI Prudential Life Insurance Company Limited, ICICI Lombard General
Insurance Company Limited, ICICI Trusteeship Services Limited, ICICI Prudential Pension
Funds, Management Company Limited, ICICI Home Finance Company Limited and ICICI
Securities Limited.

ICICI Bank is India's second-largest bank with total assets of Rs. 3,562.28 billion (US$ 77
billion) at December 31, 2009 and profit after tax Rs. 30.19 billion (US$ 648.8 million) for the
nine months ended December 31, 2009. The Bank has a network of 1,700 branches and about
4,883 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking
products and financial services to corporate and retail customers through a variety of delivery
channels and through its specialised subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset management. The Bank currently
has subsidiaries in the United Kingdom, Russia and Canada, branches in United States,
Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and
representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand,
Malaysia and Indonesia. Our UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock
Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New
York Stock Exchange (NYSE).

Specialties

Banking products and financial services

Products and Services

ICICI Bank offers a host of products and services to its clients, which include Deposits, Loans,
Cards, Investments, Insurance, Demat, NRI Services and Online Services etc.

Deposits

Following deposits are offered:

 Savings Account
 Advantage Deposit
 Special Savings Account
 Life Plus Senior Citizens Savings Account
 Fixed Deposits
 Security Deposits
 Recurring Deposits
 Tax-Saver Fixed Deposit
 Young Stars Savings Account
 Child Education Plan
  Bank@Campus
 Salary Account
 Advantage Woman Savings Account
 EEFC Account
 Resident Foreign Currency (Domestic) Account
 Privilege Banking
 No Frills Account
 Rural Savings Account
 People's Savings Account
 Self Help Group Accounts
 Outward Remittance
 Freedom Savings Account
 Family Banking

Loans

ICICI Bank offers following loan facilities:

 Home Loans
 Loan Against Property
 Personal Loans
 Car Loans
 Two Wheeler Loans
 Commercial Vehicle Loans
 Loans Against Securities
 Loan Against Gold Ornaments
 Pre-approved Loans
Cards
ICICI Bank is India's largest issuer of credit cards. It also offers other types of cards. The various
cards offered by ICICI bank are as below:

 Consumer Cards
 Credit Cards
 Travel Cards
 Debit Cards
 Commercial Cards
 Corporate Cards
 Prepaid Cards
 Purchase Cards
 Distribution Cards
 Business Cards
 Merchant Services

Investments

ICICI Bank facilitates a range of investment products including:

 ICICI Bank Tax Saving Bonds

 Mutual Funds
 Government of India Bonds
 Initial Public Offers (IPO) by Corporates
 Foreign Exchange Services
 ICICI Bank Pure Gold
 Senior Citizens Savings Scheme, 2004

Insurance

ICICI Bank offers various types of insurance. Customers can choose from the following:
  Home Insurance
 Health Insurance
 Health Advantage Plus
 Family Floater
 Personal Accident
 Travel Insurance
 Individual Overseas Travel Insurance
 Student Medical Insurance
 Motor Insurance
 Car Insurance
 Two Wheeler Insurance
 Life Insurance
 ICICI Pru LifeTime Gold
 ICICI Pru LifeState RP

NRI Services

Following services are offered to the NRIs:

 Money Transfer
 Bank Accounts
 Investments
 Home Loans
 Insurance
 Loans Against FD
ICICI Bank

CEO
Chanda Kochhar
Chairman of the Board
Kandapur Kamath

Chairman of the Board

Narayanan Vaghul

Director
Sridar Iyengar

Director
Vivan Watsa
Director
Thai Vijayan
Director
Narendra Murkumbi

Director
Priya Sinha

Director
Anupam Puri
Director
Arun Ramanathan
Director
Lakshmi Mittal

Director
Marti Subrahmanyam
Director
Mahendra Sharma
Executive Director
MPB
Executive Director
VV
Executive Director
SC
Compliance, Secretary
SBHuman Resources
KR
Engineering

ICICI Bank’s Strategy for

Promotion of Financial Inclusion
Introduction
People from low-income groups live in high-risk and unpredictable environment,
making access to financial services vital for their sustenance. Dealing with life
cycle events, emergencies and planning for future are some aspects in which
financial intervention can help. A large part of this financially under-served
segment resides in rural India. Integration of rural India into economic mainstream
will boost rural household incomes and have a multiplier effect on the demand for
goods and services across the economy while promoting financial inclusion.
However, considering the sheer size of the population and the geographic spread,
neither the existing bank branch based infrastructure nor the standard financial
products are optimal to meet the financial needs of the rural populace. Seasonality
in income, coupled with dependence on weather, necessitates creation of financial
products that mitigate such risks. At the same time, traceable credit histories need
to be built that will help in designing products that meet needs such as housing,
health, education, child care etc. Further, varying financial needs of different
customer segments viz. manual labourers, farmers, traders, and rural
entrepreneurs calls for customised financial products.
Focus on Underserved Segments
ICICI Bank has taken up specific initiatives to ramp up financial literacy as well as
intermediation to the underserved and underbanked segments in both rural and
urban areas.
Customers’ Financial Behaviour
In the absence of a formal Credit Bureau, extending financial service to low income
segments becomes a challenge. To overcome this challenge, ICICI Bank’s financial
intermediation models, both through the microfinance institutions and business
correspondents have been designed to build a repository of information with regard
to financial behavior of the customers. Through Financial Information Network and
Operations Limited (FINO (Refer Annexure I for details on FINO)), the technology
platform it has helped conceptualise, and the biometric card, the Bank is able to
collect demographic information of the customers. It would be possible to trace
details such as credit history, savings habit and investment patterns of individuals.
This information would be useful to incentivise those with good credit history and
to discourage wilful default, at the same time developing better-suited financial
products.
This information, when shared across the industry, will enable the underserved
segments to have access to financial services in a well-defined credit analysis
framework. It will also go a long way in channelising funds from funding agencies
involved in promoting financial inclusion. They can track and monitor the end use
of their funds, thus being able to assess the impact of their interventions.
ICICI Bank’s Financial Intermediation Models:
With focus on low-income segments, ICICI Bank has come up with innovative
delivery channels:
Microfinance
ICICI Bank works closely with MFIs and NGOs to adapt its products to suit consumer
needs.
Two innovative models have helped achieve scale in serving the low-income
household:
a) Partnership Model being implemented with NGOs and MFIs: Under this model
ICICI Bank forges an alliance with existing MFIs wherein the MFI undertakes the
promotional role of identifying, training and promoting the micro-finance
clients and the ICICI Bank finances the clients directly on the recommendation
of the MFI, so the customer and portfolio resides in the Bank’s book.
b) Securitisation of Portfolios of MFIs: Under this model ICICI Bank buys out
portfolios from MFIs. The MFI continues to service the clients and acts as the
collection agent. Here again, the MFI shares the credit risk with the Bank. A
variant of the securitisation model is ‘on-tap securitisation’, wherein the MFI
receives an advance purchase consideration to create a portfolio of loans that
could then be periodically sold to ICICI Bank.
The guiding principles on the basis of which these models have evolved have been
to separate the MFI’s balance sheet risk from its operational risk, and leveraging
the core competencies of a Bank (financial strength) and an MFI (social
mobilization, client management) to achieve scale.
Technology
The Bank has been actively looking at technology solutions to scale up the micro
finance portfolio. Further, the Bank has been considering adopting a 'Core Banking
System' (CBS) for managing the loan portfolio generated under the partnership
model. In this regard, the Bank has found an able partner in FINO to provide
technology solutions to the micro finance sector. The technology solution
comprises of core banking and smart card systems. In light of the technology
solutions available through FINO, the Bank has designed a new process for
delivering loans under the partnership model.
Some of the key aspects where a strong technology platform will add value to the
micro finance operations include reduction in transaction cost; better data
management and reporting capacities and capability to interface with multiple
peripherals, etc. This will also enable enhanced disclosure and transparency in the
operations of MFIs, setting a platform for robust securitisation / buyout
opportunities to meet the priority sector lending objectives of the regulator.
Business Correspondent
In line with the RBI guidelines ICICI Bank employs Business Correspondent (BC)
model to extend financial services, especially the much-needed savings services to
rural customers.
In the pilot stage, the transactions by BC are being done with the help of an 'e-
Passbook' and an Authentication Device (AD). The e-Passbook can display and store
the customer KYC information, customer account details and the transactions in
each account. It also has a unique feature of biometric authentication by the way
of fingerprints, thereby mitigating the risk related to PIN (Personal Identification
Number) in the rural scenario.
ADs provide Customer interface with user-friendly menu options, enabling
transactions. An authorized operator is enrolled by capturing the fingerprints of all
the 10 fingers to mitigate fraud risk, can operate each AD. The transaction is
recorded on the AD, which at specific intervals would be uploaded and updated in
the Bank's system through a normal telephone line, which is a widely available
infrastructure even in remote rural areas. Further connectivity through GSM and
CDA would also be made possible to ensure that the transaction details are
updated in the Bank’s system at higher frequency.
How does this Align with the Overall Rural & Agri Strategy of ICICI Bank?
ICICI Bank has adopted inclusive banking strategy to provide financial
intermediation to farmers, traders and processors as well as the underserved
segments. The elements on which the Bank’s rural strategy is based are multiple
products that meet customer requirements, offered through technology-based
channels.
Multiple products
ICICI Bank offers a complete suite of products and services to meet the individual
financial requirements of customer segments. Savings, investments and insurance
products are made available to its rural and agri customer base. The Bank also
offers microfinance services to low-income households and crop loans, farm
equipment loans, commodity based loans to farmers.
Hybrid channels
ICICI Bank employs delivery channels backed by technological innovations to
achieve scale and outreach in a sustainable manner. The Bank’s channel
architecture includes branch and non-branch channels. Branches act as a business
hub providing banking services on the one hand, while facilitating the fulfilment of
products that have been sourced by the business facilitators and business
correspondents.
Non-branch channels are of two types, business facilitators and business
correspondents. Business facilitators, referred to as ‘Vikas Sahyogis’, are
outsourced channels that generate business opportunities for the Bank. Network of
Vikas Sahyogis has been set to act as referral or sourcing agents for loans,
insurance and investment products such as mutual funds. These centres are
operated by local people with existing relationship with the Bank’s customer
segments. Vikas Sahyogis include agri input dealers, tractor dealers, automobile
dealers and diesel dealers.
Annexure: I
Financial Information Network & Operations Ltd
Solution for the rural masses
The FINO team has developed a platform using a biometric enabled multiapplication
hybrid smart cards and biometric enabled handheld devices to cater to
the needs of Local Financial Institutions (LFIs) serving the rural masses. The
platform has been sized for 12 - 50 mn customers at the moment but can easily be
expanded if the needs are larger. FINO's solution is a comprehensive solution which
encompasses three key components:
1. Core banking system component which is built as a shared back end banking
engine that provides accounting, MIS, reporting and monitoring facility for all
asset and liability products that the micro sector requires.
2. Distribution component that enables “offline” data capture from end user
specific unique, biometric enabled hybrid multi-application Smart Cards. These
smart cards can hold upto 15 different types of end consumer financial and
non-financial relationships on a single card. In the field, these cards can
interact with various offline channel enablers like FINO's biometric enabled
Point of Transaction devices (POT), Mobile POS/PDAs etc. and existing magstripe
based on-Line networks of ATMs, PCs, POS and Kiosks. Captured end
consumer data is periodically transferred to a centralized location using
connectivity options like PSTN (GSM/CDMA options are being planned).
Authentic identification and non-repudiation of transactions is achieved through
the biometric finger print templates stored in the card of the end user. The
finger print verification is done at the device level where a live fingerprint of
the end user is captured and verified using against the stored fingerprint
template on the card.
3. Credit Bureau component which enables creation of knowledge base and
financial credit worthiness, credit rating profile of the end user

Company’s current position in market

ICICI Bank (NSE: ICICIBANK, BSE: 532174, NYSE: IBN) (formerly Industrial Credit and

Investment Corporation of India, Hindi: आय सी आय सी आय बैं क ) is a major banking and
financial services organization in India. It is the second largest bank in India [3] and the largest
private sector bank in India by market capitalization. The bank also has a network of 2,016
branches (as on 31 March 2010) and about 5,219 ATMs in India and presence in 18 countries,[2]
as well as some 24 million customers (at the end of July 2007). ICICI Bank offers a wide range
of banking products and financial services to corporate and retail customers through a variety of
delivery channels and specialization subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset management. (These data are
dynamic.) ICICI Bank is also the largest issuer of credit cards in India.[4] ICICI Bank's shares are
listed on the stock exchanges at BSE, NSE, Kolkata and Vadodara (formerly Baroda) ; its ADRs
trade on the New York Stock Exchange (NYSE).
The Bank is expanding in overseas markets and has the largest international balance sheet among
Indian banks. ICICI Bank now has wholly owned subsidiaries, branches and representatives
offices in 19 countries, including an offshore unit in Mumbai. This includes wholly owned
subsidiaries in Canada, Russia and the UK (the subsidiary through which the HiSAVE savings
brand[5] is operated), offshore banking units in Bahrain and Singapore, an advisory branch in
Dubai, branches in Belgium, Hong Kong and Sri Lanka, and representative offices in
Bangladesh, China, Malaysia, Indonesia, South Africa, Thailand, the United Arab Emirates and
USA. Overseas, the Bank is targeting the NRI (Non-Resident Indian) population in particular.

ICICI reported a 1.15% rise in net profit to 1,014.21 crore on a 1.29% increase in total income
to 9,712.31 crore in Q2 September 2008 over Q2 September 2007. The bank's CASA ratio
increased to 30% in 2008 from 25% in 2007.[6][7]

ICICI Bank is one of the Big Four Banks of India, along with State Bank of India, Punjab
National Bank Bank of india and Canara Bank — its main competitors.[8]

In 1954, The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives of
Indian industry, with the objective of creating a development financial institution for providing
medium-term and long-term project financing to Indian businesses. In 1994, ICICI established
Banking Corporation as a banking subsidiary. Formerly known as Industrial Credit and
Investment Corporation of India, ICICI Banking Corporation was later renamed as 'ICICI Bank
Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking
operations - taking deposits, credit cards, car loans etc. In 2001, ICICI acquired Bank of Madura
(est. 1943). Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank
(est. 1933) and Illanji Bank (established 1904) in the 1960s. In 2002, The Boards of Directors of
ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary
regulatory approvals, ICICI integrated the group's financing and banking operations, both
wholesale and retail, into a single entity. At the same time, ICICI started its international
expansion by opening representative offices in New York and London. In India, ICICI Bank
bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it
acquired Grindlays Bank.

In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it
established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in
Singapore and representative offices in Dubai and Shanghai. In 2004, ICICI opened a
representative office in Bangladesh to tap the extensive trade between that country, India and
South Africa. In 2005, ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with
about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in
Moscow. ICICI renamed the bank ICICI Bank Eurasia. Also, ICICI established a branch in
Dubai International Financial Centre and in Hong Kong. In 2006, ICICI Bank UK opened a
branch in Antwerp, in Belgium. ICICI opened representative offices in Bangkok, Jakarta, and
Kuala Lumpur. In 2007, ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in
Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka
State. Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With
respect to the international sphere, ICICI also received permission from the government of Qatar
to open a branch in Doha. Also, ICICI Bank Eurasia opened a second branch, this time in St.
Petersburg. In 2008, The US Federal Reserve permitted ICICI to convert its representative office
in New York into a branch. ICICI also established a branch in Frankfurt. In 2009, ICICI made
huge changes in its organisation like elimination of loss making department and restreching
outsourced staff or renegotiate their charges in consequent to the recession. In addition to this,
ICICI adopted a massive approach aims for cost control and cost cutting. In consequent of it,
compesation to staff was not increased and no bonus declared for 2008-09.

On 23 May ICICI Bank announced that it would merge with Bank of Rajasthan through a share-
swap in a non-cash deal that values the Bank of Rajasthan at about 3,000 crore. ICICI
announced that the merger expand ICICI Bank's branch network by 25%.[9][10][11]

On 18h October 2010, ICICI will inaugurate I-Express, an instant cross-border money transfer
option for Non-Resident Indians (NRIs). This service will be available through the ICICI Bank's
select partners in the Gulf Cooperation Council