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Undertaken and completed the project work titled STRATEGY OF ICICI BANK during the academic year 2012 2013 under the guidance of MR.VINOD CHANDWANI submitted by_ MR AKSHAY SABLE This is to certify that the BACHELOR OF MANAGEMENT STUDIES, SEMISTER THIRD, have, roll No: _83_ during Semester III of the bms This is a bonafide project work and the information presented in it is true and original to the best of our knowledge and belief.

Project Guide


Executive Summary <<<<<<<<<<<..<<<<<<< Pg. 07 History of ICICI Bank <<<<<<<<..<<<<<<<<<.. Pg. 08 Timeline History of ICICI Bank <<<.<<<<<<<<<<.. Pg. 09 ICICI Bank present scenario Financial Aspect <<<<<<<<<<<<<..<<<<< Pg. 11 Capital Structure <<<<<<<<<<<<<<<<<<. Pg. 12 Services Provided Principal Services <<<<<<<<.<<<<<<<<...Pg. 13 Principal Credit Products <<<<<<<<<<..<<<Pg. 13 Commercial Banking for Corporate Customer<<<<.. Pg. 16 Other Fees & Commission based activities<<<<<< 17 Commercial Banking for International Customers<<<. Pg. 19 Commercial Banking for Agriculture & Rural CustomersPg. 20

Strategies Focus on Quality Growth Opportunities<<<Pg. 22 Strengthen Insurance and Asset Management Businesses Pg. 23 Emphasize Conservative Risk Management Practices and Enhance Asset Quality<<<<<<<<<<<<<<<<.. Pg. 24

Strategic Analysis TOWS MATRIX Analysis <<<<<<<<<<<<< Pg. 26 SERVICE GAP Analysis <<<<<<<<<<<<<<Pg. 28 Recommendations to ICICI Bank <<<<<..<<<..<Pg. 30 Suggestions to Other Financial & Banking Institutes <...Pg. 31 Bibliography <<<<<<<<<<<<<<<<<<... Pg. 33

ICICI Bank is a leading Indian private sector commercial bank offering a variety of products and services. It was incorporated in India in 1994. In 2002, ICICI, a non-bank financial institution, and two of its subsidiaries, ICICI Personal Financial Services and ICICI Capital Services, were amalgamated with ICICI Bank. As of March 31, 2007 ICICI Bank is the largest private sector bank in India and the second largest bank in India, in terms of assets. May 10, 2007, ICICI Bank has the largest market capitalization among all banks in India.

ICICI Banks commercial banking operations span the corporate and the retail sector. It offers a suite of products and services for both its corporate and retail customers. ICICI Bank offers a range of retail credit and deposit products and services to retail customers. The implementation of its retail strategy and the growth in the commercial banking operations for retail customers has had a significant impact on its business and operations in recent years. At year-end fiscal 2007, retail finance represented 63.8% of its total loans and advances compared to 62.9% at year-end fiscal 2006 and 60.9% at year-end fiscal 2005. ICICI Bank has approximately 24.0 million retail customer accounts. Its corporate customers include Indias leading companies as well as growth-oriented small and middle market businesses, and the products and services offered to them include loan and deposit products and fee and commission-based products and services. Through its treasury operations, it manages its balance sheet and strives to optimize profits from the trading portfolio by taking advantage of market opportunities. ICICI Bank believes that the international markets present a major growth opportunity and have, therefore, expanded to countries other

than India to serve its customers cross border needs and offer its commercial banking products to international customers.

At year-end fiscal 2007 its principal network consisted of 710 branches, 45 extension counters and 3,271 automated teller machines, or ATMs, across several Indian states. Pursuant to the amalgamation of Sangli Bank with ICICI Bank, its network of branches and extension counters increased by 198. ICICI Bank offers its customers a choice of delivery channels, and they use technology to differentiate there products and services from those of its competitors. ICICI Bank remains focused on changes

ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and Indian industry representatives. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. Until the late 1980s, ICICI primarily focused its activities on project finance, providing long-term funds to a variety of industrial projects. With the liberalization of the financial sector in India in the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services provider that, along with its subsidiaries and other group companies, offered a wide variety of products and services. As Indias economy became more market-oriented and integrated with the world economy, ICICI capitalized on the new opportunities to provide a wider range of financial products and services to a broader spectrum of clients.

ICICI Bank was incorporated in 1994 as a part of the ICICI group. ICICI Banks initial equity capital was contributed 75.0% by ICICI and 25.0% by SCICI Limited, a diversified finance and shipping finance lender of which ICICI owned 19.9% at December 1996. Pursuant to the merger of SCICI into ICICI, ICICI Bank became a wholly-owned subsidiary of ICICI. Effective March 10, 2001, ICICI Bank acquired Bank of Madura, an old private sector bank, in an all-stock merger.

Conversion into a bank offered ICICI the ability to accept low-cost demand deposits and offer a wider range of products and services, and greater opportunities for earning non-fund based income in the form of banking fees and commissions. ICICI Bank also considered various strategic alternatives in the context of the emerging competitive scenario in the Indian banking industry. ICICI Bank identified a large capital base and size and scale of operations as key success factors in the Indian banking industry. In view of the benefits of transformation into a bank and RBIs pronouncements on universal banking, ICICI and ICICI Bank decided to merge.

At the time of the merger, both ICICI Bank and ICICI were publicly listed in India and on the New York Stock Exchange. The amalgamation was approved by each of the boards of directors of ICICI, ICICI Personal Financial Services, ICICI Capital Services and ICICI Bank at their respective board meetings held on October 25, 2001. The amalgamation was approved by ICICI Banks and ICICIs shareholders at their extraordinary general meetings held on January 25, 2002 and January 30, 2002, respectively. The amalgamation was sanctioned by the High Court of Gujarat at Ahmedabad on March 7, 2002 and by the High Court of Judicature at Bombay on April 11, 2002. The amalgamation was approved by RBI on April 26, 2002. The amalgamation became effective

on May 3, 2002. The date of the amalgamation for accounting purposes under Indian GAAP was March 30, 2002.


1955: The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated at the initiative of the 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. Mr.A.Ramaswami Mudaliar elected as the first Chairman of ICICI Limited.

ICICI emerges as the major source of foreign currency loans to : Indian industry. Besides funding from the World Bank and other multi-lateral agencies, ICICI also among the first Indian companies to raise funds from International markets.

ICICI declared its first Dividend at 3.5%. 1956: ICICI building at 163, Backbay Reclamation was inaugurated. 1960: The first West German loan of DM 5 million from Kredianstalt 1961: was obtained by ICICI.

ICICI made its first debenture issue for Rs.6 crore, which was

1967: oversubscribed.

1969: First two regional offices in Calcutta and Madras were opened.

1972: Second entity in India to set-up merchant banking services.

1977: ICICI sponsors the formation of Housing Development Finance Corporation. Managed its first equity public issue.


Becomes the first ever Indian borrower to raise European Currency Units.

ICICI commences leasing business.


ICICI first Indian Institution to receive ADB Loans. First public issue by an Indian entity in the Swiss Capital Markets.

: ICICI along with UTI sets up Credit Rating Information Services of India Limited, (CRISIL) India's first professional credit rating agency.

ICICI promotes Shipping Credit and Investment Company of India Limited. (SCICI)

: The Corporation made a public issue of Swiss Franc 75 million in Switzerland, the first public issue by any Indian equity in the Swiss Capital Market. 1987: ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth Development Corporation (CDC), the first loan 1988: by CDC for financing projects in India.


ICICI promotes TDICI - India's first venture capital company.

ICICI sets-up ICICI Securities and Finance Company Limited in joint venture with : ICICI sets up ICICI Asset Management Company. 1994: ICICI sets up ICICI Bank. 1996: ICICI becomes the first company in the Indian financial sector to : raise GDR. J. P. Morgan.

: ICICI announces merger with SCICI.

Mr.K.V.Kamath appointed the Managing Director and CEO of

1997: ICICI Ltd

ICICI was the first intermediary to move away from single prime : rate to three-tier prime rates structure and introduced yieldcurve based pricing.

The name "The Industrial Credit and Investment Corporation of : India Limited" was changed to "ICICI Limited".

1998: ICICI announces takeover of ITC Classic Finance.

Introduced the new logo symbolizing a common corporate : identity for the ICICI Group.


ICICI announces takeover of Anagram Finance.

ICICI launches retail finance - car loans, house loans and loans for consumer durables.

ICICI becomes the first Indian Company to list on the NYSE 2000: through an issue of American Depositary Shares.

: ICICI Bank becomes the first commercial bank from India to list its stock on NYSE.

2001: ICICI Bank announces merger with Bank of Madura.

The Boards of ICICI Ltd and ICICI Bank approved the merger of 2002: ICICI with ICICI Bank.

Moodys' assign higher than sovereign rating to ICICI.

Merger of ICICI Limited, ICICI Capital Services Ltd and ICICI Personal Financial Services Limited with ICICI Bank.


FINANCIAL ASPECTS (As on 31st March 2007)

A Net P.A.T of Rs. 31,102.2 million, a growth of 22.45% from 2006.

35000 30000 25000 20000 15000 10000 5000 0 2003 2004 2005 2006 2007

26.84 2003 Net Profit After Tax 12,061.8 2004 16,371.0 2005 20,052.0 2006 25,400.7 2007 31,102.2



3500 3000 2500 2000 1500 1000 500 0 1 2 3 4 1068.12 1,252.29 1,676.59 2,513.89


worth Rs. 3,446.58 2007.

CAPITAL STRUCTURE A. Authorised Capital

(Rs. billion)

1,275 million Equity Shares of Rs. 10/- each 15 million Preference Shares of Rs. 100/- each 350 Preference Shares of Rs. 10 million each





Issued, Subscribed and Paid-Up Capital

899.38 million Equity Shares of Rs. 10/- each



Issued, Subscribed and Paid up Preference Share Capital 3.50

350 Preference Shares of Rs. 10 million each

Overview of its Operations

ICICI Bank offer products and services in the areas of commercial banking to corporate and retail customers, both domestic and international. ICICI Bank also undertakes treasury operations and offer treasury related products and services to its customers. Its subsidiaries are engaged primarily in insurance, asset management, investment banking and venture capital and private equity fund management.

Commercial Banking Products and Services for Retail Customers Its commercial banking operations for retail customers consist of retail lending and deposits, credit cards, depositary share accounts, distribution of third-party investment and insurance products, other feebased products and services and issuance of unsecured redeemable bonds. Retail Lending Activities ICICI Bank offer a range of retail asset products, including home loans, automobile loans, commercial vehicle loans, two wheeler loans, personal loans, credit cards, loans against time deposits and loans against shares. ICICI Bank also fund dealers who sell automobiles, two wheelers, consumer durables and commercial vehicles. ICICI Bank have capitalized on the growing retail opportunity in India and believe that ICICI Bank have emerged as a market leader in retail credit, with an

outstanding retail finance portfolio of Rs. 1,292.81 billion at year-end fiscal 2007. Its principal retail credit products are: Home Finance Its home finance business, and the business of its subsidiary ICICI Home Finance Company, involves giving long-term housing loans to individuals and corporations and construction finance to builders. These loans are secured by a mortgage of the property financed. These loans are extended for maturities generally ranging from five to 20 years and a large proportion of these loans are at floating rates of interest. This reduces the interest rate risk that ICICI Bank assumes, since its funding is generally of shorter maturity. Any change in the benchmark rate to which the rate of interest on the home loan is referenced is passed on to the borrower on the first day of the succeeding quarter or succeeding month, as applicable. Any decrease in the rate of interest payable on floating rate home loans is affected by an acceleration of the repayment schedule, keeping the monthly installment amount unchanged. Any increase in the rate of interest payable on floating rate home loans is effected first by a prolongation of the repayment schedule, keeping the monthly installment amount unchanged, and based on certain criteria, by changing the monthly installment amount.

Automobile Finance and Two Wheeler Loans Automobile finance generally involves the provision of retail consumer credit for an average maturity of three to five years to acquire specified new and used automobiles. Automobile loans are secured by a charge on the purchased automobile. ICICI Bank has a strong external distribution network and a strong in-house team to manage the distribution network which has been instrumental in achieving this

leadership position. ICICI Bank also has strong relationships with automobile manufacturers and is a preferred financier with several automobile manufacturers in India. ICICI Bank also provides two wheeler loans.

Commercial Business ICICI Bank fund commercial vehicles, utility vehicles and construction and farm equipment sold through manufacturer-authorized dealers. The finance is generally for a maximum term of five to seven years through loans, hire purchase agreements or a lease. Personal Loans Personal loans are unsecured loans provided to customers who use these funds for various purposes such as higher education, medical expenses, social events and holidays. Recently ICICI Bank has experienced rapid growth in its portfolio of personal loans. Its portfolio of personal loans includes micro-banking loans, which are relatively small value loans to lower income customers in urban areas.

Credit Cards ICICI Bank has a credit card base of over 7.5 million cards. As the Indian economy develops, ICICI Bank expect that the retail market will seek short-term credit for personal uses, and its offering of credit cards will facilitate further extension of its retail credit business. ICICI Bank also earns fee incomes from card transactions as the issuing bank and as the acquiring bank where the transaction occurs on a point of sale terminal installed by us

Dealer Funding ICICI Bank fund dealers who sell automobiles, two wheelers, consumer durables and commercial vehicles. These loans are generally given for a short term. ICICI Bank has played a leading role in the growth and development of the securitization market in India. ICICI Bank also focus on selling down its loans to better utilize capital, manage portfolio concentrations and provide additional flexibility and liquidity.

Lending to Small Enterprises ICICI Bank is seeking to extend its reach to the growing small enterprises sector through segmented offerings. ICICI Bank provides supply chain financing, including financing of selected customers of its corporate clients. ICICI Bank also provide financing on a cluster-based approach that is financing of small enterprises that have a homogeneous profile such as apparel manufacturers, auto ancillaries, pharmaceuticals and gems &jewellery. ICICI Bank has launched smart business loans to meet the working capital needs of small businesses. ICICI Bank also provides short term loans to small businesses for a period of up to 36 months. The funding under this facility is unsecured and the loan amount varies from more than Rs. 0.2 million to Rs. 2.5 million per customer.

Retail Deposits Its retail deposit products include the following: Time deposits including:

Recurring deposits, which are periodic deposits of a fixed amount over a fixed term that accrue interest at a fixed rate and may be withdrawn before maturity by paying penalties; and certificates of deposit; Savings accounts, which are demand deposits that accrue interest at a fixed rate set by RBI (currently 3.5% per annum) and upon which cheques can be drawn; and Current accounts, which are non-interest bearing demand deposits. In addition to deposits from Indian residents, ICICI Bank accept time and savings deposits from non-resident Indians, foreign nationals of Indian origin and foreign nationals working in India. These deposits are accepted on a repatriable and a non-repatriable basis and are maintained in rupees and select foreign currencies. Following a strategy focused on customer profiles and product segmentation, ICICI Bank offer differentiated liability products to various categories of customers depending on their age group, such as Young Star Accounts for children below the age of 18 years, Student Banking Services for students, Salary Accounts for salaried employees and Senior Citizens Account for individuals above the age of 60 years. During fiscal 2007, ICICI Bank launched special term deposit products for durations of 390, 590 and 890 days. ICICI Bank have also segmented various categories of customers to offer targeted products, like Private Banking for high net worth individuals, Defence Banking Services for defence personnel, Special Savings Accounts for trusts and Roaming Current Account for businessmen.

Bond Issues ICICI Bank offer retail liability products in the form of a variety of unsecured redeemable bonds. RBI has prescribed limits for issuance of bonds by banks. During the financial year ended March 31, 2007, ICICI Bank did not issue any bonds to retail investors. While ICICI Bank expects that deposits will continue to be its primary source of funding, ICICI Bank may conduct bond issues in the future.

Fee-Based Products and Services Through its distribution network, ICICI Bank offer government of India savings bonds, insurance policies from ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance Company and distribute public offerings of equity shares by Indian companies. ICICI Bank also offers a variety of mutual fund products from ICICI Prudential Asset Management Company and other select mutual funds. ICICI Bank also levies services charges on deposit accounts. ICICI Bank offer fee-based products and services including foreign exchange products, documentary credits and guarantees to small and medium enterprises. As a depositary participant of the National Securities Depository Limited and Central Depository Services (India) Limited, ICICI Bank offer depositary share accounts to settle securities transactions in a dematerialized mode. Further, ICICI Bank are one of the banks designated by RBI for issuing approvals to non-resident Indians and overseas corporate bodies to trade in shares and convertible debentures on the Indian stock exchanges.

Commercial Banking for Corporate Customers ICICI Bank provide a range of commercial banking products and services to Indias leading corporations and growth-oriented middle market companies, including loan products, fee and commission-based products and services, deposits and foreign exchange and derivatives products. ICICI Bank serves its corporate clients through two corporate relationship groups, the Global Clients Group and the Major Clients Group. The Global Investment Banking Group and the Global Project Finance Group focus on origination and execution of investment banking and project finance mandates. The Transaction Banking Group focuses on transaction banking and product development and sales. The Global Markets Group provides foreign exchange and other treasury products to corporate as well as small enterprise clients.

Corporate Loan Portfolio Its corporate loan portfolio consists of project and corporate finance (including structured finance and cross border acquisition financing) and working capital financing.

Project and Corporate Finance Its project finance business consists principally of extending mediumterm and long-term rupee and foreign currency loans to the manufacturing and infrastructure sectors. ICICI Bank also provides financing by way of investment in marketable instruments such as fixed rate and floating rate debentures. ICICI Bank generally has a security interest and first charge on the fixed assets of the borrower. ICICI Bank also focus on the application of securitization techniques to credit enhance its traditional lending products. ICICI Bank leverages its international presence to offer debt financing and other products and

services to its corporate customers. ICICI Bank offer foreign currency loans to Indian corporates that wish to raise debt in offshore markets under the External Commercial Borrowings guidelines of RBI. ICICI Bank offer bilateral facilities and also arranges the financing from the offshore syndicated loan market. Foreign currency credit is arranged through commercial loans, syndicated loans, bonds and floating rate notes, lines of credit from foreign banks and financial institutions, and loans from export credit agencies. These loans are typically denominated in US dollars and their maturity varies from three to seven years. ICICI Bank seeks to leverage its international presence to originate and syndicate financing mandates. In addition to taking credit exposures, ICICI Bank earns fee incomes from its corporate and project finance activities.

Working Capital Finance Its working capital financing consists mainly of cash credit facilities and bill discounting. Under the cash credit facility, a line of credit is provided up to a pre-established amount based on the borrower's projected level of inventories, receivables and cash deficits. Up to this pre-established amount, disbursements are made based on the actual level of inventories and receivables. The facility is generally given for a period of up to 12 months, with a review after that period. Its cash credit facility is generally fully secured with full recourse to the borrower. In most cases, ICICI Bank has a first charge on the borrower's current assets, which normally are inventory and receivables. Bill discounting involves the financing of short-term trade receivables through negotiable instruments. These negotiable instruments can then be discounted with other banks if required, providing us with liquidity

Other Fee and Commission-Based Activities Letters of Credit and Guarantees ICICI Bank provides letter of credit facilities to its customers both for meeting their working capital needs as well as for capital equipment purchases. Lines of credit for letters of credit are approved as part of a working capital loan package provided to a borrower. These facilities, like cash credit facilities, are generally given for a period up to 12 months, with review after that period. ICICI Bank provides guarantees, which can be drawn down any number of times up to the committed amount of the facility. ICICI Bank issue guarantees on behalf of its borrowers in favor of corporations and Government authorities. Guarantees are generally issued for the purpose of bid bonds, guaranteeing the performance of its borrowers under a contract as security for advance payments made to its borrowers by project authorities and for deferral of and exemption from the payment of import duties granted to its borrowers by the Government against fulfillment of certain export obligations by its borrowers. The term of these guarantees is generally up to 36 months though in specific cases, the term could be higher. In addition, as a part of its project financing activity, ICICI Bank issue guarantees to foreign lenders, export credit agencies and domestic lenders on behalf of its clients.

Other Fee-Based Activities ICICI Bank also offer cash management services (such as collection, payment and remittance services), escrow, trust and retention account facilities, online payment facilities, custodial services and tax collection services on behalf of the government of India and the governments of

Indian states. Under cash management services, ICICI Bank offer its corporate clients custom-made collection, payment and remittance services allowing them to reduce the time period between collections and remittances, thereby streamlining their cash flows. Its cash management products include physical cheque-based clearing in locations where settlement systems are not uniform, electronic clearing services, central pooling of country-wide collections, dividend and interest remittance services and Internet-based payment products. ICICI Bank also act as bankers to corporates for their dividend pay out to their shareholders, as also for interest pay out to the companys investors and depositors which results in interest-free float balances for us. ICICI Bank also offers custodial services to clients. At year-end fiscal 2007, total assets held in custody on behalf of its clients (mainly foreign institutional investors, offshore funds, overseas corporate bodies and depositary banks for GDR investors) were Rs. 910.49 billion. As a registered depositary participant of National Securities Depository Limited and Central Depository Services (India) Limited, the two securities depositaries operating in India, ICICI Bank also provide electronic depositary facilities to investors. Further, ICICI Bank generates fee income from its syndication and securitization activities.

Corporate Deposits ICICI Bank take deposits from its corporate clients with terms ranging from 15 days (seven days in respect of deposits over Rs. 1.5 million) to 10 years but predominantly from 15 days to one year. RBI regulates the term of deposits in India, but not the interest rates, with some minor exceptions. Banks are not permitted to pay interest for periods less than seven days. Also, pursuant to the current regulations, ICICI Bank are permitted to vary the interest rates on its corporate deposits based upon the size range of the deposit so long as the rates offered are the same for

every customer of a deposit of a certain size range on a given day. Its deposit products for corporations include:

Current accounts non-interest-bearing demand deposits; Time deposits fixed term deposits that accrue interest at a fixed rate and may be withdrawn before maturity by paying penalties; and Certificates of deposit a type of time deposits.

ICICI Bank also acts as a banker to the market offerings of select companies on account of raising of equity or debt; buy back of equity and takeovers. These companies are required to maintain the subscription funds with the bankers to the offering until the allotment of shares/buy back of shares and the refund of excess subscription is completed. This process generally takes about 15 to 30 days, resulting in short-term deposits with us. ICICI Bank act as a banker to corporates for their dividend payout to their shareholders and interest payout to investors and depositors, which results in mobilizing interest-free, float balances to us.

Customer Foreign Exchange ICICI Bank provides customer specific products and services and risk hedging solutions in several currencies to meet the trade and servicerelated requirements of its corporate clients. The products and services offered include: Spot foreign exchange for the conversion of foreign currencies without any value restrictions;

Foreign exchange and interest rate derivatives.

ICICI Bank earns commissions on these products and services from its corporate customers. Forward Contracts, Interest Rate Swaps and Currency Swaps ICICI Bank provide forward contracts to its customers for hedging their short-term exchange rate risk on foreign currency denominated receivables and payables. ICICI Bank generally provides this facility for a term of up to six months and occasionally up to 12 months. ICICI Bank also offer interest rate and currency swaps to its customers for hedging their medium and long-term risks due to interest rate and currency exchange rate movements. ICICI Bank offers these swaps for a period ranging from three to 10 years. Its customers pay a commission for this product that is included in the price of the product and is dependent upon market conditions. ICICI Bank also hedges its own exchange rate risk related to its foreign currency-trading portfolio with products from banking counter-parties. Its risk management products are currently limited to foreign currency forward transactions and currency and interest rate swaps for selected approved clients. ICICI Bank believes, however, that the demand for risk management products will grow, and are building the capabilities to grow these products.

Credit Derivatives Its offshore branches and subsidiaries are allowed to invest in credit derivatives. Its branches have been making investments in credit derivatives including credit default swaps (CDS), credit linked notes (CLN) and collateralized debt obligations (CDO). At year-end fiscal 2007, the outstanding investments in credit derivatives included Rs. 14,684.2 million (March 31, 2006: Rs. 12,938.3 million) in funded instruments and Rs. 59,096.9 million (March 31, 2006: Rs. 23,514.4 million) of notional principal amount in unfunded instruments. The exposures through these derivatives are governed by its investment policy, which lays down the position limits and other risk limits.

Commercial Banking for Rural and Agricultural Customers ICICI Bank believes that rural India offers a major growth opportunity for financial services and has identified this as a key focus area. Till fiscal 2007, RBIs directed lending norms required us to lend 18.0% of its net bank credit on the residual portion of its advances (i.e., its total advances excluding the advances of ICICI at year-end fiscal 2002) to the agricultural sector. Effective fiscal 2008, RBI has linked the directed lending targets for all banks to their adjusted net bank credit (net bank credit plus investments made by banks in non statutory liquidity ratio bonds included in the held to maturity category) or credit equivalent amount of off balance sheet exposure, whichever is higher at the previous year-end. The guidelines have capped eligible direct agriculture finance to non-individuals, (i.e. partnerships, corporates and institutions) at Rs. 10.0 million per borrower. Rural banking presents significant challenges in terms of geographical coverage and high unit transaction costs. Its rural banking strategy seeks to adopt a holistic

approach to the financial needs of various segments of the rural population, by delivering a comprehensive product suite encompassing credit, transaction banking, deposit, investment and insurance. ICICI Bank provides corporate banking products and services to corporate clients engaged in agriculture-linked businesses. ICICI Bank are seeking to grow its rural individual and household lending portfolio by developing and scaling up credit products to various segments of the rural population, whether engaged in agriculture or other economic activity. Its rural credit products for individuals and households include loans to farmers for cultivation, post-harvest financing against warehouse receipts, and loans for purchase of tractors, working capital for trading and small enterprises, loans against jewellery and microfinance loans for various purposes. ICICI Bank is seeking to roll-out its rural strategy and reach out to rural customers through partnerships with micro-finance institutions and companies active in rural areas. Its rural delivery channels include branches, micro-finance institutions, third-party kiosks and franchisees.

Commercial Banking for International Customers Many of the commercial banking products that ICICI Bank offer to international customers, such as trade finance and letters of credit, are similar to the products offered to its corporate customers in India. Some of the products and services that are unique to international customers are:

Money2India: ICICI Bank is a large player in the Indian remittance market. According to Reserve Bank of India data, the aggregate private transfers to and from India during fiscal 2006 were US$ 24.6 billion. For

easy transfer of funds to India, ICICI Bank offer a suite of online as well as offline money transfer products featured on its website These speedy, cost effective and convenient products enable non-resident Indians to send money to any bank at over 18,000 locations in India. During the nine months ended December 31, 2006, ICICI Bank had a market share of over 25.0% in all inward remittances to India.

Trade Way: an Internet-based documentary collection product to provide correspondent banks access to real-time on line information on the status of their export bills collections routed through us.

Remittance Tracker: an Internet-based application that allows a correspondent bank to query on the status of their payment instructions and also to get various information reports online.

Offshore banking deposits: multi-currency deposit products in US dollar, pound sterling and euro.

Foreign currency non-resident deposits: foreign currency deposits offered in four main currenciesUS dollar, pound sterling, euro and yen.

Non-resident external fixed deposits: deposits maintained in Indian rupees.

Non-resident external savings account: savings accounts maintained in Indian rupees.

Non-resident ordinary savings accounts and non-resident ordinary fixed deposits.

Its organization structure for international operations comprises the International Retail Banking Group, the International Financial Institutions Group and the geographic regions of Europe, North America and Russia; the Middle-East and Africa; and Asia. The International Retail banking Group is jointly responsible with the three regions for retail banking products and services across markets. It focuses primarily on non-resident Indians and direct banking currently. Through branches and subsidiaries in the three geographic regions ICICI Bank also deliver products and services to its corporate clients. ICICI Bank leverages its international presence to offer debt financing and other services to its corporate customers. ICICI Bank currently have subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore, Dubai International Finance Centre, Sri Lanka, Hong Kong and Bahrain and representative offices in the United States, China, United Arab Emirates, Bangladesh, South Africa, Thailand, Indonesia and Malaysia. ICICI Bank has received approval from RBI and Qatar Financial Centre Regulatory Authority to establish a branch in the Qatar Financial Centre for which operations would commence shortly. Its subsidiaries in the United Kingdom, Canada and Russia offer local banking products and services in those countries. Its subsidiary in United Kingdom has also opened a branch in Antwerp, Belgium in May 2006. In Canada and the United Kingdom, ICICI Bank have also launched direct banking offerings using the Internet as the access channel.

ICICI Bank objective is to enhance its position as a provider of banking and other financial services in India and to leverage its competencies in financial services and technology to develop an international business franchise. The key elements of its business strategy are to:

Focus on Quality Growth Opportunities

Maintaining and Enhancing its Strong Retail Franchise With upward migration of household income levels and acceptance of use of credit to finance purchases, retail credit has emerged as a growing opportunity for banks that have the necessary skills and infrastructure to succeed in this business. While recent increases in interest rates and asset prices as well a larger base have resulted in moderation in growth rates, ICICI Bank believes that the Indian retail financial services market has the potential for sustained growth. Cross selling of the entire range of credit, deposit and investment products and banking services to its customers is a key aspect of its retail strategy. ICICI Bank securitizes a portion of the retail assets originated by it self.

Maintaining and Enhancing its Strong Corporate Franchise

ICICI Bank is focusing on leveraging its corporate relationships to increase its market share in project finance, cross border finance, non-fund-based working capital products and other fee-based services. Corporate lending activities will continue to focus on structured project and corporate finance and working capital lending to highly rated corporations. The focus on infrastructure development and the repositioning and emerging global competitiveness of the Indian industry offer growth opportunities in the area of project financing. ICICI Bank believe that a number of Indian companies in both the public and private sector have significant investment plans for setting up infrastructure facilities as well as industrial production capacities. The international expansion of Indian companies also provides a major opportunity. ICICI Bank is seeking to build a global corporate and investment banking franchise focused on Indian companies, covering advisory, origination, structuring, execution and syndication. It will continue to focus on leveraging its expertise in structuring and project financing, syndicating the financing required and actively managing its project finance portfolio to reduce portfolio concentration and manage portfolio risk. ICICI Bank aim to provide comprehensive and integrated services, and to increase the cross-selling of its products and services and maximize the value of its corporate relationships through the effective use of technology, speedy response times, quality service and the provision of products and services designed to meet specific customer needs.

Build an International Presence: ICICI Bank believes that the international markets present a major growth opportunity. ICICI Bank have therefore expanded to countries other than India to cater to its customers cross border needs

and offer its commercial banking products in select international markets. It is also building an international private banking franchise and leveraging its technological capabilities and relative cost efficiencies by offering direct banking in select international markets. ICICI Bank aims to expand its offering of local banking products and services to non-resident Indians as well as to the broader local market. Build a Rural Banking Franchise: ICICI Bank believes that serving the rural markets is a key element in driving future growth for the Indian economy and for it self. ICICI Bank rural banking strategy seeks to adopt a holistic approach to the financial services needs of various segments of the rural population, by delivering a comprehensive product suite encompassing credit, transaction banking, deposit, investment and insurance, through a range of channels. Its rural delivery channels include branches, internet kiosks, franchisees and micro-finance institution partners. Strengthen Insurance and Asset Management Businesses ICICI Bank believes that the insurance and asset management sectors have significant growth potential. It also believes that its subsidiaries, ICICI Prudential Life Insurance Company Limited, ICICI Lombard General Insurance Company Limited and ICICI Prudential Asset Management Company has built a platform for continued growth, high market share and profitability in the medium term based on extensive distribution efforts, brand recall and underwriting and portfolio management capabilities. According to statistics published by the Insurance Regulatory & Development Authority, ICICI Prudential Life Insurance Company had a market share of 28% in the private sector and an overall market share of approximately 10% based on new business premiums (on a weighted received premium basis) during fiscal 2007. ICICI Lombard General Insurance had a market share of 34% among the private sector and a total market share of approximately 12% during the

year fiscal 2007. ICICI Prudential Asset Management Company had a market share of 11.5% in assets under management of the mutual fund industry at March 31, 2007. ICICI Bank seeks to leverage the synergies it has with its insurance and asset management subsidiaries. Emphasize Conservative Risk Management Practices and Enhance Asset Quality ICICI Bank believes that conservative risk management policies, processes and controls are critical for long-term sustainable competitive advantages in its business. ICICI Banks Risk Management Group is independent and centralized group responsible for establishing and implementing company-wide risk management policies, with a focus on enhancing asset quality. Its independent and centralized Compliance Group, Internal Audit Group and Middle Office Groups monitor adherence to regulations, policies and procedures. ICICI Bank continues to build on its credit risk management procedures, credit evaluation and rating methodology, credit risk pricing models, proprietary analytics and monitoring and control mechanisms. It seeks to control credit risk in the retail loan portfolio, the small enterprises loan portfolio and the agricultural financing portfolio through carefully designed approval criteria and credit controls and efficient collection and recovery systems. ICICI Bank has also established standards and investigative verification procedures for selection of its marketing and processing agents. Following the frauds in its rural warehouse receipt financing product, it has undertaken a comprehensive review of its products and process for rural and agricultural financing. ICICI Bank seeks to improve the credit risk profile of the project and corporate loan portfolio through the use of financing structures based on a security interest in the cash flows generated from the business of the borrower and increased collateral, including additional security in the form of liquid assets, such as investment securities and readily marketable real property. It is also trying to mitigate project risk through the allocation of risk to various

project counterparties, such as construction contractors, operations and maintenance contractors and raw material and fuel suppliers, by entering into rigorous project contracts with those counterparties. ICICI Bank expect to enter new product markets only after conducting detailed risk analysis and pilot testing programs. Use Technology for Competitive Advantage ICICI Bank seeks to be at the forefront of technology usage in the financial services sector. Information Technology is a strategic tool for its business operations to gain a competitive advantage and to improve overall productivity and efficiency of the organization. All of its technology initiatives are aimed at enhancing value, offering customer convenience and improving service levels while optimizing costs. ICICI Bank expects to continue with its policy of making investments in technology to achieve a significant competitive advantage. The key objective behind its information technology strategy continues to be:

Building a cost-efficient distribution network to accelerate the development of its retail and rural franchise;

Enhancing cross selling and client segmenting capability by using analytical tools and efficient data storage and retrieval systems;

Improving credit risk and market risk management;

Improving product and client profitability analysis; and

Leveraging its technology competencies and cost efficiencies in international markets. Attract and Retain Talented Professionals ICICI Bank believes a key to its success will be its ability to continue to maintain and grow a pool of strong and experienced professionals. ICICI Bank have been successful in building a team of talented professionals with relevant experience, including experts in credit evaluation, risk management, retail consumer products, treasury, technology and marketing. Recruitment is a key management activity and ICICI Bank continues to attract graduates from the premier Indian business schools as well as employees with other professional qualifications. Recruitment and assimilation of talented professionals from other organizations is a key element of its strategy. ICICI Bank believes it has created the right balance of performance bonuses, stock options and other economic incentives for its employees so that they will be challenged to develop business, achieve profitability targets and control risk. ICICI Bank intends to continuously re-engineer its management and organizational structure to allow it to respond effectively to changes in the business environment and enhance its overall profitability.



O P P O Strength: Large Capital base. R T U N I T I E S Strategy: Deep Penetration into Rural Market. Strategy: Outsource Customer Care & other E-Helps. Opportunity: Market Expansion. Opportunity: Outsourcing of Non Core Business. Weakness: Responsiveness. Workforce S O Strategies W O Strategies

S T Strategies T H Strength: Low operating costs R E A Threat: Increased Competition T S Strategy: Steps to Ensure Loyalty by old Customers. Strategy: benefits from others Pvt. Banks.

W T Strategies





International Standards.

Threat: Entry of many Foreign Banks.



Detailed Analysis: i. Strength - Opportunity Analysis.

Strength: It is well know that ICICI Bank has the largest Authorised Capital Base in the Banking System in India i.e. having a total capacity to raise Rs. 19,000,000,000 (Non Premium Value) Opportunity: Seeing the present financial & economic development of Indian Economy and also the tremendous growth of the Indian companies including the acquisition spree followed by them, it clearly states the expanding market for finance requirements and also the growth in surplus disposal income of Indian citizens has given a

huge rise in savings deposits from the above point it is clear that there is a huge market expansion possible in banking sector in India. Strategy: From the analysis of Strength & Opportunity the simple and straight possible strategy for ICICI Bank could be - to penetrate into the rural sector of India for expanding its market share as well as leading all other Pvt. Banks from a great gap.

ii. Strength - Threat Analysis. iii. Strength: ICICI Bank is not only known for large capital but also for having a low operations cost though having huge number of branches and services provided. Threat: After showing a significant growth overall, India is able to attract many international financial & banking institutes, which are known for their state of art working and keeping low operation costs. Strategy: To ensure that ICICI Bank keeps going on with low operation cost & have continuous business it should simply promote itself well & provide quality service so as to ensure customer loyalty, therefore guaranteeing continuous business.


Weakness - Opportunity Analysis.

Weakness: It is well known that workforce responsiveness in banking sector is very low in Indian banking sector, though ICICI Bank has better responsible staff but it still lacks behind its counterparts like HSBC, HDFC, CITI BANK, YES BANK etc.

Opportunity: In the present world, India is preferred one of the best places for out - sourcing of business process works and many more. Strategy: As international companies are reaping huge benefits after out-sourcing there customer care & BPOs, this same strategy should be implemented by ICICI Bank so as to have proper customer service without hindering customer expectations.

v. Weakness - Threat Analysis. Weakness: Though having a international presence, ICICI Bank has not been able to keep up the international standards in providing customer service as well as banking works. Threat: In recent times, India has witnessed entry of many international banks like CITI Bank, YES Bank etc which posses an external entrant threat to ICICI Bank as this Banks are known for their art of working and maintain high standards of customer service. Strategy: After having new entrants threat, ICICI Bank should come up with more additional benefits to its customer or may be even reduce some fees for any additional works of customers.


Detailed Analysis: GAP 1: No Strong R & D for finding hidden needs of customers. Though ICICI Bank has been investing in R&D, but the investments are not that high as well as the R&D of ICICI Bank is not strongly equipped so as to analysis the deep hidden needs of customers as well as employees.

GAP 2: Not able to provide the desired services due to regulations. Though knowing some of the desired services of customers or having some innovative schemes all this schemes are not implemented by ICICI Bank, as all banks in India are under the regulation of Reserve Bank of India.

GAP 3: Improper Implementation by Employees. Many schemes are launched by ICICI Bank to ensure old customer loyalty as well as new customer base after compiling with RBI approval; still these schemes are not implemented properly by the bank staff and mostly agents of banks because of less understanding of schemes or because of no faith in them.

GAP 4: Problems faced by customers are spread rapidly, affecting the new customer decision. It is well noted in India that mouth to mouth publicity is the fastest way of publicity whether it is positive or negative, under such situations any problem or inconvenience faced by any customer of ICICI Bank spreads like rapid fire and effects the decision of old as well as new customer directly & indirectly.

GAP 5: Services as promised by the agents are not delivered either on time or not at all provided.

In order to get better pay, the agents of ICICI Bank usually give false promises to there customers regarding the quality of service or new schemes so as to lure them. In such cases the final loser is not just the customers but the ICICI Group as whole as it effects all there businesses.

i. A Major revamp of its Customer care.

A complete over hauling of its customer care department is required so as to reduce complaints of customer in turn which may affect its working.


Penetration into Rural Market with E Commerce Facility. Though it is one of the strategies of ICICI Bank to enter deeply into rural sector, but this step has to be taken up seriously and as soon as possible so as to tap the market the rural market easily and these services should be well equipped with E Commerce features mainly like Tele banking and ATMs etc.


Introduction of Smart Cards for New as well as Old Credit Card Holders. ICICI Bank should come up with the concept of smart cards were the data regarding all the accounts & credit cards details of a individual customer is placed in a single cards hence reducing the burden of carrying all credit cards & other necessary items required for banking transaction.


Concentrate on Building Brand Image. ICICI Bank is very well known institution for investing purposes and as well as for its practices involving anti social elements; therein affecting its name and Brand value of its self and also ICICI group as a whole.


Formulation of a Win - Win Situation to reduce Non Performing Assets. It has become a necessity for ICICI Bank to reduce its NPAs which have risen tremendously after the merger with ICICI Limited.


Completely separation of other alike Businesses like Insurance, Mutual Funds etc. It is usually seen the ICICI Bank branches are over crowded with ICICI staff though they dont belong to that branch or does not even belong to the ICICI Bank, they usually are the agents of its other businesses like Insurance, Mutual funds etc this annoys the customer and creates a bad impression.


Major re-look at working of their Agents. The easiest way to reach to customers is through agents; and the agents of ICICI Bank are highly skilled in this field but they do it at the cost of customers innocence. There are many incidences where in the information provided by the agents is false. Its time for ICICI Bank to look into the matter and rework on its agents policies.


Reduction of Penalty Fees & Special Service Fees. The penalties & special service imposed by ICICI Bank is very high as compared to public sector banks; this some times adds a negative perspective to ICICI Bank.

SUGGESTION TO OTHER FINANCIAL INSTITUTIONS AND PVT. BANKS i. ii. Better flexibility in schemes should be provided as done by ICICI Bank to lure mass customer base. Better banking hours is need of the hour of Indian banking customer and in this race ICICI Bank has moved a step ahead; to ensure not to lose out all financial institutions and banks should extend there bank working hours. Concentration on small working groups rather than just corporate for business this suggestion is basically for Pvt. Banks operational in India, as they focus more on corporate rather then huge base of small traders, self employed and other small & medium business. Go for packaged schemes for accounts many banks in India are not providing package schemes for customers except few Banks like ICICI bank, CITI Bank etc in some cases. The availability of packaged schemes can become turning points for there business growth




News Papers


Red herring prospectus of ICICI Bank 2007