Professional Documents
Culture Documents
Financial Markets
(A) Money Markets
Money markets is the collective name given to the various firms and
institutions that deal in the various grades in near money The definition
implies that the money market caters to short-term demand and supply of
funds. The major participants of the money market are as follows:
Lenders: Lenders include the regulator RBI, commercial banks and brokers.
These participants facilitate the expansion or contraction of money in the
market
Borrowers: Borrowers include commercial banks, stock brokers, other
financial institutions, businesses houses and governments provide financial
instruments to other investors depending upon the money borrowed from
lenders
Accordingly, the characteristics of money market include the following:
Financial Markets
The description of capital and money markets leads to understanding the
following characteristics of financial markets:
Financial markets enable large volume of transactions and mobilize financial
(short-term and long-term) resources at real-time basis through investments
in stocks, bonds and money
Financial markets generate a scope of arbitrage across different markets.
This implies, that investors can take advantage of price differences across
different markets and diversify risks
Financial markets are characterised with volatility directed by trade of large
volume of securities. Mostly, these markets are influenced by
macroeconomic and political changes in India and the world
Markets are dominated by financial intermediaries who take investment
decisions as well as risks on behalf of depositors (savers)
Financial markets are also characterised by externalities. An externality
refers to cost or benefit that are not transmitted by prices but influenced by
a stakeholders actions in the financial markets leading to market failures.
For example, speculation in prices of stock markets could affect the workings
of the money market
Domestic financial markets are also becoming integrated with global
financial markets that not only enables capital mobility at a global level but
spread of risks across the globe
FINANCIAL SYSTEM & THE ECONOMY
An economy consists of two kinds of economic structures that encompasses
the financial system Savings structure and Borrowing Structure
Savings structure
The savings structure in an economy consists of savers or entities that save
in the form of financial assets (deposits, life insurance, etc) or cash balances.
Savings can be estimated as the remainder or surplus from incomes earned
after expenditures (food, rent, home supplies, etc). This surplus or savings
can be directed in the form of financial assets or withheld as cash.
Savers or entities that save can be further categorised into the following:
Household sector The household sector include individuals, unincorporated
businesses, farm production units and non-profit businesses. Savings for the
household sector is mostly in financial such as includes deposits, life
insurance, shares & debentures, provident and pension fund, loans for
durables and real estate.
ICICI bank
ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian
financial institution, and was its wholly-owned subsidiary. ICICI's shareholding
in ICICI Bank was reduced to 46% through a public offering of shares in India
in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in
fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock
amalgamation in fiscal 2001, and secondary market sales by ICICI to
institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955
at the initiative of the World Bank, the Government of India and
representatives of Indian industry. The principal objective was to create a
development financial institution for providing medium-term and long-term
project financing to Indian businesses.
In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services
group offering a wide variety of products and services, both directly and
through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI
become the first Indian company and the first bank or financial institution
from non-Japan Asia to be listed on the NYSE.
After consideration of various corporate structuring alternatives in the
context of the emerging competitive scenario in the Indian banking industry,
and the move towards universal banking, the managements of ICICI and ICICI
Bank formed the view that the merger of ICICI with ICICI Bank would be the
optimal strategic alternative for both entities, and would create the optimal
legal structure for the ICICI group's universal banking strategy. The merger
would enhance value for ICICI shareholders through the merged entity's
access to low-cost deposits, greater opportunities for earning fee-based
income and the ability to participate in the payments system and provide
transaction-banking services. The merger would enhance value for ICICI Bank
shareholders through a large capital base and scale of operations, seamless
access to ICICI's strong corporate relationships built up over five decades,
entry into new business segments, higher market share in various business
segments, particularly fee-based services, and access to the vast talent pool
of ICICI and its subsidiaries.
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Deposits
ICICI Bank Wealth Management brings you a wide range of competitively
priced deposit products that offer you safety of investment and steady
growth of your portfolio.
What's more, you can now invest in Deposits through our 24x7 channels:
Internet Banking, Phone Banking & at select ATMs
Product Offered by ICICI Prudential Asset Management Company Ltd
Equity Funds
Balanced/Hybrid Fund
Debt Funds
Fund of Funds
Exchange Traded Funds
Equity Funds
ICICI Prudential Dynamic Plan
ICICI Prudential Dynamic Plan is an Open-ended Diversified Equity
Fund that aims to make the most of market changes. Given the
dynamic nature of the markets, the fund has the ability to attack by
taking aggressive asset calls in equity and equity related securities.
On the flip side it may also adopt a defensive strategy by investing
in debt, money market instruments and derivatives as and when
markets get overvalued.
Fund Returns
1 mth
(%)
3 mth
(%)
6 mth
(%)
1 yr
(%)
2 yr
(%)
3 yr
(%)
5yr
(%)
1.8
5.6
24.5
48.9
26.4
22.1
16.2
3 mth
(%)
6 mth
(%)
11
1 yr
(%)
2 yr
(%)
3 yr
(%)
5yr
(%)
Fund Returns
1.6
7.9
25.7
44.9
24.3
20.8
16.1
Fund Returns
1 mth
(%)
3 mth
(%)
6 mth
(%)
1 yr
(%)
2 yr
(%)
3 yr
(%)
5yr
(%)
1.7
11.4
46.5
86.8
36.9
31.5
21.8
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At times for a growing company, the amount of capital that a promoter can
infuse in the business becomes limited. Businesses can be self sufficient for
capital needs in their nascent and initial growth phases. However to meet
expansion and growth plans, external capital is imperative. We at ICICI Bank,
with our lending experience, fully understand this and help clients raise
equity to fund growth. We have developed a strong network of domestic and
international investors who are keen to partner with such success stories in
India and these players solicit our advice for investing into such companies. .
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Consumer perspectives
Most consumers agree that while achieving business targets, companies
should do CSR at the same time. Most consumers believe companies doing
charity will receive a positive response. Somerville also found that
consumers are loyal and willing to spend more on retailers that support
charity. Consumers also believe that retailers selling local products will gain
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loyalty. Smith (2013) shares the belief that marketing local products will gain
consumer trust. However, environmental efforts are receiving negative views
given the belief that this would affect customer service. Oppewal et al.
(2006) found that not all CSR activities are attractive to consumers. They
recommended that retailers focus on one activity. Becker-Olsen (2006) found
that if the social initiative done by the company is not aligned with other
company goals it will have a negative impact. Mohr et al.(2001) and Groza et
al. (2011) also emphasise the importance of reaching the consumer.
Scope
Initially, CSR emphasized the official behavior of individual firms. Later, it
expanded to include supplier behavior and the uses to which products were
put and how they were disposed of after they lost value.
Ethics training
The rise of ethics training inside corporations, some of it required by
government regulation, has helped CSR to spread. The aim of such training is
to help employees make ethical decisions when the answers are unclear. The
most direct benefit is reducing the likelihood of "dirty hands fines and
damaged reputations for breaching laws or moral norms. Organizations see
increased employee loyalty and pride in the organization. Common actions
Common CSR actions include:
Environmental sustainability: recycling, waste management, water
management, renewable energy, reusable materials, 'greener' supply chains,
reducing paper use and adopting Leadership in Energy and Environmental
Design (LEED) buildind standards.
Community involvement: This can include raising money for local charities,
providing volunteers, sponsoring local events, employing local workers,
supporting local economic growth, engaging in fair trade practices, etc.
Ethical marketing: Companies that ethically market to consumers are placing
a higher value on their customers and respecting them as people who are
ends in themselves. They do not try to manipulate or falsely advertise to
potential consumers. This is important for companies that want to be viewed
as ethical.
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The policy would pertain to all activities undertaken by the Bank towards
fulfilling its corporate
social responsibility objectives. The policy would also ensure compliance with
section 135 of the
Companies Act, 2013 (CA2013/Act) and would include the activities as
covered under Schedule
VII to the Act and the Companies (Corporate Social Responsibility Policy)
Rules, 2014 and as
amended from time to time.
C. Governance structure
The Corporate Social Responsibility Committee (CSR Committee) is the
governing body that will
articulate the scope of CSR activities for the Bank and ensure compliance
with the CSR Policy.
The CSR Committee would comprise of three or more Directors including at
least one
independent Director. The Bank has a CSR Committee which is duly
constituted in accordance
with the provisions of the Act with respect to its composition and terms of
reference.
D. Operating framework
1. The CSR Committee has duly formulated the CSR policy which has been
approved by the
Board as prescribed under CA2013. The CSR plan would operate as
prescribed by the CSR
Committee and under its supervision
2. Activities undertaken by the Bank may include projects being
implemented directly by the
Bank as well as contributions to ICICI Foundation and other eligible entities
with track record
and standing in line with regulation and as may be decided by the CSR
Committee from time
to time.
3. The responsibility for implementation of identified activities/ projects shall
be as per the
organisational structure approved by the Managing Director & CEO.
4. Funds would be disbursed in accordance with the directions of the CSR
Committee.
E. Monitoring
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children in the country. ICICI Bank will continue to work with institutes of
higher education
for focused capacity-building in specified disciplines, particularly finance &
management.
2. Health care
(Schedule VII (i) Eradicating hunger, poverty and malnutrition, promoting
preventive healthcare
and sanitation and making available safe drinking water; (iii) Promoting
gender equality,
empowering women, setting up homes and hostels for women and orphans,
setting up old age
homes, day care centres and such other facilities for senior citizens and
measures for reducing
inequalities faced by socially and economically backward groups; (x) Rural
development projects)
The healthcare challenge in India spans a number of dimensions, including
access to affordable
healthcare for the poor; awareness of health issues & available facilities/
benefits among the less
privileged segments of society and specific vulnerable sections of the
population; and child
malnutrition, which impairs the capacity of a child to lead a healthy and
productive life.
Addressing this challenge is essential to achieve the objective of inclusive
growth.
The Bank and ICICI Foundation will continue to focus on developing
innovative models with the
potential to scale up and bring about improvements in the delivery of
healthcare to the
marginalised segments of society and other appropriate measures to
promote health care.
3. Skill development and sustainable livelihoods
(Schedule VII (ii) promoting education, including special education and
employment enhancing
vocation skills especially among children, women, elderly and the differently
abled and livelihood enhancement projects; (iii) Promoting gender equality,
empowering women, setting up homes and hostels for women and orphans,
setting up old age homes, day care centres and such other facilities for
senior citizens and measures for reducing inequalities faced by socially and
economically backward groups)
Enabling Indias youth to gain skills that can provide employment is key to
realising the potential of Indias demographic dividend and driving inclusive
growth. Improving employability of the youth from lower-income sections of
society is hence an important focus area. 6
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The ICICI Academy for Skills has been set up across the country to provide
job-oriented skill
training to youth. Several centres have been set up across the country. In
this initiative, ICICI
Foundation is also leveraging the skills and training capabilities of large
corporates in developing
training modules in their respective domains. ICICI Foundation is also liaising
with corporates and
businesses to get the trained youth employed, through a job portal. ICICI
Bank will continue to
develop the ICICI Rural Self Employment Training Institutes.
4. Financial inclusion
(Schedule VII (iii) Promoting gender equality, empowering women, setting up
homes and hostels
for women and orphans, setting up old age homes, day care centres and
such other facilities for
senior citizens and measures for reducing inequalities faced by socially and
economically
backward groups (x) Rural development projects).
The Bank strongly believes that to improve the overall economic condition of
the low-income
Population and to empower them with means to overcome adversities or
inequalities, access to
Financial services are an important factor.
The Bank would continue to focus on expanding its reach and its initiatives in
this area include
Using various channels like branches and business correspondents, and
leveraging technology,
To make banking services accessible to low-income groups and the rural
population, including
The urban poor and migrant workers.
5. Support employee engagement in CSR activities
The Bank supports the involvement of its employees in CSR activities. The
Bank will encourage
employees to participate in CSR activities of the Bank and ICICI Foundation.
6. Capacity building for corporate social responsibility
ICICI Foundation will continue to promote incubation of expertise for
implementing corporate
social responsibility initiatives. It will also work towards providing a platform
for organisations
engaged in social initiatives, and discussion & thought leadership on critical
challenges to
inclusive growth. The Bank and ICICI Foundation will continue to support
initiatives that promote
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country and build a platform for sustained growth that will create value for
our stakeholders.
ICICI Banks Read to Lead initiative aims to bridge gaps in the access to
formal schooling for a large number of children from disadvantaged
backgrounds. This initiative aims to reach out to 100,000 children through
different voluntary organizations, facilitating formal schooling, bridge
courses, and supplementary teaching-learning material. For children like
Riya, formal education is now a reality
The Foundations mission is to improve the incomes of the low-income
households in India. It believes that improving market access for low income
households is the only sustainable way to bring about increase in their
incomes and therefore it principally focuses its attention on redressing
market failures which constrain them.
However, low income households are often not able to access even well
functioning markets because they lack the necessary physical capacity and
education due to lack of access to healthcare and schooling. It is also
possible that even well-developed markets may not provide a level playing
field for low income households. Also in the long-run markets may pursue
strategies that are not environmentally sustainable. Driven by these
concerns, the Foundations is actively mentoring institutions that work on
these defined focus areas:
Markets: The Foundation focuses on facilitating universal access to finance
to make markets more responsive to the needs of the poor and to link with
low-income households both as producers and consumers. This is done
through developing appropriate channels, business models and back-ends
for financial services access. It also supports research and model building for
expanding financial services access. The Foundation works closely with and
mentors the IFMR Foundation (www.ifmrfoundation.org.in) and its partners to
fulfill its own mission of increasing the incomes of low income households in
a sustainable manner. It is the Foundations belief that addressing financial
market failures substantively will have an impact on the access of low
income households to a variety of other markets including healthcare,
schooling and drinking water.
Human Capacity:
A focus on fundamental human capacities such as health and education is
crucial for people to reach their full potential and lead productive lives. Child
survival and early childhood development are amongst the most urgent
development challenges facing Indiatoday.
The Foundation works closely with the ICICI Centre for Child Health &
Nutrition (ICCHN) (http://www.icchn.org.in/), an interdisciplinary funding and
research centre focused on the health and nutrition of vulnerable women,
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"In the second major high point, we participated in catalysing the consumer
demand in the country, including by way of retail loans for housing, auto and
a whole lot of other purposes.
The third major high point has been technology, being an underlying feature
for all banking services that we offer," Kochhar said.
Incidentally, Prime Minister Narendra Modi on Friday asked banks to become
'agents of social transformation'.
Speaking at a function to dedicate a 'digital village' developed by ICICI Bank
in Gujarat, Modi said banks need to take up social causes and adopt a
charter for the nation's development.
ICICI Bank was earlier a wholly-owned subsidiary of the erstwhile ICICI Ltd,
whose principal objective was to create a development financial institution
for providing medium-term and long-term project financing to Indian
businesses.
In the 1990s, ICICI transformed its business from a development financial
institution offering only project finance to a diversified financial services
group offering a wide variety of products and services, both directly and
through a number of subsidiaries and affiliates like ICICI Bank. The parent
firm later merged with the bank.
While ICICI Ltd was formed in 1955, just about seven years after India's
independence, it got a new lease of life in 1971, when the company hired a
group of young management school graduates, including K V Kamath, then
24-years old.
Kamath later went on to head the bank and is currently serving as Chairman
of the bank.
Kochhar also joined the group as a trainee in 1984 and went on to hold
several senior positions before being drafted in 1993 to a core team to set up
ICICI Bank.
She was elevated to the Board of Directors of ICICI Bank in 2001 and was
instrumental in establishing ICICI Bank during the 1990s, and subsequently
headed the infrastructure finance and corporate banking business inICICI
Limited.
She became Joint MD and CFO in 2007 and continued in that role before
becoming Managing Director & CEO of ICICI Bank in 2009.
Now, she is responsible for the bank's diverse operations in India and
overseas and also chairs the boards of the bank's principal subsidiaries,
which include life and general insurance companies.
ICICI Bank is now India's largest private sector bank with total assets of Rs
5,94,642 crore (USD 99 billion) as on March 31, 2014 and profit after tax of
Rs 9,810 crore (USD 1.6 billion) for the year ended March 31, 2014.
It has a network of 3,845 branches and 12,012 ATM's across India.
Some of the CSR initiatives already undertaken by the Bank are
providing
Solar street lights and Hand pumpsets in Rural areas.
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CONCLUSION
Banking sector is highly contributing towards the Corporate Social
Responsibilities for the benefit of society along with their basic banking
services, ICICI is a emerging private sector bank which is stepping positively
towards the social banking apart from earning the profit, ICICI is increasing
their amount of expenditure as the year possess, by seeing its contribution in
the year 2013 we can say that this Bank can give a tough competition to
other private sector banks. The Bank must try to increase the amount of
expenditure in the future which will shows a positive attitude by the banking
sector. The concept of CSR is now turning in to the
act in the year 2013, supported by the government. Banks can play an
important role in the growth of nations economy ,when the people get
additional support in the form of different social programmes then their
standard of living will raise and it help in making a developed nation. The
banks must focus on making the people aware about what they are doing for
them so that they can get the benefit from such CSR initiatives. Banking
sector in India is showing interest in integrating sustainability into their
business models but its CSR reporting practices are far from satisfaction.
There are only a few banks which report their activities on triple bottom line
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principles. As a matter of fact, the standards for rating CSR practices are less
uniform in comparison to that for financial rating. This leads to problem in
comparison of corporate houses and determining the CSR rating. The study
found out that among the reporting banks also, some banks are making false
gestures in respect of their efforts for socio environmental concerns. Most of
the Banks use CSR practices as a marketing tool and many are only making
token efforts towards CSR in tangential ways such as donations to charitable
trusts, NGOs, sponsorship of events, etc. Very few banks have a clearly
defined CSR philosophy. Mostly banks implement CSR in an ad-hoc manner,
unconnected with their business process and dont state how much they
spend on CSR activities. Further voluntary actions are required to be taken
by the financial bodies to ensure the socio-environmental feasibility of
projects to be financed. Indian banking sector must also portray their socially
responsible behaviour through integrating triple bottom line
principle.Financial Institutions can do a lot to assist efforts for social
responsibility and achieve sustainability. Banks must also provide appropriate
training
to its employees on environmental and social risks in lending to ensure that
climate change is taken into account in corporate banking decisions.
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