Erika M.

Lorenzo
Case study on ICICI Bank

1. What is ICICI Bank's innovation?

ICICI bank’s innovation is to convert the poor people into customers and at the
same time empowering them.

2. What is special about RBI's pilot project with NABARD in 1991?

It is established by linking a self help group to the micro financing on banks in

rural areas.

3. According to Mahajan, why are the transaction costs of savings in formal

institutions as high as 10% for the rural poor?

“This was because of the small average size transaction and distance of the
branches from the villages”

4. What are some of the problems of MFIs in India?

“Most of the problems with MFIs are due to the fact that their primary focus has
been on access to credit. With such small loan (and thus meager interest
payments) the key to sustainability becomes scale”

5. What are the two innovative BOP models of the ICICI?

 “Direct access, bank0led model

 Indirect channels partnership model”

6. What is the connection between Grameen Bank and Bank of Madura?

From the start, Bank of Madura is having trouble increasing profitability because
there were many issues in the poor society that prevented it to become
profitable. Then the executive of Bank of Madura started using Grameen Bank
because it was a success in Bangladesh.

7. Describe ICICI's three-tier system. Discuss why it is three-tiered.

It is a hierarchal based system wherein the project manager is on top. Followed

by the Coordinator, and lastly, by the promoter. The project managers are those
in charge of the bank. The coordinators are SGH people that coordinate and
serve as a bridge between the other two tiers. And lastly the promoters are those
who are doing field work.
8. What are the 3 essential steps in the SHG process? Comment on why
each step is necessary.

 “Learn to save
 Learn to lend what you have saved

 Learn to borrow responsibly.”

In order to make the money circulate you must first have to own your own
money, and then from that point onwards, it is a matter of give and take.

9. Discuss the NABARD checklist for SHG's. Comment on why each item
on the checklist is necessary.

 “Is the group size between 15 and 20 members?”

o It needs to be 15-20in numbers so that they can easily pay any debt
they made.

 “Are all members considered very poor?”

o They have to consider the status of every members to somehow make

generalization on whether they can pay up or not.

 “Was there a fixed amount of savings collected each month?”

o There should be a fixed amount of savings collected each month so

that things will be coordinated and not in a one lump some of money
giving.

 “Is there more than 20% literacy?”

o There should be someone in the group who knows how to read/write.

He/she will be the one coordinating with the bigger group.

 “Have they used their savings for internal lending purposes?”

o The ICICI bank should know where the money is going.

 “Have the members kept a high level of attendance?”

o All members should be active.

10. What is the impact of microlending in a household according to a
NABARD study?

“The NABARD research concluded that SHG participation had significant impact
on various aspects of confidence, communication, and decision making. One of
the most important objectives for the SHG program is to improve the
assertiveness of the SHG members, which NABARD measured in a survey
published in their series on microfinance.”

11. Discuss the possible implementation of a smart-card based payment

system? Would it work? Why?

Because of the implementation of microfinance and the emerging other

technologies such as smart cards, it is possible now to implement the smart-card
payment based system. But I don’t know if it’d work. If majority of people in India
don’t know how to read, they won’t be able to these kiosk system properly.

12. Discuss the quote: "Banking with the poor has undergone a paradigm
shift. It is no longer viewed as a mere social obligation. It is financially
viable as well". Do you think this quote can be applied in the Philippines?
Discuss.

No. if we’re talking about the poor people here in the Philippines, this won’t be
applicable. Poor people here don’t invest their money at a bank. They live in an
environment wherein what they earn today will be lost today as well.