Sm Final Project 1234567

7/29/2019 Sm Final Project 1234567

http://slidepdf.com/reader/full/sm-final-project-1234567 1/46

A STRATEGIC ANALYSIS OF ICICI BANK

-: SUBMITTED BY:-

Mr. AKSHAY SABLE

BACHALOUR OF MANAGEMENT STUDIES

SYBMS DIV- B

Roll no-83

-: UNDER GUIDANCE OF:-

Mr.VINOD CHANDWANI

-: SUBMITTED TO:-

N.G BEDEKAR COLLEGE THANE



CERTIFICATE Undertaken and completed the project work titled “STRATEGY OF

ICICI BANK” during the academic year 2012 – 2013 under the guidanceof 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

(Prof.. VINOD CHANDWANI)



CONTENTS

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<<<<<<..pg. 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



EXECUTIVE SUMMARY

ICICI Bank is a leading Indian private sector commercial bank offering avariety 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 India’s 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 onchanges

HISTORY OF ICICI

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 India’s 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

Bank’s 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 ofSCICI 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, andgreater 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 RBI’s 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 Bank’s and ICICI’s 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.

TIME LINE HISTORY OF ICICI

1955:

:

1956:

1960:

1961:

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 toIndian 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%.

ICICI building at 163, Backbay Reclamation was inaugurated.

The first West German loan of DM 5 million from Kredianstalt

was obtained by ICICI.

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



1967:

1969:

1972:

1977:

1982:

1986:

:

:

oversubscribed.

First two regional offices in Calcutta and Madras were opened.

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

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 Servicesof India Limited, (CRISIL) India's first professional credit rating

agency.

ICICI promotes Shipping Credit and Investment Company of

India Limited. (SCICI)



:

1987:

1988:

1993:

:

1994:

1996:

:

:

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.

ICICI signed a loan agreement for Sterling Pound 10 million with

Commonwealth Development Corporation (CDC), the first loan

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 J. P. Morgan.

ICICI sets up ICICI Asset Management Company.

ICICI sets up ICICI Bank.

ICICI becomes the first company in the Indian financial sector to

raise GDR.

ICICI announces merger with SCICI.

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



1997:

:

:

1998:

:

1999:

:

2000:

:

ICICI Ltd

ICICI was the first intermediary to move away from single primerate to three-tier prime rates structure and introduced yield-

curve based pricing.

The name "The Industrial Credit and Investment Corporation of

India Limited" was changed to "ICICI Limited".

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

through an issue of American Depositary Shares.

ICICI Bank becomes the first commercial bank from India to list

its stock on NYSE.



0

5000

10000

15000

20000

25000

30000

35000

2003 2004 2005 2006 2007

2001:

2002:

:

ICICI Bank announces merger with Bank of Madura.

The Boards of ICICI Ltd and ICICI Bank approved the merger of

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.

ICICI BANK PRESENT

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.



1068.121,252.29

1,676.59

2,513.89

3,446.58

0

500

1000

1500

2000

2500

3000

3500

4000

1 2 3 4 5

26.84

2003 2004 2005 2006 2007

Net ProfitAfter Tax

12,061.8 16,371.0 20,052.0 25,400.7 31,102.2

Assets worth Rs.

3,446.58

billion – 2007.



CAPITAL STRUCTURE (Rs. billion)

A. Authorised Capital

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

12.75

1.50

3.50

B. Issued, Subscribed and Paid-Up Capital

899.38 million Equity Shares of Rs. 10/- each 8.99

C. Issued, Subscribed and Paid up Preference Share

Capital

350 Preference Shares of Rs. 10 million each

3.50



SERVICES PROVIDED

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 offertreasury 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 fee-

based 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 repaymentschedule, 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 areaccepted 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, StudentBanking 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 RoamingCurrent 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 India’s 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 medium-term 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 itsinternational 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 theoffshore 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 ofimport 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 collectionservices 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 cashmanagement 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 company’s 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 rangingfrom 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 fortheir 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 service-

related 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 itscorporate 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 interestrate 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, RBI’s 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 corporateclients 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 micro-

finance 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

www.money2India.com. These speedy, cost effective and convenient

products enable non-resident Indians to send money to any bank at over18,000 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 onthe 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 currencies—US 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, NorthAmerica 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.



STRATEGIES

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 andacceptance 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 publicand 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 projectfinancing, 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 specificcustomer 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 Bankaims 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 tothe 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 andimplementing company-wide risk management policies, with a focus on

enhancing asset quality. It’s 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 conductingdetailed 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 itstechnology 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 schoolsas 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.



STRATEGIC ANALYSISTOWS MATRIX

STRENGTHS WEAKNESSES

O

P

P

O

R

T

U

N

I

T

I

E

S

S – O Strategies

Strength: Large Capital base.

Opportunity: Market Expansion.

Strategy: Deep Penetration into

Rural Market.

W – O Strategies

Weakness: Workforce

Responsiveness.

Opportunity: Outsourcing of Non -

Core Business.

Strategy: Outsource Customer Care

& other E-Helps.



T

H

R

E

A

T

S

S – T Strategies

Strength: Low operating costs

Threat: Increased Competition

from others Pvt. Banks.

Strategy: Steps to Ensure Loyalty

by old Customers.

W – T Strategies

Weakness: Not Equal to

International Standards.

Threat: Entry of many Foreign

Banks.

Strategy: Consider additional

benefits

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.

iv. 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 likeHSBC, 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 & BPO’s, 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.



SERVICE GAP ANALYSIS

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.

RECOMMENDATIONS

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.

ii. 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 ATM’s etc.

iii. 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.



iv. 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 ICICIgroup as a whole.

v. Formulation of a Win - Win Situation to reduce Non Performing

Assets.

It has become a necessity for ICICI Bank to reduce its NPA’s which

have risen tremendously after the merger with ICICI Limited.

vi. 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 don’t 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.

vii. 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 customer’s 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.



viii. 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. Better flexibility in schemes should be provided as done by ICICI

Bank to lure mass customer base.

ii. Better banking hours is need of the hour of Indian bankingcustomer 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.

iii. 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.iv. 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



BIBLOGRAPHY

www.icicibank.com

www.google.co.in

News Papers

Magazines

Red herring prospectus of ICICI Bank 2007

http://www.icicibank.com/

http://www.google.co.in/

http://www.google.co.in/

http://www.icicibank.com/

Documents

Sm Final Project 1234567