Page 144 - DCOM208_BANKING_THEORY_AND_PRACTICE

Unit 8: Banking Systems

Notes

Case Study Retail Banking Business of ICICI Bank

r. Bhargava Dasgupta heads the international business operations of ICICI
bank and he has to travel a lot these days. He is busy in building the ICICI
Mbank’s next big platform-globalization. He feels that it is impossible to reach to
the clients everywhere across the world physically for providing the financial services, so
it will be strategically sound to leverage the relationships with other banks in serving the
global consumer. The success of the bank in the domestic market is largely credited to the
customer orientation, high quality of customer service, innovative financial product
introductions and active involvement in serving the emerging and latent needs of the
Indian consumer. They want to take their domestic market success to the global level. The
recent spot of operations by the bank is an indicator of becoming a global financial service
provider. ICICI bank has opened its first overseas branch in Singapore in 2003; in mid
2003, they opened the representative offices in London. They are close to acquire properties
by the year 2003 end in Pundong and have already procured properties in East London to
start their business operations including strategies to open offices in Toronto and Bahrain.

Retail banking is a key element of ICICI’s growth strategy. With upward migration of
household income levels, increasing affordability of retail finance and acceptance of use
of credit to finance purchases, retail credit has emerged as a rapidly growing opportunity
for banks that have the necessary skills and infrastructure to succeed in this business.
ICICI Bank has capitalized on the growing retail opportunity in India and has emerged as
a market leader in retail credit. The dimensions of the retail strategy include innovative
products, parity pricing, customer convenience, strong processes and customer focus.
Cross-selling of the entire range of credit and investment products and banking services
to customers is a critical aspect of ICICI’s retail strategy. ICICI Bank offers a wide range of
retail credit products. It has expanded the market significantly over the last few years by
taking organized retail credit to a large number of high-potential markets in India, by
penetrating deeper into existing markets and by offering customized solutions to meet
the varying credit needs of the Indian consumer.
ICICI Bank is one of the leading providers of mortgage loans, two-wheeler loans,
commercial vehicle loans and personal unsecured loans, and continues to maintain
leadership in automobile finance. ICICI Bank’s total retail disbursements in fiscal 2003 are
approximately ` 200 billion. Retail credit constituted 18% of ICICI Bank’s balance sheet at
March 31, 2003, compared to only 6% at March 31, 2002. Cross selling has emerged as one
of the significant drivers of retail credit growth. In fiscal 2003, cross selling accounted for
about 20% of mortgage loans and auto loans and about 25% of credit cards issued. In May
2003, ICICI Bank acquired the entire paid-up capital of Transamerica Apple Distribution
Finance Private Limited (TADFL), which is renamed as ICICI Distribution Finance Private
Limited (IDFL). IDFL is primarily engaged in providing distribution financing in the
two-wheeler segment. The acquisition is expected to supplement the Bank’s retail franchise,
especially in the two-wheeler segment.
Retail Deposits

During fiscal 2003, ICICI continued its focus on retail deposits. This has reduced its funding
cost and has enabled it to create a stable funding base, with over 4.7 million deposit
customers. Following a life stage segmentation strategy, ICICI Bank offers differentiated
liability products to various categories of customers depending on their age group (Young
Contd...

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