Financial Times

ICICI to ‘thrive’ on banking weaknesses
Offering the local industry tough competition in the months to come, coupled with a strategy built upon ‘targeting the inefficiencies of the banking sector in the country’, ICICI, India’s largest private sector bank, opened in Colombo last week.

The bank has aggressive plans to expand in the shortest possible time, while not ruling out acquisition of other financial entities in the country. Bhargav Dasgupta, Senior General Manager (International Banking & Global Markets), ICICI Bank told The Sunday Times FT that ICICI will create a market in the country by leveraging on ‘banking inefficiencies’ of other local players. “We want to be like a local player and at the same time step in to areas where the other players charge extremely high rates or overcharge customers which we feel are banking inefficiencies,” he explained, adding that ICICI is very bullish on Sri Lanka.

“We feel that the current political and economic situation is a ‘short term phenomenon’ and ICICI is here for the longer term,” he said. On being a ‘tough competitor’ for multinationals in the country, he said ICICI will not strive to grab market share from other players, but shape the industry.
Dasgupta said they applied for the license nearly 18 months ago but had to re-send their application when the Central Bank changed the minimum capital adequacy requirements. “We debated about this requirement, but given our plans to build this business, we feel the amount is appropriate,” he said.

ICICI Bank has plans to partner with a Sri Lankan bank to use ATMs as a distribution channel, he said adding that they have not finalised a model on synergising a local player’s strengths, but said it will definitely be with someone who has a wide reach.

About ICICI initially wanting to start up together with an existing bank in the country, while discussing such possibilities with the Pan Asia Bank (PABC), he said that such a negotiation never took place. “A lot of players enter into a market through acquisition, but we never wanted to, because our core competency is our linkages to India. We did not have any discussions with PABC,” he said. However, he did not rule out future acquisitions. “Whenever and whatever fits with our overall strategic plans, we will consider acquisition,” he said.

K. V. Kamath, Managing Director and CEO, said that Sri Lanka marks one of the key steps in embarking on the next phase of ICICI’s international expansion. “In this phase the Bank proposes to target countries with high growth economies, which have close cultural and economic linkages with India, and we mainly want to bring in the technological know-how in to the country,” he said.

He said that the bank believes the economic progress will continue and will base their strategy in applying the technological force to the industry. “Our core competencies in India are mortgages, car loans and personal debt and we have over 33 percent market share in this area. We want to make these available here as well,” he said. He said their internet banking is the fastest growing business segment in India and is growing at 15 percent of the total customer base is transacting over the Internet and they see a huge potential in this area in Sri Lanka.

Lalita D. Gupte, Joint Managing Director, ICICI Bank said that they will target the non resident Sri Lankans together with Indian residents in the country. She said the bank plans to work with local banks to provide trade finance. “The Sri Lanka branch represents an important platform in ICICI Bank’s strategy of global expansion, enabling us to capitalise on opportunities to offer a range of superior products with specific solutions to cater to the corporate and retail segments, both Indian and Sri Lankan. She said that ICICI Bank also sees an immense business opportunity between Sri Lanka and other geographies using the Bank’s presence and banking partnerships across various locations internationally. “We see Sri Lanka growing at a rate of six percent,” she said.

Naveen Agarwal, Country Head, Sri Lanka Branch, ICICI Bank said that Sri Lanka Branch will offer retail and corporate banking services, trade finance, remittances, investment advisory services, syndications and treasury services.

He said that ICICI Bank uses IT as a strategic tool in all the business operations, a theory they will apply here to gain competitive advantage. “The IT based initiatives have been aimed at enhancing value by integrating diverse products, offering customer convenience and improved service while optimising costs. The Bank has also pioneered several technology-based remittance offerings and has garnered a leadership in the India linked remittance market with a market share of over 15 per cent.

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