There has been rise in the number of defaults on payments by borrowers therefore the rating agency Crisil has downgraded ICICI Bank’s securitized car and personal loan pool worth over Rs 203 crore from AAA (so) to AA (so).
In 12 months the negligence levels for the loan pool since securitization has gone up than expected, with collections significantly going down below expectations.
Crisil in its report said this has led to the rating revision for pass through certificates (PTCs) series A13 (Rs 105.73 crore) and A14 (Rs 98.2 crore).
Prasad Koparkar, head of structured finance rating with Crisil, said there has been no default in payment to PTC investors. There are enough credit development cushions for payment to investors in securities.
For instance while securitizing loans, the cushion will be in multiple of expected defaults rate. He added for Rs 100 crore loan pools if the expected default rate is Rs 5 crore, then the credit enhancement will be three-four times the default rate.
There is no need to panic as the rise in default of personal and vehicle loans extended by banking and financial entities is on expected lines. When banks will move away from the saturated safe loan market, the default rate is set to go up, as they are persuading the relatively higher risk segment (self employed). But these segments of loans also carry higher interest rates — reflecting risks and higher transaction costs.
All the PTCs are backed by a pool of new car and personal loan receivables created and serviced by ICICI Bank. The rating outfit reaffirmed the outstanding ratings on 16 other PTCs. The reaffirmed papers carry AAA (So) rating.
Monday, April 28, 2008
Tuesday, April 22, 2008
ICICI bank, SBI to be affected most by CRR hike says analyst
The inflation is running at a three-year high and the interest rates are also at the highest in six years. To control the inflation the Reserve Bank of India (RBI) on April 17 said that it will raise the cash reserve ratio (CRR). On the other hand banks are already facing slower loan growth as the interest rates are high due to which there has been fall in the earnings and returns have fallen by 1 percent to 2.7 per cent.
The statement released by the central bank in Mumbai on April 17 stated CRR will be raised to 8 per cent from 7.4 per cent in two phases by May 10. The central bank said the increase, the first in 2008, would drain as much as Rs 18,500 crore from the financial system.
According to a Goldman Sachs Group report the nation’s two biggest banks State Bank of India (SBI) and ICICI Bank, will be affected most by the central bank’s decision to increase the amount of cash they must hold with it.
On April 18 Goldman analyst Sampath S K Kumar had written in a note to clients, “ICICI Bank is likely to be the most impacted by this change followed by State Bank of India and other state-owned banks.”
ICICI bank is more dependent on large deposits that come with higher interest rates so the average cost of the funds is much higher than the most state-run banks. The State-run banks have lower cost deposits from retail savers.
According to information available on the websites of the banks low-cost deposits, which consist of current and savings accounts, comprise 27 per cent of ICICI Bank’s deposits and 39.45 per cent of State Bank’s.
To review the monetary policy the central bank is holding a meeting on April 29. In the year through March 2008, the loan growth has slow down to 21.6 per cent from 28.1 per cent a year earlier as consumers have postponed purchases of automobiles and homes because of higher interest rates.
The statement released by the central bank in Mumbai on April 17 stated CRR will be raised to 8 per cent from 7.4 per cent in two phases by May 10. The central bank said the increase, the first in 2008, would drain as much as Rs 18,500 crore from the financial system.
According to a Goldman Sachs Group report the nation’s two biggest banks State Bank of India (SBI) and ICICI Bank, will be affected most by the central bank’s decision to increase the amount of cash they must hold with it.
On April 18 Goldman analyst Sampath S K Kumar had written in a note to clients, “ICICI Bank is likely to be the most impacted by this change followed by State Bank of India and other state-owned banks.”
ICICI bank is more dependent on large deposits that come with higher interest rates so the average cost of the funds is much higher than the most state-run banks. The State-run banks have lower cost deposits from retail savers.
According to information available on the websites of the banks low-cost deposits, which consist of current and savings accounts, comprise 27 per cent of ICICI Bank’s deposits and 39.45 per cent of State Bank’s.
To review the monetary policy the central bank is holding a meeting on April 29. In the year through March 2008, the loan growth has slow down to 21.6 per cent from 28.1 per cent a year earlier as consumers have postponed purchases of automobiles and homes because of higher interest rates.
Monday, April 21, 2008
ICICI Bank raises savings a/c minimum balance limit
The country's largest private sector lender ICICI Bank on Wednesday increased the limit of minimum quarterly balance to be maintained in its savings account. The bank said it has doubled the minimum quarterly balance to be maintained in its savings accounts to Rs 10,000. The reason it gave is the cost of infrastructure has increased with the expansion of service offerings for its customers.
The bank's Executive Director V Vaidyanathan told the media from Mumbai that the new minimum balance requirement, will be effective from July 1, and is not applicable to the salary, no-frills and senior citizen accounts.
He added the salary and no-frills accounts do not require minimum balance to be maintained, while minimum levels for senior citizen accounts remain untouched at current levels.
Vaidyanathan said for over 10 years the bank has been maintaining the minimum balance at Rs 5,000 and now it has become necessary to revise it in view of the rise in the number of services customers were being offered.
"There has been a sharp increase in the number of customers, branches and ATMs, while the bank timings have also been increased... This required us to revise the minimum quarterly balance," Vaidyanathan said.
Most of the foreign banks operating in the country are already having a minimum quarterly balance of Rs 10,000 for savings accounts, though some of the domestic private banks such as HDFC Bank have it at Rs 5,000.
Whereas, public sector banks have a much lower minimum balance, mostly ranging from Rs 500-1,000 per savings account.
When the second largest private sector lender HDFC Bank, was inquired about their plans of increasing minimum balance companies spokesperson said, "There are no such plans at this moment."
The bank's Executive Director V Vaidyanathan told the media from Mumbai that the new minimum balance requirement, will be effective from July 1, and is not applicable to the salary, no-frills and senior citizen accounts.
He added the salary and no-frills accounts do not require minimum balance to be maintained, while minimum levels for senior citizen accounts remain untouched at current levels.
Vaidyanathan said for over 10 years the bank has been maintaining the minimum balance at Rs 5,000 and now it has become necessary to revise it in view of the rise in the number of services customers were being offered.
"There has been a sharp increase in the number of customers, branches and ATMs, while the bank timings have also been increased... This required us to revise the minimum quarterly balance," Vaidyanathan said.
Most of the foreign banks operating in the country are already having a minimum quarterly balance of Rs 10,000 for savings accounts, though some of the domestic private banks such as HDFC Bank have it at Rs 5,000.
Whereas, public sector banks have a much lower minimum balance, mostly ranging from Rs 500-1,000 per savings account.
When the second largest private sector lender HDFC Bank, was inquired about their plans of increasing minimum balance companies spokesperson said, "There are no such plans at this moment."
Saturday, April 19, 2008
ICICI in tie-up with Visa, Elcom Systems launch Visa eMarketplace
The first Visa eMarketplace service has been launched in the Asia Pacific region, jointly by Visa, ICICI Bank and Elcom Systems Ltd. A press note released said Visa eMarketplace is an online gateway that connects sellers and buyers of commercial goods and services.
The press release said Visa eMarketplace will provide a platform for the businesses in India to conduct the entire procurement and payment transaction electronically and efficiently over the internet using a Visa purchasing card.
Mr Santanu Mukherjee, country manager, South Asia, Visa International, informed, Visa eMarketplace has been designed to be an efficient, perfect and transparent procurement system for the commercial and government sectors. He further added that it will help to eliminate the need for paper-based purchase orders and approvals therefore with eMarketplace manual effort will be reduced as the process of payment and management of costs is automated.
Visa eMarketplace is fully secured online option that has been built on the existing Visa purchasing card platform. By using this seller will be able to give buyers easy access to their product catalogues while buyers can have better understanding and management of their inventories, for instance, by providing purchase analysis to help in the planning of expenses. The records provided also help ensure detailed tracking for audit purposes.
The main hub to Visa eMarketplace is the Visa purchasing card, which is meant for low-value, high-volume purchase of non-personal goods and services.
Mr Sachin Khandelwal, head of cards product group, ICICI Bank said, “Corporates and government departments can use Visa eMarketplace to make purchases online from their suppliers and use ICICI Bank purchase card to make payment.”
Visa eMarketplace is an eProcurement service which does not require participating organizations to invest in hardware, software or continuous upgrades. Visa eMarketplace is a secure system. It uses secure sockets layer (SSL) data encryption to help ensure that information exchanged within Visa eMarketplace is encrypted to prevent unauthorized disclosure.
The press release said Visa eMarketplace will provide a platform for the businesses in India to conduct the entire procurement and payment transaction electronically and efficiently over the internet using a Visa purchasing card.
Mr Santanu Mukherjee, country manager, South Asia, Visa International, informed, Visa eMarketplace has been designed to be an efficient, perfect and transparent procurement system for the commercial and government sectors. He further added that it will help to eliminate the need for paper-based purchase orders and approvals therefore with eMarketplace manual effort will be reduced as the process of payment and management of costs is automated.
Visa eMarketplace is fully secured online option that has been built on the existing Visa purchasing card platform. By using this seller will be able to give buyers easy access to their product catalogues while buyers can have better understanding and management of their inventories, for instance, by providing purchase analysis to help in the planning of expenses. The records provided also help ensure detailed tracking for audit purposes.
The main hub to Visa eMarketplace is the Visa purchasing card, which is meant for low-value, high-volume purchase of non-personal goods and services.
Mr Sachin Khandelwal, head of cards product group, ICICI Bank said, “Corporates and government departments can use Visa eMarketplace to make purchases online from their suppliers and use ICICI Bank purchase card to make payment.”
Visa eMarketplace is an eProcurement service which does not require participating organizations to invest in hardware, software or continuous upgrades. Visa eMarketplace is a secure system. It uses secure sockets layer (SSL) data encryption to help ensure that information exchanged within Visa eMarketplace is encrypted to prevent unauthorized disclosure.
Monday, April 14, 2008
ICICI Bank to sell mortgage loan products through MBRD in Russia
The Moscow Bank for Reconstruction and Development is a medium-sized bank in Russia having 166 branches in 34 regions in Russia. India’s largest private sector bank, ICICI Bank, is in talks with the bank, an arm of Sistema, for selling its mortgage loan products in Russia.
Giving comments regarding talks with ICICI bank Sergey Ya Zaytsev, chairman of the executive board, Moscow Bank for Reconstruction and Development (MBRD) said, “We have held discussions with ICICI Bank for possible cooperation in mortgage lending and trade finance. ICICI Bank may design the mortgage products and we will sell them in the Russian market through our banking network”.
MBRD has a retail loan portfolio of $800 million, as on January 1, 2008, and total assets of $3 billion.
In Russia ICICI Bank is having a subsidiary, ICICI Bank Eurasia LLC, but it has a very small branch network. ICICI bank is very positive about the tie-up with MBRD as it will enable the Bank to enter many Russian regions which will offer good opportunity to lenders in mortgage financing. In Russia at present, mortgage financing is less than 3 per cent of Russia’s GDP, while it is more than 100 per cent in western countries.
The tie-up with ICICI Bank will be clearly on revenue-sharing basis. The mortgage products will be designed by ICICI, and will be sold by MBRD. ICICI bank will buy the mortgage portfolio for a fee from MBRD.
Furthermore MBRD following the footsteps of its parent Sistema has plans to open its representative office or branch office in India.
Giving comments regarding talks with ICICI bank Sergey Ya Zaytsev, chairman of the executive board, Moscow Bank for Reconstruction and Development (MBRD) said, “We have held discussions with ICICI Bank for possible cooperation in mortgage lending and trade finance. ICICI Bank may design the mortgage products and we will sell them in the Russian market through our banking network”.
MBRD has a retail loan portfolio of $800 million, as on January 1, 2008, and total assets of $3 billion.
In Russia ICICI Bank is having a subsidiary, ICICI Bank Eurasia LLC, but it has a very small branch network. ICICI bank is very positive about the tie-up with MBRD as it will enable the Bank to enter many Russian regions which will offer good opportunity to lenders in mortgage financing. In Russia at present, mortgage financing is less than 3 per cent of Russia’s GDP, while it is more than 100 per cent in western countries.
The tie-up with ICICI Bank will be clearly on revenue-sharing basis. The mortgage products will be designed by ICICI, and will be sold by MBRD. ICICI bank will buy the mortgage portfolio for a fee from MBRD.
Furthermore MBRD following the footsteps of its parent Sistema has plans to open its representative office or branch office in India.
Wednesday, April 9, 2008
ICICI Bank launched SME Knowledge handbook for entrepreneurs
With the change in time one has to update its skills and knowledge to survive and to increase the output.
ICICI Bank in an attempt to help CEOs of small and medium enterprises sharpen their skills and knowledge, and enhance the productivity, on Tuesday in collaboration with Cyber Media, Bank launched a program SME CEO Knowledge Series.
The program has been conceived for providing a platform to the CEOs of various SMEs for interacting with experts of various fields including human resources, finance and entrepreneurship.
For this purpose it has identified groups in 26 cities across the country.
As a pilot program the bank has already conducted the program at a leather cluster in Agra, ICICI Senior General Manager and Global head SME Vijay Chandok told reporters here.
"The SME CEO Knowledge series will enable us to cater to the entrepreneurs at the root level," he said.
Former President APJ Abdul Kalam unveiled the SME Knowledge handbook for entrepreneurs. On the occasion APJ Abdul Kalam said: “The information ... Will be handy in creation of new enterprises, enhancing the productivity of present SMEs, reducing the sickness among SMEs and above all, increasing the throughput of the SMEs significantly."
Senior faculty from IIM-C and bankers along with other experts have been lined in for giving advise to the entrepreneurs on how to raise capital for each stage of business, information about M&A, forex advice etc.
Approximately there are about 13 million SMEs in the country which employ about 31 million people.
ICICI Bank in an attempt to help CEOs of small and medium enterprises sharpen their skills and knowledge, and enhance the productivity, on Tuesday in collaboration with Cyber Media, Bank launched a program SME CEO Knowledge Series.
The program has been conceived for providing a platform to the CEOs of various SMEs for interacting with experts of various fields including human resources, finance and entrepreneurship.
For this purpose it has identified groups in 26 cities across the country.
As a pilot program the bank has already conducted the program at a leather cluster in Agra, ICICI Senior General Manager and Global head SME Vijay Chandok told reporters here.
"The SME CEO Knowledge series will enable us to cater to the entrepreneurs at the root level," he said.
Former President APJ Abdul Kalam unveiled the SME Knowledge handbook for entrepreneurs. On the occasion APJ Abdul Kalam said: “The information ... Will be handy in creation of new enterprises, enhancing the productivity of present SMEs, reducing the sickness among SMEs and above all, increasing the throughput of the SMEs significantly."
Senior faculty from IIM-C and bankers along with other experts have been lined in for giving advise to the entrepreneurs on how to raise capital for each stage of business, information about M&A, forex advice etc.
Approximately there are about 13 million SMEs in the country which employ about 31 million people.
Saturday, April 5, 2008
ICICI Bank to enhance wealth management and mobile banking
ICICI Bank country’s second largest lender this year will be mainly focusing more on enhancing its wealth management business and value-added services such as mobile and internet banking.
ICICI Bank Executive Director V Vaidyanathan in a press meet told "We would focus more on areas like product distribution, wealth management and mobile banking in the period ahead”.
He said the bank this year there has been a 50 per cent growth in the share of revenues contributed from the distribution of products as against a credit growth of 20 per cent.
"If you look at profits of any bank, the contribution from liability and distribution sides are more than credit, so equation is shifting to the non-credit side."
The home loan portfolio is expected to maintain its growth in the months ahead, "as it (housing) is a basic need of the people," he said.
"Mortgage will continue to be an important part of Indian banking system," he said, adding that "good underwritten practices will help the country even in turbulent times,"
ICICI Bank Executive Director V Vaidyanathan in a press meet told "We would focus more on areas like product distribution, wealth management and mobile banking in the period ahead”.
He said the bank this year there has been a 50 per cent growth in the share of revenues contributed from the distribution of products as against a credit growth of 20 per cent.
"If you look at profits of any bank, the contribution from liability and distribution sides are more than credit, so equation is shifting to the non-credit side."
The home loan portfolio is expected to maintain its growth in the months ahead, "as it (housing) is a basic need of the people," he said.
"Mortgage will continue to be an important part of Indian banking system," he said, adding that "good underwritten practices will help the country even in turbulent times,"
Wednesday, April 2, 2008
Businessman duped ICICI bank of Rs 2.2. crore
Last year Mumbai police had arrested a business who was one of Haseena Parker’s associates has been arrested again by EOW on Tuesday on the new complaint lodged by ICICI bank on the charges of doing fraud of Rs 2.2.crore.
ICICI bank officials lodged a complaint on October 11, 2006 against the businessman, Krishnamilan alias Baba Shukla. The EOW is searching for two of Shukla's associates, builder Arshad Shaikh and Sameer.
The police said in the EOW case a first round of inquiry has been done before registering an FIR. "Shukla had floated a company called Biltech Engineering in Vashi.
Arshad Shaikh would persuade several people to submit their documents to procure loans from banks and promised them to pay around Rs 50,000 each. On receiving the documents, Shaikh, with the help of Sameer, prepared some more fake documents and took housing loan of Rs 2.2 crore from the ICICI bank," said a police officer.
The money was purportedly deposited in Shaikh's account as he had posed as a developer for the project. "Shukla had withdrawn money from Shaikh's account. On going through the documents, bank officials realized documents were fake and lodged a complaint," said the officer.
Earlier also Shukla (41) was arrested in connection with extortion and cheating case involving Dawood Ibrahim's younger sister Haseena Parkar and six others. The case was about the development of an SRA plot near Wadala, for which real estate broker Vinod Avlani paid Shukla and his associates Rs 1 crore.
When Shukla and the others did not hand over the project or return the money, Avlani lodged a complaint. Later, Shukla also filed a complaint to the ACB that two crime branch officers asked him for money in return for not pursuing the case.
ICICI bank officials lodged a complaint on October 11, 2006 against the businessman, Krishnamilan alias Baba Shukla. The EOW is searching for two of Shukla's associates, builder Arshad Shaikh and Sameer.
The police said in the EOW case a first round of inquiry has been done before registering an FIR. "Shukla had floated a company called Biltech Engineering in Vashi.
Arshad Shaikh would persuade several people to submit their documents to procure loans from banks and promised them to pay around Rs 50,000 each. On receiving the documents, Shaikh, with the help of Sameer, prepared some more fake documents and took housing loan of Rs 2.2 crore from the ICICI bank," said a police officer.
The money was purportedly deposited in Shaikh's account as he had posed as a developer for the project. "Shukla had withdrawn money from Shaikh's account. On going through the documents, bank officials realized documents were fake and lodged a complaint," said the officer.
Earlier also Shukla (41) was arrested in connection with extortion and cheating case involving Dawood Ibrahim's younger sister Haseena Parkar and six others. The case was about the development of an SRA plot near Wadala, for which real estate broker Vinod Avlani paid Shukla and his associates Rs 1 crore.
When Shukla and the others did not hand over the project or return the money, Avlani lodged a complaint. Later, Shukla also filed a complaint to the ACB that two crime branch officers asked him for money in return for not pursuing the case.
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