ICICI Bank launches I-Express cross-border money transfer service

The largest private sector lender of the country, ICICI Bank has launched an instant cross-border money transfer option called I-Express, for Non-Resident Indians (NRIs).

According to bank press release NRIs can avail this service at ICICI bank’s select partners in Gulf Cooperation Council-political and economic union involving the six Arab states of the Persian Gulf.

Under I-Express facility the remitter can visit any partner outlet and get instant credit into the beneficiary account maintained with ICICI Bank in India that too at no extra. The funds will be remitted instantly and the beneficiary will be able to withdraw money immediately, under this service.

An ICICI Bank spokesperson said, "ICICI Bank not only offers funds transfer facility into the accounts of beneficiaries held in its own branches in India, but also helps in crediting funds into accounts of beneficiaries held in over 65,000 branches of other Indian banks."

The bank release added, the beneficiaries will be able to withdraw funds through the network of over 2,500 branches and 5,600 ATMs, apart from the over 55,000 Visa-enabled ATMs, thus, this facility will significantly increase the value-proposition of ICICI Bank’s cross-border remittance offerings to both the partners and NRIs in the GCC.

However, in the Indian remittance market, ICICI Bank has stood as a strong remittance player which had enabled remittances from across 40 countries worldwide.

Moreover, bank is having relationships with over 80 correspondent banks and 23 exchange houses across GCC.

ICICI Bank ends special home loan scheme

ICICI Bank, the country’s largest private sector bank has revised its home loan rates. The bank has hiked its home loan rates by 50 basis points also it has discontinued its special home loan (fixed and floating) scheme. The new rates are effective from 1October, 2010.

ICICI Bank senior bank official has confirmed about discontinuation of their special home loan scheme in which bank offered fixed rate of interest for the first two years.

Under the scheme bank was offering 8.25percent for the first year and 9.25% for the second year, thereafter the rate was reverted to the floating rate of the bank.

Other banks that have hiked their home loan rates by a similar 50 basis points include IDBI Bank and Allahabad Bank. IDBI Bank and Allahabad Bank hiked their base rate from 8 per cent to 8.5 per cent.

An IDBI Bank official said the cost of funds has gone up, in line with RBI's rate hike. "We have also hiked our deposit rates," the official said.

The banks are hiking their deposit rates in the range of 25-75 basis points for varying maturities. After the Reserve Bank of India (RBI) had raised the rate at which it lends to banks, the cost of funds of banks increased which has resulted in the revision of interest rates.

HDFC Bank, a mortgage lender had raised its interest rate by 0.5% to 9.25% floating in September, 2010. Bank under special home loan is offering loans at a fixed rate of 8.50 percent, will be available up to the end of this financial year, 9.50 per cent for financial year 2011-12 and the applicable floating rate for the balance term.
Meanwhile, SBI the largest public sector bank has extended its special home loan scheme to December 31, 2010. But it has not hiked its base rate, which is at 7.5%. Under its special home loan scheme bank is offering loans at 8 per cent for the first year, and then 9 per cent for the next two years thereafter it will revert back to the floating rate of interest that would be decided by the bank.

ICICI Bank's first retail outlet in Singapore

ICICI Bank has opened its first retail outlet in Singapore.

MD and CEO of the bank, Ms Chanda Kochhar said, the retail outlet has been opened in the banking hub of Singapore’s central business district the branch office is the first step towards starting of ICICI’s retail operations in the country under a 25-branch qualified full banking (QEB) license given by the Monetary Authority of Singapore in April.

She said, "We look at Singapore not just as doing business with Singapore, but the region," while emphasizing on the bank’s growth plans without setting forward targets.

In reply to questions on acquisitions, and further expansion in the region, she said ICICI will basically focus on organic growth.

ICICI Bank annual balance sheet is $90 billion out of which Singapore accounts for $5.8 billion and a significant 25 per cent portion of its international business.

Kochhar added, "In that sense, Singapore is one of the largest hubs of international businesses." She added, "Our focus will be to develop the regional banking business through Singapore operations," and also underlined the importance of Southeast Asian markets.

She said, "I expect a lot of business coming from the regional facilitated by the QFB license in Singapore."

The ICICI Bank Managing Director stated bank will be adding new products in order to expand its Singapore and regional businesses.

Kochhar also pointed out the importance of non-resident Indian (NRI) remittances, and said, bank has a 28 per cent share of the total remittances coming into India thus Singapore is an important part of that business.

Speaking about ICICI’s growth strategy for the coming years, she said, "Our expectation is that we will grow around 18 per cent for the current year ending March, 2011, and 20 per cent to 22 per cent the following year."

Kochhar also referred to strong growth of banks in India, based on the projected 9 percent to 10 per cent annual Indian economic growth.

According to her Indian banking sector annual growth would be over 20 per cent, with some big banks achieving growth "more than that".

Kochhar said, "In five years' time, the Indian banking sector should be about 2-1/2 times the size of what it is currently," and admitted there is a massive financial requirement for developing the country's multi-billion dollar infrastructure sector.

She added, "I think there are huge opportunities for all of us in India. The pie is large and there will opportunities for all banks to grow."

Banking Ombudsman charged ICICI, HDFC for violating norms on recovery agents

Government informed the Lok Sabha that HDFC and ICICI Bank have been violating RBI guidelines on engagement of recovery agents for loans the banking ombudsman has received several complaints against both the banks.

Finance Minister Pranab Mukherjee said in Lok Sabha, "RBI has reported that 120 complaints had been received by 15 Banking Ombudsman Offices in year 2009-10 regarding non-observance of RBI guidelines on engagement of recovery agents by private sector banks."

He said, "Further, it has also been reported that HDFC Bank Ltd and ICICI Bank Ltd have reportedly violated the said guidelines."

Regarding the remedial measures, he said, RBI had issued detailed guidelines to banks on engagement and training of recovery agents. Banks were instructed to ensure that the recovery agents were provided proper training to handle with care and sensitivity particularly in aspects like hours of calling, privacy of customer information etc.

He added banks have also been advised to make sure that the contracts with the recovery agents do not encourage adoption of uncivilized, unlawful and questionable behavior of recovery process.


Finance Minister further said that the banks, being responsible for actions of their agents have been advised to ensure that the agents hired for recovery of dues should strictly follow the guidelines and instructions issued by RBI, including the Banking Codes and Standards Board of India.

He added, banks engaging recovery agents have been instructed to do a periodical review of the mechanism to learn from the experience to bring improvement in the mechanism.

As per the Banking Ombudsman Scheme, 2006 as amended in 2009, the Ombudsman has the power to award compensation up to Rs 1 lakh to those harassed by the agents.

In a reply of another question, Mukherjee said the Khandelwal Committee in its report has said that if public sector banks have to truly make its position strong in a competitive environment, wages have to be set in co-relation with the performance of staff and profitability of banks.
The committee (headed by former chairman of Bank of Baroda A K Khandelwal) had recommended that PSBs (public sector banks) might be given freedom to negotiate wages and service conditions to create a better fit between compensation and performance.

ICICI Bank, Harley Davidson sign agreement to provide finance for bikes

An agreement has been signed between ICICI Bank and iconic US cult bike maker Harley-Davidson to provide finance facilities to its prospective customers.

The bike making company has opened outlets at Hyderabad and Chandigarh and will be opening three more outlets this fiscal. The company sources said next year it will be opening its outlets at four more places, including Chennai and Kolkata.

Harley-Davidson MD Anoop Prakash told reporters here today on the sidelines of opening its outlet in Chandigarh, "We have made an arrangement with ICICI Bank for making available finance to buyers for our bikes."

In India Harley-Davidson has launched 12 models priced between Rs 6.90 lakh and Rs 35 lakh per bike.

Regarding expansion of branches in India, he told next year company will be opening its outlets in Chennai, Kolkata, Gujarat and Kerala next year. Currently company has opened outlets in Hyderabad and Chandigarh. "Three more outlets will be opened in Delhi, Mumbai and Bangalore in this fiscal."

Up till now the company has not set any target about how many bikes it will be selling in the country. He added, "We have not set any target in terms of sales in the country because this segment exceeding 800 CC and above is very new to the country and we will have to see how the volumes grow."

Regarding the size of market for these high-powered bikes, he said last year, the company sold 700 units in the country and it is growing in double digits.

ICICI bank to get control RRBs branches sponsored by BoR

ICICI Bank, India's largest private sector bank will gain more from merger of the Bank of Rajasthan. Apart from getting hold of 468 branches, it will also get control of 58 branches of a regional rural bank sponsored by BoR.

The regional rural bank (RRB) sponsored by BoR is Mewar Aanchalik Gramin Bank (MAGB). The RRB was set up in 1983 and has branches spread across three districts — Udaipur, Rajsamand and Pratapgarh in Rajasthan.

ICICI Bank as the new sponsor of MAGB will be able to step into BoR’s shoes as all other things get equal.

But ICICI Bank's ‘foreign-owned, Indian-controlled' tag might create problem in carrying out a change in sponsorship of MAGB. The bank might have to face the legislative hurdles as RRBs were established under the provision of an Ordinance promulgated on September 26, 1975, and the RRB Act, 1976.

Except MAGB, J&K Gramin Bank (sponsor: J&K Bank Ltd) and Kshetriya Kisan Gramin Bank (sponsor: UP State Co-op Bank), all other RRBs are sponsored by public sector banks/ associate banks of State Bank of India. In India there are 83 RRBs.

In RRBs there is a joint owner ship of Government of India, the State Government concerned and the sponsor bank with the issued capital being shared in the proportion of 50 per cent, 15 per cent and 30 per cent, respectively. The RRBs were set up to ensure sufficient institutional credit for agriculture and other rural sectors.

After merger with BoR, ICICI bank will be the new sponsor of MAGB. According to Mr Pramod Kumar Sharma, General Secretary, All-India BoR Officers Association, but the doubtful point is whether the Government and the Reserve Bank of India will allow a ‘foreign-owned, Indian-controlled' bank to become the sponsor of a RRB. However there is no robust between the working culture of ICICI Bank with either BoR or MAGB, said Mr Sharma.

On the other hand the United Forum of BoR Unions has written a letter to the Reserve Bank of India and has asked it to intervene to stop the merger of BoR with ICICI Bank on grounds of violation of established norms of corporate governance.

The forum pointed out that the dominant shareholder group (the Tayal Group) and allied entities proposed the merger of BoR with ICICI Bank in a secret manner on May 18 through a swap (25 equity shares of ICICI Bank for 118 equity shares of BoR) while they have been disqualified by SEBI through an interim ex-parte order (issued on March 8) from dealing in the market with immediate effect.

Meanwhile Mr Vishwas Utagi, General Secretary, All-India Bank Employees Association has demanded for an investigation into insider trading in BoR shares by SEBI. He has maintained that the merger deal between two banks was finalized in the early hours (0430 hrs) of May 18, but the same was not disclosed until 5 p.m. to the three stock exchanges — Jaipur Stock Exchange, Bombay Stock Exchange and National Stock Exchange — on which BoR is listed.

Also, according to RBI guidelines, private sector banks have to make sure that the decision on merger must get the approval by two-thirds majority of the total board members and not those present alone.

An association representative said, on May 18, out of the total 15 directors on the BoR board, 12 members attended the board meeting. From those 12, seven directors voted in favor of the merger, five abstained from voting.

ICICI Bank to increase its presence in rural and semi-urban areas

ICICI Bank, country’s largest private sector lender will be increasing its presence in rural and semi-urban areas.

Managing director and CEO Chanda Kochhar said in the bank’s annual report, “As we focus on enhancing our capabilities to serve our corporate and retail customers across India’s towns and cities, it is also our endeavor to proactively reach out to rural India and to the vast numbers of our people who do not have access to formal financial services.”

Bank is using its branch network for the distribution of most of its loans, rather than direct sales agents. By the end of March 2010 bank’s direct agriculture advances accounted to Rs 17,329 crore. The gross non-performing assets of agriculture and allied services accounted to 5.62 per cent of advances of this sector.

Last year bank expanded its branch network by adding more than 500 branches and now it has around 2000 branches.

It is expected that bank’s proposed merger with Bank of Rajasthan (BoR) is going to boost its plans to increase focus on rural and semi-urban areas. BoR has a total of 463 branches out of which 46 per cent are located in rural and semi-urban areas.

Earlier in 2005-06, ICICI Bank had increased its focus on rural areas. Although, it suffered heavy losses on this front and due to this it had to stop its rural ventures for sometime. In 2006, the bank was cheated of Rs 200 crore at the central and state government warehouses in Kolhaput district in these warehouses it had not engaged third-party collateral managers. In 2006-07, ICICI Bank had kept a provision of Rs 93 crore to cover losses from frauds related to the warehouse receipt-based financing for agricultural products.

Due to this bank shrink its rural loan book by 50 per cent to Rs 10,000 crore at the end of September 2007. By the end of March 2007 its rural loan book amounted to Rs 20,000 crore.

To fulfill its rural market requirement bank commenced several initiatives which included offering credit through micro-finance institutions, micro-insurance and micro-investment products. It is giving financial support in the rural market, including farmers, traders, commission agents, small processors and other medium- and large agri-corporates. As of March 31, 2010 bank had around four million micro-finance borrowers with an outstanding portfolio of Rs. 3,179 crore.

ICICI –BoR merger will have to get approval from govt

ICICI Bank Ltd and Bank of Rajasthan Ltd (BoR) merger will have to pass through a new regulatory hurdle, said a senior official in the industry ministry.

Generally, mergers in the banking industry can proceed once they are appoved by the RBI. But in this case, approval from the Government is also required as the controversy ove the foreign nature of ICICI Bank is still persistant.

“The merger needs the approval of the FIPB (Foreign Investment Promotion Board) under Press Note 3,” an anonymous official of the department of industrial policy and promotion, told Mint, which is responsible for formulating foreign investment policy.

As per the Press Note 3 of 2009 series, in case the ownership of an existing Indian company is transferred to a non-resident entity, as a consequence of transfer of shares to non-resident entities through amalgamation, merger or acquisition will have to take approval from FIPB.

According the new rules private sector lenders ICICI Bank and HDFC Bank Ltd have been defined as foreign-owned as more than half their equity is owned by foreign entities, including foreign institutional investors, who have no board presence or say in company policy.

According to the press note, this regulation is applicable in sectors which have foreign direct investment (FDI) caps, such as defence production, private sector banking, broadcasting, commodity exchanges, insurance, print media, telecommunications and satellites, according to the press note

Thus any foreign company trying to takeover a local company requires taking the prior approval of FIPB.

This week the two banks had signed a deal that has got a cold reception from investors and analysts.

According to an anonymous analyst working with a consulting firm, said either of the banks need to approach FIPB for approval. “It does not matter which bank approaches FIPB. One entity can also approach FIPB on behalf of the other,” he said.

As per the new regulations, ICICI Bank, with another six banks, has become a foreign-owned lender as overseas entities hold more than 50% of the company’s stake. As on March 31 the shareholding of foreign institutional investors in ICICI Bank stood at 65.30%.

RBI said the new norms will create a new set of banks that are “owned by foreigners, but controlled by Indians”, thus creating a regulatory challenge for the central bank.

On the other hand, commerce and industry minister Anand Sharma had recently said that no change in the new FDI regulation was needed as it was working just fine.

Banks offering lucrative schemes to card holder to recover dues

Banks are facing problem in recovering credit card dues. Last year due to economic crisis and regression in jobs there has been sharp increase in bad assets linked to them due to this many banks will be flushing out credit cards from the market, instead increase debit card count.

Thus most of the major banks including ICICI Bank and Citibank are cutting down their credit card exposure and are offering lucrative schemes to card holders. But banks are not publicizing these schemes as it might increase the risk of defaults from other card users who are regular with the payments and opt for these easier settlement options.

So, if you have large outstanding on credit cards and paying the usual high interest on the same, you can avail this opportunity to convert credit card loan to a lower interest bank loan on a long tenure.

An anonymous senior ICICI Bank official told, “There are various structured payment plans that we’ve been offering. These limited schemes are worked out in consultation with the customer as an alternative repayment plan.” The reporter of ET emailed a query with this regard but did not get any reply from the bank. However banks are offering different-different schemes.

In case you have an outstanding loan of around Rs 2 lakh on credit card and have been paying high interest of 18%, now is the chance to convert it into a regular loan, which you can pay over a period of three years, and the interest rate will be as low as 12%. Citibank, Sandeep Bhalla, a business manager cards, said, “We have a retention-oriented, assistance-based collections process, and if there is a genuine inability to pay, we work closely with customers to offer repayment solutions based on his or her cash-flows.”

There are around 2.5 million Citibank card holders. A CIBIL spokesperson told that when a bank sends a report of restructured loan it is displayed in CIBIL records as it is and also reflects in the same manner in the credit report.

Banks refused to disclose their bad loans, but they are moving very cautiously.

By the end of October 2009 there has been sharp decline of 21% to 21.1 million in a credit card base from 26.7 million a year ago. The decline was also seen in the credit card outstanding, by 12.13% to Rs 5,660 crore at the end of October 2009, from 6,442 crore a year ago.

According to Venture Infotek study all banks are reducing their credit card business. ICICI bank the largest credit card issuer has cut down the number of card holders from 9 million in 2008 to 7 million in 2009.