ICICI bank to orient itself towards fee-based income

ICICI bank mainstream for its growth has been retail business all these years but now bank is changing its track of business to fee-based income. Mr Vijay Chandok, Senior General Manager, Head SME Business, ICICI Bank said banking industry is facing pressure on spreads hence ICICI bank will be focusing itself towards fee-based income this fiscal.

Bank is looking forward to increase its share of current accounts and add to its fee income by improving the business banking services. The bank’s total fee income is getting 13-14 per cent from SME sector, though its share in total assets is about 2-3 per cent.

“This year, our orientation is towards improving the visibility and servicing of current account business in our branches,” Mr Chandok said. Mr Chandok said.some visible changes will come in the forefront in the bank’s branches and the staff too will be encouraged through incentives linked to business banking services and products to encourage promoting business banking products and not merely retailing.

The bank’s share of low-cost CASA (current account savings account) to total deposits was 26 per cent, as on March 31, 2008.

Mr Chandok in an interview told Business Line, that the SME sector can experience moderation this fiscal, as compared to last year, but it will be restricted to industries that are highly export-oriented.

He added there has been some muting of growth in export-oriented industries such as apparels and IT, even though the dollar has seen a rebound. In fact, the investment market continues to be healthy as companies are looking to acquire relatively low-priced assets overseas this will them to access overseas markets, while they can provide low-cost manufacturing domestically, he said.

Mr Chandok added while demand for credit is strong and liquidity is not a problem, interest rates are likely to have an upwards bias, due to inflation.

“The question being asked by companies is that of cost,” he said. About the emergence of new clusters within the SME structure, Mr Chandok said, “Infrastructure in SME space is basically small contractors who work with large companies. That is a strong growth area for us. In the next few years there will also be significant investment in social infrastructure, such as educational institutions and wellness centres.”

Mr Chandok informed for the last five years ICICI Bank’s SME segment has seen a growth of over 50 per cent and is expected to maintain the same this year as well.