In 1955, The Industrial Credit and Investment Corporation of India Limited (ICICI) was incorporated at the initiative of
World Bank, the Government of India and representatives of Indian industry, with the objective of creating a
development financial institution for providing medium-term and long-term project financing to Indian businesses. In
1994, ICICI established Banking Corporation as a banking subsidiary. Formerly known as Industrial Credit and
Investment Corporation of India, ICICI Banking Corporation was later renamed as 'ICICI Bank Limited'. ICICI founded
a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans
etc. In 2001, ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank, and had
acquiredChettinad Mercantile Bank (est. 1933) and Illanji Bank (established 1904) in the 1960s. In 2002, The Boards
of Directors of ICICI and ICICI Bank approved the reverse merger of ICICI, ICICI Personal Financial Services
Limited and ICICI Capital Services Limited, into ICICI Bank. After receiving all necessary regulatory approvals, ICICI
integrated the group's financing and banking operations, both wholesale and retail, into a single entity. At the same
time, ICICI started its international expansion by opening representative offices in New York andLondon. In India,
ICICI Bank bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it
acquiredGrindlays Bank.
In 2003, ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK it established an alliance
with Lloyds TSB. It also opened an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai
and Shanghai. In 2004, ICICI opened a representative office in Bangladesh to tap the extensive trade between that
country, India and South Africa. In 2005, ICICI acquired Investitsionno-Kreditny Bank (IKB), a Russia bank with about
US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI renamed the
bank ICICI Bank Eurasia. Also, ICICI established a branch in Dubai International Financial Centre and in Hong Kong.
In 2006, ICICI Bank UK opened a branch in Antwerp, in Belgium. ICICI opened representative offices
in Bangkok, Jakarta, and Kuala Lumpur. In 2007, ICICI amalgamated Sangli Bank, which was headquartered
in Sangli, in Maharashtra State, and which had 158 branches in Maharashtra and another 31 in Karnataka State.
Sangli Bank had been founded in 1916 and was particularly strong in rural areas. With respect to the international
sphere, ICICI also received permission from the government of Qatar to open a branch in Doha. Also, ICICI Bank
Eurasia opened a second branch, this time in St. Petersburg. In 2008, The US Federal Reserve permitted ICICI to
convert its representative office in New York into a branch. ICICI also established a branch inFrankfurt. In 2009, ICICI
made huge changes in its organisation like elimination of loss making department and restreching outsourced staff or
renegotiate their charges in consequent to the recession. In addition to this, ICICI adopted a massive approach aims
for cost control and cost cutting. In consequent of it, compesation to staff was not increased and no bonus declared
for 2008-09.
On 23 May ICICI Bank announced merger with Bank of Rajasthan with it through share-swap in a non-cash deal that
values the Bank of Rajasthan at about Rs 3,000 crore. Each 118 shares of Bank of Rajasthan will be converted into
25 shares of ICICI. It is said that this merger will also expand ICICI Bank's branch network by 25%.
The traditional banking functions would give way to a system geared to meet all the
financial needs of the customer. We could see emergence of highly varied financial
products, which are tailored to meet specific needs of the customers in the retail as well
as corporate segments. The advent of new technologies could see the emergence of
new financial players doing financial intermediation. For example, we could see utility
service providers offering say, bill payment services or supermarkets or retailers doing
basic lending operations. The conventional definition of banking might undergo
changes.
The competitive environment in the banking sector is likely to result in individual players
working out differentiated strategies based on their strengths and market niches. For
example, some players might emerge as specialists in mortgage products, credit cards
etc. whereas some could choose to concentrate on particular segments of business
system, while outsourcing all other functions. Some other banks may concentrate on
SME segments or high net worth individuals by providing specially tailored services
beyond traditional banking offerings to satisfy the needs of customers they understand
better than a more generalist competitor.
One of the concerns is quality of bank lending. Most significant challenge before banks
is the maintenance of rigorous credit standards, especially in an environment of
increased competition for new and existing clients. Experience has shown us that the
worst loans are often made in the best of times. Compensation through trading
gains is not going to support the banks forever. Large-scale efforts are needed to
upgrade skills in credit risk measuring, controlling and monitoring as also revamp
operating procedures. Credit evaluation may have to shift from cash flow based
analysis to “borrower account behaviour”, so that the state of readiness of Indian banks
for Basle II regime improves. Corporate lending is already undergoing changes. The
emphasis in future would be towards more of fee based services rather than lending
operations. Banks will compete with each other to provide value added services to their
customers.
Structure and ownership pattern would undergo changes. There would be greater
presence of international players in the Indian financial system. Similarly, some of the
Indian banks would become global players. Government is taking steps to reduce its
holdings in Public sector banks to 33%. However the indications are that their PSB
character may still be retained.
Mergers and acquisitions would gather momentum as managements will strive to meet
the expectations of stakeholders. This could see the emergence of 4-5 world class
Indian Banks. As Banks seek niche areas, we could see emergence of some national
banks of global scale and a number of regional players.
Concept of social lending would undergo a change. Rather than being seen as directed
lending such lending would be business driven. With SME sector expected to play a
greater role in the economy, Banks will give greater overall focus in this area. Changes
could be expected in the delivery channels used for lending to small borrowers and
agriculturalists and unorganized sectors (micro credit). Use of intermediaries or
franchise agents could emerge as means to reduce transaction costs.
[edit]Private Banks
Axis Bank
Dhanalakshmi Bank
Federal Bank
Jammu & Kashmir Bank
Yes Bank
ICICI Bank
HDFC Bank
PB BANK