| Topic : Trends In Banking |
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Banking & Insurance Professionals |
Business & Strategy |
Consumer & Retail Banking in India
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Activity:
Question posted: 01 23 2010 21:30:48 +0000,
4 answers, 186 views, last activity
07 06 2010 20:18:08 +0000
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Some of you may recall that when the financial crisis started in 2008, the only bank that came under scrutiny in India was the ICICI Bank. For some time, there was a run on the bank. There were rumors galore that ICICI Bank is going to fail. I wonder why this happened only to ICICI Bank and not to any other bank in India?
Mr. Azhar Kazmi, Your concern is understandable. However, fall of a bank in India is not that easey. First, about 30% of total bank's deposit will be with RBI/Govt in the form of investments in debt instruments and cash balalance with RBI. Second, the lending has to be as per RBI guidelines, viz, creation of security, in particular, collaterals. So, you need not concern of bank's health comparing to American style Banking. Thirdly, banks in india, go bankrupt not suddenly, but in a phased manner. The indian banking system has a wonderful mechanism, another bigger bank would adopt or takeover such banks. Because, its not the mistake of depositor or borrower for the bad health of the bank, and whose interest need to be safegaurded in the interest of country and industry.
In case of ICICI bank, the aggressive selling during early 2000s proved wrong. They have problems in retail segment. But, still corporate / wholesale banking is working fine. I understand, ank has already in the process of weeding out excess fat and corrective action is already in place. May be, they will be able to comeout with all problems in another 2 years. I also understand, they're implementing policy and methods which is a mix of both Nationalised banks and new gen. banks.
I agree with the view of Mr. Kazmi. Mr. Mnajunath has tried his best to project a bettwr image of ICICI Bank, which it does not have. Just have alook at the number of cases that have been filed and decided against ICICI Bank in the consumer courts and other fora. The bank is cheating the innocent population of this country by porjecting its high image on the proudct and technology front.
ICICI did have exposure and huge losses in the American Tsunami. Further, they are the 'most hated' banking institution among the middle classes of India because of their goonda-style of loan recovery. Hundreds have been driven to suicide by them. They cared two hoots even for Supreme Court admonition. In fact, Mr. Kamath has often been described as the person responsible for the goonda-isation of Indian banking. Such an image led to stricter scrutiny and larger public interest in their misfortune.
Thanks Mr. Manjunath for your assurance. The first para of your comment relates to the Indian banking industry and applies to all the banks. So it doesn't help explain why only ICICI Bank came under fire. Your second para however offers some explanation.
There is a real problem in the retail segment. In my view it arises because of ICICI's internal policies. The lacunae which the top management at ICICI fails to see is that the Bank cannot fool all the people all the time. On the customer front, ICICI Bank is considered to be an insensitive bank with atrocious customer service. One can go to some websites where people write complaints against bad service. ICICI Bank tops the number of customer complaints. Often the number of complaints against ICICI Bank exceed even that of the SBI which has several times more branches. I think ICICI Bank should get out of retail banking and focus on corporate banking where its slick ways can produce results for it. Surprisingly, ICICI Bank keeps winning so many awards which , personally, I think it does not deserve.
I'd prefer sticking to the good, old public sector banks. They might be inefficient at times but they are not going to fool us any time.
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