A
Industrial Training Report
On
“Rural Finance Provided by ICICI BANK”
Submitted in partial fulfillment for theAward of degree of
Bachelor of Business Administration
University of Kota , Kota (Raj.).
Academic Session 2013-2014
Submitted to: - Submitted by:-
Mrs. ISHA AGARWAL Mr. PARVENDRA NIRALALecturer (MIMT) BBA-IInd YEAR
MODI INSTITUTE OF MANAGEMENT AND TECHNOLOGY, KOTA
Affiliated To University Of Kota, Kota (Rajasthan)
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ACKNOWLEDGEMENT
I express my sincere thanks to my project guide Mrs. ISHA AGARWAL,
Deptt. Lecturer of Management Studies, for guiding me right form the
inception till the successful completion of the project. I sincerely
acknowledge her for extending their valuable guidance, support for
literature, critical reviews of project and the report and above all the
moral support. She had provided to me with all stages of this project.
I would also like to thank the supporting staff Management Department,
for their help and cooperation throughout our project.
Name of the Students
PARVENDRA NIRALA BBA-IInd YEAR
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PREFACE
Customer plays an important role in the success or failure of any business
be it product or service industry. For the success of the business one should
satisfy the customer according to their expectations & needs. In short, we can
say that one should know the level of satisfaction which the consumers achieve
after using the product. Gauging the level of customer satisfaction & its
determinants is critical for every organization. Marketers can use such data to
retain customer & operate more efficiently & effectively.
In this economic era for tightening Business nuts and bolt of any company
industries or enterprises. It is necessary to measure its market position in a
certain time interval with the ever changing theories and the concept of market.
For this assessment, we need the robust methodology of survey. Although
survey does not reveal the absolute solution of any objective, but it provides the
inclination towards a good out put.
In the course of Bachelor In Business Administration
(B.B.A.), every student required to undergo application based summer
internship after the completion of one year (two semester). During the winter
internship every student comes to know about the marketing and the real
situation of the market.
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EXECUTIVE SUMMARY
ICICI Bank is one of the largest bank networks in the country. The ICICI
Group has been in existence since 1955 when ICICI Ltd., was created. ICICI
Prudential started in 2002 as subsidiary of ICICI Ltd., Today ICICI Bank has a
customer base of 4 million with total assets exceeding Rs.1, 00,000 Cr. making
it the 2nd largest bank industry in the country.
The Banking sector, after the opening up, provides greater opportunities.
Several global players have emerged and the market has changed significantly.
In the changed scenario, the expectation is that the low Insurance premium as a
percentage of GDP prevailing in India will improve and will offer better
opportunities to the insurance players.
Banking sector is one of the key areas where enormous business
potential exists.
In the Banking sector State Bank of India (SBI) is the major player. The
SBI has 2050 branches. It is constituted in to seven Zones. Currently there are 5,
60,000 Customer agents in India. Banking is another segment, which has been
growing at a faster pace.
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Table of contents
Chapter 1 Industry Profile
Chapter 2 Company Profile
Chapter 3 Project Profile
Chapter 4 Research Mythology
Chapter 5 Fact & Finding
Chapter 6 SWOT Analysis
Chapter-7 Conclusion
Chapter-8 Suggestion
BIBLIOGRAPHY
Annexure
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Chapter 1Industry Profile
INTRODUCTION OF INDIAN BANKING SYSTEM
A HISTORICAL PERSPECTIVE
The earliest banks in India can be traced to the three presidency banks (in Bengal, Mumbai, and
Chennai) in the early 1980s. Subsequently with the emergence of several small banks in the country,
the number of banks had gone up 105 by December by 1934. In 1921, the three-presidency banks
were merged into the imperial bank of India, which, apart from usual commercial operations, also took
over certain central banking functions. Since the Reserve Bank of India was established as a full –
fledged central bank of the country in 1935.
The Imperial bank of India was nationalized and came to be known as the State Bank of
India the establishment of the state bank of India was one of the significant steps taken by
the government of India to control its expanding economy.
The banking system witnessed a steady growth during the post- independence period and
by the mid- sixties the system has become fairly strong and compact. However several
deficiencies in their functioning were noticed, mainly in terms of geographical coverage and
credit deployment. The network of branches of various banks covered only a limited
segment of the population in major cities while the rural areas and semi- urban areas were
totally neglected. it was also noticed that substantial gaps in credit deployment existed in
financing agriculture, small - scale industry and self - employed persons. Further, the
ownership pattern of banks showed the concentration of economic power in few hands
DEFINITION OF BANKING
In Section 5(b) of the Banking Regulations Act, 1949. “Banking” is defined as accepting for
the purpose of lending and investments, deposits of money from the public, repayable on
demand or otherwise, and withdraw able to cheque, draft, order or otherwise.”
DEVELOPMENT OF BANKING IN INDIA
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Banking activities are performed in India since ancient times. Moreover some of the banking
activities performed in ancient times are still performed in modern days also. In ancient time,
when Indians left their homes for pilgrimages or business for long period of time, they
deposited their money and valuables for sale keeping with persons of repute. Over time, a
practice developed to lend a part of such money deposited the needy persons to earn or
interest or usury as it was called then. The person with whom money was deposited for safe
custody enjoyed a good reputation and was an indispensable pillar of ancient Indian Society.
In this way, the banking activities were performed by an individual or group of individual
privately in India since ancient times.
Banking activities existed in India even before the vedic times, where giving and taking of
Credit in one form of the other was where giving and taking of Credit in one form of the other
was prevalent the ancient Hindu Literature and Scriptures refer to the money lending
activities. Mostly of books are in Sanskrit and Pali language. In the ancient times, the main
functions of the banks relating to individual or the state in the times of crises.
Although the origin of the banking in India was in the form of money lending business, the
transition from money lending to formal banking took place in 2nd century. All banking
activities were under the control of Private Sector. The persons who performed banking
activities were known as shreslities. Nagar Seths, Sharaf and Ehietties. These names are
still popular in modern India.
East India Company established banks on the pattern of European Style. Consequently,
such banks and Government treasuries expanded and the role of indigenous banks decline
in the Indian Economy. English Agency Houses were created back to the last quarter of 18 th
Century.
The English Agency Houses in Calcutta and Mumbai began to serve as a banker of the East
India Company. They finance the movement of crops, issued paper money and passed the
way for establishment of joint stock banks. The earliest of these was established in 1770 by
one of the Agency Houses in Calcutta and its business was closely connected with other
houses. But it was wound up in 1832. when the firm of Alexander and Company, with which
it was intimately connected, failed. The Bengal bank and the General Bank of India was
established in 1784 and 1786 respectively.
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Private SectorBanks
AssociationSBI&Associated
BankNationalized
RRB’s
BankPrivate
ForeignBank
CLASSIFICATION OF BANKS
Structure of scheduled
Commercial Banks
Public Sector Banks
DEVELOPMENT OF PRIVATE SECTOR BANK
With the increase of wealth and Commerce in Europe, private Bankers established
themselves in all the principle cities and towns. They received money on deposit, they
managed the money to such borrowers as could give the necessary security and they
brought and sold bill of exchange, billion and coin.
The development of business of banking can mainly be attributed to the London Goldsmiths
during the reign of queen Elizabeth. They used to receive their customers’ valuables and
funds for safe custody. Their receipts acknowledging the same in the course of time became
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payable to the bearer on demand and hence enjoyed considerable circulation. The
Goldsmith used to deposit their funds/reserves in the exchequer and under the care of the
Government.
However, the ruin of Goldsmiths proved as turning point in the English Banking. It let to the
growth of private banking and establishment of Bank of England in 1694, is the prototype
and exemplar of all our modern banks; its history, therefore, will deserve the particular
attention.
Bank of England derived huge profits from the circulation of it. The other private English
Bankers issued their own notes, payable on and these notes according to the credit of the
issuers, obtained a great circulation in the neighborhood of the bankers who issued them.
REGIONAL RURAL BANKS
The RRBs were established with a view to combining the local feel and familiarity with rural
problems. The RRBs are primarily sponsored by the commercial banks. The primary
objectives of these banks are:
Providing credit for agricultural purposes to small entrepreneurs engaged in trade
and industry and other productive activities in rural areas.
To cater the needs weaker sections of the community.
CURRENT SCENARIO
The Indian has finally worked up to the competitive dynamics of new Indian
market and is addressing the relevant issues take on the multifarious challenges of
globalization. Banks that employ IT solutions are perceived to be futuristic and proactive
players capable of meeting the multifarious requirement of large customer base. Private
Banks have been fast on the uptake and are reorienting their strategies using the Internet as
a medium.
The Indian banking has come from a long from being a sleepy business
institution to a highly proactive and dynamic entity this transformation has been largely
brought by the large dose of liberalization and economic reforms that allowed exploring new
business opportunities rather than generating revenues from conventional streams.
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The Indian industry has confidently hit the growth trial that pick in activity is
best reflected in the banking sector which after all is as candid a mirror of a country’s
economy as you could ever find. Most of the Indian financial intermediaries have been
keeping pace with the deepening market economy, riding the opportunity that come along
with reforms even as they brace themselves for increased competition both foreign and
private by strengthening prudential norms and leveraging technology to ensure that growth
engine hums smoothly along
The essential function of a bank is to provide services related to the storing of
value and the extending credit. The evolution of banking dates back to the earliest writing,
and continues in the present where a bank is a financial institution that provides banking and
other financial services. Currently the term bank is generally understood an institution that
holds a banking license. Banking licenses are granted by financial supervision authorities
and provide rights to conduct the most fundamental banking services such as accepting
deposits and making loans. There are also financial institutions that provide certain banking
services without meeting the legal definition of a bank, a so called non-bank. Banks are a
subset of the financial services industry.
The word bank is derived from the italian banca, which is derived from
German and means bench. The terms bankrupt and "broke" are similarly derived from banca
rotta, which refers to an out of business bank, having its bench physically broken. Money
lenders in Northern Italy originally did business in open areas, or big open rooms, with each
lender working from his own bench or table.
Typically, a bank generates profits from transaction fees on financial services or the interest
spread on resources it holds in trust for clients while paying them interest on the asset.
Services typically offered by banks
Although the type of services offered by a bank depends upon the type of bank and the
country, services provided usually include:
Directly take deposits from the general public and issue checking and saving
accounts.
Lend out money to companies and individuals (see money lender)
Cash checks.
Facilitate money transactions such as wire transfers and cashiers checks
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Issue credit cards, ATM, and debit cards and online banking.
Storage of valuables, particularly in a safe deposit box.
Types of banks
There are several different types of banks including:
Central banks usually control monetary policy and may be the lender of last resort in
the event of a crisis. They are often charged with controlling the money supply, including
printing paper money. Examples of central banks are the European Central Bank and the US
Federal Reserve Bank.
Investment banks underwrite stock and bond issues and advice on mergers.
Examples of investment banks are Goldman Sachs of the USA or Nomura Securities of
Japan.
Merchant banks were traditionally banks which engaged in trade financing. The
modern definition, however, refers to banks which provide capital to firms in the form of
shares rather than loans. Unlike Venture capital firms, they tend not to invest in new
companies.
Private banks manage the assets of the very rich. An example of a private bank is the
Union Bank of Switzerland. Savings banks write mortgages exclusively.
Offshore banks are banks located in jurisdictions with low taxation and regulation, such
as Switzerland or the Channel Islands. Many offshore banks are essentially private banks.
Commercial banks primarily lend to businesses (corporate banking)
Retail banks primarily lend to individuals. An example of a retail bank is Washington Mutual
of the USA. Universal banks engage in several of these activities. For example, Citigroup, a
large American bank, is involved in commercial and retail
Lending; it owns a merchant bank (Citicorp Merchant Bank Limited) and an investment bank
(Salomon Smith Barney); it operates a private bank (Citigroup Private Bank); finally, its
subsidiaries in tax-havens offer offshore banking services to customers in other countries.
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Banks are prone to crisis
The traditional bank has an inherent tendency to crisis. This is because the bank borrows
short term and lends leveraged long term. The sum of deposits and the bank's capital will
never equal more than a modest percentage of the loans the bank has outstanding.
Even if liquidity is not a concern, if there is no run on the bank, banks can simply choose a
bad portfolio of loans, and lose more money than they have. The US Savings and Loan
Crisis in the late 1980s and early 1990s is such an incident.
Role in the money supply
A bank raises funds by attracting deposits, borrowing money in the inter-bank
market, or issuing financial instruments in the money market or a securities market. The
bank then lends out most of these funds to borrowers. However, it would not be prudent for a
bank to lend out all of its balance sheet. It must keep a certain proportion of its funds in
reserve so that it can repay depositors who withdraw their deposits. Bank reserves are
typically kept in the form of a deposit with a central bank. This behavior is called fractional-
reserve banking and it is a central issue of monetary policy. Some governments (or their
central banks) restrict the proportion of a bank's balance sheet that can be lent out, and use
this as a tool for controlling the money supply.
Even where the reserve ratio is not controlled by the government, a minimum figure will still
be set by regulatory authorities as part of banking supervision.
Regulation
The combination of the instability of banks as well as their important facilitating role in the
economy led to banking being thoroughly regulated. The amount of capital a bank is
required to hold is a function of the amount and quality of its assets. Major banks are subject
to the Basel Capital Accord promulgated by the Bank for International Settlements. In
addition, banks are usually required to purchase deposit insurance to make sure smaller
investors are not wiped out in the event of a bank failure. Another reason banks are
thoroughly regulated is that ultimately, no government can allow the banking system to fail.
There is almost always a lender of last resort—in the event of a liquidity crisis (where short
term obligations exceed short term assets) some element of government will step in to lend
banks enough money to avoid bankruptcy.
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Chapter 2
COMPANY PROFILE
HISTORY OF ICICI BANK
1955 : The Industrial Credit and Investment Corporation of India Limited (ICICI) incorporated
at the initiative of the 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. Mr.A.Ramaswami
Mudaliar elected as the first Chairman of ICICI Limited.
ICICI emerges as the major source of foreign currency loans to Indian industry. Besides
funding from the World Bank and other multi-lateral agencies, ICICI was also among the first
Indian companies to raise funds from international markets.
1956: ICICI declared its first dividend of 3.5%.
1958: Mr.G.L.Mehta appointed the second Chairman of ICICI Ltd.
1960: ICICI building at 163, Back bay Reclamation, inaugurated.
1961: The first West German loan of DM 5 million from Kredianstalt obtained.
1967: ICICI made its first debenture issue for Rs.6 crore, which was oversubscribed.
1969: The first two regional offices in Calcutta and Madras set up.
1972: The second entity in India to set up merchant banking services. : Mr. H. T. Parekh
appointed the third Chairman of ICICI.
1977: ICICI sponsored the formation of Housing Development Finance Corporation.
Managed its first equity public issue
1978: Mr. James Raj appointed the fourth Chairman of ICICI.
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1979: Mr. Siddharth Mehta appointed the fifth Chairman of ICICI.
1982: ICICI became the first ever Indian borrower to raise European Currency Units. : ICICI
commences leasing business.
1984: Mr. S. Nadkarni appointed the sixth Chairman of ICICI.
1985: Mr. N.Vaghul appointed the seventh Chairman and Managing Director of ICICI.
1986: ICICI became the first Indian institution to receive ADB Loans. ICICI, along with UTI,
set up Credit Rating Information Services of India Limited, India's first professional credit
rating agency. : ICICI promotes Shipping Credit and Investment Company of India
Limited. : The Corporation made a public issue of Swiss Franc 75 million in Switzerland, the
first public issue by any Indian entity in the Swiss Capital Market.
1987: ICICI signed a loan agreement for Sterling Pound 10 million with Commonwealth
Development Corporation (CDC), the first loan by CDC for financing projects in India.
1988: Promoted TDICI - India's first venture capital company.
1993: ICICI Securities and Finance Company Limited in joint venture with J. P. Morgan set
up. : ICICI Asset Management Company set up.
1994: ICICI Bank set up.
1996: ICICI Ltd became the first company in the Indian financial sector to raise GDR. :
SCICI merged with ICICI Ltd. : Mr. K. V. Kamath appointed the Managing Director and CEO
of ICICI Ltd
1997: ICICI Ltd was the first intermediary to move away from single prime rate to three-tier
prime rates structure and introduced yield-curve based pricing. : The name The Industrial
Credit and Investment Corporation of India Ltd changed to ICICI Ltd. : ICICI Ltd announced
the takeover of ITC Classic Finance.
1998: Introduced the new logo symbolizing a common corporate identity for the ICICI Group.
: ICICI announced takeover of Anagram Finance.
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1999: ICICI launched retail finance - car loans, house loans and loans for consumer
durables. : ICICI becomes the first Indian Company to list on the NYSE through an issue of
American Depositary Shares.
2000: ICICI Bank became the first commercial bank from India to list its stock on NYSE. :
ICICI Bank announces merger with Bank of Madura.
2001: The Boards of ICICI Ltd and ICICI Bank approved the merger of ICICI with ICICI
Bank.
2002: ICICI Ltd merged with ICICI Bank Ltd to create India’s second largest bank in terms of
assets. ICICI assigned higher than sovereign rating by Moody’s. : ICICI Bank launched
India’s first CDO (Collateralized Debt Obligation) Fund named Indian Corporate
Collateralized Debt Obligation Fund (ICCDO Fund). : "E Lobby", a self-service banking
centre inaugurated in Pune. It was the first of its kind in India. : ICICI Bank launched Private
Banking. : 1100-seat Call Centre set up in Hyderabad : ICICI Bank Home Shoppe, the first-
ever permanent aggregation and display of housing projects in the county, launched in
Pune, : ATM-on-Wheels, India’s first mobile ATM, launched in Mumbai.
2003 : The first Integrated Currency Management Centre launched in Pune. : ICICI Bank
announced the setting up of its first ever offshore branch in Singapore. : The first offshore
banking unit (OBU) at Seepz Special Economic Zone, Mumbai, launched. : ICICI Bank’s
representative office inaugurated in Dubai. : Representative office set up in China. : ICICI
Bank’s UK subsidiary launched. : India’s first ever "Visa Mini Credit Card", a 43% smaller
credit card in dimensions launched. : ICICI Bank subsidiary set up in Canada. : Temasek
Holdings acquired 5.2% stake in ICICI Bank. : ICICI Bank became the market leader in retail
credit in India.
2004 : Max Money, a home loan product that offers the dual benefit of higher eligibility and
affordability to a customer, introduced. : Mobile banking service in India launched in
association with Reliance Infocom. : India’s first multi-branded credit card with HPCL and
Airtel launched. : Kisan Loan Card and innovative, low-cost ATMs in rural India launched. :
ICICI Bank and CNBC TV 18 announced India’s first ever awards recognizing the
achievements of SMEs, a pioneering initiative to encourage the contribution of Small and
Medium Enterprises to the growth of Indian economy. : ICICI Bank opened its 500th branch
in India. : ICICI Bank introduced partnership model wherein ICICI Bank would forge an
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alliance with existing micro finance institutions (MFIs). The MFI would undertake the
promotional role of identifying, training and promoting the micro-finance clients and ICICI
Bank would finance the clients directly on the recommendation of the MFI. : ICICI Bank
introduced 8-8 Banking wherein all the branches of the Bank would remain open from 8a.m.
to 8 p.m. from Monday to Saturday. : ICICI Bank introduced the concept of floating rate for
home loans in India.
2007: First rural branch and ATM launched in Uttar Pradesh at Delpandarwa, Hardoi. :
"Free for Life" credit cards launched wherein annual fees of all ICICI Bank Credit Cards were
waived off. : ICICI Bank and Visa jointly launched mChq – a revolutionary credit card on the
mobile phone. : Private Banking Masters 2007, a nationwide Golf tournament for high
networth clients of the private banking division launched. This event is the largest domestic
invitation amateur golf event conducted in India. : First Indian company to make a
simultaneous equity offering of $1.8 billion in India, the United States and Japan. : Acquired
IvestitsionnoKreditny Bank of Russia. : ICICI Bank became the largest bank in India in terms
of its market capitalization. : ICICI Bank became the first private entity in India to offer a
discount to retail investors for its follow-up offer.
2008: ICICI Bank became the first Indian bank to issue hybrid Tier-1 perpetual debt in the
international markets. : ICICI Bank subsidiary set up in Russia. : Introduced a new product -
‘NRI smart save Deposits’ – a unique fixed deposit scheme for nonresident Indians. :
Representative offices opened in Thailand, Indonesia and Malaysia. : ICICI Bank became
the largest retail player in the market to introduce a biometric enabled smart card that allow
banking transactions to be conducted on the field. A low-cost solution, this became an
effective delivery option for ICICI Bank’s micro finance institution partners. : Financial
counseling centre Disha launched. Disha provides free credit counseling, financial planning
and debt management services. : Bhoomi puja conducted for a regional hub in Hyderabad,
Andhra Pradesh.
2009: ICICI Bank‘s USD 2 billion 3-tranche international bond offering was the largest bond
offering by an Indian bank. : Sangli Bank amalgamated with ICICI Bank. : ICICI Bank raised
Rs 20,000 crore (approx $5 billion) from both domestic and international markets through a
follow-on public offer. : ICICI Bank’s GBP 350 million international bond offering marked the
inaugural deal in the sterling market from an Indian issuer and also the largest deal in the
sterling market from Asia. : Launched India’s first ever jewellery card in association with
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jewelry major Gitanjali Group. : ICICI Bank became the first bank in India to launch a
premium credit card -- The Visa Signature Credit Card. : Foundation stone laid for a regional
hub in Gandhinagar, Gujarat. : Introduced SME Toolkit, an online resource centre, to help
small and medium enterprises start, finance and grow their business. : ICICI Bank signed a
multi-tranche dual currency US$ 1.5 billion syndication loan agreement in Singapore. : ICICI
Bank became the first private bank in India to offer both floating and fixed rate on car loans,
commercial vehicles loans, construction equipment loans and professional equipment
loans. : In a first of its kind, nation wide initiative to attract bright graduate students to pursue
a career in banking, ICICI Bank launched the "Probationary Officer Programme". : Launched
Bank@home services for all savings and current a/c customers residing in India : ICICI Bank
Eurasia LLC inaugurated its first branch at St Petersburg, Russia.
2008 : ICICI Bank enters US, launches its first branch in New York : ICICI Bank enters
Germany, opens its first branch in Frankfurt : ICICI Bank launched iMobile, a breakthrough
innovation in banking where practically all internet banking transactions can now be simply
done on mobile phones. : ICICI Bank concluded India's largest ever securitization
transaction of a pool of retail loan assets aggregating to Rs. 48.96 billion (equivalent of USD
1.21 billion) in a multi-tranche issue backed by four different asset categories. It is also the
largest deal in Asia (ex-Japan) in 2008 till date and the second largest deal in Asia (ex-
Japan & Australia) since the beginning of 2009. : ICICI Bank launches ICICIACTIVE -
Banking Interactive Service - along with DISHTV, which will allow viewers to see information
about the Bank's products and services and contact details on their DISHTV screens. : ICICI
Bank and British Airways launch co-branded credit card, which is designed to earn
accelerated reward points to the card holders with every British Airways flight or by spending
on everyday purchases : ICICI Bank Board appoints Mr K. V. Kamath as non-executive
Chairman and Ms Chanda Kochhar as Managing Director & CEO effective May 1, 2009,
while the existing non-executive Chairman Mr N Vaghul retires after completing his term on
April 30, 2009 2009 : ICICI bank ties up with BSNL Cell One for bill payments, it will facilitate
bill payment for BSNL Cell One users through www.icicibank.com across all the 27 circles of
BSNL. : ICICI Bank Limited acting through its Hong Kong Branch (ICICI Bank) signed an
agreement on Export Credit Line totaling up to US$100 million with the Japan Bank for
International Cooperation (JBIC) which constitutes the international wing of Japan Finance
Corporation. : ICICI Bank Limited acting through its Hong Kong Branch (ICICI Bank) signed
a loan agreement with the Export-Import Bank of China (China Exim) for USD 98 million
under the Two- step Buyer Credit (Export Credit) arrangement. ICICI Bank is the first Indian
Bank to have entered into this arrangement with China Exim : ICICI Bank with Singapore
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Airlines launched “ICICI Bank Singapore Airlines Visa Platinum Credit Card”, the Card has
exclusive privileges especially designed for the members.
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Chapter 3
Project ProfileICICI Rural Finance
While these design principles may be consistent with many on-ground configurations
pursued by other institutions, ICICI Bank has chosen the following:
1. ICICI Bank and its Group Companies to be the providers of deposit taking and insurance
services and therefore warehouse all the attendant risks. Since as on June 30, 2012 its
assets are USD 70 billion and its net worth exceeds USD 5 billion and its rating is AAA it is in
a good position to absorb these risks. As on date, ICICI Bank has built a portfolio exceeding
Rs.17,000 crore in rural finance of which Rs.2,800 crore is to low-income families and has a
customer base exceeding 2.8 million clients.
2. Develop a relationship with a network of local institutions (both urban and rural), which
could be cooperative banks, producer cooperatives, non-bank finance companies and not-
for-profit civil society organizations to actually distribute these services. A combination of
these partner institutions, rural hub branches at a cluster level and agents (such as tractor
dealers) appointed by the bank represent the core of its ‘No White Spaces’ strategy that
aims to cover 200 districts by 2012. Under this strategy, the bank plans to have at least one
touch point (collectively referred to as ICICI Bank Grameen Kendras which may belong to
ICICI Bank or to partners) every 3-5 kilometers in rural and semi-urban areas. If the model
succeeds this implies that the number of ICICI Bank Grameen Kendras capable of offering a
reasonably complete suite of financial services would exceed 50,000 (or 1 for every 11 to 13
villages) by March 2011 and the customer base could exceed 28 million by 2012.
3. For the lending business, use the "partnership model" to build incentive compatibility with
the local institution that is delivering this specific financial service. This design draws on the
separation of functions discussion in the preceding section.
The partnership model leverages the local information and cost structure of a local financial
institution in order to unlock the financing ability latent in the commercial banking sector. The
model has been designed with the feature of the local institution sharing risk with the bank
so that there is careful origination and supervision on an ongoing basis.
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4. For deposit taking work with a variety of local institutions to provide these services under
the Business Correspondent model. Business Correspondents are agents identified by the
bank to provide basic banking services such as opening bank accounts, collecting savings
deposits offering insurance products in rural areas. ICICI Bank takes full responsibility for its
correspondent’s business conduct. The bank has already launched this service in Orissa
and Andhra Pradesh.
5. Similarly in insurance, ICICI Bank and its group companies ICICI Prudential Life Insurance
Company and ICICI Lombard General Insurance Company work with local institutions for
design and delivery of insurance products - under the banc assurance model these policies
will be sold at the ICICI Bank Grameen Kendras. Given the peculiar challenges of health
insurance delivery, it has worked with hospital networks and third-party administrators to
coordinate quality of health care as well.
6. In order to facilitate better price discovery and price risk management for farmers, ICICI
Bank co-promoted the National Commodity and Derivates Exchange (NCDEX) jointly with
National Bank for Agriculture and Rural Development (NABARD), the National Stock
Exchange (NSE) and Life Insurance Corporation (LIC). NCDEX along with its affiliate
National Commodities Management Services Limited (NCMSL) is attempting to improve
access to price derivatives for farmers, facilitate commodity based finance through banks,
provide weather stations and improve the warehousing infrastructure.
7. For its work in product development, ICICI Bank has combined its expertise in financial
engineering with the insights generated by its partners and allied research institutions. To
date, ICICI Bank and its group companies have designed and are taking to scale products
including the following:
(a) index-based rainfall insurance
(b) catastrophic health insurance
(c) working capital facilities for agriculture traders
(d) working capital facilities for craftspeople and artisans
(e) take-out finance for start-up local financial institutions
(f) warehouse receipt based financing
(g) credit to low income households through partnership model
(h) savings to low income households through banking correspondent model
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8. It is ICICI Bank’s belief that in order to improve efficiencies in financial intermediation,
especially in the context of small unsecured loans, the role of technology
is crucial. ICICI Bank’s initiatives in technology may be broadly thought of in two categories:
1. Front-end technology investments – this includes issuance of smart cards with unique
identifiers to its clients that help the client track financial services usage data on a real-time
basis as well as sharing of credit information across ICICI Bank’s network. 2. Back-end
technology investments – this relates to investment in creating better core banking systems
among its partner institutions. This enables more efficient data capture and sharing and
reduces margin of error on transactions. ICICI Bank has collaborated with FINO; a company
that seeks to provide front-end (smart card, point-of-sale terminals), back-end (banking
software, performance management and reporting, MIS) and information services (credit
bureau) to community based financial institutions and is now looking to partner with
NABARD, State Bank of India and the Credit Information Bureau of India Limited (CIBIL) to
try and see if FINO could, as in the case of NCDEX, become a provider of these technology
services on a system wide basis particularly to cooperative bank and non-bank finance
companies engaged in the business of lending to and collecting savings from small
borrowers. The participation of the RBI and NABARD in some
of these initiatives that have a systemic benefit would be an accelerator of access to finance.
9. ICICI Bank is conscious that working in rural India and with poor households is fairly
uncharted territory. It has tried to base its growth strategies on systematic results of what
works at household and local economy levels. In order to catalyst high-quality work in this
area, it works closely with research centers that systematically research issues related to
access to finance. These centers are housed within the Institute for Financial Management
and Research (IFMR) and they seek to provide thought leadership to all institutions working
in this field.
Corporate Supply-Chain Links
ICICI Bank's agri-banking has created an interface between rural areas and mainstream
financial service providers to maximize outreach and leverage technology.
This reduces the cost of finance delivery, devises customized solutions and offers complete
supply-chain solutions for the corporate partner.
The Bank acts as a cohesive partner between corporate and rural aggregators (like co-
operatives, MFIs, NGOs). These aggregators have the inherent strength of grass root
relationships in the rural domain.
Services Offered
21
Also, there is a range of financial products for these aggregators and their members,
which have been developed by the bank. Advantages offered to clients
Aids the corporate to establish a supply chain in the rural domain.
Helps market the corporate products in rural areas.
Facilitates economic development and employment in rural areas
Farmer Service Centres
India's rural revolution has come through co-operatives in sectors such as milk and sugar.
The Bank has initiated measures to convert these district level co-operatives into full-fledged
Farmer Service Centers (FSC) by clubbing them with other co-operative societies.
Services offered by the FSCs
One-point service providers to farmers. The Bank provides credit assistance to farmers
utilizing the infrastructure of the FSC.
• The FSC would also help strengthen the supply chain.
• This would include an alliance with a number of crop output companies (multi-
nationals, exporters and retailers) who would assure off-take and prices to farmers.
• On the other end of the spectrum, through its relationship with a number of agri-input
companies, the Bank can also bring in input companies so that the entire input requirement
(fertilizer, seed, pesticide) of farmers could be provided under one roof.
FSC initiatives undertaken by various private sector companies have resulted in substantial
value addition at the farm end. The Bank has played a key role in conceptualizing,
developing and implementing the FSC model with various partners.
The Sugar Sector
ICICI Bank has strong ties with the sugar sector. It finances both the sugarcane farmer and
the sugar industry. We structure products at very competitive rates to meet the needs of the
cane growers and the processors.
For the Sugar Industry
Regular commercial banking facilities are available for the sugar industry. We offer the
industry banking services like working capital finance, term loans, forex assistance, etc.
Know more about Transaction Banking
22
For Farmers
The bank provides Corporate-linked Agricultural loans to farmers associated with sugar
companies. The association may be in form of an agreement to buy agricultural inputs or sell
their produce to the sugar company.
Salient features of the loan
The loan is for 12-18 months depending on the duration of the crop
Loans are disbursed either in the form of agricultural inputs or a combination of
agricultural inputs and cash.
The amount of loan sanctioned would depend on the area of sugarcane cultivation.
Repayment of principal and interest would be in the form of
deductions by the sugar company when it makes cane payments
to farmers.
Eligibility criteria
Land ownership by the farmer
Consistent supply of cane to the sugar company for the last three years.
Registered member of the sugar company.
The farmer should have an assured irrigation facility
The Plantation Sector
The importance of the plantation sector can be understood from the fact that 15% of
agricultural export earnings come from crops like tea, coffee and rubber - although these
industries occupy only one percent of the total plantation area.
Plantations have lengthy gestation period lasting four to five years, which distinguish their
financial needs. Having long-term industry relations with the plantation industry, ICICI Bank
has developed especially structured products.
• Long-term loans for capital expenditure on plantations and
processing facilities.
• Short-term loans for working capital requirement of the
plantations and the processing factories.
• Bills Discounting, Bank Guarantees and Packing Credit facilities
for exporters.
• Cash management service for domestic marketers.
• Real time remittance services for Auction Houses, Brokers and
Exporters
23
• Dealer financing through Bills Discounting for domestic
marketers.
The Seeds Sector
Agricultural inputs are an important part of the Bank's agenda in rural banking. In the
seeds sector, it have the following products for our clients
Organizer of finance
Seed organizers undertake seed production on behalf of the seed company. Short-term
loans are extended for seed cultivation or against stocks held by seed organizers
pending the seed-certification process.
The Bank provides financial assistance to seed organizers on a recommendation and
letter of comfort given by seed companies. The credit limit depends on the value of the
seeds to be procured by the seed company from the seed organizer.
The seed company has to make payments directly to the bank on the due date from
payments due to the organizer, and this arrangement is to be confirmed by the seed
company.
Regular working-capital financing
The working capital required for seed companies is seasonal and varies depending
upon the crop portfolio and seasonality. Working capital assessment for seed
companies is done by the cash-flow method. The regular working capital assistance
may be in the form of cash credit or working capital demand loan. Any fluctuations in the
working capital could be structured as cash credit. The balance could be structured as a
working capital demand loan, which is a revolving credit for a fixed tenor with a
minimum stipulated withdrawal.
24
Short-term loans for peak working capital requirements
Short-term loans for tenures of three to six months to support peak season
requirements can be given during the Kharif and Rabi seasons. The loans are for a
fixed period and are to be repaid at the end of the season. This facility can be availed of
by the seed company to make farmer payments during peak seasons.
The Fertilizer Sector
Fertilizer companies require high working capital due to the seasonal nature of their
sales and the long credit period given to farmers. The industry is characterized by an
established distributor and dealer network, which forms the backbone of the dispersed
sales network. We have developed products in conjunction with fertilizer companies to
suit the needs of their channel partners.
Dealer financing
This product provides short-term finance to dealers of fertilizer companies to make
purchases of products from companies. The finance is to meet the requirements for the
inventory-holding period of the dealer, i.e. typically up to 90 days. Financing to the
dealers would be made on one of the following bases
• Financial recourse in the nature of a Corporate Guarantee for the
overall arrangement
• Non-Financial Recourse in the nature of Letter of Comfort for the overall
arrangement (Stop supply, etc.).
Securitization of Receivables for companies
Many fertilizer companies provide 90-day credit to dealers. These book debts can be
securitized to provide liquidity to a company. The pricing and structure of the transaction
is worked out on a case-to-case basis.
Infrastructure
The Bank has a strong presence in Agri-infrastructure financing. Areas include financing
of various agricultural projects in the agri- infrastructure sector like:
• Warehouses / God owns
• Silos
• Cold Chains
25
• Refrigerated Transport Infrastructure
• Development of Market Yards
• Agri-Business Clinics
• Value Addition Farm Centers
• Food Parks
• Agri-Export Zones, etc
We are actively involved in conceptualizing and structuring innovative and customized
financial products for infrastructure projects, based on the projects' arrangement with
private and public enterprises. The Bank jointly works with various warehousing
corporations, private infrastructure participants, government bodies and corporate
across the country.
Market Federations
The Bank works with State-level Market Federations (Markfeds) at various platforms
and has several products and services designed for them.
Working Capital
Working Capital facilities designed to take care of the day-to-day business requirements
of the organization.
In accord with the domestic trading business of MARKFED, the Bank provides cash
credit and other customized short-term products
Short-term financing of Fertilizer Distribution
Distribution of fertilizers is a core function of each Markfed.
Strong demand for fertilizers arises at the onset of the Rabi and Kharif seasons, which
coincide with the requirement of funds.
We structure this short-term fund requirement at competitive rates. It replaces the regular
and expensive cash-credit limits.
Long-term Fund Requirement for Expansions/ New Projects
The Bank provides medium-term and long-term funds for new projects and/or expansions.
We structure the loan so as to reduce the risk and transfer the benefit to the client.
Converting the Marked structure into Farmer Service Centers
Each State Marketing Federation has a wide distribution network at the district level. This
26
is called "The District Co-operative Marketing Society" and "The Primary Agricultural
Credit Society (PACS)" network. These are made use of in distributing agricultural inputs
to farmers.
The Bank helps convert them into Farmer Service Centres to offer a single window service
to farmers
Cash Collection and Disbursement
Regional offices of MARKFED have collections from and payments to their district level
co-operatives.
We provide a solution that would take care of both cash collection and disbursement.
Our solution will provide the following benefits:
• Reduced time for cash collection and disbursement
• Provide instantaneous funds transfer from/ to district level
branches and the head office.
• Customized MIS reports, giving the status of cash collected and
disbursed from each centre, and various other customized
reports.
• Our network of 500+ branches and extension counters
provides a technologically advanced network at numerous towns.
The Food Processing Sector
Food processing is one of the fastest growing sectors of the Indian economy. The Bank
works with various companies, both established and new, in this sector.
The products offered are:
Working Capital Finance
Working capital finance takes care of the daily business requirements of the organization.
The bank provides pre-/ post- shipment credits, cash credits and a bill purchasing/
discounting facility based on the requirements of the company.
Term Loans
The Bank gives loans of various tenures according the requirement of the company.
We provide short-term funds to take care of any seasonal requirement and medium-term
and long-term funds for new projects, expansions and upgrading of plants.
Agricultural Commercialization and Enterprise Program
These are USAID funds managed by the Bank. The main purpose is to improve the investment
environment for private agri-business in post-farm horticulture.
27
The focus is primarily on promoting agri-business innovations and diversity. Activities covered are
fresh and processed fruit and vegetables, herbal products, spices, fruit- and vegetable-based
processed foods, flowers and foliage.
Rural Educational Institutions
Education is the cornerstone of development. ICICI Bank provides loans to rural
educational for investment in infrastructure with an objective to increase their enrolment of
students and
provide better facilities.
The product caters to the need of privately run educational institutions/ trust/ societies for
addition or expansion in infrastructure like adding new class rooms, lab facilities,
residential facilities for students/ teachers, transportation, establishing a new school/
college etc by an existing institution.
No White Spaces
In order to scale up our outreach to the under-served population in rural areas, we have
adopted the 'No White Spaces' (NWS) strategy for our retail business.
We intend to cover the selected areas in rural India so that there is an ICICI Bank
customer touch-point within a radius of 10km of a customer -- thus leaving 'no white space'
in those locations.
This strategy aims to bring holistic banking to the doorstep of our rural customer in the
following manner:
• Developing and providing products customized to different
customer segments - agri- trader, processors, farmers and
entrepreneurs in semi-urban and rural areas.
• Channels customized to these customer segments.
• Agri-solutions towards all stages of the agri-value chain
By 2008, the Bank would extend its initiatives to 450 districts.
In addition to its branch infrastructure, the Bank has evolved a network of non-branch channels
to penetrate into rural areas not yet covered
28
3. PRODUCT OFFERED BY ICICI BANK TO RURAL PEOPLE
1. RURAL SAVINGS ACCOUNT.
You can approach us through your local Business Correspondent. Rural Savings Account is
a Zero balance account and hence there is no minimum balance requirement. Interest
earned on your Rural Savings Account balance shall be credited to your account on a half
yearly basis in the months of September and March. You can change the nominee(s) by
making a declaration to that effect, in the appropriate form, which is available with the
Business Correspondent.
Features
The Rural Savings Account will be available through Business Correspondents.
The account is zero balance with no initial deposit.
The Customer is provided with an E-passbook.
All transactions in the accounts are done only after a biometric authentication.
Nomination facility is available.
Interest is payable half-yearly.
29
Chapter 4Research Mythology
TITLE OF THE STUDY
The title of the study is “Rural finance provided by ICICI bank”
DURATION OF THE STUDY
I have been assigned a project on the “Rural finance provided by ICICI bank” as a part of our course curriculum.The duratiion of the research was 30 Days.
OBJECTIVE OF THE STUDY
"Creating awareness about ICICI Rural Loans and to know the people behavior
towards ICICI and to determine the market potential in Rural areas."
TYPE OF RESEARCH
It refers to the search for knowledge. It can be defined as scientific and systematic
search for pertinent information on a specific topic. It is careful investigation or
inquiry through search for new facts of any branch of knowledge.
Research plays an important role in the project work. The results of the
project are completely based upon the research of the facts and figures collected
through the different ways of research. That is why it is also called a movement from
known to unknown. Research is the original contribution to the existing stock of
knowledge. This section includes the overall research design, the sampling
procedure, the data collection method, the field method, and analysis and
procedure.
RESEARCH is a scientific and systematic search for pertinent information on a
specific topic. It is also said to be the pursuit of truth with the help of study,
30
observation, comparison and experiment. research methodology is a way to
systematically solve the research problem.
Research design: -
A research design is a framework or blueprint for conducting the marketing
research project. It details the procedures necessary for obtaining the required information,
and its purpose is to design a study that will test the hypotheses of interest, determine
possible answers to the research questions, and provide the information needed for decision
making. Conducting exploratory research, precisely defining the variables, and designing
appropriate scales to measure them are also a part of the research design. The issue of
how the data should be obtained from the respondents (for example, by conducting a survey
or an experiment) must be addressed. It is also necessary to design a questionnaire and a
sampling plan to select respondents for the study.
Research can classify in one of three categories:
Exploratory research
Descriptive research
Causal research
These classifications are made according to the objective of the research. In some cases
the research will fall into one of these categories, but in other cases different phases of the
same research project will fall into different categories.
Exploratory research has the goal of formulating problems more precisely, clarifying
concepts, gathering explanations, gaining insight, eliminating impractical ideas, and
forming hypotheses. Exploratory research can be performed using a literature
search, surveying certain people about their experiences, focus groups, and case
studies. When surveying people, exploratory research studies would not try to
acquire a representative sample, but rather, seek to interview those who are
knowledgeable and who might be able to provide insight concerning the relationship
among variables. Case studies can include contrasting situations or benchmarking
against an organization known for its excellence. Exploratory research may develop
hypotheses, but it does not seek to test them. Exploratory research is characterized
by its flexibility.
31
Descriptive research is more rigid than exploratory research and seeks to describe
users of a product, determine the proportion of the population that uses a product, or
predict future demand for a product. As opposed to exploratory research, descriptive
research should define questions, people surveyed, and the method of analysis prior
to beginning data collection. In other words, the who, what, where, when, why, and
how aspects of the research should be defined. Such preparation allows one the
opportunity to make any required changes before the costly process of data
collection has begun.
There are two basic types of descriptive research: longitudinal studies and
cross-sectional studies. Longitudinal studies are time series analyses that make repeated
measurements of the same individuals, thus allowing one to monitor behavior such as
brand-switching. However, longitudinal studies are not necessarily representative since
many people may refuse to participate because of the commitment required. Cross-
sectional studies sample the population to make measurements at a specific point in time. A
special type of cross-sectional analysis is a cohort analysis, which tracks an aggregate of
individuals who experience the same event within the same time interval over time. Cohort
analyses are useful for long-term forecasting of product demand.
Here I use descriptive type of research design
SAMPLE SIZE AND METHOD OF SELECTING SAMPLE
Sample size: -
Sampling is simply the process of learning about population on the basis of
learning about population on the basis of a sample drawn from it. The primary objective of
the sampling survey is to obtain accurate and reliable information about universe with
minimum cost, time and energy and to set out the limits of accuracy of such estimates.
For sampling I have chosen non-probability sampling technique.
Non probability sampling is based on the personal judgment. Under this
method a desired number of sample units are selected deliberately depending upon the
object of the enquiry so that only the important items representing the true characteristics of
the population are included in the sample.
32
Non-probability sampling is of two types:- purposive sampling quota
convenience sampling
I have chosen convenience sampling under non-probability sampling
technique keeping all constrains in mind a sample size of 100 people is selected from
Jaipur. This sample contains a mix type of customer (Servicemen, student and
businessmen) so as to remove any type be biased results. Research for the Importance of
the Brand image of the company’s which is kept in mind by customers while buying any
product. It was very difficult to get the actual feedback from the customer. That’s why I have
designed a Questionnaire for the customers. As customer is king of the market. Today every
product is made according to desire or need of the company. And customers have varied
taste. Only consumers’ satisfaction can predict the actual scenario of the market.
Method of selecting sample: - Two methods of collecting data used for this research are as
follows: -
PRIMARY DATA – Data is collected primarily through personal contact,
meeting, interview and questionnaire with the concerned authority of the organization
and respondents’.
SECONDARY DATA – Data are collected through secondary modes such as
various published data, reports, related books and websites.
SCOPE OF STUDY
The scope of the project during the research and study will be focused on the following
parameters:
33
To know consume preference regarding Rural Finance
To know what features and services attract the customers
Effect of brand image (ICICI)in buying behavior
Impact of advertisement in buying behavior
Impact of celebrity endorsement in buying behavior
Effect of family &friends in buying behavior (Focus group)
LIMITATION OF STUDY
1. Rural area is scattered.
2. Language barrier.
3. Level of literacy was less.
4. Proper sources are not available.
5. People do not belief on outsiders.
6. People are not aware about ICICI bank.
7. Lack of advertising.
34
DATA ANALYSIS AND INTERPRETATION
GROWTH OF ICICI BANK
Performance Review – Quarter and year ended March 31, 2013
• 29% year-on-year increase in standalone profit after tax to 8,325 crore (US$ 1.5 billion) for
the year ended March 31, 2013 (FY2013) from ` 6,465 crore (US$ 1.2 billion) for the year
ended March 31, 2012 (FY2012)
• 21% year-on-year increase in standalone profit after tax to 2,304 crore (US$ 424 million)
for the quarter ended March 31, 2013 (Q4-2013) from ` 1,902 crore (US$ 350 million) for the
quarter ended March 31, 2012 (Q4-2012)
• 26% year-on-year increase in consolidated profit after tax to 9,604 crore (US$ 1.8 billion)
for FY2013 from ` 7,643 crore (US$ 1.4 billion) for FY2012
• Consolidated return on equity of 14.7% for FY2013 compared to 13.0% for FY2012
• 38 basis points improvement in full year net interest margin to 3.11% for FY2013
• Net non-performing asset ratio at 0.64% at March 31, 2013
• Strong capital adequacy ratio of 18.74% and Tier-1 capital adequacy of 12.80%
• Dividend of ` 20.00 per share proposed
The Board of Directors of ICICI Bank Limited (NYSE: IBN) at its meeting held at Mumbai
today, approved the audited accounts of the Bank for the year ended March 31, 2013.
Summary Balance Sheet
Rs. croreAt
March31, 2012
December31, 2012
March31, 2013
Capital and LiabilitiesCapital 1153 1153 1154Employee stock 2 4 4
35
options outstandingReserves and surplus
59250 65961 65548
Deposits 255500 286418 292614Borrowings (includes subordinated debt)1
140165 147149 145341
Other liabilities 32999 26654 32134Total Capital and Liabilities
489069 527339 536795
AssetsCash and balances with Reserve Bank of India
20461 21778 19053
Balances with banks and money at call and short notice
15768 19351 22365
Investments 159660 166842 171394Advances 253728 286766 290249
Fixed assets 4615 4619 4647Other assets 34937 27983 29087Total Assets 489069 527339 536795
1. Borrowings include preference share capital of ` 350 crore. 2. Prior period figures have been regrouped/re-arranged where necessary.
All financial and other information in this press release, other than financial and other This release does not constitute an offer of securities.
For further press queries please call Sujit Ganguli at 91-22-2653 8525 or email [email protected].
For investor queries please call Rakesh Mookim at 91-22-2653 6114 or email [email protected].
36
Chapter 5Fact & Finding
1. No of people in a sample is 100 out of them 21% are between age of 25-35, 27%
are between 35-45 , 32% are between 45-55 and rest are of above age of 55.
2. Regarding the profession 34% people are doing the farming work. And after them
25% & 12% people are doing the business of dairy and poultry farming respectively.
21% people are Govt employees and rest 8% belong to other professions.
3. The above graph is showing the income level of people the highest no of population
41% are earning more than 200000rs per annum.
4. After the independence still the highest no of population (32%) is taking loan from
money lenders. After them highest no loan are taken 26% from Govt banks. After
them Gramine banks come.
5. Purpose of loan is still the tractor which is taking the highest place 37%. Seeds and
dairy equipment comes after them at 24% & 16% respectively. And others reasons
stand on 23% which includes home, motorcycle, jeeps, mini vans etc.
6. 67% people do still not believe in private banks and they are not willing to take loan
from them.
7. The highest No. of people 32% are take loan for more than 5 years. After time
interval for which people took loan is 3-5 years. That is 31% of respondents. Rest
are of 23% and 14% are took loan for 2-3 and 1-2 years respectively.
8. Before taking loan people 34% people look in to brand and 25% look for service.21%
looks for interest rate and rest people look into other features.
9. People are still preferring the SBI as there main bank to take loan.10. 83% people still not aware about ICICI rural loans.
11. People who are aware about ICICI rural loans out of them 21% will get knowledge
from friends.
12. Lack of advertisement is main causes why people are not aware about ICIC loans.
37
SWOT ANALYSIS
A. STRENGTHS
ICICI Bank has excellent brand awareness and high quality image.
ICICI Bank has excellent market coverage all over the world and covers a
lot on the globe.
The company stands No. 1 in infrastructure.
Advanced Technology
Providing innovative products & Services
Vast pool of skilled manpower
B. WEAKNESS
ICICI Bank's product line is not clearly positioned compared with HDFC and
IDBI
It needs a unique selling proposition.
Too many competitors
High cost of funds
Low international credit ratings and Bureaucratic procedures
C. OPPORTUNITIES
Consumers are showing increased interest in some good schemes of ICICI
Bank.
Company develops a device for measuring illumination level.
Liberalization of the economy
Growing banking sector
Use of foreign earnings for investment in foreign activities
ICICI uses technology to provide value-added service to its customers. For
ICICI; technology is an integral part of their business
38
D. THREATS
Expansion always brings high risk with itself so that is to be checked and
expected returns are not guaranteed.
Major prolonged economic depression in financial expansion in rural areas.
Domestic political dominance
ICICI bank has a tough competition to be faced by various financial
institutions Among its top competitors are HDFC Bank, Bank of Baroda,
Bank of India Oriental Bank of Commerce etc.,
Competitors superiority in services and operations
39
CONCLUSION
While these design principles may be consistent with many on-ground configurations
pursued by other institutions, ICICI Bank has chosen the following:
1. ICICI Bank and its Group Companies to be the providers of deposit taking and insurance
services and therefore warehouse all the attendant risks. Since as on June 30, 2012 its
assets are USD 70 billion and its net worth exceeds USD 5 billion and its rating is AAA it is
in a good position to absorb these risks. As on date, ICICI Bank has built a portfolio
exceeding Rs.17, 000 crore in rural finance of which Rs.2, 800 crore is to low-income
families and has a customer base exceeding 2.8 million clients.
2. Develop a relationship with a network of local institutions (both urban and rural), which
could be cooperative banks, producer cooperatives, non-bank finance companies and not-
for-profit civil society organizations to actually distribute these services. A combination of
these partner institutions, rural hub branches at a cluster level and agents (such as tractor
dealers) appointed by the bank represent the core of its ‘No White Spaces’ strategy that
aims to cover 200 districts by 2012. Under this strategy, the bank plans to have at least one
touch point (collectively referred to as ICICI Bank Grameen Kendras which may belong to
ICICI Bank or to partners) every 3-5 kilometers in rural and semi-urban areas. If the model
succeeds this implies that the number of ICICI Bank Grameen Kendras capable of offering a
reasonably complete suite of financial services would exceed 50,000 (or 1 for every 11 to 13
villages) by March 2012 and the customer base could exceed 28 million by 2012.
3. For the lending business, use the "partnership model" to build incentive compatibility with
the local institution that is delivering this specific financial service. This design draws on the
separation of functions discussion in the preceding section.
The partnership model leverages the local information and cost structure of a local financial
institution in order to unlock the financing ability latent in the commercial banking sector. The
model has been designed with the feature of the local institution sharing risk with the bank
so that there is careful origination and supervision on an ongoing basis.
4. For deposit taking work with a variety of local institutions to provide these services under
the Business Correspondent model. Business Correspondents are agents identified by the
bank to provide basic banking services such as opening bank accounts, collecting savings
40
deposits offering insurance products in rural areas. ICICI Bank takes full responsibility for its
correspondent’s business conduct. The bank has already launched this service in Orissa
and Andhra Pradesh.
5. In order to facilitate better price discovery and price risk management for farmers, ICICI
Bank co-promoted the National Commodity and Derivates Exchange (NCDEX) jointly with
National Bank for Agriculture and Rural Development (NABARD), the National Stock
Exchange (NSE) and Life Insurance Corporation (LIC). NCDEX along with its affiliate
National Commodities Management Services Limited (NCMSL) is attempting to improve
access to price derivatives for farmers, facilitate commodity based finance through banks,
provide weather stations and improve the warehousing infrastructure.
6. For its work in product development, ICICI Bank has combined its expertise in financial
engineering with the insights generated by its partners and allied research institutions. To
date, ICICI Bank and its group companies have designed and are taking to scale products
including the following:
(a) index-based rainfall insurance
(b) Catastrophic health insurance
(c) Working capital facilities for agriculture traders
(d) Working capital facilities for craftspeople and artisans
(e) Take-out finance for start-up local financial institutions
(f) Warehouse receipt based financing
(g) Credit to low income households through partnership model
(h) Savings to low income households through banking correspondent model
41
SUGGESTIONS AND RECOMMENDATIONS
Firstly I could observe that the general level of awareness among the people regarding
ICICI RURAL FINANCE brand is low, therefore the brand should focus on advertising both
at the central as well as local Level.
We know that the products and services offered by the company are the best but more or
less similar are offered by other company as well, so promotional campaigns are must in
this era of stringent competition.
We know that in this world of intense competition everyone is trying to prove itself best its
respective field therefore we can conclude that there is always an edge of improvement and
hence the brand should work on that. Establish and coordinate business relation with big
corporate houses across the country .ICICI can improve upon its efficiency by not changing
its staff frequently. By doing this company can continue to create, maintain and grow strong
relationship with its existing customers. Idea behind this is that staff which is already working
for company is well acquainted with the nature and wants of the existing customers.
The rural finance concept must be specifically promoted. The general perception of
rural finance has to change in India before progress is made in this field. People
should not be afraid to invest money in insurance and must use it as an effective tool
for tax planning and long term savings.
ICICI RURAL FINANCE could tap the rural markets with cheaper products and
smaller policy terms. There are individuals who are willing to pay small amounts as
interest rates but the plans do not accept interest below a certain amount. This was a
general conclusion drawn during prospecting clients.
ICICI should chalk out some programs to create general awareness regarding its
presence and various services of the company.
Today is the era of competition. In order to increase the company network (In terms
of clients and business volumes) an aggressive approach is required.
The Bank should recruit more number of marketing personnel so that they can cover the
whole of the city and nearest villages of Jaipur. Personal marketing can be one of the
methods of modes of taking people into confidence.
ICICI should try to make its promotional activities more effectively.
42
It can use industrial magazine media as an advertising tool for approaching is market
segment.
Try to reduce hidden charges so as to satisfy the customers more effectively.
It should regularly conduct market research and surveys for knowing customers
better and for facing threat from competitors.
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BIBLIOGRAPHY
Books:
Barley, Fundamental of investment, pearson third edition
Haugen, Morden investment theory, pearson sixth edition
Mathew,M J, Fundamental of insurance, Tmh second edition
Web sites:
www.cgap.org
www.icici.com
www.rbi.org
www.indiacore.com
www.icicibank.com
Magazines:
Business Today
Business India
Economic Times
Material provided by the company
Business World
Search Engines:
www.google.com
www.yahoo.com
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