merger of icici and icici bank

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MERGER OF ICICI

& ICICI BANK

PREPARED BY:

SALONI SHARMA

ROLL NO. 57


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Introduction to sector- banking sector

The banking sector plays an important role in the growth and development

of an economy.

The banks provide funds to various institutions which infinance other sectors of economy. India too relies largely on the banking

sector for mobilization of deposits as well as for accelerated growth of

deposits. This sector has helped in the development of rural as well as that of

backward areas by providing assistance in agriculture industry and

international trade. The banking sector in India has evolved over time

especially after globalization.The opening up of economy in 1991 paved the

way for the next revolution in Indian Banking with the emergence of private

banks. This lead to competition and customer satisfaction. The newly

formed private banks used technology to grow in turn benefitting the

customers and the overall economy of the country.

Source- http://www.mbaknol.com/business-finance/organizational-structure-

and-role-of-banks-in-india

Introduction to ICICI

The Industrial Credit and Investment Corporation of India or ICICI was establishedon 5th January, 1955 to assist industrial units in the private sector. It wassponsored by the World Bank,the Government of India and representatives ofIndian industry.

Vision:The primary vision of ICICI was to assist industrial units in the private-sector. Themain objectives of ICICI are as follows:

To assist in the creation, expansion and modernization at industrial units inthe private sector.


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To encourage the inflow and participation of foreign capital in the privatesector industrial units.

To expand the investment market in India.

Functions: To sponsor and underwrite new issues. To provide medium and long-term loans to industrial units in the private

sector. to guarantee loans taken from other private sources. to furnish managerial, technical and administrative advice to industrial units

by the private sector. To make funds available for reinvestment. To advance loans in foreign currency towards the cost of imported capital

equipments. To extend guarantee for deferred payments. To purchase the shares and debentures of new companies.

Source- http://www.jagranjosh.com/general-knowledge/industrial-credit-and-

investment-corporation-of-india-limited-1292058489-1

The initial capital:

ICICI started with an initial capital of 25 crore rupees which grew to 100 crore inat the end of June, 1986. Various sources of financial resources of the Corporationare Indian banks, insurance companies and foreign institutions, including the worldBank, and the public. The government and the IDBI have also provided loans tothe Corporation.

Financial Assistance:

The performance of the ICICI in the field of financial assistance provided to theindustrial concerns has been satisfactory. Over the years, the assistancesanctioned by ICICI has grown from Rs.14.8 crore in 1961-62 to Rs. 43.0crore in 1970-71 and Rs. 36229 crore in 2001-02.
http://www.jagranjosh.com/general-knowledge/industrial-credit-and-investment-corporation-of-india-limited-1292058489-1http://www.jagranjosh.com/general-knowledge/industrial-credit-and-investment-corporation-of-india-limited-1292058489-1http://www.jagranjosh.com/general-knowledge/industrial-credit-and-investment-corporation-of-india-limited-1292058489-1http://www.jagranjosh.com/general-knowledge/industrial-credit-and-investment-corporation-of-india-limited-1292058489-1


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Functioning:

ICICI provided rupee loans, foreign currency loans, guarantees,underwriting of shares and debentures, and direct subscription to shares and

debentures. The assistance was initially focused to private sector which later expanded

to public, joint and cooperative sectors. Chemicals, petrochemicals, heavy engineering and metal product are the

main four categories of industries accounted for more than half of the totalassistance.

Assistance was also provided to the small scale industries and the projectsin backward areas.

In 1977, the ICICI promoted the Housing Development Finance

Corporation Ltd. to grant term loans for the construction and purchase ofresidential houses. Since 1983, the ICICI has been providing leasing assistance for

computerization, modernization and replacement schemes; for energyconservatism; for export orientation; for pollution controller balancing andexpansion: etc

The ICICI did not contribute much to reduce regional disparities. Aboutthree-fifth of the total assistance given by the ICICI was received by theadvanced states of Maharashtra, Gujarat and Tamil Nadu.

With effect from April 1, 1996, Shipping Credit and Investment company of

India ltd, (SCICI) was merged with ICICI.

Source - http://www.preservearticles.com/201012291884/icici-industrial-

credit-and-investment-corporation-of-india.html


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ICICI BANK

HISTORY:

The economic reforms initiated by Narsimha Rao government begun to show up

in 1990s. ICICI transformed its business from a development financial institution

offering only project finance to a diversified financial services group offering a

wide variety of products and services, both directly and through a number of

subsidiaries and affiliates. Thus ICICI bank came into existence in 1994. Two

years later, in 1996, K.V. Kamath joined ICICI bank as the managing director and

CEO.

The pre merger scenario: In 1997, ICICI bank became the first bank to go online. It headed to offer a

multichannel delivery system to customers with a starting of 5000 online

customers.

In 1999, ICICI become the first Indian company and the first bank or

financial institution from non-Japan Asia to be listed on the NYSE. The next

year, ICICI Bank followed suit and its ADRs made a debut at $14 on the

NYSE, at a premium of over 27% over its issue price of $11.

During 1997-2001, ICICI bank acquired SCICI Ltd, ITC Classic Finance,

which had a strong retail base in Eastern India and a strong base in the West.

It even acquired Bank of Madhura. At that time, the revenues of ICICI bank

were around 25 billion rupees and that of Bank of Madhura were 1 billion

rupees.

In 2002, the board of directors of ICICI and ICICI bank approved their

merger.

Source - http://www.rediff.com/money/2007/jun/09icici.htm


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The merger:To keep pace with the competitive scenario of banking sector, the managements of

ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank

would be the best option for both entities to create the synergy and optimal legal

structure for the ICICI group's universal banking strategy. After this merger, the

ICICI group's financing and banking operations, both wholesale and retail, became

integrated as a single entity.

The deal:

The merger was approved by shareholders of ICICI and ICICI Bank in January

2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High

Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. .

After this merger, the ICICI group's financing and banking operations, both

wholesale and retail, became integrated as a single entity. It was a reverse merger,

a very rare type wherein a parent company merged with its subsidiary and adopted

the later's identity.

Vision of ICICI-ICICI bank (2010) :To be the leading provider of financial services in India and a major global bank.

Mission:

be the banker of first choice for our customers by delivering high quality,world-class products and services.

expand the frontiers of our business globally. play a proactive role in the full realisation of Indias potential. maintain a healthy financial profile and diversify our earnings across

businesses and geographies. maintain high standards of governance and ethics.


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contribute positively to the various countries and markets in which weoperate.

create value for our stakeholders.

Benefits: ICICI bank emerged as the largest private bank in India. ATMs were

introduced across the country in accordance with the technologicaladvances. This helped to increase the growth rate considerably.

Soon after the merger, ICICI set up offices in New York and Londonin 2002.

The very next year it established subsidiaries in Canada and alsojoined hands with Lloyds TSB in the UK. Offshore banking unitswere set up in Singapore, offices in Dubai and Shanghai.

It is became the second largest bank in terms of assets. The bank hastotal assets of about USD 100 billion (at the end of March 2008),over 1,399 branches, 22 regional offices and 49 regional processingcenters, about 4,485 ATMs (at the end of September 2008), and 24million customers (at the end of July 2007).

Source - http://www.icicigroupcompanies.com/corporate_governance.html

http://goindocal.com/business-%BB-corporate-icici-bank-a-typical-case-of-reverse-mergergo-709.htm

Conclusion:

The merger of ICICI and ICICI bank has been proved to be fruitful and has helped

the combined entity to reach new heights. It has expanded globally and has the

largest international balance sheet among all the Indian banks.
http://www.icicigroupcompanies.com/corporate_governance.htmlhttp://www.icicigroupcompanies.com/corporate_governance.html


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merger of icici and icici bank

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