As a storm of rumours – that the global financial meltdown had caused a liquidity crunch in India’s largest private bank – raged around ICICI Bank, it sent an SMS to depositors on Saturday, assuring them that their money was secure.
“Your deposits with ICICI Bank are safe. Your bank is well capitalised, with good liquidity. Please do not listen to baseless rumours. Happy festive season,” read the message.
Call it “micro assurance”.
A senior ICICI official told Hindustan Times: “It’s a simple confidence-building measure to reassure investors.”
Depositors, many of whom had been on edge as the rumours gained ground, had a mixed response.
“I think my money is safe. Also, I have a home loan with the bank, so I am adequately leveraged,” said an investor in Bhopal, who works as a consultant on process equipment.
Another investor, who has over Rs 1 lakh in his account, said: “I think my money is safe as, ultimately, the government will protect depositors.”
Others were concerned and were turning to experts. “I have been receiving calls, even from well-informed investors, about their deposits with private sector banks. There is no panic yet, though,” said Surya Bhatia, a Delhi-based financial planner.
Amit Pandit, a Mumbai-based financial planner, added: “People are not panicking, but I am getting calls from clients asking whether to continue holding deposits with private sector banks.”
This is not the bank’s first firefighting measure. The Reserve Bank of India and Finance Minister P Chidambaram had assured depositors that the bank had enough money and was well-placed to tide over the crisis.
© HT Media
October 13, 2008
Dear Sir/ Madam,
We greatly value your relationship with us. In the context of the developments in the international financial markets, we thought it pertinent to bring to you our perspective of the prevailing situation.
We would like to bring to your attention that the Indian banking system is well regulated and significantly insulated from global developments. This is because it is mandatory for all Indian Scheduled Commercial Banks to retain 34% of the deposit base in the form of Government Securities (SLR) and cash with RBI (CRR). Besides, sound policies of RBI have ensured prudent credit practices in the Indian Banking system.
ICICI Bank is already compliant with the BASLE II requirement in respect of risk management practices and capital adequacy. At 13.4%, ICICI Bank has one of the highest capital adequacy ratios in the Indian banking industry. Last year, ICICI Bank raised Rs. 20,000 crores (US $ 5 billion) of equity capital, which almost doubled our equity capital base. We have a net worth of over Rs. 47,000 crores (US$ 10 billion), again one of the highest in the banking industry in India We have consolidated total assets of over Rs. 4,84,000 crores (over US $ 105 billion), which is diversified across a wide range of asset classes across retail, wholesale and rural banking.
ICICI Bank is amongst the most profitable banks in India. In FY 08, ICICI Bank made a profit of Rs. 4,158 crores (US$ 900 million).
ICICI Bank has the highest credit ratings in the Indian financial sector. We have AAA ratings for our instruments, such as senior bonds, subordinated bonds, and deposits. We have the highest foreign currency bond ratings assigned to any Indian bank from Moodys and S&P.
We continue to invest in growth, indicating our confidence in the opportunities in the Indian market. In 07-08, ICICI Bank added 650 new branches, taking the total strength to over 1400 branches.
We thank you for reposing trust in us over the years. We look forward to setting new benchmarks in service levels in India and to create a bank that you will continue to be proud of.
As a testimony to the above, please find below the clarification given by Reserve Bank of India.
Date : 30 Sep 2008
RBI Statement on ICICI Bank’s Financial Position
There are reports in some sections of the media that based on rumours regarding the financial strength of ICICI Bank, depositors are withdrawing cash at its ATMs and branches in some locations.
It is clarified that the ICICI Bank has sufficient liquidity, including in its current account with the Reserve Bank of India, to meet the requirements of its depositors. The Reserve Bank of India is monitoring the developments and has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers at its branches/ ATMs.
The ICICI Bank and its subsidiary banks abroad are well capitalised.
Alpana Killawala
Chief General Manager
Press Release : 2008-2009/412
Sincerely,
Nazia Sayeed
Office of Head Service Quality
ICICI Bank Ltd.