The new ICICI CEO is done with the hard charging, aggressive bank everybody knows
The 11th floor conference room in the South Tower at ICICI Bank’s headquarters has witnessed many stormy meetings. Like the one in progress that warm April day in 2008. K.V. Kamath’s A-team — Chanda Kochhar, V. Vaidyanathan, Madhabi Puri-Buch, K. Ramkumar and Sonjoy Chatterjee — had assembled there, a day before presenting the bank’s budget to the board. Kamath had told them they ought to focus on reining in costs.
Then there was this period when Kamath told a whole generation of Indians why visiting a bank doesn’t make sense. Use ATMs instead, he urged. And to sell a credit-starved country all that a modern bank could offer, he recruited an army of direct selling agents (DSA). It was his way of getting around infrastructural deficiencies that could otherwise hamper ICICI’s growth plans.
Since the time Kochhar has taken over though, the emphasis at ICICI is to get people into branches. Folks at the bank used to working at its giant headquarters in Bandra Kurla Complex in Mumbai are being redeployed to run branches. And 70 percent of ICICI’s DSA operations have been wound up. By next year, the bank may no longer rely on any outsourcing for business acquisition and collections.
Why, you wonder, is Kamath’s protégé talking in a tongue different to his? Equally puzzling, why does Kamath approve of where she is taking the bank to? What changed?
Even as these changes were unfolding, inflation was moving up. In turn, it compelled the central bank to tighten interest rates. Through all of 2007 and 2008, the RBI pushed up interest rates repeatedly. For ICICI, that proved disastrous and exposed another chink in its armour — an over reliance on higher cost bulk deposits. Traditionally, most commercial banks monitor a ratio called CASA. This indicates the percentage of current and savings accounts to total deposits. A higher CASA ratio means the bank has access to cheaper funds. This allows it to earn higher margins when it lends.
Kamath knew his successor was in for a tough haul and would need the time to settle down and gain the confidence of the team. Which is perhaps why, two months before he stepped down, he made sure he came in a half hour late to work and left an hour earlier in the evening. And immediately after he stepped down as CEO, he took six weeks off from the bank to spend time with his daughter and grand children in Seattle. It was his way of providing space to the new leader.
In any case, he had primed Kochhar for the job well in advance. That nod put Kochhar’s plan to hold operational expenses at previous year’s levels firmly in the saddle and stoked a chain of events over the next couple of months.
(This story appears in the 14 August, 2009 issue of Forbes India. To visit our Archives, click here.)