K V Kamath is credited with perhaps the most successful makeover of a development bank from India’s pre-reform days into India’s largest private bank. Mr Kamath sees a bright future for Indian banks because of a pick-up in investment demand from restructured Indian companies and the demand for loans from infrastructure projects. “Over the last four to five years, we were firing on just one cylinder – retail loans. Now, there are three key drivers to growth. We intend to keep our market share at around 30%,” he declares.
Eight years ago, Mr Kamath, who trained as a mechanical engineer, returned from an assignment with the Asian Development Bank to take charge at ICICI, the place where he began his career. He led the merger between ICICI and its commercial banking arm, and forged joint ventures with the UK’s Prudential in life insurance and asset management and Lombard in general insurance. “We will be in every area in financial services because that is what our customers want,” says Mr Kamath.
Mr Kamath is a great believer in technology and unlike other banks, ICICI has no chief investment officer because Mr Kamath makes those decisions. ICICI Bank pioneered internet banking and online securities trading in the Indian market. The key challenge for an Indian bank, he says, is to service a large number of very small transactions, and to do it profitably. “We are adept at using technology to deliver services at a fraction of what it costs globally. Our operating expenses are less than one-tenth of a global bank of similar size,” he says. ICICI has 10 million customers, up from 100,000 just five years ago.
There is plenty of room for Indian banks to grow, says Mr Kamath. They are healthier than their counterparts in Asia, the level of non-performing loans is not too high, and banks have adequately provided for them. The state banks are historically not geared to lend to consumers and need to put in the appropriate technology, rationalise the delivery channels and acquire the right human resource competencies. Their major shareholder, the government, needs to take a call on this, he points out. “Foreign banks consider India an interesting opportunity now. Capital is not a constraint for them but creating a distribution network is,” Mr Kamath adds. “Some of the key foreign banks should show their intent by making a move, perhaps even acquire a local bank.”
