Top bank targets Indian rural expansion
The chief executive of ICICI Bank tells Emerging Markets of her plans to expand from its urban base into India’s towns and villages
Indias leading private lender plans to push further into the countrys vast hinterland in search of growth and new customers, the banks chief executive officer has told Emerging Markets in an exclusive interview.
ICICI Bank, which is already well represented in Indias leading cities, now plans to plant its flag firmly in the countrys towns and villages. Rural expansion is a big part of our future growth plan, Chanda Kochhar said.
We plan to expand our distribution network across the country, setting up new branches and inventing new products directly relevant to rural regions. She said one example of this was a systematic push into mobile banking, a service widely adopted in sub-Saharan Africa and which would slash the cost of banking in rural India.
Boosting financial and economic inclusion a key theme of the ongoing Asian Development Bank conference in Delhi is vital in a rapidly urbanizing and increasingly unequal country.
A 2012 Bank of India report found that three quarters of Indias 89 million farming households had no access to formal sources of credit. The same report found that 41% of all Indians remained unbanked, 61% of whom lived in rural areas. Financial exclusion is highest in poorer northeastern provinces like Assam, Bihar and West Bengal.
Kochhar said that her bank would continue to boost its presence in Indian cities, while continuing to expand its overseas operations. We want to see growth created across all sectors, from mortgages on the retail side to corporate loans on the wholesale side. Another area we are planning to push further into is banking the countrys [growing army of] small- and medium-sized enterprises. ICICI last week posted a 21% year-on-year rise in profit for the quarter ended 31 March, while boosting net interest income by 22%.
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At this point in time, Kochhar said, its all about achieving full closure on projects. The problem at the moment is that the last mile of most projects just isnt being completed. And that is slowing down the pipeline going forward.
Investors are not the only ones to step back from the infrastructure space. ICICI Bank, one of the most aggressive investors in Indian power plants over the past decade, has no plans to plough money into new power projects going forward.
Kochhar said that attitude was representative of India as a whole. Lenders and investors would return to infrastructure in time, she said, but added: Clearly at this point in time there is a wait-and-see approach with investors. Its not a lack of long-term belief in Indias growth story, but there is [a sense that] we need to get some of the roadblocks [out of the way] first.
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