Credit Appraisal with Icici

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Innovation to SME Financing by ICICI Bank

Bhubaneswar May 24, 2005



The Customer Spectrum for Banks
Consumer Banking

Small and Medium Enterprises

Corporate Banking

Individuals as Individuals as Consumers Consumers

Individuals in Business

Partnership & Partnership & Family Owned Family Owned Businesses Businesses

Small & Small & Medium Sized Medium Sized Companies Companies

Large Local Large Local Corporates Corporates

Top Tier Top Tier Local and Local and Global Global Corporates Corporates

SME segment is an essential part of the customer spectrum for banks


Indian experience in SME Banking
SMEs are vulnerable Information about SMEs is scarce SMEs are geographically disbursed SMEs are transaction intensive Poor entrepreneurial attitude



Challenges to Banks in SME Financing
Evaluation of credit Evaluation of credit risk risk Lack of transparent credit information, access to credit history Limited sectoral data Low capitalisation and collateralhigh impairment propensity High cost of acquisition of new client High cost of credit processing, services & delivery coverage Poor legal framework for collateral enforcement Dealing with poor entrepreneurial attitude No secondary market for SME loans No clear exit route for private equity

Cost to acquire and Cost to acquire and serve serve

Other challenges Other challenges


Global best practises
Wells Fargo, Citibank Wells Fargo, Barclays, Amex, Banc One Wells Fargo, J P Morgan

• Market segmentation • Aligned with retail strategies , • channels Integrated private & business banking (including call centre) Credit score based credit assessment automation Market intermediaries / feet on street to multiply capacity

• Multi-channel acquisition •

• Intensive use of technology , •





SEG - Coverage model
Business segment
Corporate Corporate Linked Business Linked Business (CLB) (CLB)

Business Focus

Business approach
Corporate specific umbrella finance proposal Program based lending with industry experts Liability led backed by parameterised products

Channel finance needs of WBG Selective targeting of homogenous client segments

Cluster Banking Cluster Banking Group (CBG) Group (CBG) Business Business Banking Group Banking Group (BBG) (BBG)

Liability led strategy



ICICI Bank in Orissa


Presence In Orissa

-23ATMs -6Branch


Orissa: a focus state for ICICI Bank
• • • • Branches coming up at Angul, Keonjhar and Balasore CD Ratio of 205% Highest deposits of important minerals in the Country Power surplus state (Installed Cap.: 4178.5 MW) Minerals Bauxite Chromite Manganese Nickel Graphite Share % 59.5% 98.4% 67.60% 91.80% 71% 15

•The mining sector is expected to be the main driver to the States future growth •Mineral stock is a high 220 mn. tonnes out of the estimated all-India figure of 231 mn tonnes (199900).

Some SME customers in Orissa
FUND-BASED Assistance Emerson Network, Bhubaneswar DEALERS of L&T and IOCL, Sambalpur DEALERS of NALCO, Lafarge & Finolex, Cuttack NON-FUND BASED Assistance Neepaz Metallics, Rourkela Jai Balaji Sponge, Rourkela DERIVATIVES Neepaz Metallics, Rourkela Jai Balaji Sponge, Rourkela 16

The most basic of all human needs is the need to understand and be understood..

The best way to understand your customer is to listen to him

We listened to our customer, we understood and together we keep growing… We continue to listen….


Thank you

BBG - Strategy
Present in 79 centres Comprehensive mapping of SEG SMs to each branch Acquisition through outbound call Centre & feet on street Road shows Direct marketing Mass media inbound calls Trade finance services and products Cross sell retail products Parameterised asset products for complete share of wallet

Coverage Coverage

Marketing Marketing

Focus on fee income Focus on fee income

Parameterised asset...
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