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 INTRODUCTION TO THE PROJECT
The project focuses on the study of Growth, Development, Strategic initiatives and Profitability
and productivity study of two private sector banks and in our study we have taken ICICI (
Industrial Credit & Investment Corporation of India Ltd.) and AXIS Bank as two private sector
bank.
In this project, we also talked about various strategic initiatives taken by above two banks in
order to achieve competitiveness in the existing environment.
ICICI BANK
(ounded in 1955 as Industrial Credit and Investment Corporation of India, ICICI Limited was
established by the Government of India in the 1960s as a (inancial Institution like Industrial
Development Bank of India (IDBI) to finance large industrial projects.
ICICI then, was not a bank and hence could not take retail deposits and was not required to
comply with Indian banking requirements for liquid reserves. ICICI borrowed funds from
various agencies like the World Bank, often at concessional rates. These funds were deployed in
large corporate loans. However, the scenario changed drastically in1990s when ICICI founded a
separate legal entity and named it "ICICI Bank".ICICI Bank, as the name would suggest,
undertook normal banking operations like accepting deposits, issuing credit cards, providing car
loans etc. The experiment was so successful that ICICI merged into ICICI Bank and this "reverse
merger" happened in 2002.
ICICI Bank offers a wide range of banking products and financial services to corporate and retail
customers through a variety of delivery channels and specialised subsidiaries and affiliates in the
areas of investment banking, life and non-life insurance, venture capital and asset management.
ICICI Bank is also the largest issuer of credit cards in India. Banks have also provide internet
banking, phone banking, anywhere banking, mobile banking, debit cards, Automatic Teller
Machines (ATMs) and combined various other services and integrated them into the mainstream
banking arena. In a span of just four years, ICICI Bank has emerged as a consumer banking
behemoth. With a retail book of over Rs 56,000 crore (Rs 560 billion) and a market share that is
the envy of competition -- it has a share of over 30 per cent -- ICICI Bank today has reached a
commanding position. The bank boasts of the widest integrated technology platform in the
country and only a fourth of its business takes place at its branches The Bank is expanding in
overseas markets and has the largest international balance sheet among Indian banks. ICICI Bank
now has wholly-owned subsidiaries, branches and representatives offices in 18 countries,
including an offshore unit in Mumbai. This includes wholly owned subsidiaries in Canada,
Russia and the UK (the subsidiary through which the hisave savings brand is operated), offshore
banking units in Bahrain and Singapore, an advisory branch in Dubai, branches in Belgium,
Hong Kong and Sri Lanka, and representative offices in Bangladesh, China, Malaysia, Indonesia,
South Africa, Thailand, the United Arab Emirates and USA. Overseas, the Bank is targeting the
NRI (Non-Resident Indian) population in particular.
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c 1955-The Industrial Credit and Investment Corporation of India Limited (ICICI) was
incorporated at the initiative of World Bank, the Government of India and representatives
of Indian industry, with the objective of creating a development financial institution for
providing medium-term and long-term project financing to Indian businesses.

c 1994-ICICI established Banking Corporation as a banking subsidiary formerly Industrial
Credit and Investment Corporation of India. Later, ICICI Banking Corporation was
renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to
undertake normal banking operations - taking deposits, credit cards, car loans etc.

c 2001-ICICI acquired Bank of Madura (est. 1943). Bank of Madura was a Chettiar bank,
and had acquired Chettinad Mercantile Bank (est.1933) and Illanji Bank (established
1904) in the 1960s.

c 2002-The Boards of Directors of ICICI and ICICI Bank approved the reverse merger of
ICICI, ICICI Personal (inancial Services Limited and ICICI Capital Services Limited,
into ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrated the
group's financing and banking operations, both wholesale and retail, into a single entity.

c 2003-ICICI opened subsidiaries in Canada and the United Kingdom (UK), and in the UK
it established an alliance with Lloyds TSB. It also opened an Offshore Banking Unit
(OBU) in Singapore and representative offices in Dubai and Shanghai.

c 2007-ICICI amalgamated Sangli Bank, which was headquartered in Sangli, in
Maharashtra State, and which had 158 branches in Maharashtra and another 31 in
Karnataka State. Sangli Bank had been founded in 1916 and was particularly strong in
rural areas.

c ICICI Bank became the first Indian bank to list on the New York Stock Exchange.

c Launching of mobile banking services for its customers using the wireless application
protocol (WAP) technology.

c Expansion in overseas market.

c ICICI Bank is the largest issuer of credit cards in India.

c In a span of just four years, ICICI Bank has emerged as a consumer banking behemoth.

c The largest private sector lender in the country.

c 2010-Recent Development- Merger of Bank of Rajasthan into ICICI Bank.
X 
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ICICI Bank has taken up specific initiatives to ramp up financial literacy as well as
intermediation to the underserved and under banked segments in both rural and urban areas.

Customer (inancial Behaviour

In the absence of a formal Credit Bureau, extending financial service to low income segments
becomes a challenge. To overcome this challenge, ICICI Bank¶s financial intermediation models,
both through the microfinance institutions and business correspondents have been designed to
build a repository of information with regard to financial behavior of the customers.
It would be possible to trace details such as credit history, savings habit and investment patterns
of individuals. This information would be useful to incentivise those with good credit history and
to discourage wilful default, at the same time developing better-suited financial products.

ICICI Bank¶s (inancial Intermediation Models

With focus on low-income segments, ICICI Bank has come up with innovative delivery
channels:

c Microfinance
ICICI Bank works closely with M(Is and NGOs to adapt its products to suit consumer
needs by implementing two models viz Partnership Model being implemented with
NGOs and M(Is & Securitisation of Portfolios of M(Is.

c Technology
The Bank has been actively looking at technology solutions to scale up the microfinance
portfolio. (urther, the Bank has been considering adopting a 'Core Banking System'
(CBS) for managing the loan portfolio generated under the partnership model.

c Business Correspondent
In line with the RBI guidelines ICICI Bank employs Business Correspondent (BC) model
to extend financial services, especially the much-needed savings services torural
customers.

c Maximize value of client relationships

c Leverage technology to enhance delivery capabilities

c Proactive portfolio management


c (or efficient capital utilization and lower balance sheet exposure.

c Leverage expertise to facilitate loan origination and ensure sell down leading to

c Reduced concentration of risk

c Optimal risk-return trade-off

c Aggressively pursue cross-sell opportunities for all ICICI group products.

c Corporate Solutions Group

Ëc Reach the entire universe of current and potential clients (over 1300) and offer tailor-
made solutions

c Government Solutions Group

Ëc Develop comprehensive banking relationships with all central, state and local
governmental entities

c Small & Medium Enterprises Group

Ëc Develop comprehensive banking relationships with small & medium sized enterprises
leveraging corporate linkages
Ëc (ocus on Agri-lending to help in compliance with priority sector norms.

c Infrastructure Projects Group

Ëc Create a balanced portfolio across sub-sectors
Ëc Telecom, Power, Transportation, Urban Infrastructure
Ëc (ocus on non-fund based activities

c Manufacturing Projects Group

Ëc Consolidation and modernization in core sectors
Ëc Cement, Steel, Textiles, Chemicals
Ëc Structured opportunities in certain emerging sectors
Ëc Oil & gas, Mining, Retail, Agri infrastructure
AXIS BANK
âc Axis Bank was the first of the new private banks to have begun operations in 1994, after
the Government of India allowed new private banks to be established.
âc The Bank was promoted jointly by the Administrator of the specified undertaking of the
c Unit Trust of India (UTI),
c Life Insurance Corporation of India (LIC) and
c General Insurance Corporation of India (GIC) .
âc The Bank's Registered Office is at Ahmedabad and its Central Office is located at
Mumbai.
âc The Bank has a very wide network of more than 905 branches and Extension Counters.
âc The Bank has a network of over 3894 ATMs providing 24 hrs a day banking convenience
to its customers. This is one of the largest ATM networks in the country.
âc At present AXIS BANK is the 3rd largest private sector bank in India.

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âc 3rd largest private sector bank.

âc Expanding global reach by way of setting up 3 branch offices in Singapore, Dubai and
Hong Kong and 2 representative offices in Sanghai and Dubai recently.

âc Aggressive branch and ATM expansion to 1021 branches and 3714 ATMs by (Y10E in
upcoming tier II and Tier III cities where disposable incomes are on an upsurge will
provide further economies of scale.

âc C
n  en g


Over the past 31 quarters the bank has grown its net profit in excess of 30% y-o-y in 29
out of those 31 quarters. Even in the two quarters that it did not grow its net profit it was
more of a case of extraordinary expense write off because of valuing G-Sec on mark to
market basis.
âc R
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The past few years (2002-07) has seen the company grow its fee income at a stupendous
CAGR of 51 %. As the fee income grows at a higher rate to the interest income the
proportion of fee income in the overall revenues is increasing at a brisk pace. This will
create adequate trigger for a PE re-rating in the times to come.
 âc Ene ed n e n  n
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Other businesses like asset management, investment banking, Private Equity and wealth
management will help the bank to maintain its growth in fee based Income growth.
The Bank sells Mutual (unds, Insurance, On-Line Broking, Portfolio Management
Services (Non-discretionary) and Gold Coins to retail customers as part of its fee income
initiative.
âc Ex
ellen A e Q ly
The asset quality of the bank has shown a remarkable improvement Gross NPAs as a
proportion of gross customer assets declined to 0.95% in Q2(Y08 as compared to 1.22%
in Q2(Y07. Similarly, net NPAs as a proportion of net customer assets also declined to
0.55% in Q2(Y08 as compared 0.74% in Q2(Y07.
âc Öe l M n geen 
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The Bank also intends to enter the wealth management business in a big way and has set
up a US $ 500 million offshore infrastructure fund, with a $50 million proprietary seed
investment. The Bank will leverage its Corporate and SME loan book to create
investment opportunities for the infrastructure fund.
âc D e
 S le C nnel
Presently Retail Assets constitute 24% of the Bank¶s total advances, and the Bank
continues to grow this field slowly. Generally Direct selling Agents (DSA¶s) form a large
part of the distribution costs in selling retail loans. To overcome this cost centre Axis
bank has set up a subsidiary (UBL Sales Ltd). This subsidiary would minimize cost and
focus on better distribution of products and services as well as maintain the quality of
clients so acquired.

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1. The key element of AXIS bank business strategy is: -

c (ocus on quality growth opportunities by

a) Building a strong retail franchisee.

b) Maintaining and enhancing strength in corporate banking.


c Comprise conservative risk management practices and enhanced assets qualities.

c Used technology for comparative advantage.

c Attract and retain talented professionals.

2. Initiatives of Axis Bank for formal financial inclusion.

Micro credit is one of the powerful tools for inclusive growth and AXIS Bank have adopted
different strategies to extend micro credit to the marginalized sections of society. The relevant
broad initiatives adopted by our Bank for financial inclusion as a strategic business proposition is
spelt out hereunder:

c Partnering with reputed Micro (inance Institutions (M(Is)
During the financial year 2004-2005, Axis Bank created an exclusive team at our
corporate office to handle M(I lending. Axis Bank have ensured that it will extend
support to good organizations across the country. As on November 30, 2007, Axis Bank
have its microfinance presence in 15 states through 71 M(Is and are having an
outstanding portfolio of Rs 437.47 crs.

c Lending through Self Help Groups.
Axis Bank had on a pilot basis, extended finance to 50 Self-Help Groups (SHGs) in the
state of AP. After having satisfactory experience with them, further assistance has been
considered for supporting the already assisted SHGs as well as to explore the possibilities
for extending assistance to new SHGs.

c Lending through Government Sponsored Schemes
Axis Bank encourage its branches to extend finance under various Government
Sponsored Schemes. Many of its branches commenced lending under Government
Sponsored Schemes in (Y 05-06 and this continued in (Y 06-07 also.

c Extending loans under Differential Rate of interest scheme (DRI)
Our strategy is to identify clients through credible developmental organisations and
extend loans through them. Under this scheme, our finance so far has been for candle
making, minor house repairing, petty trading, purchase of goats etc.

c New initiatives
Our Bank as part of Govt. Business initiative is already participating in the (inancial
Inclusion Pilot Project being undertaken in Warrangal District of Andhra Pradesh by
Department of Rural Development, Govt. of Andhra Pradesh towards disbursement of
wages/ allowances to individual beneficiaries under Andhra Pradesh Rural Employment
Guarantee (APREGS) Scheme and Pensioners under Social Security Pension (SSP)
Scheme.