Circa 1999, Venue: Conference room Raheja Towers Bangalore, KV Kamath is holding fort with his bunch of managers (all blue blooded mgt whizkids adept at crunching numbers with 7 to 10 zeros in tow) all of them waiting intently for their Rōshi to lay the future plan for them in corporate lending (ICICI was a Institutional lending behemoth then) . Little did they realize that they were in for a shock when KVK announced converting ICICI into a retail lending powerhouse and a universal Bank.He told them that the future was in retail banking. So go goes the story as told to me by one of my friend who is in a senior position in Infy now. These guys then thought that KVK had lost his bearings to announce something that radically different. But then nobody saw into the future like KVK did, and ICICI chairman Vaghul had specially plucked him back from ADB back into ICICI fold for this specific purpose: to charter new growth avenues for the Company.
KVK had smartly read the macroeconomic numbers then, which he revealed in his latest interview “The country is now at another tipping point” in Mint recently .What did KVK see in 1999 which made him big bet on retail lending? He aimed at doubling the balance sheet strength every 3rd year or sooner then. In the interview he says “ You may remember that the entire basis for refocusing the bank on retail lending in 1999-2000 was that India’s per capita income had crossed $500, a tipping point for aspirations & consumption”. Smart reading but implementing the plan was a different ball game altogether and he achieved that by handpicking a few key men/women to the crucial posts in the bank.
Between 1999 & 2005 ICICI increased its Asset portfolio from roughly INR 22000 crores to 80000 crores, the company’s market capitalization grew by more than 100 % and in the process beat established players like HDFC on the Home Loan turf, Citibank on Cards and few other to the post. The scorching growth placed it next only to SBI Bank in overall balance sheet size & strength in the Banking sector, no mean feat for a 6 year old bank toddler operating with 60+ year old peers in the Industry.
The interesting part of the article is that he believes another tipping point is due now. And the trigger being the per capita Income now falling in the $1,000-2,000 range. Looks like good news on the ‘Infrastructure’ front , & I bet KVK is aiming at another bulls eye.
(Pic courtesy Mint)
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