What next for ICICI Bank

AS WITH SACHIN TENDULKAR, it’s difficult to find something new to write about Chanda Kochhar. But the managing director and CEO of ICICI Bank is quick to say that she's nowhere as popular as the cricketing superstar. Yet, in her industry, she’s almost as ubiquitous.

Kochhar became the face of the bank after taking over from K.V. Kamath. She has since taken strong measures to tone down ICICI Bank’s aggressive image, which she had helped to create. She’s now chalking out an elaborate plan for the next phase of growth. Edited excerpts:

Given the highly regulated environment, how does a bank of ICICI’s scale operate to catch up with its global peers? When you talk of regulations in India, you have to bear in mind that they are quite prudent and have worked well. The regulations cannot be termed as “closed” for foreign banks. If you look at the foreign banks here, the field is level; they are allowed to do almost everything, with the possible exception of buying another Indian bank.

Now, with the draft guidelines for subsidiarisation of foreign banks, the playing field will be further levelled. The Indian financial system, in that sense, is more open to foreign participants than several other countries are to Indian banks.

In the next five years, we don’t want to just catch up; we want to move much higher in terms of global ranking. It is achievable. In China, it was clearly the country’s growth that gave its banks the scale and size and, therefore, the market cap to put them on the global rankings. I can see India on the cusp now, with a faster relative rate of growth than the others and that’s how our ranking could improve.

The bank grew in size in the early years, but how does it intend to grow so that talent can be retained?
For people to find growth in their careers, it’s really a mix of everything. I must admit that not too many new initiatives will be added in the next few years because we have started out in every business imaginable in the financial sector.

But there's fresh learning from each new business. For example, we reinvented our retail business over the past couple of years. Similarly, in the life insurance business or the asset management business, the last year has involved resetting plans because the regulatory environment changed. It was like setting up a new company in both cases. I think the whole landscape is evolving substantially and that creates new challenges and opportunities to learn.

Do you think the bank may be setting itself up for attrition as competitors come in and pay top dollar?
As new players come in, the entire industry will face the challenge of moving to newer people, and everybody will want to get the best young talent. Also, organisations don’t always retain executives with only monetary benefits; what also matters is the comfort given to people within the system. Yes, there will be some challenges but the final answer is in having substantial depth in talent within the group.

Large global banks have a significant presence in investment banking. What plans do you have for that part of your business?
The simple way of looking at this when you are doing a transaction for your client is to ask if you are getting involved in advising, structuring the deal, and the financial package. We are increasingly doing all this.

A project is a project but the way it is structured financially determines its viability. As merger and acquisition deals take place, we advise our clients based on our research and experience in buying and selling.

Many refer to ICICI Bank as an Indian Citibank, given its widespread presence and aggression.
I would like to think that we stand for dynamism and agility. In my view, these attributes are part of a strategy suited to an environment. That’s our underlying strategy. So, I believe the bank shouldn’t be stamped as aggressive or consolidatory. That’s a function of what the market environment needs.

You drove the retail push when you took over at ICICI Bank. Now you want to change the way it is perceived and want to project a holistic sort of growth. How are you implementing the changes?
A lot of explanation was required for the new vision and the underlying reason for change. The reason largely was the change in the [economic] environment. That meant spending a lot of time in explaining the logic of the change, the long-term impact, how the consolidation process would be a stepping stone for the next round of growth, and that it meant getting back on the growth path in a much stronger manner.

You don’t just impose a vision or change. It's important to get acceptance from your team and show them the long-term view. I spent a lot of time in 2009 with various teams. There have been some changes but a large part of the organisation remains the same.

There’s a lot of talk about governance and the role that boards play in Indian companies. But do the hard questions really get asked of management?
Our board is very active and diverse, and the members are well established in their fields. Moreover, our board moved into governance-related structures before it was mandated. We formed board committees for credit, customer, risk, and audit well before any of this was a regulatory requirement. All the panels we formed were chaired by independent directors. Even the board’s effectiveness is discussed internally at times.

In some ways, the board relies heavily on the executive management—largely the CEO­—for direction. But it applies its own process in discussing how these strategies are shaped and implemented. For that matter, even the consolidation strategy, which was implemented after the economic downturn, was brought in by the board.

As you progress in your career, how would you like to make your role more exciting?
In a way, the excitement comes from India’s growth opportunities. As it grows to its full potential, the banking sector can grow at between two and two-and-a-half times the GDP rate, which means there’s a lot for us to do. I would like to look at how we operate in areas that have growth potential, such as retail and corporate.

Simultaneously, as the world gets more global, we will look at capitalising on trade flows between India and the rest of the world. To that extent, the excitement is about the scale to which you can grow, the benchmarks to be set in global banking, and the innovations which can be brought in, especially in the area of inclusive banking.

If and when you achieve your objectives at ICICI Bank, would you be open to parlaying your industry experience into a government or industry body role?
I’m already doing that quite a bit. As a responsible banker, it’s important to spend some time on these bodies; that's what helps one to understand policy formulation, as well as recognition of India at the global platform.

I have spent quite some time on government committees, the Reserve Bank of India, the World Economic Forum, and the International Monetary Conference of bankers. But, yes, I’d like to do more of it.

There appears to be a fall in the percentage of women in senior management. What do you think is the reason for this?
That may be the perception. However, I have just looked at our gender composition numbers and 26% of our employee base comprises women, with a fair distribution at all levels. If you look at the 10 people who report directly to me, you'll see that two of them are women.

What we have seen is that at the beginning of the difficult period—getting married, starting a family—is when you lose some women. That's true across all industries and corporations.