OUR BUSINESS STRATEGY

Retail and Rural Banking

The retail business continued to be a key driver of growth in fiscal 2021, as we pursued a strategy of building a diversified and granular loan portfolio. The focus in the retail business was on understanding and fulfilling customer needs underpinned by personalised banking, simple banking, fair banking and strong risk management. The Bank’s retail loan portfolio (including the rural and business banking portfolios) grew by 19.9% year-on-year to ₹4,892.20 billion at March 31, 2021, compared to a growth of 17.7% in the overall domestic loan book to ₹6,961.39 billion. Retail loans accounted for 66.7% of total loans, and including non fund-based outstanding, the share was 55% in the total portfolio.

The Bank’s funding profile remained robust with strong growth in the deposit base. Total savings account deposits increased by 20.3% year-on-year to ₹2,954.53 billion at March 31, 2021. Total term deposits grew by 18.4% year-on-year to ₹5,008.99 billion at March 31, 2021. The growth in the deposit franchise was supported by ongoing efforts to strengthen the Bank’s digital platforms and process simplification to provide a seamless banking experience to our customers.

Retail Banking

A first-of-its-kind facility, iMobile Pay extended the ambit of the Bank’s mobile banking app to customers of any bank, providing instant access to the entire range of payment options and the Bank’s services. An innovative feature is the facility to pay to contacts, which enables users to automatically see the Unique Payment Interface (UPI) IDs of their phone book contacts. The mobile app is interoperable with all other UPI-based payment apps. In a span of five months since its launch, there were more than 2.5 million activations from non-ICICI Bank customers.

Rural and Inclusive Banking

Our rural banking operations aim to meet the financial requirements of customers in rural and semi-urban locations. Our products in this segment include working capital loans for growing crops, financing post-harvest activities, loans against gold jewellery along with personal loans, financing against warehouse receipts, farm equipment loans, affordable housing finance and auto and two-wheeler loans. We also provide consumption loans for low-income customers. We offer financial solutions to micro-finance institutions, self-help groups, co-operatives constituted by farmers, corporations and medium enterprises engaged in agriculture-linked businesses.

Our operational structure and offerings put us in a unique position to leverage opportunities in different ecosystems within the rural markets. At the heart of this approach are six main ecosystems identified in the rural market which include Agriculture, Dealers, Self-Employed, Corporates, Institutions and Micro-Entrepreneurs.

The farmer ecosystem includes participants like farmers, seed producers, agri-input dealers, warehouses, agri-equipment dealers, commodity traders and agri processors. The Bank has designed different products for each player to meet their specific financial requirements so that the entire agri-value chain is well-financed. Products offered include working capital loans through the Kisan Credit Card and gold loans, and term loans for farm equipment, dairy livestock purchase and farm development. The rural ecosystem of corporates includes manufacturing and processing units, employees, dealers and suppliers. The dealer ecosystem comprises dealers/distributors of farm equipment, white goods, and pharmaceutical manufacturers. Similarly, the self-employed ecosystem comprises of rural entrepreneurs who are engaged in trading and manufacturing activities based out of commercial and industrial areas in the rural market dealing with both agri and non-agri related products. The institutional segment comprises various institutes like schools, colleges, hospitals and government offices. We closely engage with them to develop products and processes, including technology solutions. The micro-lending space includes women from the lower-income strata of the population, non-government organisations and other institutions working at the grass-root level in the rural economy. The Bank has products and services specifically to cater to this segment.

A community banking approach has been adopted with emphasis on personal relationships with customers. The operational structure ensures that we can meet holistic financial needs of customers in the villages at their doorstep. The Bank’s reach in rural areas comprises a network of branches, ATMs and field staff, and business correspondents providing last-mile access in remote areas. Of the Bank’s network of 5,266 branches, 51% are in rural and semi-urban areas with 649 branches in villages that were previously unbanked. There were over 4,000 customer service points enabled through the business correspondent network at March 31, 2021.

The Bank has a mobile application that enables its employees to capture and submit loan applications from the applicant’s doorstep and also gives indicative eligibility and deviations on product lending norms. This effectively shortens the turnaround time and the cost to service new loan applications. A light version mobile app, 'Mera iMobile' has been developed for rural customers in 11 regional languages, with 135 services, in which multiple functionalities work without internet access. ‘Mera iMobile’ app is used by more than half a million customers.

We have tied up with fintech start-ups that support Aadhaar-enabled transactions. During the year, 180 million transactions aggregating about ₹389 billion were facilitated. These solutions are making financial services more accessible and affordable.

The rural banking portfolio grew by 26.9% year-on-year during fiscal 2021 to ₹721.58 billion, driven mainly by growth in loans against jewellery and loans to rural self-employed customers.

Small & Medium Enterprises and Business Banking

The Small and Medium Enterprises (SME) portfolio comprises exposures to companies with a turnover of up to ₹2.50 billion. Our business banking portfolio comprises small business customers with an average loan ticket size of ₹10-15 million. The SME portfolio grew by 32.5% year-on-year to ₹302.84 billion and the business banking portfolio grew by 40.5% year-on-year to ₹373.27 billion at March 31, 2021.

Our focus in these businesses is on parameterised and programme-based lending, which is granular and well-collateralised. We offer our SME and business banking customers a wide spectrum of solutions addressing their evolving business needs such as customised offerings, faster turnaround time, transaction convenience, timely access to capital and cross-border trade and foreign exchange products. Providing digital solutions is at the core of the engagement, with the range of solutions spanning customer onboarding, payments and collections, lending and cross-border transactions.

Following the Covid-19 pandemic, we have provided financial assistance to clients based on various government schemes, which includes providing moratoria on loan repayment and Emergency Credit lines to eligible SME customers. We have disbursed an aggregate amount of about ₹140 billion to SME and other customers under the government's Emergency Credit Line Guarantee Scheme till March 31, 2021. We were able to leverage on our growing digital capabilities during this period by providing contactless solutions like digital current account opening, online electronic franking and digital signature-based document execution (Eazysign).

A new digital platform, InstaBIZ, was launched specifically for the small and medium enterprises (SME) and the self-employed segment, which offers over 200 products and services on mobile and internet banking platforms.

These platforms also automatically assess the eligibility of the corporate’s dealers and vendors for credit through business rule engine and intelligent algorithm with automated bureau checks. With these capabilities, digital approval letter generation automation and e-sign features, we are able to set up credit limits and offer credit sanction to the corporate’s dealers and vendors within a few hours, even if they are not customers of the Bank. Over half of our supply chain linked business corporate clients have been onboarded on our digital platforms.

We follow strong risk management practices in managing our SME and business banking portfolio, with a view to enhancing the portfolio quality by reducing concentration risks and a focus towards granular and collateralised lending-based growth. Our robust portfolio monitoring framework is able to proactively analyse and detect stressed cases which enables us to take early action and ensure healthy portfolio quality. The Bank has further strengthened its underwriting process by integrating various digital tools like bank statement analyser, automatic fetching of bureau reports and enhanced business rule engine to generate probability of default scores for score-based analysis into one single ecosystem called Infinity. A combination of qualitative and quantitative assessment tools are utilised to arrive at the final decision.

Wholesale Banking

The Wholesale Banking Group has a wide and deep client franchise, which includes top business houses, large private sector companies, financial institutions and banks, public sector undertakings and central and state government entities. In the last few years, we have developed a strong franchise across multi-national companies (MNCs) and new age services companies, and also established a strong franchise in the financial sponsors space with special focus on private equity funds and their investee companies.

We have a comprehensive coverage model. Our Bank’s established presence as a financial service provider and extensive branch network across the country providing last mile coverage has helped us to strengthen our client franchise. By leveraging the Bank’s overseas branches, we have been able to focus on MNCs, financial sponsors and India linked companies. Our approach has been to deepen our partnership and support our clients through their life cycle. Our leading-edge product portfolio is comprehensive and technologically advanced and includes lending products for working capital and capital expenditure requirements and other products that the client may need across trade, treasury, bonds, commercial papers, channel financing, supply chain solutions, and various other activities.

With a focus on the Bank’s overall strategy of maximising the risk-calibrated core operating profit, the Wholesale Banking Group has reimagined its strategy of engaging with corporate clients. While Portfolio Quality and Earning Quality remain the key principles driving our strategy value creation for our clients is the main focus. Instead of being only capital providers, we aim to become business partners to our clients. To achieve this, we realigned our structure in the past from product-centric to a client-centric model. With the client at the centre, all the groups across the Bank are well-aligned to offer the entire Bank’s offerings to our clients and their ecosystems. We continued our strategy of 360° banking across the corporate ecosystem by offering a comprehensive suite of banking products to the corporate and its entire network of employees, dealers, vendors and all other stakeholders. This has not only made client servicing more effective, but also helped us to penetrate deeper in high-value retail accounts of promoters, directors and employees through a suite of retail products like salary, private and wealth banking, home loans, personal loans, vehicle loans, etc. This approach also reduced client acquisition cost. The Group focussed on capturing the money in motion for the entire Corporate Ecosystem to strengthen the Bank’s liability franchise further.

Transaction Banking

In fiscal 2021, the disruptions due to measures to control the spread of Covid-19 impacted the day-to-day functioning of our corporate and SME clients, whether it was paying their suppliers and employees, collecting money from their customers or handling their daily import and export transactions. Our proactive response coupled with technology investments made in our digital capabilities over the years, both in customer facing solutions and in internal workflow management, became compelling for our customers and enabled our employees to provide uninterrupted services to customers. In this context, one key positive outcome has been a multi-year acceleration in the digital adoption by our corporate customers leading to enhanced customer satisfaction, amongst other business outcomes. The number of customers on our Trade Online platform more than doubled during fiscal 2021.

In continuing with our thought leadership in the digital space and customer-centric approach, we have also brought to market certain ecosystem based solutions. We curated a number of industry and segment specific solutions. An example of industry specific solutions that we launched in fiscal 2021 was an end-to-end digital capability for the capital market industry, which in turn helped us capture a greater share of the liability opportunity from this ecosystem. An example of a segment specific solution that we launched during the year was a platform to enhance the ease of doing business for MNCs in India through our Infinite India portal. The portal offers value-added services in collaboration with partners to ease the MNCs’ journey of setting up or scaling up their business in India. Similar initiatives have been taken to capture the entire ecosystem opportunity across multiple industries and segments.

We have also launched 15 industry STACKs as a part of ICICI STACK for Corporates to provide the depth and breadth of digital solutions required by the diverse customer segments we serve.

With a focus on capturing the entire 360° banking opportunity, the Bank continues to create best-in-class digital solutions to meet the varied requirements of our customers. These solutions range from industry shaping initiatives such as the first 'e-bank guarantee with e-stamping' issuance in collaboration with the state of Uttar Pradesh, thus creating a pathway for complete paperless bank guarantee issuance and advising, and amendments to operational efficiency-enhancing solutions for our customers such as a simplified digital payment solution for 'Multi-state GST'. Customisation at a scale is a key factor in our approach.

These solutions are being delivered to our customers through physical and digital channels. In addition to leveraging the existing physical branch network, we have expanded our capabilities to provide transaction banking services to our customers from about 114 locations as of March 31, 2020 to 183 locations as of March 31, 2021. This has also involved co-location of skilled transaction banking teams to branches. Many of these expanded branch capabilities are in the factory/township premises of certain large conglomerates in the country.

In addition to our scalable corporate internet banking platform which has over 100 features that are being continuously upgraded, we also embarked on providing embedded solutions at scale to our customers. These embedded banking solutions, which are offered through APIs or host-to-host connectivity, provide access to day-to-day banking services to corporates within their own ERP environments. In fiscal 2021, the Bank delivered over 21% higher number of integrations compared to a year ago. In addition to enhancing customer satisfaction, these embedded solutions ensure stable business for the Bank.

A critical aspect of capturing the ecosystem opportunity is vendor and dealer financing. A key priority for our corporate customers is to ensure continued and competitive financing for their supply chain to ensure uninterrupted business. In this regard, the Bank offers a complete product suite including all forms of vendor and dealer financing solutions. Necessary investments have been made in technology capabilities to ensure scalability of business is achieved within the credit guardrails. The digital capabilities are also supplemented by distributed teams located out of our branches capturing this important business for our customer and the Bank.

In these digital capabilities developed by the Bank, data analytics plays a very critical role. Investments in capability and capacity building in data analytics have resulted in delivering a number of use cases in wholesale banking, which is aimed at three main objectives of improved customer service, enhanced revenue opportunities and superior risk management. A number of tangible use cases have been delivered with measurable outcomes across the stated objectives.

International Business

ICICI Bank’s international presence consists of branches in the United States, Singapore, Hong Kong, Bahrain, Dubai International Finance Centre, South Africa, China, Offshore Banking Unit (OBU) and IFSC Banking Unit (IBU), and representative offices in Bangladesh, Dubai, Abu Dhabi, Indonesia and Malaysia. We also have wholly-owned subsidiaries in the United Kingdom (UK) and Canada. ICICI Bank UK also has a branch in Germany. The Bank opened a new representative office in Nepal and closed its branch in Sri Lanka during the year.

Our international franchise continues to focus on four strategic pillars, namely the NRI ecosystem comprising deposits, remittances, investments and asset products; the MNC ecosystem comprising both foreign MNCs investing in India and Indian MNCs branching out for their foreign currency and other India related requirements and also Global In-house Centres (GIC), which are back-offices of MNCs created to serve the world; Trade ecosystem, comprising primarily India-linked trade transactions which are self-liquidating in nature; and funds ecosystem, to capture fund flows into India through the Foreign Portfolio Investment (FPI) and Foreign Direct Investment (FDI) route. Apart from this, the Bank continued to progress in its objective of reducing the non-India linked exposures in a planned manner. The non-India linked corporate portfolio reduced by 56% year-on-year or by USD 1.60 billion during fiscal 2021.

The Bank plays a pioneering role in promoting digital initiatives across businesses in the international banking arena. We have been continuously introducing and innovating products to enhance customer experiences. In the NRI segment, re-imagining the NRI ecosystem with ICICI STACK, for a deeper understanding of customer profiles and needs with 360° STACK solutions designed to meet the evolving banking needs of NRIs and their families in India, has been a core focus. The on-boarding of NRI customers has been made seamless by leveraging emerging technologies like OCR based account opening with facility to track applications. We also launched the opening of three-in-one accounts digitally, an industry-first initiative, for seamless opening of savings account with linked demat account and broking account. Remote servicing accessibility was enhanced with the launch of WhatsApp banking and i-Pal chatbot. The new and value-added digitised services for NRI customers resulted in 85% of NRI customers being digitally active.

Government Banking

We are extensively engaged with government departments/ bodies and support them with technology-driven banking solutions. Government banking has been a core focus area for the Bank and we provide a range of banking services to Government of India ministries, state government departments and district and local bodies across the country. ICICI Bank offers its government customers a wide spectrum of solutions addressing the fast-evolving needs such as customisable and integrated solutions, large transaction processing capabilities and superior turnaround time. The customised products and services offered are aligned to act as enablers for enhancing e-governance and financial management.

The Bank assists the Government in collection of central taxes, state taxes and GST payments through authorised branches and digital channels. Our technology-driven banking platforms provide simple online tax payment options to customers. Statutory payments like EPFO and ESIC dues can also be done online through the Bank’s platform.

We have partnered with a number of Central and State government departments to ensure quick disbursement of funds/benefits to beneficiaries and implementing agencies through the Public Financial Management System (PFMS) and non-PFMS platforms. These customisable and integrated solutions have supported the government’s endeavour for efficiency in expenditure management.

ICICI STACK, the comprehensive digital banking suite is offered to government bodies, institutions, district administrations, local bodies and associated stakeholders, including their staff and employees to bring transparency and desired efficiencies in the implementation of the Government's objectives.