ICICI eyes low-cost funds of trusts, NGOs

The clamour for low-cost funds had seen ICICI Bank package a special savings account to tap entities such as temples, trusts, non-government organisations and educational institutions.

The account has helped the Bank bag 18,534 accounts of such institutions. The average balances in these accounts range from Rs 1 lakh to as high as Rs 5 crore.

Bank balances of such institutions total about Rs 1 lakh crore. Their share in total bank deposits has ranged from 6 per cent to 10 per cent. This segment of deposits have largely remained "untapped" in an organised manner by banks, said Anup Bagchi, head-retail liabilities.

"This segment is serviced by neighbourhood banks through current accounts. It, however, has peculiar banking requirements, more on the lines of small and medium enterprises. Our services such as cash flow management, investment advisory and remittance products are of great help to them," Bagchi said.

The advantage of ICICI Bank's package is that it offers these entities a savings account, where balances earn an interest of 3.5 per cent.

The "auto invest" facility ensures that balances above a particular level get swapped into fixed deposits, thus providing an additional 2 per cent interest on the invested portion. Investment advisory services also help these institutions invest surplus balances in instruments like mutual funds and ICICI Bonds.

"It's a win-win situation. Trusts, schools, NGOs not only save on administrative costs, their yield on surplus funds also rises significantly," Bagchi said.

ICICI Bank has biggest temple trusts as its customers. These include Tirupati Temple Trust, Shirdi Trust, Shiromani Gurudwari Prabhandak Committee, Vaishnodevi Trust, Wakf Board, Swaminarayan Trust, Badrinath/Kedarnath Trust.

Ford Foundation, US Aid, Action Aid, Indian Institute of Management, Ahmedabad, IIT Kanpur, Jawaharlal Nehru University and St Paul's School, Darjeeling are among those who have availed of ICICI Bank's special package.

The bank's strategy now is to bring about a greater depth in its relationship with special account holders. The bank is now working at making these customers shift more of their banking transactions from other banks.

"We will now start working at deepening of relationship by having these customers shift more of their banking requirements to ICICI," Bagchi said.

Cash flow management by ICICI Bank helps schools streamline inflows of fees and outflows including salaries. NGOs, charitable trusts and temples get the benefit of remittance products that facilitate collection of donations from anywhere in the world.