Icici Launches Project Dreams

Term-lending institution ICICI Ltd has launched Project Dreams to convert itself into universal bank. A brainchild of ICICI managing director and CEO K V Kamath, Project Dreams is closely looking at the possible steps leading to the institution's fastest conversion to a bank. Other members of the committee which are overseeing the project are Lalita D Gupte, joint managing director and chief operating officer, S H Bhojani, deputy managing directors, senior general managers Kalpana Morporia and Chandra Kochar and joint general manger N S Kannan. ICICI Bank is represented by its chief HN Senor and senior executive vice-president PH Ravikumar among others on the committee. "With over Rs 60,000 crore worth of asset base, the magnitude of the task is enormous. Once the institution opts to become a bank, it will be subjected to SLR and CRR and other stipulations like priority sector lendings, etc. The project is looking into every minutest detail...," said an ICICI insider. ICICI's loan funds were pegged at Rs 50,881 crore and net worth Rs 9330 crore on March 31, 2000. In April credit policy, Reserve Bank of India governor Bimal Jalan said: "... any development financial institution... should have the option to transform itself into a bank provided prudential norms as applicable to banks are fully satisfied. ... A DFI would need to prepare a transition path in order to fully comply with the regulatory requirement of a bank." Jalan also said the institutions may consult RBI for such transition arrangements and the central bank "will consider such requests on a case by case basis". However, ICICI has not formally moved the RBI with a proposal to convert itself into a bank. The only financial institution which has put in a formal application in this regard is Exim Bank which wants to become a full-fledged bank. However, neither the finance ministry nor the RBI has cleared the Exim Bank proposal. ICICI's Project Dreams assumes significance in the context of another financial institution the Industrial Development Bank of India's decision to become a bank. IDBI is in the process of appointing a global consultancy firm to formulate the universal banking strategy. One of the major worries of IDBI is the rising cost of funds. The one-man MB Athreya panel, set up to chalk out the vision and strategic directions for the IDBI, had recommended transforming the term-lending institution into a bank. The report submitted to the finance ministry last year recommended that the IDBI should become a bank and its subsidiary IDBI Bank should be merged with it as and when the regulatory barriers are lowered. The panel was in favour or adopting a group approach by exploiting the synergies of all group outfits like IDBI Bank, IDBI Investment Management Company and IDBI Capital Market Services Ltd. ICICI has already adopted a group approach and centralised the risk management for all the outfits under the ICICI umbrella.