ICICI BANK LTD

e-Finance in India A Perspective Geneva October 24, 2001 Agenda  Traditional SME Banking in India  e-Finance in ICICI Bank  e-Finance and SME  Legal Structure in India  Going Forward 2 SME Banking in India  SME in India characterised by      Low capitalisation and limited assets Geographical diversity and high mortality Poor access to capital markets Cash intensity in transactions Lack of credit information    Poor financial disclosure on account of tax issues Directed lending based on Central Bank guidelines High risk perception has led to high borrowing costs 3 Agenda  Traditional SME Banking in India  e-Finance in ICICI Bank  e-Finance and SME  Legal Structure in India  Going Forward 4 ICICI Group - lending approach  Focussed product approach to SME sector  Lending to SME based on strong corporate linkage  Product and delivery technology dependent  Pooling of assets at central hubs enables optimum monitoring  Lending approach  Sectoral and liability led  Parameterised 5 Relationship buildup …. Step 1 SME relationship through “enhanced checking account” Step 2 Transaction oriented products the key drivers Step 3 Subject to satisfactory transaction record, SME elevated to quasi credit relationship Step 4 Offer takeout financing Step 5 Offer regular long term credit 6 Key Products  Leverage corporate linkages through  Vendor financing  Dealer financing - with and without recourse  Standalone, 3-P and rent securitisation  Equipment financing  Transaction oriented products  Web based Cash Management Services  Online FX applications  Internet based payment system 7 Electronic products Bill Junction Utility bill payments Pay Seal electronic payment system Corporate Infinity online transfer/ settlement system e-banking in ICICI ICICI Markets online FX, Debt, SME Portal ICICI Direct and ICICI Select Business Multiplier web interface 8 Some innovative e-initiatives  Customer queries routed to “Call Centres”  Intermediate step to web enablement  Staff trained to handle complex transaction query  Incentivise clients to use web platforms  Introduction of pre-loaded smart cards for small value purchases  Smart card solutions for fleet and transport owners  Dedicated SME Portal for non financial solutions 9 10 Agenda  Traditional SME Banking in India  e-Finance in ICICI Bank  e-Finance and SME  Legal Structure in India  Going Forward 11 Advantage SME .... e-banking leads to:  Lower cost of delivery  Speed and wider reach  Credit information through transaction analysis  Risk mitigation  Through credit scoring model - statistical  Portfolio based approach  Corporate information 12 Agenda  Traditional SME Banking in India  e-Finance in ICICI Bank  e-Finance and SME  Legal Structure in India  Going Forward 13 e-banking related laws ….  e-banking governed by:  Information Technology (IT) Act, 2000  Internet Banking guidelines of the Central Bank   India is the 2nd country in Asia to initiate technology related act e-banking encouraged through:  Focussed legislation  Access to IT skills, computers and incentives to ISPs 14 Salient features of IT Act ….   Drawn as per the UN Model Law for IT Legal recognition to  Electronic records  Electronic contracts  Digital signature  Appointment of certifying authority and controller  Issuer of public and private key  Controller - repository of all the signatures  e-Governance- Filing of documents in e-form 15 Central Bank guidelines ….  Bank to have security policy approved by Board of Directors  Introduction of logical access control systems  Security buffers between bank system and internet  Products to be compliant with domestic foreign exchange regulations  Setting of inter bank payment gateway  Mandatory disclosure of risks in internet based dealings 16 Agenda  Traditional SME Banking in India  e-Finance in ICICI Bank  e-Finance and SME  Legal Structure in India  Going Forward 17 Creating the “e” wave ....  Encourage internet/ “e” usage  Voice over Internet Protocol (IP)  Telecom infrastructure  Tax incentives for internet based transaction  Incentive for electronic settlement  Legal validity for e transaction  Consumer Protection Act  Negotiable Instrument Act  Acceptance of electronic based document 18 Creating the “e” wave .… Cont.  Capital Account Convertibility  Exchange Control Laws  Strengthening the Intellectual Property Laws 19 Thank You !!!