After retail, ICICI eyes digital opportunities in corporate sector, BFSI News, ET BFSI
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ICIC Bank, which has been cautious on bulky corporate lending, is looking to increase exposure to companies as it sees them benefiting from the Covid pandemic recovery. Corporate loans constitute 45% of the bank’s Rs 7.33 lakh crore loan book.
To tap the corporate loan pie, the company has launched a digital solution, aimed at profiting by offering a wider set of services to high-value clients.
The second-largest private sector lender also said that the corporates are slower in adopting digital solutions as compared to the retail segment, and added that the solution focuses on tech-based new age offerings.
A corporate needs a trusted partner, who will handhold and help manage business holistically.
Its newly launched ‘ICICI STACK will provide digital banking solutions to corporates, their channel partners, employees and other stakeholders.
The bank expects corporate demand also to pick up in the next economic cycle. The bank has doubled the number of current accounts in the last year, The bank has launched a new digital banking product that will provide transaction services, credit facilities, advisory and M&A services for companies and their vendors. It will also offer savings bank accounts to the company employees which will help it build its deposits.
Comprehensive product
The new comprehensive digital offering will help the bank connect with companies their vendors and also employees providing it with valuable information to assess the financial health of their clients besides multiplying opportunities for business.
The bank will offer this new product to 15 industries initially, like information technology, pharmaceuticals, steel and financial services. It has opened eight dedicated branches, five in Mumbai and three around Delhi to serve these customers. Another four branches focussed on these services will be launched later this fiscal.
The lender is not looking at it from a line-by-line perspective and expects the initiative to play into the overall profits.
About 90 per cent of the bank’s retail transactions have moved away from paper-based systems like cheques and termed the adoption of digital alternatives among corporates as “low”. Corporates have doubled up on digital transactions, but have a long way to go on it.
Corporate loan growth
The bank feels India will grow after the ravages of the pandemic and the same will come from both investment and consumption.
In such a scenario the corporate loan demand will also fire up, and added that its corporate loan book is a function of the opportunities in the market.
The bank had witnessed a 13 per cent growth in corporate advances in the March quarter as against 20 per cent on the retail front, and overall domestic loan growth of 18 per cent.
It can be noted that even before the pandemic, corporate loan growth was trailing for banks, which shifted focus to the more resilient retail segment amid asset quality reverses on the large value loans. Some experts say with demand affected, corporates are unlikely to up their investment activities, which typically result in loan growth.
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