Two years ago when Chanda Kochhar took over at ICICI Bank, she not only had to fill in the large shoes of doyen KV Kmamath, but also grapple with the system that had its back to the wall. The Lehman crisis had let to a flight of money to public sector banks from several private sector banks. Her owns banks' balance sheet had been contracting for three quarters with several stalwarts leaving the ship or were soon to quit.
In a turmoil-filled scenario, she brought a virtual turnaround in two years, which few expected. As of now, the bank is firmly on the growth path with loans and balance sheet registering growth in FY11. She has increased branch count by 80% in two years with some quick acquisitions. The percentage of low-cost deposits jumped from 29% to 45% in these years. However, this hasn't come around without taking risks. There is more investment in non-government bonds, more risk weighted assets in an economy that is showing signs of slowdown. In an interview with CNBC-TV18, Chanda Kochhar, MD & CEO, ICICI Bank said that the banking sector is likley to grow at a robust pace of 18-20% in coming months despite the slowdown in the economy. Citing her views on RBI's mid-quarter credit policy announced on June 16, she added that another 50-75 bps rate hike is likely in the rest of financial year. She further elaborated, "I do expect that during rest of the financial year as well, liquidity is going to be tightly managed. So, in that sense the increases will be passed on to consumers." Also Read: Expect continuation of tight credit policy says Narayan Below is the verbatim transcript of her interview with Latha Venkatesh of CNBC-TV18. Also watch the accompanying video. Q: Will you be able to maintain the growth momentum and whether growth would start faltering because of the slowdown? A: There is some slow down in the economy, but let me break this up into two parts. One is the clear slowdown in a way on the retail side where the rate of growth in car sales and the rate of growth in new housing registrations has gone down. So clearly, the growth will not be as fast as what one could have expected last year. But, there is still some growth and that is where the retail growth will come from. On the corporate side, the slowdown is clearly on the fact that in the last few months no new projects have been announced. But, still the fact of the matter is there were many projects which were announced in the last year and the year before that for which we have done our approvals. Now those projects are still kind of continuing through their implementation. So, the next two years the Indian banking credit growth will just come out of approvals that have been done in the past and the projects that are going to their implementation. So, while the growth rates for industry and therefore us may not be as high as 25% is something that many of us must have expected a few months ago. But, still 18-20% growth is quite possible, keeping these factors in mind. Q: What would be ICICI's own projection because you were speaking about 22%. Looking at the economy you think that needs to be scale down? A: Yes, so we are also talking of now an 18-20% a growth rate. Our growth rate will be similar to the industry growth rate, which is 18-20%. Q: So when is ICICI getting to the situation where you better the industry growth? That was the big ICICI legacy and obviously because of the global turmoil and whole host of reasons, you all scale down considerably. When do we get to that growth trajectory in your strategy? A: Yes, very clearly in the time of one year we would get to that trajectory as well. If you see the last two or three years evolution, in last two years, at one point we were actually contracting some amount of loans. So, we were in total terms growing slower than the industry. Last year, our growth on corporate was faster than the industry though retail business was still contracting. So, on total basis its just about grew the industry growth rate. So this year, our business will more or less will be in line with the industry growth rate. The next year we would be a little faster than industry growth rate. Q: That
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