The demonetisation move by the government has led to a spurt in value of transactions done via mobile and other online modes, says ICICI Bank‘s MD & CEO Chanda Kochhar. Digital and non-cash transactions have gained traction and a large number of inactive debit cards have also started being put to use, she says.
The demonetisation move by the government has led to a spurt in value of transactions done via mobile and other online modes, says ICICI Bank’s MD & CEO Chanda Kochhar. Digital and non-cash transactions have gained traction and a large number of inactive debit cards have also started being put to use, she says.
In a discussion with CNBC-TV18 Kochhar shared details of the steps taken by the bank to make cash available across all its branches and ATMs, including micro-ATMs in rural and far-flung areas.
To ease off the cash crunch the bank has doubled the usage limit for debit cards, she says.
Below is the verbatim transcript of Chanda Kochhar’s interview to Ritu Singh on CNBC-TV18.
Q: Since November 8 it is now 10 days that the demonetisation drive was announced. How have banks been coping up so far? Have the queues gotten shorter? How much longer do you think before normalcy returns to the economy?
A: The queues have gone shorter, the footfalls have come down. I think gradually in fact we are moving towards normalcy. The number of transactions that we did on the initial days, now the number of transactions are much less. The distribution of currency is only kind of increasing.
So, I want to give this comfort that the currency is getting moved to more and more interior places. Now the Rs 500 denomination notes have also started coming out. So, as that supply increases, you will see more and more ATMs working on the Rs 2000 and Rs 500 notes. So, gradually the queues would come down even more.
Q: What has been the impact on the banks because while this has paralysed the economy in the initial phase, it is also acting as a catalysts for the digital payment ecosystem. What has been the response in your debit and mobile and online transactions post this move?
A: First of all, if you look at the banks, they have geared up their scale so as to be able to handle this increase in transactions with the branches. Then they worked towards recalibrating the ATMs; we were the first bank to start recalibrating it towards the Rs 2,000 note and the Rs 500 note. We are all working towards making sure that the currency reaches as remote areas as possible, reaches the business correspondents.
So, as we speak, for us also more than 5,000 business correspondents have received currency and so on. Then comes the focus on the digital channel; I think this is a great transformation that is happening in the economy where people are now being more and more open to use digital channels.
On the first day itself, we announced that we doubled the limit for the debit card usage and we have seen that we are currently at run rates where the debit card transactions are double than the normal rate for us. The value of debit card transactions has gone up, the value and the number of transactions on the mobile banking have gone up substantially.
There is a huge demand for installation of point-of-sale (POS) terminals and we are all installing those. People whose debit cards were so far lying inactive, they have started using them. So, there is a huge drive towards the digital and no-cash kind of modes of payment.
Q: Talking about the POS terminals, that is one thing that the banks are doing other than ATMs and we understand only 10 percent of the over 2 lakh ATMs have been recalibrated so far. What steps is the bank taking to reach the cash to the far flung areas, to the rural areas where there are fewer ATMs and fewer bank accounts and debit card usage?
A: The rural areas have the micro ATMs, they have the business correspondents. First of all, wherever we have branches in the rural areas, we have been from day one making cash reach there. However, now, as I said, the banks have started reaching cash to the business correspondents as well.
There the micro ATMs are working; some of the camps that I talked about, that talks about making cash reach the remote areas. The mobile vans that I spoke about, that is about making the cash reach the far flung areas.
Q: Could you give us some figures in terms of the deposits you have received so far and the exchanges you have made at ICICI Bank?
A: If I give you rounded numbers end of day, the deposit inflow is about Rs 32,000 crore.
Q: Any exchange figures what transactions you made in that front?
A: About Rs 1,500 crore.
Q: Also we have been speaking to a slew of bankers on this demonetisation drive, there were various suggestions for instance a lot of the execution could be better say for example if the Rs 2,000 note was the same size as the Rs 1,000 note, perhaps the ATMs would not have to be recalibrated or for instance if there was higher printing of Rs 500 notes to begin with and then perhaps the Rs 2,000 denomination notes could have been introduced, the execution could have been a lot better. What in your view could have been better now when you see in hindsight, there is obviously being a lot of promise to the common man, what could have been done better?
A: Well, I think I always focussed on saying that what we have available with us, how do we make it work the best and therefore my focus is to say that, there is a lot of Rs 2,000 currency available. Let’s make sure all of us work our logistics so well that we spread it as much as possible and make it reach as remote places as possible. Let take our innovation to that extent that we very fast start recalibrating the ATMs that is why we were the first ones to kind of start it and gradually as the Rs 500 note comes out that will also start easing the situation.
Q: Just also wanted to understand you are focussing a lot of the bank’s efforts towards this recalibration and also dealing with this whole demonetisation exercise. In the meantime are you seeing any impact on the corporate book in terms of the loans against property (LAP) portfolio or perhaps cash collections from the MSMEs, what has been the impact on that end?
A: While there is a lot of focus on doing this and as I said we actually even shifted many of our employees from other departments to do this, but that does not mean that the focus from the other areas go away. I think the regular lending business, the resolution, the collection etc there are teams focussing on that as well and right now it is too early to either think of any positive or negative impact on those, I think lets watch. We will have to watch the actual impact as this money goes back into the formal economy and goes back into the formal gross domestic product (GDP).
Q: Just one last question 86 percent of the currency is being made invalid as of November 8 and that is slowly being replaced. Is there enough cash in circulation now is there no need to panic?
A: I would say that there is no need to panic. There is lot of currency in the country. We all have to understand that it does take time logistically to move it around and therefore you feel this intermittent pressure even under branches, but the currency is there and it will keep moving continuously.
Secondly, yes the Rs 500 note supplies have started coming out, so gradually that will also improve further and the third is that I will urge everybody to start using as much of non-cash ways of making payments as possible, so I think this is a golden opportunity to start getting used to that as well, but yes queues are coming down, footfalls are coming down and as more and more currency starts moving this will become only better.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.