India's largest private sector lender, ICICI Bank, on Tuesday said it can mobilise up to 75 billion dollars in the next three to five years to meet the growing economy's credit requirement by leveraging the bank's just concluded five billion dollar public offer.
"Banking is all (about) leveraging... we just now concluded the five billion dollar public offer... this can help us raise funds from borrowing in the ratio of one to ten," ICICI Bank Managing Director and CEO K V Kamath told PTI.
This coupled with internal generation could help us generate funds between 50 to 75 billion dollars that could be used for the credit needs of the country, about whose sustainable high growth the banker was bullish.
Kamath, however, declined to comment on any of the bank's financial plans and borrowing details. Within a month of its successful equity offer in domestic and international market, the bank today closed a syndicated loan of 1.5 billion dollars (in yen denomination), which is the largest ever such borrowing by an Indian financial institution.
ICICI had raised about 6.5 billion dollars in the previous financial year to meet the growing credit requirements.
On the issue of further hitting the equity market, Kamath said that the bank has no plans to go for this route for at least three years and that the bank was in a comfortable position to meet the credit demand put up by the fast growing economy. "If the economy grows at a high pace, which I have no doubt about it, then the banking services sector also grows... in case the economy grows by about ten per cent annually, the financial services sector will grow by 25-30 per cent.
"This would mean doubling the size of the institution in three years," he quipped.
Kamath said that the follow-up equity issue had given the bank sufficient flexibility to meet the immediate credit requirement of its insurance and mutual fund business, for which ICICI has sought permission from the Reserve Bank to create a holding company.
"There are hardly any issues on the subject... as a regulator RBI (has) got to satisfy itself," he said when asked about the reports of sharp differences between ICICI and the apex bank.
Attributing the ongoing controversy to the media hype generated on the subject, Kamath said that RBI has recently issued a discussion paper on the issue and "we would submit our views in due course."
As part of efforts to leverage funds for the fast growing insurance business, which is estimated to be surging by about over 100 per cent, ICICI had sought to separate it from the Bank and create a holding company for insurance and asset management businesses, where it was planning more equity infusion from private participants.
"We had thought of private placement of the equity for the holding company... eventually, we can also go to the public investors," he said.
Kamath did not appear unduly perturbed over the delays in getting the clearances from RBI even after getting a nod from the Insurance Regulatory Development Authority and Foreign Investment Promotion Board, saying that the issue would be cleared in due course. "It is a straight forward proposal...I'm hopeful (for the deal to go through) .. there is a regulatory process and we are following this," he said.
"Since we have already raised the capital, we are not necessarily constrained immediately.... Growth in insurance business is not to be impacted because of the delay... yes, for the longer term, a structure is needed but there are no issues to be worried of at the moment."
Presently, the insurance business requires about 500 million dollars annually and going forward it could be up to 750 million dollars a year, he said. On the possible valuation of the insurance business, Kamath said that the Bank was earlier contemplating diluting five per cent stake in the holding company for over 500 million dollars.
"By our estimation, the valuation could be about 11 billion dollars," he said. The proposed creation is structured that can create the market independently, he said while emphasising that ICICI would be fully behind the new entity.
