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ICICI to operate as universal bank within existing framework, says Kamath

ICICI Limited is well-positioned to operate as a universal bank within the existing regulatory framework, its chairman K V Kamath said today.

Kamath said that the diversified financial functions of ICICI and its subsidiaries allow the financial institution to become a universal bank.

''Regulations stipulate a time-frame for financial institutions to become universal banks. We are not going to wait for that. Our strategy is to position ourselves to operate as such an entity within the framework of the existing regulations,'' asserted Kamath.

He said that to operate as banks, FIs will have to abide by the priority sector guidelines of the RBI. They will have to earmark a certain proportion of their loan portfolio to sectors recognised as priority areas.

''Banks are not being able to create agricultural assets. These are the issues FIs will have to look into,'' he noted. On the asset quality of ICICI, he said that the non-performing assets curve of ICICI has flattened. ''Asset quality issues are determined by what happens in the overall system. Suppose the commodities business does well, then the asset quality will be better,'' he opined.

Kamath said that ICICI has during the last two years relied on structured products, resulting in better servicing of debt assets. The ICICI chief said that the adoption of United States Generally Accepted Accounting Principles in the financial results enable better understanding of the company's performance to foreign institutional investors holding 35 per cent stake in ICICI.

Instead of borrowing from abroad, Kamath said, the company is creating 'synthetic' dollars by undertaking currency swaps for its clientele. He added that ICICI is working towards giving momentum to floating rate products.

The ICICI board approved an employee stock option scheme for the employees of the financial institutions.

Although, the nod by shareholders in 1993 to the scheme enables the company to issue upto one per cent of subscribed capital, the board decided to take a fresh shareholder approval.

The proposal for issue of ESOPs upto one per cent of the capital would be placed for approval at the annual general meeting on July 30.

UNI

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