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“ I feel women are always better at managing finance.” In India’s typically male-dominated banking sphere, this may be regarded as a bold statement. But to Chanda Kochhar, CEO and Managing Director, ICICI Bank, India, it is a way of life. It has only been since mid-2009 that Kochhar took over the helm of India’s second largest bank, but her mark has been made. Already, the bank’s net profits posted a 16.8% increase for the first quarter of 2010.
Noted for her colorful and vast sari collection and her matching accessories, Kochhar has not let the acclaim go to her head. She has remained strong-willed and focused as ever, and her resolve has only grown.
Kochhar, a management graduate from the highly esteemed Jamnalal Bajaj Institute of Management Studies in Mumbai, joined The Industrial Credit and Investment Corporation of India Ltd (ICICI) just over 25 years ago as a management trainee. In a way, Kochhar’s growth can be traced alongside the phenomenal expansion of the bank itself over the last several years.
Kochhar teed off her career by handling projects related to various industries including paper and petrochemicals. The first turning point occurred when ICICI decided to enter commercial banking in 1993 and Kochhar was asked to be part of the core team that set up the process. ICICI was on an aggressive development run and Kochhar was one of the few who kept up with the pace. When the bank formed the Infrastructure Industry Group, which formed a pool of expertise on the rapidly growing telecom, transport and power sectors, Kochhar was asked to head the division.
It was in 2000 that Kochhar developed her wings. She jumpstarted ICICI’s retail division and it was here that her knack to convert challenges into opportunities came to the fore. To move ahead of the competition, Kochhar kept her bank’s branches open 12 hours a day unlike others whose doors remained open only for four to seven hours. She was also one of the early bankers to promote electronic banking in India, installing 2,000 ATM machines across the country. “We took the decisions to do this when retail banking was very small and no one thought growth would be enough to justify 2,000,” she muses to CNN.
Under her sharp strategic planning, the bank sped ahead to become the largest retail financier in India by 2005, earning the distinct honor of “Best Retail Bank in India” for five consecutive years by Asian Banker. Parallel to ICICI’s success was Kochhar’s own growth. In 2007, she became the bank’s Joint Managing Director and CFO, and under her watchful eyes ICICI began to focus more on international clients.
“Growth need not be aggressive and growth need not always mean
balance sheet growth.”
Chanda Kochhar, 2009
But by the beginning of 2009, the financial crisis acted as a major speed breaker to ICICI’s unmitigated climb. The bank’s exposure to Lehman Brothers was viewed as potentially dangerous. With ICICI’s U.K. division holding senior bonds worth $72 million of the ill-fated American bank, nervous shareholders sent the stock tumbling while worried depositors began withdrawal of accounts.
Despite reassuring its customers that Lehman Brothers transactions constituted less than 1% of the U.K. branch’s total assets, the Indian bank’s shares lost two-thirds of its value. Adding to this, over the past one year, the weakened ICICI could not cope with aggressive competition from rivals. According to a McKinsey report, ICICI had been losing market share to the State Bank of India, which is the country’s largest lender. Other players such as HDFC and Axis Bank also upped their game and ICICI had been a bit slow on the uptake. SBI’s market share of assets had risen to 18.4% in 2009 from 15.9% in 2007, while ICICI Bank’s share had declined from to 7.2% from 9.7%.
Kochhar, it seems, stepped in to the CEO’s shoes at the right time. One of her first challenges was to rearrange the cost structure of the bank. “The immediate focus will be on the deposit structure and to focus on credit quality,” she specified to Rediff. She wants to amplify low cost Current And Savings Account (CASA), which takes up 26% of the bank’s portfolio at present, so that deposit costs are reduced. This in turn will increase the bank’s net interest margin, which is the difference between its earnings through loans and expenditure on deposits. Kochhar is also planning to add 600 branches this year bringing the total to 2,000 in order to weaken their dependence on direct sales agents. “Overseas, we have been depending on public deposits, bonds and inter-bank borrowings to build assets. The cost of bonds is high. We will use deposits to replace bonds,” she reveals further to Livemint.
By 2009, Kochhar had been ranked 20th on the Forbes list of the most powerful women in the world and in business. A Bollywood movie lover who highly enjoys shopping with her daughter, Kochhar’s 25 years with ICICI have left impressionable footprints all along. And now, as she continues on her journey, there is no dearth of challenges. “But I have no hesitation in saying that I absolutely love my work. It is my passion as well as my relaxation,” counters Kochhar in Tribune India. A woman CEO in India’s banking world may be unusual, but it seems that a personality like Kochhar is an even rarer and welcome advantage.
Image Credit: The World Economic Forum on Flickr under a Creative Commons license
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