Credit Crisis a Threat to India Outsourcers
A high-level U.S. analyst has said the mess on Wall Street means the end of the glory days of offshoring for India
by N Shivapriya
A top-ranked US analyst has said the events that shook Wall Street last week spell the end of the golden age of offshoring for India.
Days after Wall Steet's collapse, vice-president and principal analyst with US research firm Forrester, John McCarthy, said the scale of the crisis had rendered all previous studies including Forrester's own survey, released earlier this month, redundant, and that Indian IT providers should prepare for slower growth and lower profits.
"It is naive to say an economic slowdown is good because cost-cutting will lead to higher offshoring. This is no longer a recession, it is fundamental a re-structuring of financial services that is taking place," he told ET
from Boston, Massachusetts. Many analysts, including research firm, Gartner, had said there could be higher opportunities for Indian companies and for offshoring.
However, Mr McCarthy said there was already an impression that the financial services sector was over-staffed. Mergers and acquisitions and the conversion of large investment banks into commercial banks meant there would be fewer employees, fewer vendors and less extravagant IT budgets.
These developments, Mr McCarthy said, would have a huge impact. Growth from financial services, the most aggressive buyers of technology, he predicted, would 'go back to 25% and stay that way'. To put this in perspective, IT bellweather Infosys Technologies had shown a 50% growth in revenues from financial services clients in FY07.
What makes Indian IT vendors more vulnerable is their significant exposure to financial services clients—almost double that of their global peers as a percentage of revenue, according to Mr McCarthy.
"There is no denying it will particularly impact Indian companies. In a way, they are paying the price for having under-invested in marketing all these years. Margins will continue to drift down to 15% and there will be real pressure on the topline," he said.
Also, the big difference between the last slowdown and the current one is that offshore presence of global vendors like IBM and Accenture has swelled from around 2,000-3,000 employees to 60,000-70,000.
The profit margins of Indian service providers, according to Mr McCarthy, will move closer to that of their global peers, and barring one of two quarters of exceptional growth, Indian IT providers were unlikely to return to their historical growth rates.
Forrester's own study, released just before the crisis came to a head, and based on an extensive survey across North America and Europe, had found 40% of large businesses had slashed IT budgets, but a subset, 90% of enterprises in media, entertainment and leisure, were not cutting back on IT spends. While this holds some cheer for IT vendors, Mr McCarthy said these sectors could not match the spends of financial services.
Indian Economy: News and Discussion (June 8 2008)
Re: Indian Economy: News and Discussion (June 8 2008)
Businessweek
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Re: Indian Economy: News and Discussion (June 8 2008)
Hmm.. ICICI bank just dropped like a knife through its 52 week low and got killed by around 13% today. What is going on there? . Any new skeletons tumbled out of the closet out there ?
Re: Indian Economy: News and Discussion (June 8 2008)
everything has dropped like a stone. not a icici-specific problem.
Re: Indian Economy: News and Discussion (June 8 2008)
ICICI's 52 week high was $74.25 and today is selling for $22.13, or at leass than 305 of its 52 week high.
Is it a buying oppertunity?
Or still a falling khanjar ?
Is it a buying oppertunity?

Or still a falling khanjar ?

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Re: Indian Economy: News and Discussion (June 8 2008)
Rumors of ICICI going down. Theres a run going on against the bank. Walked out to the ATM (my salary account is with ICICI) and found a mob around the ATM. Sometime later, the ATM went bust.
I hope its just a rumor though. I have significant money with them
I hope its just a rumor though. I have significant money with them

Re: Indian Economy: News and Discussion (June 8 2008)
Pradeepe. Go and change that ASAP. Not time to think about it.
Re: Indian Economy: News and Discussion (June 8 2008)
Things are not exactly rosy out in USA. Folks how is the general health of Indian economy? My mother was saying how a tamil magazine "Anada Vikatan" had an article about Indian IT going down.
Re: Indian Economy: News and Discussion (June 8 2008)
Ya Pardepee, act now!!
Re: Indian Economy: News and Discussion (June 8 2008)
Folks, My reading is that the natural equilibrium for the Dow is around 8800 - 9000.
Those of fellow BR members who invest in MF in US on regular basis should stop buying, except employee contributed parts of 401 k, an additional amounts of disposable income should go into FDIC insured preferably joint accounts as it is insured upto 200,000.
Dont build too much equity into your home by sending extra cash. Think twice and try to amass liquid cash, there are bargains around till feb of 2009.
I had to buy a car and I got Acura TL with Navi for 31,000 out of the door, 2008 new no not a demo car, brand new. I wanted a ES350 fully equipped of 39,800 before tax, he came down to 34, 700 but plus tax. Eventhough I thought ES was better, than TL (3.2).
Cash is the king please keep it dry and ready to cherry pick. Camry LE you can get out of the door for 15,500 if do your home work and negotiate. All automotive companies are starved.
Oh by way even though I have out right cash to buy my car, I am going with 0.9% finance with bare minimum down payment.
Negotiate Negotiate Negotiate, Cash Cash Cash.
Wish I was on Nuke team
This my reading individual cases may differ, consult you Financial advisor and invest prudently etc etc. as Suzie orman says
People First
Money next
then Mortgage
Those of fellow BR members who invest in MF in US on regular basis should stop buying, except employee contributed parts of 401 k, an additional amounts of disposable income should go into FDIC insured preferably joint accounts as it is insured upto 200,000.
Dont build too much equity into your home by sending extra cash. Think twice and try to amass liquid cash, there are bargains around till feb of 2009.
I had to buy a car and I got Acura TL with Navi for 31,000 out of the door, 2008 new no not a demo car, brand new. I wanted a ES350 fully equipped of 39,800 before tax, he came down to 34, 700 but plus tax. Eventhough I thought ES was better, than TL (3.2).
Cash is the king please keep it dry and ready to cherry pick. Camry LE you can get out of the door for 15,500 if do your home work and negotiate. All automotive companies are starved.
Oh by way even though I have out right cash to buy my car, I am going with 0.9% finance with bare minimum down payment.
Negotiate Negotiate Negotiate, Cash Cash Cash.
Wish I was on Nuke team

This my reading individual cases may differ, consult you Financial advisor and invest prudently etc etc. as Suzie orman says
People First
Money next
then Mortgage

Last edited by John Snow on 30 Sep 2008 01:32, edited 1 time in total.
Re: Indian Economy: News and Discussion (June 8 2008)
If persons have information about banks etc, they should come out with it rather than create unnecessary panic.
Re: Indian Economy: News and Discussion (June 8 2008)
Panic is a personal reaction, be informed, be logical, read, evaluate, understand, think, get priorities straight, then walk to the bank cooly and then withdraw from bank premisis realising all of US are in together when we believe In God we trust!SK Mody wrote:If persons have information about banks etc, they should come out with it rather than create unnecessary panic.
Last edited by John Snow on 30 Sep 2008 01:38, edited 1 time in total.
Re: Indian Economy: News and Discussion (June 8 2008)
ya I apologise. I have no info on ICICI. It may be fairly stable. It was more on a personal level advice. Just so that the money is safe.
rgds,
fanne
rgds,
fanne
Re: Indian Economy: News and Discussion (June 8 2008)
Folks, please desist from rumour mongering about bank collapses. Under the current economic situation that sort of emotional speculation is the last thing we need, and no, I don't work for ICICI or any other bank.
Re: Indian Economy: News and Discussion (June 8 2008)
Is Humor mongering ok!Suraj wrote:Folks, please desist from rumour mongering about bank collapses. .
Can I Bank on it ? or
Will it also collapse under admin rights?

Re: Indian Economy: News and Discussion (June 8 2008)
Thanks Fanne.
One may want to keep in mind that there are segments of the Indian govt. that are not too keen to see private banks succeed. Expect JNU types to be on the lecture circuit showcasing their superior economic skills and talking about "overseas exposure" etc.
One may want to keep in mind that there are segments of the Indian govt. that are not too keen to see private banks succeed. Expect JNU types to be on the lecture circuit showcasing their superior economic skills and talking about "overseas exposure" etc.
Re: Indian Economy: News and Discussion (June 8 2008)
Sorry for the digression folks.John Snow wrote: Dont build too much equity into your home by sending extra cash. Think twice and try to amass liquid cash, there are bargains around till feb of 2009.
Snow garu. Why would you say that? I am one of those who sends in a whole lot more as principal amount along with the mortgage.
Re: Indian Economy: News and Discussion (June 8 2008)
The opportunity cost is higher if you send the extra cash to pay down your mortgage.SwamyG wrote: Sorry for the digression folks.
Snow garu. Why would you say that? I am one of those who sends in a whole lot more as principal amount along with the mortgage.
The home prices are going adjust further down so your equity will decline
The banks are starved of cash even after the bail out, the money that federal govt wants inject will come at higher cost meaning the beta is higher that is intrst is higher at base line that plus has to be offered to you get your from.your pocket that is still there will.be credit crunch
The idea of building equity is to cash out some time later
That means your dollar is less valued than what it is now
Cash works charms even better than sarah who Palins in comparison
Sare for the tipos from. Black berry
Re: Indian Economy: News and Discussion (June 8 2008)
There is no difference between ICICI and SBI in Indian context. They both are regulated by RBI to the smallest details. ICICI/HDFC have much better capitalization level than any of the sarkari banks. Anything can happen but this kind of unsubstantiated fear mongering against a particular bank in open forums is not a proper thing especially in such troubling times. Rumors can cause large real damages to institutions and investors for no faults of theirs.
People here somehow trying to make out as if sarkari banks are ultra safe or beacon of conservative Banking. I would not confuse inefficiency and backwardness for conservative values. People have short memory but it would serve well to check the recent history of sarkari banks including SBI. They have rather poor record of several times coming close to complete collapse and than GoI bailing them out with huge cash infusions. SBI is still paying-back money from last bailout by GoI in late 90s. Large private bank would also be similarly bailed out by GoI if they are in trouble.
People here somehow trying to make out as if sarkari banks are ultra safe or beacon of conservative Banking. I would not confuse inefficiency and backwardness for conservative values. People have short memory but it would serve well to check the recent history of sarkari banks including SBI. They have rather poor record of several times coming close to complete collapse and than GoI bailing them out with huge cash infusions. SBI is still paying-back money from last bailout by GoI in late 90s. Large private bank would also be similarly bailed out by GoI if they are in trouble.
Re: Indian Economy: News and Discussion (June 8 2008)
Whysa tho every indian bank is atijore for neta baaki sab Ram bharosa. Aakhir jaan tho bhi rambharosa desh may
Every budget indian FM takes tax payer money to write off NPA assets and who are the culprits?
Bharat Ratnas like Rahul Bajaj
Chidambaram Hon Minister etc etc
Every budget indian FM takes tax payer money to write off NPA assets and who are the culprits?
Bharat Ratnas like Rahul Bajaj
Chidambaram Hon Minister etc etc
Re: Indian Economy: News and Discussion (June 8 2008)
Katare: Can you furnish evidence for your claims against SBI?
No point in better capitalization, if they don't give loans out to the farmers, villagers etc. ICICI/HDFC are in the retail sector playing the middle-class market. Bulk of the country is not middle-class and is served by the sarkari banks along with the others.
Snow: Thanks. But how does it matter if I send in more cash now or later. The loan amount is not going to reduce, right?
No point in better capitalization, if they don't give loans out to the farmers, villagers etc. ICICI/HDFC are in the retail sector playing the middle-class market. Bulk of the country is not middle-class and is served by the sarkari banks along with the others.
Snow: Thanks. But how does it matter if I send in more cash now or later. The loan amount is not going to reduce, right?
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Re: Indian Economy: News and Discussion (June 8 2008)
Thats a huge leap of faith Katare saar. The last time there was a bank collapse in India, (I dont remember the bank name, it was a private bank), RBI engineered a take over of that by Punjab National Bank , just like the Fed is doing today. The govt is not obliged to bail out the share holders of ICICI .Katare wrote: Large private bank would also be similarly bailed out by GoI if they are in trouble.
Re: Indian Economy: News and Discussion (June 8 2008)
Most likely this bank would have been Lord Krishna Bank. A private bank which was based out of Cochin.vina wrote:The last time there was a bank collapse in India, (I dont remember the bank name, it was a private bank), RBI engineered a take over of that by Punjab National Bank ,
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Re: Indian Economy: News and Discussion (June 8 2008)
It turned out to be a rumor. Or more to the point, the run fizzled out, yes there was a run of sorts on the bank yesterday. But try preaching that to the person who has a lot of money (a lot being subjective of course) with the bank and has to come back empty handed when trying to get his/her money out. So its as first hand as it gets....SK Mody wrote:If persons have information about banks etc, they should come out with it rather than create unnecessary panic.
And the reason why people panicked - most folks had their salaries credited yesterday.
Today in DC, ICICI took a half page ad - trust in us was the underlying message.
Re: Indian Economy: News and Discussion (June 8 2008)
>>>Most likely this bank would have been Lord Krishna Bank. A private bank which was based out of Cochin.
No, it was the Nedungadi Bank. The collapse was due to some bad loans (deliberate loot by someone in the top management0
Lord Krishna bank was bought by Centurion bank of Punjab, which is now in the kitty of HDFC Bank.
No, it was the Nedungadi Bank. The collapse was due to some bad loans (deliberate loot by someone in the top management0
Lord Krishna bank was bought by Centurion bank of Punjab, which is now in the kitty of HDFC Bank.
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Re: Indian Economy: News and Discussion (June 8 2008)
No.. No. It was a more "upmarket" private bank with "strong" corporate backing.. If my memory is right, it was InduSind or something that became Centurion that was bought out by PNB.. I remember because one of my colleagues had his money in that bank and heaved a massive sigh of relief when it was bought by PNB. I am not sure.
Anyways, the stock market will be an absolute carnage today. All the Indian ADRs got murdered in the range of 12 to 15 % yesterday in the US. The market signals are ominous to say the least. I think we might see 15 to 20% drops in certain stocks today .
Anyways, the stock market will be an absolute carnage today. All the Indian ADRs got murdered in the range of 12 to 15 % yesterday in the US. The market signals are ominous to say the least. I think we might see 15 to 20% drops in certain stocks today .
Re: Indian Economy: News and Discussion (June 8 2008)
>>>No.. No. It was a more "upmarket" private bank with "strong" corporate backing.. If my memory is right, it was InduSind or something that became Centurion that was bought out by PNB.. I remember because one of my colleagues had his money in that bank and heaved a massive sigh of relief when it was bought by PNB. I am not sure.
Boss, I don't know if PNB bought any other bank, but Nedungadi bank was integrated with PNB.
Also, LKB was bought by CBoP which again was bought by HDFC. Integration of CBoP to HDFC is still going on..I know because I have accounts in all these banks.
Boss, I don't know if PNB bought any other bank, but Nedungadi bank was integrated with PNB.
Also, LKB was bought by CBoP which again was bought by HDFC. Integration of CBoP to HDFC is still going on..I know because I have accounts in all these banks.
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Re: Indian Economy: News and Discussion (June 8 2008)
It was "Global Trust Bank" which failed and was acquired by Oriental Bank of Commerce (A GOI bank)
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Re: Indian Economy: News and Discussion (June 8 2008)
I doubt this $700b bailout will be able to stop the death spiral the US banking system is in. After that bailout is announced, there will be further write downs and it surely will pull down a couple of more banks along with it and might need further rescues if it is one of the big remaining 3 (JPM, Citi and BofA).
This will drag on into 2009 for sure. There will be a massive stink that will be raised of Fed goes and acquires toxic mortgages at "hold to value price" (Wampum by any other name and massively overpay and capitalize the banks by stealth) and with sinking home prices, whose value keeps dropping . Lets face it, much of the new housing stock, especially those financed by NINJA and Alt A and subprime will have to be condemned and demolished . With entire neighborhoods blighted, there is no other alternative. That is a massive loss of capital. What the govt is hoping that with mortgage off the books, the banks will be strong enough to deal with the remaining problems.. I dont know how in a scene of sinking economy that will happen.
But fundamentally, will credit start flowing again, when the free market has all but collapsed and stopped working. With everyone trying to save themselves, no amount of reward will compensate for such risks. Even if the mortgages are off their books, I doubt they will start lending again.
I hate to say this, but I think the market based solutions wont work here. (yeah.yeah.. JNU types rejoice..
) . I think what will ultimately happen will be a Sweden like solution on a far larger scale. The entire US banking system will have to be nationalized.
Bade Saar had it right.. all bankers will end up working for the govermund and they will lend by fiat to industry and "priority" sector , just like the Sarkari banks in India (oh..what sweet revenge no ??
) . That is the only way you can get enough liquidity into the system and also take the short term losses on asset and share it for longer term upside , and when things stabilize, in say 3 to 5 years, the banks will be made private again under a much stronger regulatory structure and the tax payers get their money back..
This will drag on into 2009 for sure. There will be a massive stink that will be raised of Fed goes and acquires toxic mortgages at "hold to value price" (Wampum by any other name and massively overpay and capitalize the banks by stealth) and with sinking home prices, whose value keeps dropping . Lets face it, much of the new housing stock, especially those financed by NINJA and Alt A and subprime will have to be condemned and demolished . With entire neighborhoods blighted, there is no other alternative. That is a massive loss of capital. What the govt is hoping that with mortgage off the books, the banks will be strong enough to deal with the remaining problems.. I dont know how in a scene of sinking economy that will happen.
But fundamentally, will credit start flowing again, when the free market has all but collapsed and stopped working. With everyone trying to save themselves, no amount of reward will compensate for such risks. Even if the mortgages are off their books, I doubt they will start lending again.
I hate to say this, but I think the market based solutions wont work here. (yeah.yeah.. JNU types rejoice..


Bade Saar had it right.. all bankers will end up working for the govermund and they will lend by fiat to industry and "priority" sector , just like the Sarkari banks in India (oh..what sweet revenge no ??


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Re: Indian Economy: News and Discussion (June 8 2008)
My take on bank failures:
We still have a highly controlled and regulated financial system, and people expect and depend upon the govt to avoid major catastrophies. None of the major banks can go tits up. The govt will get a biggie take it over to protect the depositors.
Yes, I am talking about the depositors, not the shareholders. No one cares about those greedy lot
So, for the foreseeable future, the tier 1 banks are as safe as GOI itself.
In other words, the day ICICI Bank or HDFC fails, that piece of paper in your hand with Gandhi's picture, will be as valueless as the ATM card, and most probably, a flag other than the tricolour would be flying at that circular building in Delhi.
There was rumours of ICICI failure even last week. SHQ's small FD was moved out on insistance of in laws (story in Nukkad). My money is in HDFC, and I am not worried.
I have more confidence on HDFC. I tried to get a loan from them. I know!!!
We still have a highly controlled and regulated financial system, and people expect and depend upon the govt to avoid major catastrophies. None of the major banks can go tits up. The govt will get a biggie take it over to protect the depositors.
Yes, I am talking about the depositors, not the shareholders. No one cares about those greedy lot

So, for the foreseeable future, the tier 1 banks are as safe as GOI itself.
In other words, the day ICICI Bank or HDFC fails, that piece of paper in your hand with Gandhi's picture, will be as valueless as the ATM card, and most probably, a flag other than the tricolour would be flying at that circular building in Delhi.
There was rumours of ICICI failure even last week. SHQ's small FD was moved out on insistance of in laws (story in Nukkad). My money is in HDFC, and I am not worried.
I have more confidence on HDFC. I tried to get a loan from them. I know!!!
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Re: Indian Economy: News and Discussion (June 8 2008)
I don't understand zilch in finance. Even I knew something is wrong when listening to the mortgage ads on the radio in Massaland. No credit? No problem. Bad credit? No problem! Robbed a Bank? No problem! Killed your mom? No problem!! Take this money and buy that house. Should be surprised if the darned thing didn't come down!!
Even in massa, money doesn't grow on trees. Well, even if it did, certain number of trees need certain amount of time to grow certain amount of money. If you do stuff thinking that nine women can work for a month and make a baby, you are a moron.
Except that in Fall street, you used to get paid huge money for that fantastic idea.
Sathyam Sivam Sundaram guys. I should polish my resume now.
Or better, polish that maNvetti (spade) too. Might need it in near future.
Even in massa, money doesn't grow on trees. Well, even if it did, certain number of trees need certain amount of time to grow certain amount of money. If you do stuff thinking that nine women can work for a month and make a baby, you are a moron.
Except that in Fall street, you used to get paid huge money for that fantastic idea.
Sathyam Sivam Sundaram guys. I should polish my resume now.
Or better, polish that maNvetti (spade) too. Might need it in near future.
Re: Indian Economy: News and Discussion (June 8 2008)
I find a lot of people bad mouthing ICICI bank, though i have had some good experience with them... they have rude and some incompetent staff on front desks, otherwise things are same with most of the banks, but to suggest that ICICI is going to sink appears far fetched. ICICI has lower NPA's than most of the Indian Banks and on technology front they are better than HDFC Bank. I still maintain my salary account with ICICI even though my company offers the option of both ICICI and HDFC.
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Re: Indian Economy: News and Discussion (June 8 2008)
My personal experience is HDFC gives much better customer service, and also is stricter and more diligent in lending out money. That doesn't imply ICICI is crappy. They are an excellent bank.
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Re: Indian Economy: News and Discussion (June 8 2008)
Here is the story of how the government killed a bank:
http://en.wikipedia.org/wiki/Palai_Central_Bank
This event got embedded in the psyche of us poor mallus, and gave rise to cliches like "Whenever I ask, you have no money!! Did you have your account in Palai Bank", or "collapsed like palai bank" etc. Those days most of the wealth of the people around us was rice in the "paththaayam" (wooden silo) they didn't loose anything though.
A decade+ after that, there was a rumour that Federal Bank was going to collapse. People ran to the branches to get their money out. The story (not sure if true) is that the leading booze king helped the bank my making a huuge FD in cash to honour the withdrawals. Bales of money were hauled into the local branches from the local liquor shops. As everyone got their money back in the initial rush, people believed that the bank is sound, and went back home happy.
http://en.wikipedia.org/wiki/Palai_Central_Bank
This event got embedded in the psyche of us poor mallus, and gave rise to cliches like "Whenever I ask, you have no money!! Did you have your account in Palai Bank", or "collapsed like palai bank" etc. Those days most of the wealth of the people around us was rice in the "paththaayam" (wooden silo) they didn't loose anything though.
A decade+ after that, there was a rumour that Federal Bank was going to collapse. People ran to the branches to get their money out. The story (not sure if true) is that the leading booze king helped the bank my making a huuge FD in cash to honour the withdrawals. Bales of money were hauled into the local branches from the local liquor shops. As everyone got their money back in the initial rush, people believed that the bank is sound, and went back home happy.
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Re: Indian Economy: News and Discussion (June 8 2008)
OK, to clear up the air on ICICI. Here's the official communique sent to all -
ICICI Bank’s financial position sound; rumours baseless
and malicious: K. V. Kamath, Managing Director & CEO
ICICI Bank Limited (NYSE: IBN) is aware that rumours are being
repeatedly circulated in certain centres regarding the financial strength of
the Bank. The Bank states that these rumours are baseless and malicious.
As these rumours could create concern among the Bank’s customers, the
Bank reiterates that:
• ICICI Bank has a very strong capital position, having proactively raised
Rs. 20,000 crore (about US$ 5 billion) in June 2007, almost doubling
its capital base. It has a networth of over Rs. 47,000 crore (i.e. over
US$ 10 billion) and a capital adequacy ratio of 13.4% at June 30, 2008,
as against the regulatory requirement of 9.0%. This is among the
highest levels of capital adequacy in large Indian banks. This reflects
the healthy capital position and comfortable level of leverage. Its
banking and non-banking subsidiaries are also well-capitalised.
• ICICI Bank has consolidated total assets of over Rs. 484,000 crore
(over US$ 105 billion), which is diversified across a wide range of
asset classes in India and overseas.
• ICICI Bank is profitable. It made a profit after tax of Rs. 4,158 crore
(over US$ 900 million) in FY2008 and Rs. 728 crore (over US$ 155
million) in the first quarter of this year. This was due to the strong core
performance, which more than offset the impact of adverse debt and
equity market conditions in India and globally since the second half of
FY2008.
2
ICICI Bank Limited
ICICI Bank Towers
Bandra Kurla Complex
Mumbai 400 051
• ICICI Bank’s wholly-owned subsidiary, ICICI Bank UK PLC has, as part
of its normal treasury operations, a diversified investment portfolio.
ICICI Bank UK PLC has zero exposure to US sub-prime credit, and zero
non-performing loans. About 98% of its non-India investment book of
US$ 3.5 billion is rated investment grade and above, with about 89%
rated A- and above. In addition, ICICI Bank UK PLC holds cash
equivalent instruments (inter-bank placements and certificates of
deposit) of USD 1.1 billion. As on the last balance sheet date of June
30, 2008, ICICI Bank UK PLC had a capital adequacy ratio of 17.4%.
• The absorption of the impact of current market conditions on
investment portfolio valuation will not pose any challenge to ICICI
Bank’s capital position.
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Re: Indian Economy: News and Discussion (June 8 2008)
Hmm. The Govt talked up the market today by making nice soothing noises in ICICI's favor and also the green signal to the domestic funds to start buying.. However, I think this will be very short lived and selling pressure will continue. Make no mistake , the direction of the markets is definitely down. The market will drift lower, irrespective of what happens in the US Congress in terms of the bailout.
But gosh. ICICI sucks and sucks hard. Their damned trading service icicidirect crashes promptly if there is heavy volumes /or is unavailable or whatever, just when some event happens. That service is such absolute rubbish. The less said about their credit cards, the better, their service is an atrocity ..I could never reach their call center, if there is any questions on the bill they said , they load it with random charges and any promise they make over the phone to reverse is NEVER done so and they pass the call between some 10 people (managers, another manager, oopps call gets dropped, you call again, they dont know,, another merry go round.. you get the idea) and you give up in frustration.. Result, I stopped using the ICICI card some 6 months ago and I called them to cancel my card, but they don't.
I just hope that those ICICI folks in London did not take too much exposure to the UK real estate market. If there is an even bigger bubble than the US mortgage, it is the UK, Spain and Ireland markets and they are falling like dominoes. The ICICI guys I think are being too clever by half in by saying that they have zero exposure to US real estate.. They are overexposed to the Indian real estate market as well.. I think all in all, they are going to see big losses in their portfolio in India when the real estate scene goes more bad in the next 6 months. They burnt their fingers in the "personal" loan business and exited that, the 2 wheeler financing business saw delinquencies rising. Lending standards in India are far better than the NINJA loans of the US. I just hope that they had the good sense not to finance too many of those RE sharks who will disappear in a Musharaffian haste with Canadian visas when the s**t hits the fan and they did not invest in overpriced projects with massive violations of every rule in the book, and no clearances .. In a softening economy, they cannot even sell those at firesale prices if they had to.
But gosh. ICICI sucks and sucks hard. Their damned trading service icicidirect crashes promptly if there is heavy volumes /or is unavailable or whatever, just when some event happens. That service is such absolute rubbish. The less said about their credit cards, the better, their service is an atrocity ..I could never reach their call center, if there is any questions on the bill they said , they load it with random charges and any promise they make over the phone to reverse is NEVER done so and they pass the call between some 10 people (managers, another manager, oopps call gets dropped, you call again, they dont know,, another merry go round.. you get the idea) and you give up in frustration.. Result, I stopped using the ICICI card some 6 months ago and I called them to cancel my card, but they don't.
I just hope that those ICICI folks in London did not take too much exposure to the UK real estate market. If there is an even bigger bubble than the US mortgage, it is the UK, Spain and Ireland markets and they are falling like dominoes. The ICICI guys I think are being too clever by half in by saying that they have zero exposure to US real estate.. They are overexposed to the Indian real estate market as well.. I think all in all, they are going to see big losses in their portfolio in India when the real estate scene goes more bad in the next 6 months. They burnt their fingers in the "personal" loan business and exited that, the 2 wheeler financing business saw delinquencies rising. Lending standards in India are far better than the NINJA loans of the US. I just hope that they had the good sense not to finance too many of those RE sharks who will disappear in a Musharaffian haste with Canadian visas when the s**t hits the fan and they did not invest in overpriced projects with massive violations of every rule in the book, and no clearances .. In a softening economy, they cannot even sell those at firesale prices if they had to.
Re: Indian Economy: News and Discussion (June 8 2008)
Chidambaramvina wrote:Hmm. The Govt talked up the market today by making nice soothing noises in ICICI's favor and also the green signal to the domestic funds to start buying.. However, I think this will be very short lived and selling pressure will continue. Make no mistake , the direction of the markets is definitely down. The market will drift lower, irrespective of what happens in the US Congress in terms of the bailout.
But gosh. ICICI sucks and sucks hard. Their damned trading service icicidirect crashes promptly if there is heavy volumes /or is unavailable or whatever, just when some event happens. That service is such absolute rubbish. The less said about their credit cards, the better, their service is an atrocity ..I could never reach their call center, if there is any questions on the bill they said , they load it with random charges and any promise they make over the phone to reverse is NEVER done so and they pass the call between some 10 people (managers, another manager, oopps call gets dropped, you call again, they dont know,, another merry go round.. you get the idea) and you give up in frustration.. Result, I stopped using the ICICI card some 6 months ago and I called them to cancel my card, but they don't.
I just hope that those ICICI folks in London did not take too much exposure to the UK real estate market. If there is an even bigger bubble than the US mortgage, it is the UK, Spain and Ireland markets and they are falling like dominoes. The ICICI guys I think are being too clever by half in by saying that they have zero exposure to US real estate.. They are overexposed to the Indian real estate market as well.. I think all in all, they are going to see big losses in their portfolio in India when the real estate scene goes more bad in the next 6 months. They burnt their fingers in the "personal" loan business and exited that, the 2 wheeler financing business saw delinquencies rising. Lending standards in India are far better than the NINJA loans of the US. I just hope that they had the good sense not to finance too many of those RE sharks who will disappear in a Musharaffian haste with Canadian visas when the s**t hits the fan and they did not invest in overpriced projects with massive violations of every rule in the book, and no clearances .. In a softening economy, they cannot even sell those at firesale prices if they had to.
Has said, no problem.
So no issues.
Buy buy ( spello? )
Re: Indian Economy: News and Discussion (June 8 2008)
CPI-M takes mutual fund route for better returns
[IBNLIVE]
The Communist Party of India-Marxist (CPI-M) and the Bombay Sensitive Index (Sensex) have never been mutually dependent.
But now the CPI-M is taking the mutual fund route to build its cash reserve even as global markets are in a tailspin and the US financial crisis is looking grim.
Even as the party continues to berate Union Finance Minister P Chidambaram for not taking the cue and being obsessed with stock markets, it hasn’t been able to entirely shun the lure of greater returns.
The income tax returns filed by the CPI-M from the year 2002 to 2006 shows a substantial income from interests and dividends.
When the markets were bullish in 2006 and the Sensex crossed 14000, the party got Rs 1.92 crore from interest and dividends and a good part of it were earnings from investments in mutual funds.
So why the doublespeak?
"I don't think there is anything wrong in party investing money in mutual fund because mutual funds give more interest than the banks. We have invested only in public sector," MK Pandhe, General Secretary, Centre for Indian Trade Unions, said.
Pandhe’s explanation is interesting given that the same logic of greater returns was rejected by the Left when the government decided to park 30 per cent of surplus funds of Navratna and Miniratna PSU's in equity-based mutual funds.
The Left Front was up in arms and their opposition to exposing employee provident funds to the vagaries of the stock markets is well documented.
"Without earning more, pension quantum will not be higher and that is what we are worried about," Pandhe explained.
Importantly the Left made substantial investments in the US-64 scheme of the UTI and like many others had their fingers burnt in US-64 fiasco of 2001.
But when it comes to money, the communists are also saying its money, honey.

Re: Indian Economy: News and Discussion (June 8 2008)
ICICI has never squandered capital: K V Kamath
ICICI Bank has fought quite a few battles in the financial market. Over the past few years, the country's largest private lender has taken the fight for leadership right into the camp of foreign and large Indian banks. However, over the past few months, and especially in the last few weeks, it has been scrambling to fight off rumours and to allay apprehension of its stakeholders. Amid this, its CEO K V Kamath took a break and spoke to ET about the bank's perception and other issues:
Unlike other Indian banks, there is perception in the market and outside that ICICI Bank's aggressive lending practices, quality of its retail portfolio, global investments and loan book are much more worrisome than what appears on the surface.
It clearly appears that we have been subject to malicious rumours. I honestly cannot say why we have been picked up. Maybe in the banking sector, this is the pick which stands out. If you see the events in the past two weeks, there is a pattern in the way things are happening. We have not gone about and squandered capital. It is there and will be used effectively.
There are concerns relating to the way ICICI Bank has grown its international balance sheet. How valid are such concerns?
We have completely exited the non-India CDOs and CDS which were at around $700 million. There are no NPAs in our UK book on the lending side. Any book which is trading will have a mark-to-market impact. In our case, the book is not of assets which will move to a level that overall capital would be impacted.
Market fluctuations will occur. It will be accounted for at the quarter end. Between the UK and Canada, we are sitting on liquid cash of $1.5 billion. Around 30% of our UK book is term deposits. The UK trading book is there due to regulatory requirement. Indeed, there are fluctuations as even US banks, which were clearly of a rating that nobody had expected to move, have been impacted.
Given the aggressive pace at which your bank grew over the past four years, skeptics say that retail delinquencies would peak over the next couple of quarters. What is your view?
The perception is totally out of context. The retail business was done when the opportunity was there. When we saw interest rates climbing, which was a year-and-a-half ago, we started putting brakes. We find banks who still have not put the brakes. Good luck to them. They will come to know about it at the right time. The other reason for the slowdown was on unsecured credit where it became difficult to collect. This is part of a development process in any country.
This quarter we will peak on the provisioning. In some businesses, where we saw a little larger-than-expected delinquencies, we have exited them. We have tightened our credit parameters in various other products in the past six months. The effect of that will also start showing. In that sense, after this quarter, the peak should be behind us. We have exited 'unsecured'. Today, we are basically into auto and mortgage. The rest of the business – credit cards, personal loans, a little bit of two-wheeler loans – is to our existing customers via our branches.
In terms of business, the bank stated that the retail portfolio will grow 5-10%, while the international book will grow at 30%. What has changed now?
The retail book is growing at that pace even now. In the current global context, we would be happier to slow down our international growth, but not dramatically. I still believe in the Indian credit story, and a bank should continue lending, but with care.
In the current context, it is obvious that fund-raising could be tough. With your holding company still to get a regulatory nod, how will you handle future business growth of the subsidiaries?
If we are looking at almost 13.4% capital adequacy ratio against the required 9%, you can assess what the surplus capital would be. However, it would not be prudent to allow our CAR to come down. So, as and when, any of our subsidiaries need capital, we will have to look at options available. At the moment, the life insurance business is the most capital-hungry. We are expecting that something could happen in October. I'm sure that the government will consider allowing market access to these companies. If they allow listing of subsidiaries, then we will go ahead with that.
There is speculation relating to the succession plan in ICICI. Has it been finalised?
It's true that my term will end by April next year, and I will not be continuing with ICICI in an executive role. Beyond that, whether I have a role here or not, will be a call that shareholders and board members will have to take. It would be presumptuous on my part to make a comment on that. But if I am asked to serve, I will certainly consider it positively.
As far as leadership is concerned, we have groomed a set of leaders. There is a core group which has demonstrated its ability to build businesses and lead companies. The board will take a call. I can assure you that the process of finding a leader is not necessarily internal, but also external assessments have been going on for a year now. It is a formal process. A long list of names were looked at and as the case would be with any company, that list will keep narrowing down till the board takes a view.
There is a buzz that you will continue as the group chairman in an executive role.
No, I don't see myself as chairman in an executive role. That has been a policy we have never been comfortable with. Today, in a regulatory context also, it is not a feasible option.
http://economictimes.indiatimes.com/art ... stry-1.cms
ICICI Bank has fought quite a few battles in the financial market. Over the past few years, the country's largest private lender has taken the fight for leadership right into the camp of foreign and large Indian banks. However, over the past few months, and especially in the last few weeks, it has been scrambling to fight off rumours and to allay apprehension of its stakeholders. Amid this, its CEO K V Kamath took a break and spoke to ET about the bank's perception and other issues:
Unlike other Indian banks, there is perception in the market and outside that ICICI Bank's aggressive lending practices, quality of its retail portfolio, global investments and loan book are much more worrisome than what appears on the surface.
It clearly appears that we have been subject to malicious rumours. I honestly cannot say why we have been picked up. Maybe in the banking sector, this is the pick which stands out. If you see the events in the past two weeks, there is a pattern in the way things are happening. We have not gone about and squandered capital. It is there and will be used effectively.
There are concerns relating to the way ICICI Bank has grown its international balance sheet. How valid are such concerns?
We have completely exited the non-India CDOs and CDS which were at around $700 million. There are no NPAs in our UK book on the lending side. Any book which is trading will have a mark-to-market impact. In our case, the book is not of assets which will move to a level that overall capital would be impacted.
Market fluctuations will occur. It will be accounted for at the quarter end. Between the UK and Canada, we are sitting on liquid cash of $1.5 billion. Around 30% of our UK book is term deposits. The UK trading book is there due to regulatory requirement. Indeed, there are fluctuations as even US banks, which were clearly of a rating that nobody had expected to move, have been impacted.
Given the aggressive pace at which your bank grew over the past four years, skeptics say that retail delinquencies would peak over the next couple of quarters. What is your view?
The perception is totally out of context. The retail business was done when the opportunity was there. When we saw interest rates climbing, which was a year-and-a-half ago, we started putting brakes. We find banks who still have not put the brakes. Good luck to them. They will come to know about it at the right time. The other reason for the slowdown was on unsecured credit where it became difficult to collect. This is part of a development process in any country.
This quarter we will peak on the provisioning. In some businesses, where we saw a little larger-than-expected delinquencies, we have exited them. We have tightened our credit parameters in various other products in the past six months. The effect of that will also start showing. In that sense, after this quarter, the peak should be behind us. We have exited 'unsecured'. Today, we are basically into auto and mortgage. The rest of the business – credit cards, personal loans, a little bit of two-wheeler loans – is to our existing customers via our branches.
In terms of business, the bank stated that the retail portfolio will grow 5-10%, while the international book will grow at 30%. What has changed now?
The retail book is growing at that pace even now. In the current global context, we would be happier to slow down our international growth, but not dramatically. I still believe in the Indian credit story, and a bank should continue lending, but with care.
In the current context, it is obvious that fund-raising could be tough. With your holding company still to get a regulatory nod, how will you handle future business growth of the subsidiaries?
If we are looking at almost 13.4% capital adequacy ratio against the required 9%, you can assess what the surplus capital would be. However, it would not be prudent to allow our CAR to come down. So, as and when, any of our subsidiaries need capital, we will have to look at options available. At the moment, the life insurance business is the most capital-hungry. We are expecting that something could happen in October. I'm sure that the government will consider allowing market access to these companies. If they allow listing of subsidiaries, then we will go ahead with that.
There is speculation relating to the succession plan in ICICI. Has it been finalised?
It's true that my term will end by April next year, and I will not be continuing with ICICI in an executive role. Beyond that, whether I have a role here or not, will be a call that shareholders and board members will have to take. It would be presumptuous on my part to make a comment on that. But if I am asked to serve, I will certainly consider it positively.
As far as leadership is concerned, we have groomed a set of leaders. There is a core group which has demonstrated its ability to build businesses and lead companies. The board will take a call. I can assure you that the process of finding a leader is not necessarily internal, but also external assessments have been going on for a year now. It is a formal process. A long list of names were looked at and as the case would be with any company, that list will keep narrowing down till the board takes a view.
There is a buzz that you will continue as the group chairman in an executive role.
No, I don't see myself as chairman in an executive role. That has been a policy we have never been comfortable with. Today, in a regulatory context also, it is not a feasible option.
http://economictimes.indiatimes.com/art ... stry-1.cms
Re: Indian Economy: News and Discussion (June 8 2008)
BSE launches Currency futures trading.
Asia's oldest bourse, the Bombay Stock Exchange (BSE) on Wednesday launched currency derivatives segment (BSE-CDX) that would enable participants to hedge their currency risks through trading in the US dollar-rupee future platform.
The National Stock Exchange (NSE) had kicked-off exchange-traded currency futures for the first time in the country on August 29, while leading commodity bourse Multi Commodity Exchange of India (MCX) is expected to launch the facility soon.
MCX had secured the in-principle approval for commencing currency futures trading in August this year.
Earlier, participants had to depend on over-the-counter (OTC) products such as forwards, swaps and options to hedge their currency risks.
Securities and Exchange Board of India (SEBI) Chairman C B Bhave inaugurated the BSE-CDX platform on the BSE.
The market regulator and the Reserve Bank of India (RBI) are in discussions to bring about further relaxation in the currency trading norms, Bhave said."RBI and SEBI are working together to relax the currency trading norms," Bhave said.
The regulators have been trying to ensure transparency and timely settlement of transactions in the system, which are essential to develop a healthy financial system in the country, Bhave said."We have been trying to bring in assurance of settlement and transparency in the market ... the present financial crisis in global markets is an outcome of lack of faith on these principles," Bhave said.
Asia's oldest bourse, the Bombay Stock Exchange (BSE) on Wednesday launched currency derivatives segment (BSE-CDX) that would enable participants to hedge their currency risks through trading in the US dollar-rupee future platform.
The National Stock Exchange (NSE) had kicked-off exchange-traded currency futures for the first time in the country on August 29, while leading commodity bourse Multi Commodity Exchange of India (MCX) is expected to launch the facility soon.
MCX had secured the in-principle approval for commencing currency futures trading in August this year.
Earlier, participants had to depend on over-the-counter (OTC) products such as forwards, swaps and options to hedge their currency risks.
Securities and Exchange Board of India (SEBI) Chairman C B Bhave inaugurated the BSE-CDX platform on the BSE.
The market regulator and the Reserve Bank of India (RBI) are in discussions to bring about further relaxation in the currency trading norms, Bhave said."RBI and SEBI are working together to relax the currency trading norms," Bhave said.
The regulators have been trying to ensure transparency and timely settlement of transactions in the system, which are essential to develop a healthy financial system in the country, Bhave said."We have been trying to bring in assurance of settlement and transparency in the market ... the present financial crisis in global markets is an outcome of lack of faith on these principles," Bhave said.