How Chanda Kochhar\'s Plan For ICICI Bank Seems To Be Working

Raveena Singh


Market experts have been preferring private banks over public sector peers for the obvious reasons: lower debt on their balance sheets, less government control and a clear growth strategy. However, it is not to say that private banks lead a life free of bad loans. ICICI Bank and Axis Bank accounted for 85 percent share of the total gross non-performing assets (NPAs) of private banks by the end of March 2016.

ICICI Bank alone made up for 68.6 percent of the total NPAs. In a move to cut down its NPA tally, the bank sold Rs 1,600 crore worth of bad loans in Essar Steel to Edelweiss ARC on Monday.

Essar Steel owed the bank a total of Rs 3,600 crore. With ICICI Bank dumping nearly half of it on the asset reconstruction company, it is left with only working capital loans. 

The bank has been on a selling spree of late. 

In April this year it sold 9 percent stake in its general insurance venture ICICI Lombard and separately 2 percent stake in life insurance subsidiary ICICI Prudential for about Rs 2,200 crore.

As recently as yesterday, the bank exited the Indian subsidiary of global credit information company TransUnion.

All these measures -- selling bad loans or offloading stake -- have been clearly a part of Managing Director Chanda Kochhar's larger strategy to "focus on capital efficiency and further unlocking of value in subsidiaries." Speaking to the press, she hinted at a plan to make the bank a lean, mean machine.

It looks like the bank is on track to give Kochhar what she needs.

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