Balberan, Jan Maxin R.             ITETHIC                                 April 11, 2008

ICICI Bank Case Study Guide Questions

1. What is ICICI Bank's innovation?

    

The ICICI bank provides insights on how formal banking can convert the poor into customer, at the same time empowering the poor by doing transaction to them.

2. What is special about RBI's pilot project with NABARD in 1991?

    

The pilot project in 1991 purveyed micro credit to the rural poor by linking self help groups (SHGs) with banks; ” a healthy microfinance sector leads to a healthy finance sector in general. This mutual link has to be established by the microfinance institutions / NGOs and realized by the policymakers.”

3. According to Mahajan, why are the transaction costs of savings in formal institutions as high as 10% for the rural poor?

    

“According to Mahajan, the transaction costs of savings in formal institutions were as high as 10% for the rural poor. This was because of the small average size of transactions and distance of the branches from the villages.”

4. What are some of the problems of MFIs in India?

    

Most of the problems with MFIs are due to the fact their primary focus has been on access to credit. They have small loans; the key to sustain the operation is scale.

5. What are the two innovative BOP models of the ICICI?

    

ICICI developed commercial retail on subsidiary bank and for R&D for new technology.

6. What is the connection between Grameen Bank and Bank of Madura?

    

Both Grameen Bank and Bank of Madura used strategies to make the BOP a market.

7. Describe ICICI's three-tier system. Discuss why it is three-tiered.

    

   • ICICI vs. Commercial Banks
   • ICICI vs. Rural Banks
   • ICICI vs. Cooperatives and Special Banks

The three-tiered dominates the market. They provide 3 tier that will accommodate to different people on different locations.

8. What are the 3 essential steps in the SHG process? Comment on why each step is necessary.

    

   • Save
   • Lend what you saved
   • Borrow and used it based on your needs

The steps make the person more responsible in handling money.

9. Discuss the NABARD checklist for SHG's. Comment on why each item on the checklist is necessary.

    

First the group must have 15-20 members’ falls under the BOP. There is a fixed monthly that all members should know. Saving must be only for internal use and all members should be present at the same time. This enhances trust between group members. Trust is important especially when money is involved. This also teaches the members on how to manage the group’s money wisely with the consent of other members.

10. What is the impact of microlending in a household according to a NABARD study?

     

This gives a positive impact with each group members since they have developed communication skills.

11. Discuss the possible implementation of a smart-card based payment system? Would it work? Why?

     

The smart-card serves as debit card which holds specific value. This will eliminate cost and time in cash transferring activities. Since it has promising benefits, the only thing that it need is an IT infrastructure that will support the smart-card.

12. Discuss the quote: "Banking with the poorer has undergone a paradigm shift. It is no longer viewed as a mere social obligation. It is financially viable as well". Do you think this quote can be applied in the Philippines? Discuss.

     

The quote describes the poor as a potential market and not just a social obligation. Bank will not only cater people with money but all people who can save money which includes even the poor people.

It is possible since anyone can save money and if ever Filipinos are uneducated on the matter, the bank can teach the Filipinos how to save then all the process will follow.