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Is ICICI Bank getting bankrupt in india????

Disclaimer: Information provided in this post/blog is collective effort of various reliable sources and author is not responsible for any consequences!!!!

Hello Folks !!!!

This is the Latest rumor taking rounds in the internet and also among the people. My two cents about this baseless rumor.

First of all, ICICI Bank, the second largest bank of India and the largest bank in private sector, has straight away dismissed any problems with its ICICI UK exposure to Lehman Brothers Bonds. As per the news, officials of ICICI Bank, said its cumulative overseas exposure is less than 4 per cent of its consolidated assets and the bank has the ability to take any losses, if they arise.

Since the day Lehman Brothers declared Bankruptcy, there are big rumors running around in the market about ICICI bank's exposure to the troubled Lehman Brothers Bank and its Bonds. There have been questions raised about ICICI bank's solvency concerns. Needless to say ICICI Bank may take a hit of US$ 28 million in this year. (that will be Rs. 126 crores to be exact.). But Rs 126 crores is nothing when compared to the ICICI operation on domestic liquidity which is in the range of Rs 8,000 crore to Rs 10,000 crore and global cash and cash equivalents of $2 billion.

So, ICICI bank in India is safe and secure. As of today, they have enough reserves to counter the loss in UK/US market. That is mainly because their lost money in Lehman Bros is a minuscule amount compared to their reserves.

However, if all the panicked people withdraw huge amounts of money, no bank can survive. Not only that, failure of a bank can trigger failure of a large number of financial institutions and banks.

So, it is important to prevent rumors.............
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Unknown said…
September 30, 2008

Dear Sir/Madam

We greatly value your relationship with us. In the context of the developments in the international financial markets, we thought it pertinent to bring to you our perspective of the prevailing situation.

We would like to bring to your attention that the Indian banking system is well regulated and significantly insulated from global developments. This is because it is mandatory for all Indian Scheduled Commercial Banks to retain 34% of the deposit base in the form of Government Securities (SLR) and cash with RBI (CRR). Besides, sound policies of RBI have ensured prudent credit practices in the Indian Banking system.

ICICI Bank is already compliant with the BASLE II requirement in respect of risk management practices and capital adequacy. At 13.4%, ICICI Bank has one of the highest capital adequacy ratios in the Indian banking industry. Last year, ICICI Bank raised Rs. 20,000 crores (US $ 5 billion) of equity capital, which almost doubled our equity capital base. We have a net worth of over Rs. 47,000 crores (US$ 10 billion), again one of the highest in the banking industry in India We have consolidated total assets of over Rs. 4,84,000 crores (over US $ 105 billion), which is diversified across a wide range of asset classes across retail, wholesale and rural banking.

ICICI Bank is amongst the most profitable banks in India. In FY 08, ICICI Bank made a profit of Rs. 4,158 crores (US$ 900 million).

ICICI Bank has the highest credit ratings in the Indian financial sector. We have AAA ratings for our instruments, such as senior bonds, subordinated bonds, and deposits. We have the highest foreign currency bond ratings assigned to any Indian bank from Moodys and S&P.

We continue to invest in growth, indicating our confidence in the opportunities in the Indian market. In 07-08, ICICI Bank added 650 new branches, taking the total strength to over 1400 branches.

We thank you for reposing trust in us over the years. We look forward to setting new benchmarks in service levels in India and to create a bank that you will continue to be proud of.

As a testimony to the above ,please find below the clarification given by Reserve Bank of India:

Date : 30 Sep 2008     
RBI Statement on ICICI Bank's Financial Position       
There are reports in some sections of the media that based on rumours regarding the financial strength of ICICI Bank, depositors are withdrawing cash at its ATMs and branches in some locations.
It is clarified that the ICICI Bank has sufficient liquidity, including in its current account with the Reserve Bank of India, to meet the requirements of its depositors. The Reserve Bank of India is monitoring the developments and has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers at its branches/ ATMs.
The ICICI Bank and its subsidiary banks abroad are well capitalised. 
Alpana Killawala
Chief General Manager
Press Release : 2008-2009/412


Sincerely,

Rakesh Sah
Office of Head Service Quality
ICICI Bank Limited
September 30, 2008 at 5:19 AM
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