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The Money Channel Interview/K V Kamath

"We are starting off with stocks because it is a well-understood product."

India's capital market is going to see a major change in the way people trade. Online trading is all set to become a reality soon. ICICI, India's premier financial powerhouse, is all set to tap this market. Managing Director and CEO K V Kamath spoke to Aravamuthan Sasikant about Internet broking, cyber laws, and how government and SEBI can play an effective role.

From where and how do you expect volumes to come for you in internet trading?

Cyber cafes are a very potent way from where I could expect trading traffic. Even in Korea online trading-- in what they call as cyber saloons (the equivalent of our cyber cafes)-- has revolutionised trading. I guess we are in for a fair degree of revolution in trading.It will be trading not only in stocks but also in a whole range of financial products online. That is going to be the key to the future from where we will get volumes.

What are the other financial instruments that you plan to bring online?

We are starting off with stocks because it is well-understood and a ready- to-use product. Mutual funds will be next. We will move on to debt instruments, gilts and insurance in due course.

How about security on the net?

I am not too concerned about security. You talk to the net gurus and they advise not to plan your net initiatives on constraints; constraints are overcome. If indeed there is an issue, it will be resolved by the time I reach there. This has been proven time and again on the net. Two years back there was a great debate whether business-to-consumer (B2C) will work. Shopping in the last two holiday seasons has proved otherwise. The glitches were not in the B2C end, but in the physical delivery capabilities in this case. If you look at the security issues, the message is that things have changed completely. Developments take place in this platform in a dynamic manner. We are not worried about traffic and speed; I very well know the constraints under which we operate.

What are these constraints?

When we talk of convergence and IT in this country we need to improve the infrastructure. There is a big difference between a 28.8 kbps line and a T1 line (48mbps). Try downloading Netscape 4.7 from the net-- it will take you one hour if you are lucky because you will bumped off five times. If you have a T1 line you can download it in two and half minutes. That's the difference between efficient and inefficient use of the web. These constraints are being overcome and luckily for us private competition has been allowed. As a couple of other walls fall, things will improve. A good example is opening up of gateways to private players.

What will be the contribution of icicidirect.com to the group?

A difficult call. In this business success is measured in different ways from how we measure success in our other businesses. In my core business, I put capital on the table and I earn a return. But, in the Internet business, capital is minimal. In the dot.com area, it is more in terms of what you create that has future potential which in turn will create value for my shareholders.That's what I want.

How about the cyber laws that are under consideration? Will that come in the way?

I think they are not coming in the way. Whatever the problems, they will be fixed. Today the cyber area is the number one focus area for the government starting right at the Prime Minister's Office. You can walk in and get them to address the issues. They are addressing much more serious issues.Cyber law, frankly, is not controversial, and is only a question of clarification. What is more complex is getting the structure changed. In the cyber area, I don't think any law will be perfect anywhere: it will have to be continuously rewritten.

What do you expect from the SEBI regulations on online trading?

So far SEBI has been very positive. They want this to be a facilitative one and I am bullish on that. In any case, as I said, with the government backing this fully, resistance to this path will be futile.

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