Kamath married tech with retail

Life begins after 60. So it seems for Kundapur Vaman Kamath, who starts his next stint as mentor, or non-executive chairman of ICICI Bank, in May next year. The 6-foot-2-inch tall banker will continue to tower over the new leadership, but in a much-mellowed manner as a strategic guide.

Kamath has been at ICICI since 1971, with a hiatus from 1988 to 1996, when he worked at the Asian Development Bank, funding projects in other developing Asian nations. That experience helped him position the once state-owned ICICI to become the growth machine it is today. As MD and CEO of the bank over the last 12 years, he has not only rescued the old ICICI, which was wilting under the burden of bad loans and growing asset-liability mismatches, by converting it into a bank, but also transformed it into a retail juggernaut.

The expansion under him over the last decade has been breathtaking: From a project finance company to a universal bank with around 1,400 domestic branches, 3,500 ATMs, 35,000 employees in around 20 countries and over 25 million customers. ICICI Bank's market capitalisation accounts for close to 17 per cent of that of all listed Indian banks. In terms of assets, it is still a distant second to State Bank of India.

As on March 31, 2008, its asset base was Rs 3,99,795 crore, compared with SBI's 7,21,526 crore. The gap has, however, been narrowing fast. The compound annual growth rate (CAGR) of ICICI Bank's assets for the last five years has been 30.21 per cent against SBI's 13.93 per cent.

Kamath has built a retail portfolio of Rs 1,22,500 crore. In percentage terms, retail assets now account for 55 per cent (63 per cent in 2007) of the bank's total assets. And despite growing at a breakneck speed, Kamath has been able to contain net non-performing assets (NPAs) at 1.5 per cent of its total assets in March 2008. The comparative figures are 1.78 per cent for SBI and 0.47 per cent for HDFC Bank.

The bank, of course, had to take a pause on its retail growth plans following the economic downturn, and his critics say Kamath has been over-aggressive. But the man, who is a Formula1 racing fan, doesn't agree and feels the bank has grown just at the speed the situation demanded. "He has been a great strategic thinker and extremely focussed on performance,'' said Narendra Murkumbi, an independent director on the board of ICICI Bank since 2006 who has watched Kamath from close quarters.

His focus on performance has largely revolved around the "90-day rule", a phrase he picked up from a dotcom seminar in New York. The start-ups there were taking products from concept to market in 90 days because if they didn't, somebody else would. Kamath has always made sure that the time gap between an idea and its execution is less than 90 days. "In the process, he changed the face of Indian banking,'' says Gita Piramal, a business historian and author of Business Maharajas.

The strategic thinker part was visible early enough when Kamath turned ICICI, a staid lender that was much smaller in size than IDBI, into a dynamic bank. He took the unconventional path of turning an industrial lender into a retail bank by scripting a reverse merger in 2001.

His colleagues -- both former and present -- acknowledge that. " In my entire career, I have not seen a leader of his capability and execution,'' says Kalpana Morparia, CEO, JP Morgan India, who has worked with ICICI for 33 years and quit the bank as joint managing director.

When Kamath took over the organisation, ICICI had 33 subsidiaries. He gradually brought them down to 24 and then to a dozen, preparing the organisation for an initial public offer in December 2005.

From a 359-branch institution in 2001, ICICI Bank ramped up its network to nearly 1,400 branches by 2008. "He took a gigantic step to build a capital base which is helping the bank to see through in difficult times,'' Morparia said.

Kamath also saw tomorrow far before any other banker did. Example: He was the first to marry technology with retail banking in India. At a time when there were fewer than 100 ATMs in the entire country, ICICI Bank said it would roll out 1,000 ATMs in the very first year. The innovation has yielded rich results: Five years ago, 90 per cent of all ICICI Bank transactions took place through branches. Today, it's less than 15 per cent. More than 20 per cent of all transactions are now done on the internet. Instruments that go directly to the back-office for processing, without hitting a branch, account for about 10 per cent.

Kamath also put together a string of acquisitions like Bank of Madura, SCICI Ltd and ITC Classic Finance, which had a strong retail base in eastern India and a strong base in the West, and was instrumental in setting up new businesses in leasing, venture capital as well as credit rating. Kamath's close relationship with India Inc's who's who was also a reason why the Ambani family turned to him for settling the dispute between the two brothers.

There is no doubt that ICICI Bank is now facing huge challenges in the external environment after decades of a scorching pace of growth. But even as he prepares to settle down in the mentor's role, Kamath continues to be optimistic. Speaking to reporters at a press conference to announce his successor, Kamath said things could improve next year when the inflation rate would be in single digit and the growth rate in double digit.

Not everyone is convinced fully. As Piramal says: "ICICI Bank was probably overly aggressive. There is a challenge for the new-comer." The man himself knows that more than anybody else.