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ICICI Bank had worked out a strategy to cover the whole of rural India in the next three years.

Kolkata , Aug. 11

ICICI Bank is in the process of rolling out a new initiative to increase rural credit offtake. The bank would be carrying out this exercise in partnership with corporate houses and micro-credit institutions.

This was announced by Mr K.V. Kamath, Managing Director and CEO of ICICI Bank, while addressing members of Indian Chamber of Commerce on Thursday.

According to him, the next spurt of economic growth in India would come from the rural sector. So ICICI Bank had worked out a strategy to cover the whole of rural India in the next three years.

"We have termed the project as No White Space. We would have our presence spread all over India, but it would not be through opening of rural branches. Instead we can reach the farmers with the support of corporate houses and self-help groups. Information technology would play a key role too," Mr Kamath said.

ICICI Bank has already started working with 40 micro-credit institutions and it would be increased to 70 by the end of the current financial year. It hopes to create partnerships with 200 such institutions by 2008-09.

At present, ICICI Bank's rural credit off-take is Rs 10,000-11,000 crore through all the channels. Mr Kamath was non-committal on the total amount of business he hopes to generate through micro credit organisations. He said that it would be approximately 20-25 per cent of the total portfolio by the next three years.

Regarding the partnership with the corporate houses, he said that the bank was are looking at companies (dealing with fertilisers, seeds or providing other inputs to the farm sector) which have a relationship with the farmers.

"We may provide the credit to these corporate houses. These companies in turn would pass it on to the farmers. We have been talking with these companies for some time," he said.

According to him, one major area of growth in the rural sector is green vegetables because 60 per cent of the production is lost due to lack of proper distribution system and marketing arrangements. "So we would have to bring the rural mandis into our network too," he added.

Apart from the rural sector, he felt, credit offtake would be spurred by the growing interest of the Indian companies in global acquisitions. He mentioned that a large number of mid-cap companies were looking at $200-250 million overseas acquisitions.

He said new projects in the manufacturing arena would not generate much of credit offtake because corporate houses now prefer more of organic capital, free cash flows and equity.

According to him, Rs 350,000 crore worth of projects are in the pipeline. Out of it Rs 150,000 crore would be funded through cash flows, another Rs 150,000 crore through cash balances. Approximately Rs 50-60 crore would come as equity and a bit as ECBs (external commercial borrowings).

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