Change Management @ ICICI

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Case Details:

Case Code : HROB008
Case Length : 10 Pages
Period : 1996-2002
Organization : ICICI
Pub Date : 2002
Teaching Note : Available
Countries : India
Industry : Financial Services

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

ICICI was established by the Government of India in 1955 as a public limited company to promote industrial development in India. The major institutional shareholders were the Unit Trust of India (UTI), the Life Insurance Corporation of India (LIC) and the General Insurance Corporation of India (GIC) and its subsidiaries...

Change Challenges - Part I

ICICI was a part of the club of developmental finance institutions (DFIs – ICICI, IDBI and IFCI) who were the sole providers of long-term funds to the Indian industry. If the requirement was large, all three pooled in the money. However, the deregulation beginning in the early 1990s, allowed Indian corporates' to raise long-term funds abroad, putting an end to the DFI monopoly. The government also stopped giving DFIs subsidized funds. Eventually in 1997, the practice of consortium lending by DFIs was phased out.

It was amidst this newfound independent status that Kamath, who had been away from ICICI for eight years working abroad , returned to the helm. At this point of time, ICICI had limited expertise, with its key activity being the disbursement of eight-year loans to big clients like Reliance Industries and Telco through its nine zonal offices. In effect, the company had one basic product, and a customer orientation, which was largely regional in nature...

Change Challenges - Part II

ICICI had to face change resistance once again in December 2000, when ICICI Bank was merged with Bank of Madura (BoM) .

Though ICICI Bank was nearly three times the size of BoM, its staff strength was only 1,400 as against BoM's 2,500. Half of BoM's personnel were clerks and around 350 were subordinate staff.

There were large differences in profiles, grades, designations and salaries of personnel in the two entities. It was also reported that there was uneasiness among the staff of BoM as they felt that ICICI would push up the productivity per employee, to match the levels of ICICI . BoM employees feared that their positions would come in for a closer scrutiny. They were not sure whether the rural branches would continue or not as ICICI's business was largely urban-oriented...


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