Corporate Strategy Case Study

ICICI into Universal Banking

OR

Abstract:
The banking sector deregulation that took place in India during the early 1990s posed a threat to the survival of Development Financial Institutions (DFIs). They were cut off from the concessional funding extended by the government and were exposed to intense competition from local and foreign banks. Over a period of time, Industrial Credit and Investment Corporation of India Ltd. (ICICI), which was set up as a DFI in 1955, underwent significant changes to meet these challenges. To exploit the synergies brought by universal banking, it went in for mergers and acquisitions and finally reverse merged with its subsidiary ICICI Bank.

Pedagogical Objectives:

• To discuss how the banking sector reforms affected the Development Financial Institutions (DFIs) in India
• To discuss the benefits that a universal bank offers and the reasons behind the merger of ICICI with ICICI Bank

Keywords : Industrial Credit and Investment Corporation of India Ltd; ICICI Bank;Mergers, Acquisitions, Alliances Case Study ; Universal banking; Low cost deposits; Cost of funds; Development financial institutions; Statutory liquid and cash reserve ratios; Reverse merger; Long term operational fund; Deregulation of Indian banking sector; Non-performing assets; Indian banking industry; Financial sector reforms; Reserve Bank of India; Long-term funding.