Is there something wrong with ICICI?

(My first interactions on issues of Banking. Though i am not well versed with Banking sector as a whole, but my comments on banking are more from an economy and effect-on-economy perspective. Full article on http://www.livemint.com/2008/09/22083329/Is-there-something-wrong-with.html)

Hi Tamal,

What happens when a growing economy de-regulates critical sectors and industries? I am not against de regulation, infact i am a proponent for it. However, i am commenting upon the trend of market skimming. The pattern that emerges when a critical sector is de regulated and FDIs allowed to flow in, is that there are quick investments in the economy. Most of this investment is attractive, not necessarily sustainable. Attractive means immediate or medium term profit based investments. Long term investments require rigour, discipline, intent and time. They would not be attractive initially and would give you average benefits over the medium and long term. They are not a function of Sales Targets and Pressures. In trying to skim the market and extract the most in profits and Dividends many companies only create a small affluent urban base.This is unsustainable in tough conditions when the small base doesnot deliver. I dont intend to say exactly the same about ICICI bank. However, your point on wholesale versus Retail deposits and structured derivatives and high growth and leveraged equity avers to the thought. I do think that ICICI bank is one of the biggest pillars and powerhouses of the financial eco system, but one gets the feeling that ICICI bank could also have bet it wrong.

Thanks Manas