ICICI Bank managing director and chief executive officer Chanda Kochhar said the lender has tie-ups with two payments bank applicants that have received the RBI’s in-principle approval on Wednesday.
“We will watch the progress in both. We have (tie-ups) with Fino and Vodafone,” said Kochhar.
Speaking on the sidelines of the State Bank of India’s banking and economic conclave, Kochhar said she belives the payments banks will be complimentary to whatever the rest of the banking system is doing.
“As the (RBI) governor also said in the morning that everything the payments banks can do, the universal banks can do in any case. So we welcome the entry of new players — something that is going to enhance the financial ecosystem,” said Kochhar. Commenting on the digital banking initiative, Kochhar indicated the bank’s digital initiative, ‘Pockets’, has hit a million downloads.
“We launched a digital bank much earlier than even the payments banks were being talked about. We have a million downloads of Pockets. I think this is a good development and we all will work together,” she added.
She also asserted the need to clear the stalled projects which are struck for some or the other reasons and added that from an FDI point of view, investors look at a sectoral solution. Speaking on rate cut transmission, Kochhar said it will never have a one-is-to-one co-relation with the reduction in monetary policy rates.
“As the monetary policy rates come down, the banks reduce their fixed deposit rates. But fixed deposits are only 60% of the deposit base of the banks and they are even smaller portion of the total funding of the banks. So, a 75 bps cut in the monetary policy rates translates into just about 40-45 bps cut in the cost of funds for the banks. And given that context, you have already seen a 30 bps reduction in the lending rates,” she said.
Kochhar also said the extent to which the deposit rates in banking system can come down will depend on the interest rate scenario in rest of the financial system.