?We can?t grow fast if mortgage rates are 15%?

When you look back and see all these years ago, when you had just joined ICICI, could you see India the way it is now. What was your view?

My perspective was different from a lot many others?. The view of universal banking was that as India grew, the traditional banking industry would have to expand from just project finance and support other activities like consumer credit and promote other financial institutions like insurance and asset management companies. Let?s look at the consumer finance story.

When the per capita income grows, so does your ability to own a home, along with this is the ability to have a vehicle. This had to happen in India. So, we took a call early that this transformation would happen. One of the observations we had was that once you are on the path of growth you would keep growing for a long time. We have the example of Japan and the Tiger economies. And then there was China and we also joined in the 2000s. In 1998 it was a tough call to take as all, including the media, believed that we were in a recession, when we were growing at 5%. It was in the 2000s that we were on the growth path. But I always believed that every 3 to 5 years we could double our per capita income. Now did I look at this happening? The answer is yes and no.

For example, in the infrastructure area, I would think that more could happen. In telecom, certainly more has happened. In ports, airports, and roads we have been slow. In urban rejuvenation we have been slow. If you look at some of the South Asian economies, urban rejuvenation was very fast. In India, we can say that only about Delhi. Some of the things have started to happen, obviou-sly with a slight lag.

Do you think that the growth momentum that has been built will be much sharper in the days ahead?

No question at all. Very important test that we were on the track or not was in 2002-03 when several leading economists, for whom I have great regard, challenged the Indian economy. They said that we could not grow at 8% because we did not have the savings rate to do so. And India?s savings rate grew to 36% and the growth rate to around 9%. And there were inflows from overseas. In India, classical economists were stumped. The basic growth sector was the knowledge sector which then translated into the manufacturing sectors as well. And this created momentum and there were the government policies, especially in the rural areas, like the NREG, which are creating momentum.

As per capita income grows so does the savings rate in a developing economy along with the consumption rate.

At this moment, what we see is that some or the other agency has to push for growth momentum. What are your views?

To me, it appears that the growth momentum will continue, unless we break the momentum. Our challenge is to see that we don?t break the momentum. If you end up keeping mortgage rates at 15% you are not going to grow. That would be dire for this country. And in the policy context, this is what has been done. If you see peer-countries that migrated into higher growth rates, they have done so on the back of low interest rates and low inflation. I think we will have to learn to manage low rates with low inflation.

One of the things that was done during the growth phase was that the government borrowing cost dropped from 11% to 5.5% and along with that systemic rates got lowered. The mortgage rates dropped and the entire system erupted. This rate also helped Indian corporates. I am very bullish that things will work out.

When we look at ICICI Bank there is the huge retail expansion at the forefront. But really it was the expansion of the ATMs overnight that captured the imagination. What was the thought behind this?

To me its not just the ATM but the entire technology focus. ATM was a big band dream, yes, with 1,000 ATMs were rolled when the country had around 128 ATMs then. That?s why it caught the imagination of people. But this is also the time when we launched call centres and online platform.

And this has been revolutionary. Today in our bank, less than 10% of the transactions take place in the branch, and 8 years back, nearly 90% of the transactions took place in branches. Of course, ATMs are definitely the largest part of the transactions scenario as they are withdrawal points, but then look at internet banking. Over 20% of the transactions take place on this platform and this is really the transformation that has taken place in the Indian banking sector.

Not many banks have the Internet capabilities that your bank has. What was the model that you introduced?

We benefited from the fact that the mainframe was becoming passive and we had other alternatives that were cheaper and more effective. So there was the Moore?s law which said that computing power would grow and become cheaper. And we bet on this and this has stood us in good stead event today. We were probably the first bank to embrace the non-mainframe route as basis for our transactions.

You were one of the first companies to list on the NYSE. How did this happen, was there some opposition you had to face?

The NYSE listing story is about he story for raising capital. These were times when the Indian capital markets were not doing so well and we had to look at the US markets, which were the deepest at that time, to raise capital. You had to make up your mind simply to adhere to reporting and then go ahead and raise capital.

Aligning to US-GAAP was a challenge. The issue was very simple. If we could see India growing and ICICI needed to be a part of this growth we needed capital. Capital will always come first and the people part is a long-term view.

What is your view on growth ahead and the metrics thereof? Especially, about the people issues?

I think the financial services sector will have to grow at two to three times of the normal if we need a 10% growth rate. And anybody who wants to grow has to think in these terms.

I remember Mr Vaghul asking me to recruit talent from leading business schools and we faced a lot of competition from multinationals. So we went ahead and were not expected to take on many and I had a side bet with the placement coordinator who said we could not take any and we eventually had two people joining us. We also started recruiting chartered accountants. Training of talent has started in the last few years though.