Calcutta, Nov. 28: ICICI Bank is repaying Rs 45,000 crore of high-cost debts over the next two years, which is going to lead to an annual saving of around Rs 1,500 crore. As a consequence, there will be a sharp rise in profits.
Executive director of the bank, Chanda Kochhar, said: “Most of these are borrowings of the erstwhile ICICI (which has merged with its subsidiary ICICI Bank) from multilateral funding agencies. These debts carry a coupon rate of over 10 per cent, and we are replacing them with borrowings at less than 7 per cent (resulting in a difference of around 3.5 per cent).”
Around Rs 22,000 crore of such high-cost debts were being repaid this year. The balance would be paid next year, she added. These debts are being replaced mostly with domestic deposits and some foreign currency borrowings.
Commenting on the recently passed Securitisation Bill, Kochhar said, “It’s a shot in the arm of banks and financial institutions and should lead to lenders coming together for recovery of sticky assets.”
“The attitude of defaulters has already changed. Those who would not respond to notices since time immemorial, are now ready to negotiate,” the director added. She, however, refused to reveal ICICI Bank’s recovery targets for the year.
Speaking on the bank’s strategy for growth, she said the retail assets would go up to 20 per cent of its balance sheet.
“The bank is churning its portfolio, and in the current year it has acquired assets worth Rs 400 crore from other institutions.”