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Posted on: Sep 20, '08

Rumour on ICICI bank going bankrupt

Dear friends,

                     There was a report in a local newspaper here shocking the customers of ICICI bank making them run all the way to the ATMs to draw all the money in their account. The ICICI is facing bankruptcy and closure due to exposure of it's assets in the American Bank Lehman brothers was the news.Lehman brothers went into bankruptcy falling as the latest victim of the U.S. sub-prime house-loan lending woes. The woes relate to the loans disbursed to the riskiest borrowers.The U.S. sub-prime woes have been brewing for quite some time and has been on for some years. The sagging U.S.economy is the culprit in bringing about this shocking state-of-affairs.

                    I happen to be one of the customers of the bank in the news and I received a message late in the evening that the bank is going into bankruptcy. Though I was skeptical of the news I too rushed to the ATM. Everything was OK. Card tansactions were being put through without any hitch.

                  Every bank in India whether in private sector or public invests money abroad in companies like lehman brothers that went into bankruptcy. But all banks are governed by stringent norms to derisk operations of the bank. It is reported that ICICI's bank exposure in investment in the U.S. is only 0.03% of it's total operations. The risk is thus kept to the minimum to the bank itself and no risk to the clients of the bank.

               The stock markets too went into tail-spin following the reports of Lehman Bros and some others like merryl lynch likely to follow suit. The union fiance minister P. Chidambaram came out with a reassuring statement that all the Indian banks including the ICICI bank follow the RBI norms and therefore the risk to Indian banks is very limited. The stock markets staged a smart recovery following the statement though it is a knee jerk reaction and nothing fundamental changed on the front of indian economy.

              Further developments have to be watched before commenting further.

            The fall out of the Lehman Bros. episode does not augur well for the Indian software companies deriving substantial monies from the banking financial serivices segment. Though leading software companies put up a branve face saying they are not affected much there is still cause for concern.

            I may come out with an update.

           Thanks for reading . Record your concerns here.

           Bharath selvan

Tags: fall out of lehman brothers bankruptcy

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ICICIBankServiceTeam said:
ICICI Bank is BASEL II compliant with capital adequacy ratio of 13.4%.Last year, we raised Rs.20,000 cr, almost doubling our equity capital.Our net worth is over Rs.47,000 cr & our consolidated total assets of over Rs.4,84,000 cr are diversified across retail, wholesale & rural banking. In FY 08, our profit is Rs.4,158 cr.Testimony to this is the RBI Press release,2008-2009/412 on 30/9/08.
“There are reports in some sections of the media that based on rumours regarding the financial strength of ICICI Bank, depositors are withdrawing cash at its ATMs and branches in some locations.It is clarified that the ICICI Bank has sufficient liquidity, including in its current account with the Reserve Bank of India, to meet the requirements of its depositors. The Reserve Bank of India is monitoring the developments and has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers at its branches/ ATMs.The ICICI Bank and its subsidiary banks abroad are well capitalised.

October 01, '08

sazzyme said:
that should quell some unwanted fears i suppose!

September 23, '08

daisyann26 said:

September 21, '08

neha_sh2000 said:

...heartening to hear.....

September 20, '08

sree2000km said:
bharath.. i hav a question to ask.. what will happen if the bank (icici) goes bankrupt and no other bank is taking it over and the govt is also doing anything?(i'm sorry , i'm rather selfish in my wildest of dreams). should i have to pay a car-loan back which is taken from ICICI??
(now u know, why i'm concerned!)

September 20, '08

earmarkedfortrouble said:
But that was a long time-a-komming!!!
As also; you are right; our investment in US kannot bee much, in any Kase~~~~~
Fer their lending rates are far below what our banks pay to their 'Saving account Customers!!
As such; by NO YARDSTICK; ken our bankers' invest in US N zee Wotld at large....

September 20, '08

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