Both the banks are high-profile, listed, new-generation banks and both faced an identical crisis. But one managed the crisis effectively while the other was left groping in the dark and needed a certificate from the country’s central bank.

The first one is GTB. The bank was in news for wrong reasons — with its founder chairman and managing director, Ramesh Gelli, putting down his papers in 2001 and the Securities and Exchange Board of India (SEBI) banning him from dealing in the bank’s shares in any manner.

And June 2002 saw panic withdrawals from select GTB branches in the twin cities — Hyderabad and Secundrabad. Around Rs 6 crore was withdrawn by the depositors in a couple of days. However, the panic withdrawal was confined to these two cities and didn’t spread as it did recently in the case of ICICI Bank.

GTB has a large presence in the twin cities, both in terms of branch network (around 15 branches) and the number of ATM machines (around 50). It suspected foul play as a couple of its competitors opened their ATM booths in the areas where GTB experienced panic withdrawals. While the bank had announced conducting a probe to trace the genesis of the panic, it wanted the Reserve Bank of India (RBI) to take action against those who spread the rumour.

But the bank met the crisis by replenishing each of the 50-odd ATMs with sufficient cash (Rs 20 lakh) so that they didn’t go dry and the damage was contained within a day or two. And the RBI didn’t give any assurance notice to the bank depositors.

But take ICICI Bank’s case. A similar situation was allowed to go out of hand by the bank officials, who, perhaps, thought the panic would be confined to Gujarat alone. Even then, such a lackadaisical attitude, when it comes to protecting its reputation, does not bode well for the group present in the entire financials services sector.

The officials failed to gauge the depositors’ mood what with cooperative banks, non-banking finance companies, provident funds and importantly Unit Trust of India tanking in recent times. Further, after the reverse merger of its parent (ICICI), the bank’s non-performing asset (NPA) went up.

Trouble signs first appeared in Gujarat on Thursday (10 April 2003) and the bank didn’t give any comfort signals to various stakeholders, more importantly the depositors. The next day the crisis blew up as the bank clearly failed to manage the issue effectively at the first instance itself. Like the other bank, ICICI Bank too had to take care that its ATMs and the branch cash chest didn’t go dry.

Finally it required the financial soundness certificate from the RBI, which put an end to depositors cashing out. And only on 14 April did the bank come out with an official statement. Till then it followed its avowed policy of not responding to speculation and rumours. Theories are galore for the depositors’ run on the bank, though the bank does not put the blame on anyone, unlike GTB which accused rival banks.

Looking back it’s clear that India’s No 2 bank has really failed to adhere to the basic dos and don’ts of crisis management in terms of internal and external communication. Says K Srinivasan, managing director, Prime Point Public Relations: “Unlike government-owned banks, private banks will always have to face the stability and credibility question. Yesterday it happened to GTB and today ICICI Bank faces the same wrath. And this may happen to any other private bank or private insurance company tomorrow.”

Terming the ICICI Bank episode as a lesson in crisis management for all corporates he says private banks should be more transparent and forthcoming when it comes to information sharing.