ICICI Bank shifts two-wheeler loans at dealer's end to branches

Mumbai: ICICI Bank Ltd, the country's largest private sector lender, will discontinue its two wheeler loans at the dealers end effective 15 August. The loans will hence be available only at the bank branches.

The move is aimed at cutting operating costs and leveraging an expanded branch network, ICICI Bank executive director V Vaidyanathan said in Mumbai.

He bank has moved over 200 employees from its two-wheeler team to other growth businesses such as auto loans, home loans and SME businesses.

''We have doubled our branch network from 750 in 2007 to over 1,400 branches in 2008. We therefore now have the distribution required to reach out to our target population. We will originate two-wheeler loans only from these branches. This provides us an opportunity to get better quality of credit, reduce our operating cost, and leverage our branch structure better." Vaidyanathan said.

ICICI Bank plans to reduce operating costs by 30 per cent to 40 per cent as  expenses increase with defaults. The operating expenses have hurt its Rs2,000 crore two-wheeler loan portfolio, he said.

Two-wheeler loans forms about two per cent of the bank's total retail business portfolio and account for nearly Rs2,000 crore of a retail business of over Rs1,30,000 crore.

Retail banking has been the mainstay of ICICI Bank for over the last decade and its retail business balance sheet of $35 billion accounts for over 55 per cent of the bank's funded assets, he pointed out.