A Project Report On Policy Analysis & identification of new sourcing avenues for Credit Card for ICICI Bank

Ltd. By Anil A. Agrawal Under the guidance of Dr. Shailesh Kasande Submitted to University of Pune In partial fulfillment of the requirement for the award of the degree of Master of Business Administration (MBA) Through Vishwakarma Institute of Management Pune-48

ACKNOWLEDGEMENT
A project is never the work of an individual. Instead, it is a combination of ideas, suggestions, reviews, contribution & work involving many people. I take this opportunity to express my deepest sense of gratitude to all those who directly and indirectly helped me in the successful completion of this project. I would like to begin by thanking ICICI Bank Ltd., for giving me the opportunity to be a part of this project. I express my gratitude to all the respected employees of ICICI Bank Ltd., for their invaluable help without which, I would not have been able to complete this project. First of all I would like to thank Mr. Vinay Bhat (Sales Manager-Pune) and Mr. Prakash sarawgi (Sales Manager-Pune) for their invaluable guidance and encouragements for the project. I also want to express my earnest and intense sense of gratitude to Mr. Shantanu Datta (Regional Head Sales) for his constant support.

This project would not have been completed successfully without the precious guidance of my project guide Dr. Shailesh Kasande, to whom I express my sincere gratitude.

This project gave me an opportunity to explore ground realities and look at business from the grass root level. I was able to meet a wide array of people which was indeed a learning experience. Anil A. Agrawal

ABBREVIATIONS 1. PFS:- Personal financial services 2. Surrogate: - Basis to source the application for credit card. 3. Policy: - Guideline laid down to source application under any surrogate. 4. DMA: - Direct marketing association. 5. DST:- Direct sales team 6. FI:- Field investigation 7. RCU: - Risk containment unit. 8. NACS:- New Application Capturing System

List of Tables Sr. No. 1 2 3 4 5 6 7 8 9 Table No. VII.1 VII.2 VII.3 VII.4 VII.5 VII.6 VII.7 VII.8 VIII.1 Title Applications decisioned in last three months Major Decline reasons Login trend in last three months Critical analysis of apps decisioned in March 08 Critical analysis of apps decisioned in April 08 Critical analysis of apps decisioned in May 08 Analysis of login & decisioned aplications of last three months Average salary of NMC cadre Policy for NMC cadre Page No. 25 26 27 31 32 33 35 37 40-41

(Last three months refers to March, April & May 08)

TABLE OF CONTENTS
S.no TITLE Page No.

Executive Summary

II III IV V VI VII VIII IX X XI XII

Company Profile ICICI Bank Credit Card Division Objective Credit cards (Literature Review) Research Methodology Analysis Findings Suggestions Limitations Exhibit References & Bibliography

3 10 16 18 22 24 38 42 45 47 58

CHAPTER I EXECUTIVE SUMMARY

CHAPTER - I

EXECUTIVE SUMMARY

ICICI Bank is Indias largest private sector bank in market capitalization and second largest overall in terms of assets. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank is also the largest issuer of credit cards in India with 34% of market share.

The project was undertaken in order to strengthen the existing policies that are used for credit card sourcing. This would help in understanding, rectifying existing policy & process. The main thrust of the project was to identify new sourcing avenue. It involved collecting exhaustive information on the current policies to understand their requirements through formal and informal interactions aided through Market scenario & competitors strategies.

Data was collected separately for different policies. Hence each policy was analysed separately. The project also helped in understanding the criterion used by Sales team for selling products. One page policy can help out the new one to understand each & every thing about credit card.It was also observed that sales team should constantly work on reopenables to get more cards out which results in reduction in CPC.

CHAPTER - II COMPANY PROFILE

CHAPTER - II

COMPANY PROFILE
Background 8

In 1955 The World Bank, the Government of India and representatives of Indian industry formed ICICI (Industrial credit & Investment corporation of India) Limited as a development finance institution to provide medium-term and long-term project financing to Indian businesses. (Similar financial institutions included IDBI and SIDBI). ICICI borrowed funds from many multilateral agencies (such as the World Bank), often at concessional rates. It used these to make large corporate loans. 1994 ICICI established Banking Corporation as a banking subsidiary.formerly Industrial Credit and Investment Corporation of India. Later, ICICI Banking Corporation was renamed as 'ICICI Bank Limited'. ICICI founded a separate legal entity, ICICI Bank, to undertake normal banking operations - taking deposits, credit cards, car loans etc. 1999 ICICI became the first Indian company and the first bank or financial institution from non-Japan Asia to list on the NYSE.

The Bank is expanding in overseas markets and has the largest international balance sheet among Indian banks. The Bank now has wholly-owned subsidiaries, branches and representatives offices in 18 countries, including an offshore unit in Mumbai. This includes wholly owned subsidiaries in the UK, Canada and Russia, offshore banking units in Singapore and Bahrain, an advisory branch in Dubai, branches in Sri Lanka, Hong Kong and Belgium, and rep offices in the US, China, United Arab Emirates, Bangladesh, South Africa, Indonesia, Thailand and Malaysia. In particular, the bank is targeting the NRI (Non Resident Indian) population. Organization Chart: 1. N. Vaghul (Chairman) 2. K.V. Kamat (MD & CEO) 3. Chanda D. Kochhar (Deputy Managing Director) 9

4. Nachiket Mor (Deputy Managing Director) 5. V. Vidyanathan (Executive Director) 6. Madhabi Puri-Buch (Executive Director)

Vision: To be the preferred brand for total financial and banking solutions for corporate and individuals (Adding a little magic to your life..) Mission: We will leverage our people, technology, speed and financial capital to: Be the banker of first choice for our customer by delivering high quality, world-class product and services. Expand the frontiers of our business globally. Play a proactive role in the full realization of Indias potential. Maintain a healthy financial profile and diversify our earnings across businesses and geographies. Maintain high standards of governance and ethics Contribute positively to the various countries and markets in which we operate. Create value for our stakeholders.

ICICI Bank has been in focus in recent years because of alleged harassment of customers by its recovery agents.Some of them are listed below, Farmers vent ire on bank after suicide. ICICI Bank officials used goondas to seize the tractor

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ICICI Bank was fined 55 lakh Rs. for hiring goons (known coloquially as "goondas") to recover a loan. 4 loan ICICI employees arrested on theft charges in Punjab. ICICI Bank told to pay Rs 1 lakh as compensation for using unlawful recovery methods.

Making the way through all those controversies ICICI made it towards it vision & Awarded by many awards some of them are as under, 2008: ICICI Bank NRI Services wins the World Finance (London) Award for Best Bank for NRI Services Worldwide, 2008 ICICI Bank wins Finance Asia Country Awards for Achievement 2008 for: 1. Best Trade Finance Bank 2. Best Foreign Exchange Bank 3. Best Private Bank 2007: 1. ICICI Bank wins the 'Excellence in Remittance Business 2007' award by The Asian Banker 2. Mr. K. V. Kamath, MD & CEO, ICICI Bank wins "The Asian Banker Leadership Achievement Award" for the Asia Pacific and Gulf Region 2007 3. Mr. K. V. Kamath, MD & CEO, ICICI Bank awarded the "Padma Bhushan" 4. ICICI Bank won "The Bankers Award" for the Bank of the Year (India) 11

5. Mr. K. V. Kamath won the Lifetime achievement Award at the seventh Annual Teacher's Achievement Awards. 6. ICICI Bank was one of the four Indian companies to make it to the global list of Top Companies for Leaders 2007, according to a survey conducted by Hewitt Associates in partnership with the RBL group and Fortune magazine. 7. The Uptime Champion Awards 2007 8. ICICI Bank has won the Euromoney Award for the "Best Bank in Asia" and "Best Bank in India 9. Best Bank in the New Private Sector Bank category By Financial Express 2006: Bank of the Year 2006 India by the Banker Business Standard's Banker of the Year for Mr.K.V.Kamath Business India's Best Bank of the Year 2006

ICICI Bank Products and Brands

ICICI group carries out its business through two divisions Corporate Banking, which includes ICICI,ICICI Bank, Securities & Ventures.Retail banking which 12

includes ICICI Bank, PFS ( Personal Financial Services ),ICICI Capital, Infotech, PruICICI AMC & Insurance.ICICI PFS involves Auto Finance,Personal Loans,Credit cards,Housing finance,Professional loans & Consumer durable loan.The company is known for its extraordinary services like :- 8 AM to 8 PM Banking, NRI Banking ,Anywhere banking, 1308 Branches & offices, about 3950 ATMs & 24 million customers ( as of end July 2007), also Company having Shahrkh khan as Brand ambassador. Building a global syndication network which enables the Bank to syndicate its foreign Currency assets across a wide variety of investors: The Bank was ranked #1 in offshore loan syndications of Indian corporates in 2007. Being the preferred advisor and financier for overseas acquisitions of Indian corporates. Achieving the status of the preferred bank for non-resident Indians in Key markets of UK and Canada.

Financial Analysis

ICICI has witnessed a 34 per cent increase in Profit after tax FY 2008 to Rs. 4158 crore ( US $ 1.0 billion) from Rs. 3110 crore ( US $ 775 million ) FY 2007. Net 13

interest income increased to 30 % to Rs. 7304 crore ( US $ 1.8 Bn) for FY 2008 from Rs., 5637 crore ( US $ 1.2 Bn ) for FY 2007. Fee income increased to 32 % from Rs. 6627 crore ( US $ 1.7 Bn ) for FY 2008 from Rs. 5012 ( US $ 1.2 Bn ) for FY 2007.At March 31,2008 ICICI bank & its subsidiaries had consolidated total assets of Rs.

485830 crore ( US $ 121.1 Bn). Each of the divisions of the company has witnessed strong growth and improved profitability has come about by improving operational and supply chain efficiency through innovative procurement strategies and modern forecasting and research tools.

The board has recommended a dividend of 110 % for FY 2008 i.e Rs. 11 per equity share as compared to 100 % FY2007. The Bank is significantly expanding its branch network to expand its reach & further enhance its deposit franchise.In India Current & saving account deposits increased 27% Where in UK & canada Aggregate retail deposits are increased by 90 % from Rs. 15740 crore ( US $ 3.9 Bn) FY 2007 to Rs. 29861 crore ( US $ 7.4 Bn) FY 2008.

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CHAPTER III ICICI Bank Credit card division

CHAPTER III

ICICI Bank Credit card division

15

ICICI Bank offers a variety of cards to suit customers different transactional needs. It includes Credit Cards, Debit Cards and Prepaid cards. These cards offer Coutomer convenience for all financial transactions like cash withdrawal, shopping and travel. These cards are widely accepted both in India and abroad.Credit card division playing very important role in the ICICI bank as it generates ICICI bank is dominant player in all the sectors it is present.The simple rule is to be followed that is ask for more. ICICI Bank Credit Cards - Most Preferred Credit Card in the country awarded by CNBC Awaaz Consumer award 2005, 2006 and 2007.The goals of ICICI bank are Leadership in Customer Satisfaction Market Leadership Which means?

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The Credence of Credit Cards in India Year 1991 Citibank launches 1st credit card in India Year 1994 Standard Chartered Bank launches its card in India Year 2000 ICICI Bank launches its card

Year 2005 10 Players and 10 mn plastics issued Year 2007 8.5 mn cards issued by ICICI bank alone, (34% market share) 17

(Source:- ICICI bank BIU team) ICICI Bank % Market share of Spends 31% ICICI Bank % Market share of Book 34%

Credit Card -A product of Customer Convenience

No requirement to carry fat wallet for making purchase

Take instant decisions for buying items of your needs. Make on-line bill payments and purchases. Take quick loans from Branches by flashing the card.. ....and pay back as per convenience and budget 18

 Keep track of your spends

The Business Opportunity

CARDS PRODUCT GROUP

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Cards product group is alienated in above three departments.Consumer cards are the retail cards which are designed for the personal use while Commercial cards are meant to be for business purpose. Merchant Acquiring team deals with the post transaction process.

Consumer Card
A consumer card is further divided in following three verticals.

(Pls refer Exhibit 3.1 for cards Business structure on Page 48 & 49) Issuance Focus is on open market / retail sourcing through DMA / DST. Storefront

Focus on sourcing through existing relationships, business partners and cross sell activity to bank customers.Existing partners involves HP,Future Group,Thomas cook,Kingfisher,Air deccan,Toyota,Airtel,Amway,India Times & many more.. Emerging Markets 20

 Activities of Issuance, Storefronts & Merchant Acceptance in cat C & D cities.

ICICI Bank - Credit Card for everyone Products and population segments have been mapped on psychographic, behavior and usage parameters.

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CHAPTER IV OBJECTIVE

CHAPTER IV

OBJECTIVE
This project seeks to review the existing policies to increase its current Approval rate and explore new Sourcing avenues on the road to increase business. This will help in understanding, influencing and predicting each & every policy used in the credit card segment, by providing insights in areas of highest approval rates. The objectives of the project will be: 22

1. The main thrust will be assessment of existing policies.

The purpose of this project is to analyse each & every policy in terms of approval & decline rate. To find out the main reasons behind the higher decline rate and to find out ways & means to reduce it.

2. Identification of new sourcing avenue

Due to large number of competitors in the market it becomes mandetory for a company to constantly strive for new market.This project will help in identifying new sourcing avenues which would help to increase business.

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CHAPTER V Credit cards (Literature Review)

CHAPTER V

Credit cards (Literature Review) What is credit card?

1. A plastic card having a magnetic strip / Chip, issued by a bank or business authorizing the holder to buy goods or services on credit.

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In simple words credit card is a plastic card which enables a cardmember to purchase goods & service from merchant establishments upto a pre determined limit, without having to pay cash.

2. Handy replacements for cash 1. Enabling purchases without having to carry much cash. 2. Most merchant establishments allow cardholders to make payment through credit cards. 3. This is especially useful in emergencies, such as hospitalization, when there may be an immediate need for a large sum of money. 3. An initial credit-free period 1. No charges are levied on the credit extended. 2. The card holder has to pay an interest on the credit availed from the date of transaction in case the full payment is not made before the expiry of the credit-free period.

4. Spend Now and Pay Later 1. The expenses incurred through a credit card are charged to the card holder's a\c by the issuing bank The card holder is billed periodically for these expenses instead of having to pay immediately

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Revolving Credit A customer can use the card to make purchases and pay only a part of the total amount spent during the billing cycle The remaining part is carried forward to the next billing cycle(s), i.e., it can be paid later. Card holder is required to pay interest on the amount carried forward Minimum Amount Due (MAD) 5% of the bill amount as MAD subject to a minimum of Rs 100 Interest Charges Interest is charged on transactions done during previous billing cycle from the respective transaction dates up to the statement date. Interest is charged on TAD for the previous billing cycle from the statement date of the previous cycle up to the part payment date Interest is charged on fresh purchases from the respective transaction dates up to statement date.

Credit Card The Case

Billing Cycle July 2 Aug 1, 2007 Outstanding Due Date Rs. 700 Aug 20, 2007 Rs. 600 26

Payment Made

 Mr Khannas outstanding for the period July 2, 2007 to August 1, 2007 was Rs 700 and he made a part payment of Rs 600 on August 20, 2007

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CHAPTER VI RESEARCH METHODOLOGY

CHAPTER VI

RESEARCH METHODOLOGY
1. Data: Secondary Sources - Last three months login & decisioned applications data taken into consideration to identify the login trend, policywise analysis, Comparison between policies. Market data was collected for the positioning of ICICI Bank. 28

2. Sampling: Sampling is the process of collecting relevant information from a part of the entire population of respondent sets in order to try and get the picture of relevant characteristics of the population based on sample.

3. Data Evaluation: The extensive data collected from Sales & Credit department is converted in table and charts so as to draw out conclusions.

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CHAPTER VII ANALYSIS

CHAPTER VII

ANALYSIS

The findings of the report can be categorized on the basis of policies used to source credit card. This would facilitate the assessment of potential for each policy 30

separately. The login and decisioning data for each policy for 3 months has been analysed (March, April & May 08). Figure VII.1:- Apps decisioned in last three months

Table VII.1:-Apps decisioned in last three months

Month March April May

Approved 2062 1734 1509

Declined 4752 5370 5425

Appr.Rate 30.26123 24.40878 21.76233

As is clear from the figure VII.1, Approval rate goes down noticeably from 30.26% to 21.76% from March to May 2008. In the month of March 2062 cases were approved out of total 6814 cases decisioned whereas in the month of May only 1509 cases got approved from the total 6934 cases decisioned. Lets take a look at the major decline reason behind this tragedy.

Table VII.2 :- Major decline cases 31

Month March April May

Major decline reason SP-11%,VC-8%,SA-7%,CM-8%,MR-6%,SR-5% SP-12%,SA-8%,CM-7%,MR-6%,DR-5%,ES-5% DR-15%,SP-8%,SA-7%,SR-6%,CM-6%,RL-5%

(Refer Exhibit VII.1 for various decline reason codes on Page no. 54 &55)

SP contributtes for the most part of the declined universe followed by VC, SA, CM & SR.As SP stands for not pertaining to surrogate policy it can be rectified at sales end itself.

Login Trend
Table VII.3:- Login trend in last three months
MONTH PROMO BLK EM1 EM2 HET Count 192 107 146 377 MARCH Percent contri. 5.94 3.31 4.51 11.66 APRIL Percent Count contri. 187 5.15 172 207 450 4.73 5.70 12.38 MAY Percent Count contri. 184 4.70 222 289 532 5.67 7.38 13.59

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PLT PP1 PP2 PP3 PP4 PPN RET SAP SDA STF OTHERS TOTAL

78 282 245 67 687 306 437 19 158 71 62 3234

2.41 8.72 7.58 2.07 21.24 9.46 13.51 0.59 4.89 2.20 1.91 100

110 255 272 82 747 295 483 12 151 70 140 3634

3.03 7.02 7.48 2.26 20.56 8.12 13.29 0.33 4.16 1.93 3.86 100

187 333 314 22 745 276 513 16 97 51 135 3916

4.78 8.50 8.02 0.56 19.02 7.05 13.10 0.41 2.48 1.30 3.44 100

(Login figures from DST & DMA only) Refer Exhibit VII.2 for details of Promo codes on Page no.56 & 57

Figure VII.2:- Login percent of Surrogates in March 08

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From Figure VII.2 Salary A/c contributes max 49% to the total aplication sourced. BLK sourcing is very less (6%) than it should be (15%). Retail market sourcing is at par with 25% Contribution. Only 8 % of exisitng cardholders applied for EMI card . Contribution of PLT is very less only 2%

Figure VII.3:- Login percent of Surrogates in April 08 34

From Figure VII.3

Salary A/c contributes max 49% to the total aplication sourced. BLK sourcing is very less (5%) than it should be (15%). Retail market sourcing is at par with 25% Contribution. Only 11 % of exisitng cardholders applied for EMI card . Contribution of PLT is very less only 3%.

Figure VII.4:- Login percent of Surrogates in May 08

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From Figure VII.4 Salary A/c contributes max 46% to the total aplication sourced. BLK sourcing is very less (5%) than it should be (15%). Retail market sourcing is at par with 27% Contribution. Only 13 % of exisitng cardholders applied for EMI card . Contribution of PLT was incresed to 5% from 3%.

Conclusion
From above, It is clear that nearly 50 % applicant are existing account holders of ICICI Bank & nearly 13 % are linked with ICICI Bank (Credit card holders, Employees).Means business generated from existing clients is around 63%.There was steady increase in EMI card applications (8% to 13%) but it need to raise upto 15%.PLT also shows reliable increase from 2% to 5%. Platinum card comes under category of Premium card so we need to push up the numbers under PLT to atleast 10% so as to increase spend.

Monthwise analysis (Apps decisioned)

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MARCH 08
PROMO CODE BLK EM1 EM2 HET PLT PP1 PP2 PP3 PP4 PPI PPN PPP PWP RET SAP SBN SDA STF OTHERS TOTAL APPR 68 84 72 124 51 108 110 112 122 7 204 4 1 359 3 1 51 21 560 2062 DECL 121 193 210 530 50 22 96 28 421 87 143 1 486 8 65 42 2249 4752 TOTAL 189 277 282 654 101 130 206 140 543 94 347 5 1 845 11 1 116 63 2809 6814 APP RATE 35.98 30.32 25.53 18.96 50.50 83.08 53.40 80.00 22.47 7.45 58.79 80.00 100.00 42.49 27.27 100.00 43.97 33.33 19.94 30.26 MAJOR DECLINE REASONS MR-13%,CM-11%,SA-8%,FD-7%,RA-7% MR-27%,SP-17%,CM-15%,JD-7% SP-23%,CM-21%,MR-13%,MA-8% CM-11%,SP-10%,JD-7%,SA-7%,NF-6% CM-16%,JD-16%,VC-14%,RI-10% CM-13%,SA-13%,JD-9%,MA-9% VC-19%,SA-17%,CM-9%RA-9% SA-18%,VC-8%,CM-10%,RI-10% SP-19%,SA-17%,IC-12%,RA-7%,VC-5% RA-17%,SA-15%,VC-15%,CM-7% SA-19%,VC-14%,RA-9%,CM-8% SA-100% VC-17%,SA-9%,CM-8%,RA-7%,MD-6% NF-25%,SP-25%,NF-12%,DM-12% VC-24%,SA-15%,RA-10% MP-28%,SA-12%,CM-7% SP-13%,SR-11%,ES-11%,VC-8%,CM6%,SA-5%,JD-5%,MR-5% SP-11%,VC-8%,SA-8%,CM-7%,MR6%,SR-5%

Table VII.4:- Critical analysis os Applications decisioned in March 08

From Table VII.4 it can be deciphered that the max. Approval rate was in PP1 sourcing (83 %) followed by PP3 (80 %) & the lowest approval rate was in the case of RET (18.96 %). Total applications sourced under salary A/c surrogate was 1576 out of which 714 application were approved,means salary a/c comprises 45 % approval rate.SP contributes max 11% to the declined universe foliowed by VC,SA & CM.

April 08
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PROMO CODE BLK EM1 EM2 HET PLT PP1 PP2 PP3 PP4 PPI PPN RET SAP SBN SDA STF OTHERS TOTAL

APPR 59 88 70 114 60 158 107 25 119 8 161 181 3 30 18 533 1734

DECL 173 155 184 691 40 63 130 37 544 51 132 623 8 1 74 33 2431 5370

APPS DECI. 232 243 254 805 100 221 237 62 663 59 293 804 11 1 104 51 2964 7104

APP RATE 25.43 36.21 27.56 14.16 60.00 71.49 45.15 40.32 17.95 13.56 54.95 22.51 27.27 0.00 28.85 35.29 17.98 24.41

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

Table VII.5:- Critical analysis of Applications decisioned in April 08 From Table VII.5 it can be deciphered that the max. Approval rate was in PP1 sourcing (71 .49 %) followed by PLT (60 %) & the lowest approval rate was in the case of HET (14.16 %). Approval rate of PP1 goes down from 80% to 71.49 % where approval rate in PP3 decreased dramatically from 80% to 40.32%.Total applications sourced under salary A/c surrogate was 1346 out of which 447 application were approved, means salary a/c comprises only 33 % approval rate.Again same as in the month of March SP contributes max with 12% to the decline universe.

May 08
PROMO APPR DECL Total APPR MAJOR DECLINE

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BLK EM1 EM2 HET IFY PLT PP1 PP2 PP3 PP4 PPI PPN PPP PWP RET SAP SBN SDA STF OTHER TOTAL

56 110 93 85 17 29 123 95 8 67 2 152 4 1 250 4 0 29 15 370 1510

162 305 306 592 67 74 109 134 32 638 30 194 12 3 1206 15 2 79 46 1420 5426

218 415 399 677 84 103 232 229 40 705 32 346 16 4 1456 19 2 108 61 1790 6936

RATE 25.69 26.51 23.31 12.56 20.24 28.16 53.02 41.48 20.00 9.50 6.25 43.93 25.00 25.00 17.17 21.05 0.00 26.85 24.59 20.67 21.77

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

Table VII.6:- Critical analysis os Applications decisioned in May 08

From Table VII.6 it can be deciphered that the max. Approval rate was in PP1 sourcing (53.02 %) followed by PPN (43.93 %) & the lowest approval rate was in the case of PPI (6.25 %) followed by PP4 (9.50%). Approval rate of PP1 again decresed from 71.49 % to 53.02%.where approval rate in PP3 decreased dramatically from 40.32% to 20%.Total applications sourced under salary A/c surrogate was 1692 out of which 476 application were approved,means salary a/c comprises only 28 % approval rate.

Conclusion:
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It is clear from above data that the approval rate of salary a/c surrogates came down from 45% to 28% from March to May 08. As sal A/c holders are existing clients approval rate should be on higher side but the main reason behind this dramatic change in approval rate is SP which contribute nearly 12 % to the total declines. PLT is meant to be HNI customers so the approval rate should be more than 50 % but it never crossed 30%. VC decline under PLT surrogate is on higher side(11%).

Login & Decisioned analysis

Table VII.7:- Login & decisioned applications analysis of last three months 40

MONTH PROMO BLK EM1 EM2 HET PLT PP1 PP2 PP3 PP4 PPN RET SAP SDA STF OTHERS

MARCH LOGIN 5.94 3.31 4.51 11.66 2.41 8.72 7.58 2.07 21.24 9.46 13.51 0.59 4.89 2.20 1.91 APP RATE 35.98 30.32 25.53 18.96 50.50 83.08 53.40 80.00 22.47 58.79 42.49 27.27 43.97 33.33 19.94 LOGIN 5.15 4.73 5.70 12.38 3.03 7.02 7.48 2.26 20.56 8.12 13.29 0.33 4.16 1.93 3.86

APRIL APP RATE 25.43 36.21 27.56 14.16 60.00 71.49 45.15 40.32 17.95 54.95 22.51 27.27 28.85 35.29 17.98 LOGIN 4.70 5.67 7.38 13.59 4.78 8.50 8.02 0.56 19.02 7.05 13.10 0.41 2.48 1.30 3.44

MAY APP RATE 25.69 26.51 23.31 12.56 28.16 53.02 41.48 20.00 9.50 43.93 17.17 21.05 26.85 24.59 20.67

(All figures are in percent)

From above table it is clear,

PP1 shows highest decline (56%) in term of approval rate. Sourcing in PP4 is on higher side each month & approval rate goes down drastically from 22.47% to 9.50%.

HET comprises lowest approval rate with Max. Declines under CM & SP. All sal A/c sourcing (Except PP4) are good in term of approval rate (> 40%). Approval rate in EMI card is on lower side.

Sourcing Avenues:41

ICICI bank has maximum no. of policies than all other competitors together.These policies are based on different surrogates which are Salary A/c Saving A/c Loans Insurance Other bank card Monthly income based ( Open Market) Investment Channel partners (Future group, Thomas cook, Kingfisher etc.) Credit cards are clean loans. Therefore they ensure that they approve applications from the people who have Capacity to repay Willingness to repay How do they do that? Capacity: - Capacity can be check out from income documents like payslip,Form no. 16,Salary Certificate & Different surrogates which are Credit card, Visiting card,Insurance policy, Loan repayment. Willingness to repay:- It can be verified to some extent contact point verification. It involves checks like FI (Field verification), CIBIL check (Credit information bureau India Limited), Dedupe check, CPCS match & RCU (Risk containment unit). On the basis of the above NMC (Non management cadre) of the different companies are analysed on the basis of their income.

Table VII.8:- Average salary of NMC cadre 42

Type of company Proprietorship/Partner ship Pvt Ltd Ltd MNC Govt/PSU

Average salary NA 5000 10000 10000 7000

(Source:- ICICI Bank database) As a salary criterion is minimum 10000 for credit card, it is not possible to issue card to NMC of Proprietor/Partnership firm, Pvt Ltd, Govt/PSU.Also in Ltd & MNC companies it is found that all GC/VC companies offers minimum salary of 8000 to NMC cadre.

43

CHAPTER VIII FINDINGS

CHAPTER VIII 44

FINDINGS
From Figure VII.2,3 & 4, It is clear that nearly 50 % applicant are existing account holders of ICICI Bank & nearly 13 % are linked with ICICI Bank (Credit card holders, Employees).. Means business generated from existing clients is around 63%.There was steady increase in EMI card applications (8% to 13%) but it need to raise upto 15%.PLT also shows reliable increase from 2% to 5%. Platinum card comes under category of Premium card so we need to push up the numbers under PLT to atleast 10% so as to increase spend. From Figure VII.4,5 & 6, It is clear that the approval rate of salary a/c surrogates came down from 45% to 28% from March to May 08. As sal A/c holders are existing clients approval rate should be on higher side but the main reason behind this dramatic change in approval rate is SP which contribute nearly 12 % to the total declines. From analysis, it is found that PP1 shows highest decline (56%) in term of approval rate. Sourcing in PP4 is on higher side each month & approval rate goes down drastically from 22.47% to 9.50%. HET comprises lowest approval rate with Max. Declines under CM & SP. All sal A/c sourcing (Except PP4) are good in term of approval rate (> 40%). Approval rate in EMI card is on lower side.

Sourcing Avenues:-

45

After analysing all the existing policies it was found that currently bank issue credit cards to employees belonging to NMC, only under one year old other bank card or one year old loan. The proposed addendum aims at issuing credit card to employees belonging to NMC on the basis of the salary income.After analysing the profile of NMCs it is found that following checks should be done for the issue of credit card. This note envisages issuance of credit cards to employees belonging to NMC of GC/VC companies. It is proposed to use the existing list of GC/VC companies formed by ICICI Bank. On the basis of Analysis the eligibility & sourcing parameters for employees belonging to NMC category are enumerated below: Table VIII.1 Serial Numb er 1 Risk Category Capacity Sub Category Income Minimum net monthly salary should be Rs.10, 000. Copy of salary slip (not more than 2 months old) to be collected. Degree or Diploma certificate photocopy clearly mentioning applicants name as mentioned on the salary slip or KYC document submitted. Credit decision module (CDM) application de-duplication applicable. All decline reasons, which indicate application declined for fraudulent / defaulter/negative field investigation (FI) report will be classified as derogatory. Multiple card policy applicable. Multiplier of 2.0 Scoring applicable. Residence FI mandatory. Office FI mandatory. 46 Options

Capacity

Leverage

2 3

Capacity Credit profile Contactabili ty

Credit Limit Credit Character Personal Contactabili

/ collectabilit y

ty

Contact Point Verification (CPV) at Residence & Office. CPV to be done at permanent address for all categories. Non-Target area applicable Credit profiles check system (CPCS) applicable. CIBIL check mandatory. 100% of the applications sourced to be screened by Risk Containment Unit from fraud perspective. Applicants to be residing in cards serviceable locations. All Education Institutes issuing the degree or diploma should be recognised by AICTE (All India Council for Technical Education) / recognised Universities. The degree or diploma should be minimum one year old to confirm one year work experience. The following fields are mandatory application fields under this policy: i. Permanent residence address. ii. Telephone number at permanent address. iii. Number of years in the current employment total years of employment has to be mentioned on the Application form. iv. Department name. KYC guidelines as approved by COD for credit cards would be applicable.

5 6

Negative history check Fraud check Other qualitative comments

Area of residence / work Personal

47

CHAPTER IX SUGGESTIONS

CHAPTER VIII

SUGGESTIONS
Backoffice Training:48

Backoffice executives have to be made felt that they are playing an essential part in the organisations process. There has to be a synergy between the objectives of the company and the backend. Backends have a greater role to play than just act as intermediaries between Sales & Credit.Maximum of the decline reasons like SP,AS,IC,NA,NC,NE,NM,NT,WN can be rectified at backend itself. This will help to increase approval rate as they are contributing nearly 25% to the decline universe.Monthly training program should be carried out for backends so as ensure that these nominal mistakes should not happen in the future.

Process:-

In the current process sales team use to check only salary & track record of existing customers at PFS (Refer exhibit VIII.1 for detail process on Page no. 50 to 54). Small change in the current process will tend to drastic increase in the current approval rate. Alongwith salary checking LOP (Loan on phone) checking should be done for existing clients as LOP having good approval rate than other surrogates available. This will help to improve falling approval rate in salary A/c surrogates.

Dedicated Reopenable team:-

A team consising of minimum 7 members should be appointed for reopenables.This team will dyed-in-the-wool for reopenables only.This team will review the declined 49

application on weekly basis.As the project has shown, VC decline contributes around 7% to the total declines.It will easily transcribe to 2 to 3% with the help of reopenable team.Again this team will rectify the declined reasons like AR,CD,OA,OU,SA,RA,RL,RU by providing required documents.Other reasons like RI,RP,OI,OP,NP can be rectified by providing correct & detailed information.Cost incurred by this team will be negligible as compared to the output gained by the Bank. This will definitely help to increase current approval rate by 5-10 %.

New Soucing avenues:-

ICICI bank has maximum surrogates in the crdit card market.After analysis of Existing surrogates (Including closed) following new sourcing avenues were found that would help to increase business. 1. Low limit card for NMC (Non management cadre) of GC/VC companies should be launched under the circumstances given in the finding (Table no.VIII.1on Page no. 40 & 41).

50

Chapter IX LIMITATIONS

Chapter IX

LIMITATIONS
While conducting this research project, certain limitations did occur. However, these are natural to any research project. 51

1. Time is the biggest limitations to any project. The same was true with this.

2. Another important limitation was the data. The data considered for this project was of only last three months (March, April & may 08).

3. It was confined to Isssuance department of Pune.

52

Chapter X Exhibit

Chapter X

Exhibit
Exhibit III.1 Cards Business Structure

53

54

Exhibit VIII.1 Credit Card Process

55

Credit Process Roles

1. Sales Team 56

1. Get Application Form filled up from customer 2. Collect documents as per ICICI Policy Norms 3. Collect KYC (Know Your Customer) Documents 4. Check for salary & track record of existing customers. 5. Inward Application in NACS (New Application Capturing System) 6. Forward Applications to CSB (Central Sales Backend) 2. Central Sales Backend (CSB) 1. Receive apps from respective channels 2. Sort apps Promo wise, Channel wise , etc. 3. Run the apps thru dip check & ensure apps are complete 4. Tele-calling Process: To complete any info missing on app form To ensures customer contactability for further reducing the declines at FI/Credit end 5. 6. Hand over the apps to CCB and RCU 3. Central Credit Backend (CCB) ( in some locations CCB & CSBs have merged ) 1. Acceptance of apps on line on NACS ( In some locations credit ops does this activity ) 2. Dip Check 3. Run the apps thru dip check & ensure apps are complete as per policy norms 4. Ensure KYC docs are in place as per norms 5. Ensure the docs have been stamped OSV( Original Seen & Verified) by executive 6. Return apps - not as per policy norms or any other issue 57

7. Entry of Returned apps in NACS ( In some locations credit ops does this activity wherever acceptance is done by ops ) 8. Sorting of Apps Promo wise, Channel wise , etc. for handing over to RCU/Vendor 9. Publishing of various MIS -Inward Acceptance Report, Return MIS, Courier MIS, etc. ( In some locations credit ops does this activity ) 4. Risk Containment Unit 1. Screening/Sampling of apps with docs 2. Sampling of apps/docs found doubtful 3. Rechecking a profile/company details if required 4. Sampled reports get uploaded in NACS with RCU comments 5. Negative RCU comments can be overridden with proper approvals from concerned RCU Manager 5. Credit Operations 1. Capturing of applications in NACS (off line) as per the process followed at different locations. 2. On receiving of the scores then the Application Credit Evaluation Sheet (ACES) is made and further score is updated on the same. 3. Tearing of Stubs by operations 4. Handover of applications with ACES to Credit for decision

6. Field Investigation (FI) Agency 1. In Cards Credit the FI is flagged after the capturing is happened and the file is allocated to the respective agencies for there locations.

58

2. FI also includes Field Visits as well as verification calls made at customers given telephone lines (Office/Resi/Cell) to confirm all the details and as well as to verify all the details. 7. Credit Team 1. Decision of applications as per the various score bands ,Policy etc 2. Initiating various checks and re-verifications like firing field

verifications, tele-calling and RCU if any document or report is found suspicious or not clear. 3. Treatment of approved applications i.e limit assignment and Logo assignment as per policy. 4. Treatment of declined applications i.e. proper decline code, reasons, etc. 5. Card Number generation 8. Credit Ops 1. Writing and Photo Sequencing 2. Photo scanning 3. Approval application Scanning 4. Storing of applications forms Approved and Declined at the Decline stores

9. Vendors 1. Embossing Generation of Card Number Writing and Photo Sequencing 59

 Photo scanning Approval application Scanning Storing of applications forms Approved and Declined at the Decline stores 10. Vendors 1. Dispatch Sending address file to courier company for further preparing the dispatch Update memos for despatch Check status of Cards Delivered Out of Delivery Process. Exhibit VI1.1 Various decline reason codes:-

Decline Reason Code AH AL AR AS BR CA CD CM CP DB DD DF DM DO DR ED EN ES FD FP FS HR IC JD

Description OVERAGE MINIMUM AGE LIMIT CRITERIA application sent for resourcing AREA NOT SERVICEABLE BAD REPUTATION HOLD-APPLICANT NOT IN STATION HOLD-ADDITIONAL DOCS Cibil Match Found Mobile phone not verified DOB of Addon missing DEDUPE ESTABLISHED BY VERIFICATION AGENCY DEFAULTER VERIFICATION AGENCY DETAILS MISMATCH DURING VERIFICATION DEFAULTER-OTHER SOURCES DIRECT REJECT BY DMA EMPLOYEE DECLINE EMPLOYMENT NATURE NOT VERIFIED E-Sourced appln awaiting documents FRAUDULENT DOCUMENTS FRAUDULENT PROFILE FORCE SOLD-NEVER APPLIED HOSTEL ACCOMMODATION UNDER INCOME JUDGEMENT DECLINE

60

MA MD MP MR NA NB NC NE NF NI NL NM NP NT OA OI OP OU PA PN PP PR QJ RA RI RL RP RS RU SA SM SP SR SS TD UA UN VC WD WN

MATCH WITH PREVIOUS APPLICATION DUPLICATE DECLINEABLE APPLICATIONS FROM SAME DMA Duplicate Application previous application is under process MULTIPLE CARD REJECT NEGATIVE AREA NO BUSINESS ACTIVITY SEEN NON TARGET COMPANY NOT ELIGIBLE MATCH WITH CPCS FILE NOT INTERESTED COMPANY NOT IN NASSCOM LIST NON MANAGEMENT CADRE NO PHONE NON TARGET PROFILE OFFICE ADDRESS NOT VERIFIED Office address incomplete OFFICE PHONE NOT VERIFIED office address incomplete or not traceable PERMANENT ADDRESS NOT VERIFIED PANCARD OR FORM 60 NOT PROVIDED Permanent address telephone not verified POOR RESIDENTIAL STATUS QUIT JOB RESIDENCE ADDRESS NOT VERIFIED Residence address incomplete RESIDENCE LOCKED RESIDENCE PHONE NOT VERIFIED RESIDENCE SHIFTED Residence address incomplete or not traceable SHARED RENTED ACCO STAFF MULTIPLE CARD DECLINE NOT CONFIRMING TO SURROGATE POLICY SCORE REJECT PENDING DECISION BEYOND TAT TEMPORARY DECLINE UNDER AGE ADD ON CARD HOLDER UBTRACEABLE VOLUNTARY CANCELLATIONion Reopenables with wrong details from sales Wrong Number provided in application form

Exhibit VII.2:- Various Promo code used for credit card

Sr no. 1 2 3 4 SURROGATE TIER 1 TIER 2 SAVINGS A/C SALARY A/C PROMO BLK BLK SBN PPN CHANNEL GCLF VCLF SNLF PNLF ELIGIBILITY & DOCS REQUIRED MIN 8K NET SALARY-LATEST SAL SLIP/FORM 16/ITR OF MIN 1.60 LAC MIN 8K NET SALARY-LATEST SAL SLIP/FORM 16/ITR OF MIN 1.60 LAC MIN AQB 5000 /MIN AQB 5000 /- .OR SAL 10K REFLECT IN A/C

61

5 6 7 8 9

SALARY A/C SALARY A/C SALARY A/C SALARY A/C OBLF (MORE THAN 6 MTHS VINTAGE)

PP1 PP2 PP3 PP4 HET

PNLF PNLF PNLF PNLF OBLF

Software Listed Co. , 3 Sal>10000 Non Listed S/w Co., 3 Sal > 10000 Infosys & Wipro Tech. , 1 Sal > 10000 Any Manufacturing Co., Only 1 Sal > 5000 MIN 25K CR LIMIT, NO DEROGATORY REMARKS-LATEST STATEMENT+PENCIL EMBOSSING(ON PLAIN PAPER & STATEMENT) IN FUEL MERCHANT & FUTUER GROUP OUTLET REQ.MIN 1000 RS CHARGELIP'S CUSTMOR COPY REQ.,MIN 2000 RS.CHARGESLIP IN ANY OTHER MERCHANT/CHARGESLIP HAS TO BE FOR AN ON US TRANSACTION (ICICI EDC MACHINE) FRONT CARDS EMBOES REQ. on Plain Paper. MIN 1 YR OLD POLICY, PREMIUM 10K, MAX 2 POLICIES TO BE CLUBBED, IF PREM IS 15K OR MORE POLICY VINTAGE WAIVED-LATEST RENEWAL PREM RECPT REQ-NO LATE FEES TO BE REF IN PREM RECPT-LATEST RENEWAL PREMIUM RECEIPT 9 MTHS VINTAGE, MIN 9 EMI CLEAR-FOR NEG AREA 12 EMI REQ, EMI OF 5500 FOR PERSONAL LOAN, 6500 FOR AUTO LOAN & 7500 FOR HOME LOAN-WELCOME LETTER, REPAYMENT SCHEDULE & BK STATEMENT REQ ITR OF MIN 1.25 LAC-LATEST ITR WITH MIN 5 PGS OF ITR WITH COMPUTATION OF INCOME MIN 10K NET SALARY IF SAL SLIP GIVEN & GROSS SAL OF 1.6 LACS IF ITR GIVEN-LATEST SAL SLIP/FORM 16/ITR / IN PVT LTD FIRM 3MONTH BANK STMT REQ. NO INCENTIVE/ADHOC ALLOWANCE IN SAL SLIP REF NO+PAN CARD COPY+ICICI A/C NO REF NO+ICICI A/C NO + PANCOPY + RES.PROOF ICICI Employee No, I card

10

CHARGESLIP

GLO

OBLF

11

INSURANCE SE

HET

INLF

12

LOAN RPMT

HET

LRLF

13

Normal SE Normal Salaried PRE APPROVEDCCOP PRE APPROVEDCCOP ICICI Bank Employee PLATINUM ( Logo 325) SUPER PRIMEICICI A/C SUPER PRIMENON ICICI A/C ELITE -ICICI A/C ELITE NON ICICI A/C OTHER BANK CARD INSURANCE (ONLY FOR LIC/PRULIFE POLICY) LOAN RPMT PRE APPROVEDCCOP ECH EMI

HET

MKLF

14

HET

MKLF

15 16 17

PPP PWR STF

BKLF BKLF STLF

18 19 20 21 22

SLP SPM SLP SPM PLT

ZULF ZULF EKLF EKLF OBLF

40K NET SALARY REF IN A/C-ICICI A/C NO-INCOME DOCS 40K GROSS SALARY-INCOME DOCS 40K NET SALARY REF IN A/C-ICICI A/C NO-INCOME DOCS 40K GROSS SALARY-INCOME DOCS MIN CR LIMIT OF 90K ON OTHER BANK CARD- + LATEST STATEMENT+PENCIL EMBOSSING ON STATEMENT AND PLAIN PAPERNO LATE FEES, PMT DISHONOUR FEE, IMMEDIATE PMT. MIN 1 YR OLD POLICY, PREMIUM 60K, MAX 2 POLICIES TO BE CLUBBED-LATEST RENEWAL PREM RECPT REQ-NO LATE FEES TO BE REF IN PREM RECPT EMI AMT*NO OF EMI'S*0.75=MINIMUM 1 LAC MIN CR LIMIT OF 90K ON OFFER-REF NO-ICICI A/C NO-KYC

23 24 25

HET HET PLT

INLF LRLF BKLF

26

CR LIMIT BETN 20K TO 40K CR LIMIT ABOVE 40K

EM1

OB4F

MIN 6 MTHS OLD CARD, CARD BE SHOULD BE ACTIVE, DELIQUENCY STRING SHLD BE OK, CUST SHOULD NOT BE REVOLVER,PENCIL EMBOSSING ON PLAIN PAPER +KYC MIN 6 MTHS OLD CARD, CARD BE SHOULD BE ACTIVE, DELIQUENCY STRING SHLD BE OK, CUST SHOULD NOT BE REVOLVER,PENCIL EMBOSSING ON PLAIN PAPER +KYC

27

EM2

OB5F

62

63

Chapter XI REFERENCES AND BIBLIOGRAPHY

Chapter XI

REFERENCES AND BIBLIOGRAPHY

BIBLIOGRAPHY

Kotler and Armstrong (2004); Principles of Marketing :- Page no. 507-521

64

Rajan Saxena (2006); Marketing Management; Tata McGraw-Hill Co. Ltd; New Delhi; Pg 425-433

REFERANCES

www.icicibank.com www.wikipedia.org www.rediff.com www.google.com

65