Mumbai: After losing more than 22% in past two weeks, ICICI Bank Ltd, the country’s largest private sector lender, bounced back on the bourses on Tuesday, gaining 8.42% to close at Rs543.85 after the bank management, the banking regulator and India’s finance minister launched a collective rescue operation, saying the bank’s health is fine and there is no worry on any front.
Still healthy: Chairman and CEO of ICICI Bank K.V. Kamath. Abhijit Bhatlekar / Mint
“ICICI Bank has sufficient liquidity, including in its current account with the Reserve Bank of India (RBI), to meet the requirements of its depositors,” a central bank statement said. RBI is monitoring the developments and has arranged to provide adequate cash to ICICI Bank to meet the demands of its customers even as some depositors withdrew cash from some branches.
Before the RBI statement, ICICI Bank’s chief executive officer and managing director K.V. Kamath issued a release highlighting the bank’s more than adequate capital and liquidity and finance minister P. Chidambaram followed it up, saying ICICI Bank’s statement should reassure every depositor.
Kamath sees a definite pattern in the “baseless and malicious rumours” to destabilize the bank. According to him, certain participatory note holders are selling the bank’s stock and capital market watchdog Securities and Exchange Board of India, or Sebi, is looking into it.
Edited excerpts from an interview:
You’re saying the bank is safe, sound and solvent and there are “baseless and malicious rumours” about the bank’s health. Who is spreading these rumours?
I don’t know. It has got something to do with the capital markets. The pattern is quite clear to me. I would like the authorities to look into it. When it first happened two weeks back, we drew Sebi’s attention to it. It has spread through web, short text messages and word of mouth. We have also seen that visual media are being used, essentially to say that something has happened at some branches and people are rushing to the branch, etc.
I clearly see an agenda. The initial agenda was probably market-driven… I don’t know what’s the ultimate agenda.
Do see involvement of any corporate house in spreading such rumours?
I don’t know. The whole thing is a shorting exercise…
Any response from Sebi?
They are looking into it.
Who are the sellers in the market?
We are still gathering data. I would leave that to the regulator. The P-Note holders could be selling (the stock).
As we talk, people are queuing up at some of your branches across the country to withdraw money. The stock is also falling.
We have a capital adequacy ratio of 13.4%. We raised capital a year and a half before we were required (to do so) and we had raised it in abundance. The stock movement is important from the sentiment angle and a trigger for the real world where you deal with your customers. So, this is beyond destabilizing the stock price.