Industrial Credit And Investment Corporation Of India: History And Overview

The Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 as a public limited company under the Indian Company Act to develop medium and small private sector industries. It was formed as a joint venture between the World Bank, the Government of India, and Indian business representatives to provide financial aid to medium and long-term Indian industry projects. ICICI merged with ICICI Bank in 2002, creating India's first universal bank and ending its status as a development financial institution.

History and Formation

The Industrial Credit and Investment Corporation of India (ICICI) was established on 5 January 1955 as a public limited company under the Indian Company Act, with the aim of developing medium and small private sector industries. It was formed as a joint venture between the World Bank, the Government of India, and Indian business representatives to provide financial aid to medium and long-term Indian industry projects.

Initially, ICICI's equity capital was owned by companies, institutions, and individuals. However, by the 2000s, its ownership had shifted to public sector institutions, including banks, LIC, CIC, and their associate companies.

ICICI began as a development financial institution, providing project financing to Indian businesses. Over time, it diversified its role and engaged in multiple financial activities. In 1994, ICICI incorporated ICICI Bank as a wholly-owned subsidiary in Vadodara, marking its expansion into the banking sector.

In 2002, ICICI merged with ICICI Bank, resulting in ICICI no longer being classified as a development financial institution. This merger created India's first universal bank. The combined entity, ICICI Bank, continued to grow and expand its services, becoming a leading Indian multinational bank and financial services provider.

Objectives

The Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 as a public limited company under the Indian Company Act. It was formed as a joint venture between the World Bank, the Government of India, and Indian business representatives. ICICI's key objectives were:

• Encouraging the development of new industries: ICICI aimed to stimulate the promotion and growth of new industries in the private sector, particularly medium and small-scale enterprises.
• Expansion and modernisation of existing industries: The corporation sought to assist established industries in expanding their operations and modernising their infrastructure and processes.
• Provision of loans for industrial projects: ICICI provided financial support in the form of long-term and medium-term loans, both in Indian rupees and foreign currencies, to facilitate industrial projects in the private sector.
• Technical and managerial assistance: The corporation offered expertise in technical and managerial domains to enhance production efficiency and overall productivity. This included guidance on strategic management and value chain analysis.
• Underwriting and equity participation: ICICI engaged in underwriting new issues of shares and debentures, as well as participating in the equity capital of various enterprises.
• Guarantees for equipment and foreign loans: The corporation assured the supply of equipment and provided guarantees for foreign loans to support Indian industrial ventures.
• Leasing assistance: Commencing in 1983, ICICI offered leasing assistance for initiatives related to computerisation, modernisation, energy conservation, export orientation, and pollution control.
• Project advisory services: ICICI provided advisory services to central and state governments, as well as public and private sector companies. These services included policy reform advice and value chain analysis for governments, and strategic management guidance for private sector entities.
• Facilities and incentives for Non-Resident Indians (NRIs): The corporation informed NRIs about the facilities and incentives provided by the Government of India to encourage their investment in the country.
• Foreign currency loans: ICICI offered foreign currency loans and advances to enable Indian industrial enterprises to acquire essential capital goods from international sources.
• Promotion of other institutions: ICICI played a pivotal role in promoting several institutions, including the Housing Development Finance Corporation (HDFC) to provide financial assistance for residential construction and purchases. They also established the Technology Development and Information Company of India Ltd. (TDICI) to facilitate technology transfer and up-gradation. Additionally, ICICI was instrumental in the creation of the Credit Rating Information Services of India Ltd. (CRISIL), a credit rating service for the corporate sector.

Financial Assistance

The Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 as a public limited company under the Indian Company Act to develop medium and small private-sector industries. It was initially formed to provide financial aid to medium and long-term Indian industry projects.

To achieve its objectives, ICICI provides financial assistance in various forms:

• Long-term and medium-term loans in both Indian rupees and foreign currency.
• Participation in equity capital and debentures.
• Underwriting new issues of shares and debentures.
• Guarantees to suppliers of equipment and foreign loaners.

The rupee loan is used to purchase machinery, equipment, or other preliminary expenses. Foreign currency loans are provided for the purchase of imported capital equipment.

ICICI also offers leasing assistance for computerization, modernization or replacement of equipment, energy conservation, export orientation, and pollution control. This leasing assistance has been available since 1983.

ICICI provides project advisory services to the central and state governments, as well as public and private sector companies. It advises governments on policy reforms and value chain analysis and private sector companies on strategic management.

ICICI also provides information on facilities and incentives offered by the Government of India to Non-Resident Indians (NRIs) for investing in the country.

In addition, ICICI has a provision of foreign currency loans and advances to enable Indian industrial concerns to secure essential capital goods from foreign countries.

Activities

The Industrial Credit and Investment Corporation of India (ICICI) was established in 1955 as a public limited company under the Indian Company Act to develop medium and small private sector industries. It was initially formed to provide financial aid to medium and long-term Indian industry projects. It was structured as a joint venture between the World Bank, the Government of India and Indian business representatives.

ICICI's activities include:

Project Finance:

ICICI provides finance to industries for the establishment, modernisation or expansion of manufacturing and processing activities. This can be in the form of rupee and foreign loans, underwriting, subscription to shares and debentures, and guarantees to supply equipment and foreign donors.

Rupee and Foreign Currency Loans:

The rupee loan is used for purchasing equipment and machinery, construction and preliminary expenses. Foreign currency loans are provided for the purchase of imported capital equipment.

Leasing Operations:

ICICI offers leasing assistance for computerisation, modernisation/replacement of equipment, energy conservation, export orientation and pollution control. This service commenced in 1983.

Project Advisory Services:

ICICI provides advisory services to central and state governments, as well as public and private sector companies. It advises governments on policy reforms and value chain analysis, and private sector companies on strategic management.

Facilities for Non-Resident Indians:

ICICI offers information and assistance to Non-Resident Indians (NRIs) regarding the facilities and incentives provided by the Government of India for investing in the country.

Promotion of Other Institutions:

ICICI has promoted the following institutions:

• Housing Development Finance Corporation (HDFC): To provide long-term finance to individuals in middle and lower-income groups for the construction and purchase of residential houses.
• Credit Rating Information Services of India Ltd. (CRISIL): Set up in association with Unit Trust of India (UTI) to provide credit rating services to the corporate sector.
• Technology Development and Information Company of India Ltd. (TDICI): To finance the transfer and upgrade of technology and provide technology information.
• Programme for the Advancement of Commercial Technology (PACT): Established with a grant from USAID to support market-oriented R&D activities jointly undertaken by Indian and US companies.
• Programme for Acceleration of Commercial Energy Research (PACER): Funded by USAID to support research and technology development proposals in the Indian energy sector.

Mergers

The Industrial Credit and Investment Corporation of India (ICICI) has been involved in several mergers since its inception in 1955. Here is a detailed overview of the mergers:

ICICI and ICICI Bank Merger

In 1994, ICICI established ICICI Bank as a wholly-owned subsidiary in Vadodara. This marked the beginning of ICICI's transformation from a development financial institution offering project finance to a diversified financial services group. The ICICI Bank was initially known as the Industrial Credit and Investment Corporation of India Bank before changing its name.

In October 2001, ICICI and ICICI Bank approved the merger of ICICI with two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, into ICICI Bank. This merger led to the privatisation of ICICI as the parent company merged into its subsidiary, ICICI Bank.

ICICI Bank Acquisitions and Mergers

ICICI Bank has expanded its presence and diversified its offerings through several acquisitions and mergers over the years. Here are some notable examples:

• Bank of Madura (2001): ICICI Bank acquired the Bank of Madura Limited in an all-stock deal.
• Grindlays Bank (2002): ICICI Bank acquired the Darjeeling and Shimla branches of Grindlays Bank.
• Investitsionno-Kreditny Bank (2005): ICICI Bank expanded its international presence by acquiring a Russian bank, Investitsionno-Kreditny Bank (IKB).
• Sangli Bank (2007): ICICI Bank acquired Sangli Bank, which had a significant presence in Maharashtra and Karnataka, with branches across other states as well.
• The Bank of Rajasthan (2010): ICICI Bank acquired The Bank of Rajasthan (BOR) for ₹30 billion (US$360 million). The Reserve Bank of India approved the merger, and BOR has since been merged with ICICI Bank.

These mergers and acquisitions have contributed to the growth and expansion of ICICI and ICICI Bank, allowing them to diversify their services, increase their market presence, and better serve their customers.

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