The year gone by saw major developments in the global landscape with the UnitedKingdom's decision to leave the European Union followed by the presidential elections inthe United States. Geopolitical issues dominated the global discourse. With regard to theglobal economy there was a moderation in growth in both developed and emerging markets.Global trade showed indications of revival. Broadly the focus has shifted from crisismanagement that was seen in the years following 2008 to growth.
Against this global backdrop India stood out as a country taking major policyinitiatives on several fronts. During the year we saw the enactment of the Insolvency andBankruptcy Code which will transform the process of workout and recovery of companiesthat are unable to meet their obligations to lenders. This was followed by the withdrawalof legal tender status of currency notes of denominations of Rs.500 and Rs.1000 and theintroduction of new Rs.500 and Rs.2000 currency notes. This led to a sharp increase infinancial savings and gave a significant boost to digital payment transactions. It isexpected to have a long-term positive impact on both these areas as well as the country'sfiscal health through improved tax compliance. Finally legislation on the Goods &Services Tax was enacted paving the way for the implementation of this landmark taxreform in the coming year.
While the above developments laid a strong foundation for the country's future growththe corporate sector experienced continued challenges during the year arising out ofglobal as well as domestic issues leading to inadequate cashflow generation frominvestments made in the past. The resolution process was also relatively slow. This led tocontinued stress on the asset quality of banks. The recent amendments to the BankingRegulation Act should facilitate and speed up the process of resolution.
The ICICI Group executed a focused strategy during the year of nimbly capturingopportunities and resolutely addressing challenges. ICICI Bank achieved robust growth inits retail business across lending deposit-taking and fee-based services. It continuedto be at the forefront of technology-led innovation in the banking sector. Following thewithdrawal of legal tender status of Rs.500 and Rs.1000 currency notes the Bank rose tothe challenge and once again demonstrated its outstanding capability to handle a complexlogistical exercise in a short timeframe while allaying customer anxieties andsimultaneously focusing on regulatory compliance. The employees worked tirelessly to servethe large numbers of customers visiting branches during this period. In the area ofcorporate banking the Bank continued to capture new opportunities while focusing onresolution of stressed borrowers with perseverance. The year saw a major milestone withthe Bank's life insurance subsidiary becoming the second listed entity in the Group.
This IPO executed in just about five months despite being the first insurance IPO inthe country demonstrated the strength of the life insurance business and unlocked valuefor the Bank and its shareholders.
As I had mentioned last year the ICICI Group is a financial institution with a longand rich history of leadership of service to the nation and of partnership in its growth.It has helped millions of individuals and families achieve their aspirations as well asplayed a key role in the creation of infrastructure and industrial capacity in thecountry. This ethos of the Group goes beyond its business. In a unique initiative thisyear ICICI Bank and ICICI Foundation for Inclusive Growth transformed 100 villages intoICICI Digital Villages combining digital payments with skill development and sustainablelivelihoods. I am sure that there will be many more innovations and transformationalinitiatives that we will see in the coming years.
ICICI Bank has a robust balance sheet with strong capital levels substantial operatingearnings and significant value across its businesses & subsidiaries. ICICI Bank hasalways demonstrated its ability to spot emerging opportunities and execute strategies tocapture them. A key strength of the ICICI Group is its depth of leadership talent and theuntiring commitment & contributions of the employees. The executive management teamunder the leadership of the Managing Director & CEO is executing a focused strategyleveraging existing strengths and building new capabilities to stay ahead in the evolvingenvironment. We are optimistic about the future as the banking sector gradually emergesfrom the challenges of recent years. ICICI Bank is well-positioned to leverageopportunities for profitablegrowth and value creation. The ICICI Group represents a uniquefinancial services franchise that will benefit from the growth and formalisation of theIndian economy and the Indian financial sector. It will continue its commitment to being apartner in India's growth and development.
With best wishes
M. K. Sharma