Thirupati Tipped To Be Ceo Of Icici Arm

V Thirupati, general manager at the Industrial Credit and Investment Corporation of India (ICICI) is being tipped to take over as the chief executive officer of the newly formed non-banking finance company (NBFC).

ICICI sources said that presently Thirupati has been put in charge of the operations of the newly formed company. The board of directors are still being worked upon.

However, as the company is a fully owned subsidiary of ICICI it is likely to have the same composition.

ICICI on February 13, 1997, decided to enter into the high margins retail business of automobile financing and consumer credit by setting up a wholly owned NBFC. ICICI has also decided to enter the factoring business.

 

The move by ICICI is the first step by any financial institution to enter the retail segment on the asset side.

The networth of the NBFC will be Rs 50 crore and the leveraging is planned to be through subordinated debt.The NBFC is expected to create a netwrok of 25 offices which will be increased to 50 in two years and a dedicated field force of about 6,000 agents.

The network will be used to raise resources for the parent organisation. ICICI will later fund the NBFC through the subordinated debt route out of the funds raised. The assets created will be in the books of the NBFC. The accounts of the NBFC and ICICI will be consolidated.

The retail areas that ICICI is entering are consumer driven automobile financing, consumer credit, vendor leasing especially in areas of office equipment and commercial vehicle sector.

These sectors are growing much faster than the GDP growth rate. ICICI had to move into the high margin retail sector as its spreads have been progressively coming under a squeeze. Under the vendor leasing scheme, ICICI will finance the supplier rather than the end user.

ICICI has also identified substantial niche markets in factoring where barriers to entry are almost non existent and therefore, the establishment of leadership position would be fairly simple. ICICI feels that the retail business is expected to be profitable as spreads in these business lines are good.