Importance of effective brand building and segmentation with respect of icici credit cards

PROJECT REPORT ON IMPORTANCE OF EFFECTIVE BRAND BUILDING AND SEGMENTATION WITH RESPECT TO ICICI CREDIT CARDS. ICFAI NATIONAL COLLEGE DEHRADUN SUBMITED TO: SUBMITED BY:

A REPORT ON IMPORTANCE OF EFFECTIVE BRAND BUILDING AND SEGMENTATION WITH RESPECT TO ICICI CREDIT CARDS. A report submitted in partial fulfillment of the requirement of M.B.A program (2006-08) ICFAI NATIONAL COLLEGE DEHRADUN

TABLE OF CONTENTS 1. CERTIFICATE 4 2. ACKNOWLEDGEMENT 5 3. ABBREVIATIONS 6 4. SUMMARY OF THE STUDY 7 5. OBJECTIVES AND LIMITATIONS 9 6. INTRODUCTION 10 7. REVIEW OF LITERATURE 13 8. COMPANY PROFILE 19 9. HISTORY OF CREDIT CARDS 29 10. CREDIT CARD FEATURES 36 11. SEGMENTATION OF CREDIT CARDS 43 12. DATA ANALYSIS 49 13. FINDINGS 54 14. CONCLUSIONS 55 15. BIBLIOGRAPHY 56

CERTIFICATE This to certify that the management thesis-2 titled “IMPORTANCE OF EFFECTIVE BRAND BUILDING AND SEGMENTATION WITH RESPECT TO ICICI CREDIT CARDS”. Enrollment no. 6nb20852 during semester-IV of the MBA program (class of 2008 embodies original work done by him.) SIGNATURE OF THE FACULTY NAME DESIGNATION CENTRE

ACKNOWLEDGEMENT The making of any project calls for contribution & co-operation from many others besides the individual alone. It is the result of meticulous effort put in by one with contribution of inputs by many that led to the formation of final report. Firstly, I sincerely thank our institute for giving me an opportunity to do the project, which helped me learn a lot about mutual fund industry. I take this opportunity to extend my gratitude to all the employees of SBI bank for their encouraging advice that really was the inspiration & the motivating force behind my endeavors. Special thanks and gratitude to Mr. ISHVINDER SINGH, Faculty guide (ICFAI National College) for giving me some practical inputs which were extremely valuable in the making of this project. Finally, my sincere thanks to all who directly and indirectly helped and encouraged me in the making of this project.

ABBREVIATIONS (POS) - POINT-OF-SALE (ADRs) - AMERICAN DEPOSITARY RECEIPTS (NYSE) - NEW YORK STOCK EXCHANGE (ICICI) - INDUSTRIAL CREDIT AND INVESTMENT CORPORATION OF INDIA. (GDP) - GROSS DOMESTIC PRODUCT. (AMC) - ASSET MANAGEMENT COMPANIES.

SUMMARY Current marketing thinking on the tasks of market definition, market segmentation, and brand building is in disarray. Segmentation, in particular, is often discussed in textbooks and articles without defining the market that’s segments are to be identified. The researcher is looking for segments among current customers, consumers that currently are prospects in the product category, or individuals taken at random from some unspecified frame. It matters how management defines its market. The definition should correspond to the strategic task that management is facing, and authors should state reasons for the definition they use. Some authors use the term “Segmentation” when discussing how customers react to a current array of product offerings. Others consider segments to be groups defined through demographic categories, such as blacks, seniors, or newlyweds. Such groups are segments of the population, but on what basis can they be regarded as market segments? It’s not clear exactly what market segmentation currently means and how it provides a distinct orientation to analysis that’s different from market definition and brand positioning. Strategic analysis in marketing has not always been so muddled. In a 1956 article in the Journal of Marketing (“Product Differentiation and Market Segmentation as Alternative Marketing Strategies,”), Wendell Smith stated that market segmentation and brand positioning are distinct forms of analysis. Market segmentation, according to Smith, involved analyzing the demand side of the market to obtain a rich understanding of where people are coming from and “the wants” they bring to the marketplace. Identifying such wants was in line with marketing’s responsibility of guiding management to “make what people want to buy” by providing insight into the conditions individuals face in their everyday life and work. Smith clearly contrasted such an approach with a form of brand positioning that creates positioning differences without regard to what people want. Segmentation has since become a general buzzword for any analysis that attempts to

identify groups of individuals who are similar in attitudes, response to marketplace offerings, where they live, or how they are described—for just about any marketing- related task. Such a state of affairs results from many factors, including the ready availability of marketplace data and the hope that meaningful insights can emerge from data analysis, however lacking in strategic direction. In fact, marketing authors often seem to use “segmentation” where authors in other disciplines would speak simply of “analysis,” seeking some form of order or pattern by creating and searching for differences among subgroups. Consider the case of an urban transportation agency that wants to develop an image advertising campaign, perhaps prior to announcing a fare increase or floating a bond issue before voters. Such a case is not an instance of seeking to base product strategy and accompanying communication on one motivational segment found within a relevant universe, as described by Smith. Instead, management is bent on achieving an externally imposed objective other than satisfying prospects’ wants as found. Analysis of current customers may identify groups of heavy users—some with negative attitudes about public transportation and others with more positive attitudes. While such analysis can provide useful information for implementing a targeted advertising campaign, it doesn’t provide the insight needed to guide management to “make what people want to buy.” The analysis of customers, their attitudes to current offerings, and marketplace behavior in general is ambiguous regarding the reasons that people find value in a brand. Simply knowing that a brand or specific attribute is preferred doesn’t provide insight into the conditions that people deal with, for which they would be glad of help and ready to part with money to receive that help. Knowing the conditions that prospects face is critically important for tasks including brand (re)formulation and obtaining the attention of targets in mass media. Moreover, these conditions need not be reflected in or be retrievable from attitudes toward the offerings currently present in the marketplace— unmet demand (i.e., prospects’ conditions that no brand is addressing) almost certainly exists in all markets.

OBJECTIVES:- 1. To study effective brand building and segmentation with specific reference to ICICI credit cards. 2. The research aims to study its concept of segmentation and brand building. 3. The application of above concepts by ICICI credit cards. 4. Evaluate the effectiveness of client concept through primary and secondary research of customers at Dehradun. LIMITATIONS:- • Paucity of time. • Limited availability of data. • Data conferred to ICICI in Dehradun only. • Reluctance in part of company to share too many details about credit cards. RESEARCH DESIGN:- • The research is limited to Dehradun ICICI Bank at Hathibarkla Road has been chosen as the model center for conducting the research. • Secondary data has been obtained from website, journals, company officials etc. • Primary data has been obtained from company officials. • Efforts have been made to identify various card users in Dehradun and willing to be part of their research. METHODOLOGY:- • Importance of segmentation. • Brand building and segmentation. • Study of credit cards industry. • Study of ICICI group with specific reference to credit cards. • Study of secondary data. • Data collection. • Data analysis. • Findings / Recommendations • Conclusion.

INTRODUCTION:- Organizations used to think if they targeted only a segment of a market, the economies would not work. Therefore, ICICI earned huge profits and became the most popular bank in private banking sector in India. Dividing the market by grouping the customers with similar tastes and preferences into one segment is called segmentation. It is becoming increasingly important for marketers. Different products ranges target different customers. Segmentation helps marketers to understand the needs of different customers better and serve them with better value propositions. Companies need to develop and refine their products and services to meet the needs and preferences of various segments. ICICI was established in 1955 at the initiative of the World Bank ,the Government of India and the representatives of Indian industry .The main objective of was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses . ICICI Bank was promoted in 1994 by ICICI Ltd. Its shares are listed in India on the Bombay Stock Exchange and National Stock Exchange and its American Depositary Receipts are listed on the New York Stock Exchange under the symbol “IBN” .In 1999 ICICI Bank became the first Indian company and the first bank from non-Japan Asia o be listed on the NYSE. Presently ICICI Bank has a wide network of more than 650 branches and over 2523 ATMs .It is the largest private sector bank in India and second largest bank after SBI. ICICI Bank’s head office is situated in Mumbai. Chairman of CICI Bank is Mr. N.Vaghul and MD and CEO is Mr.K.V.Kamath. The authorized capital of ICICI Bank is Rs.1, 000 cr. The present paid-up capital of ICICI Bank is 153.84 cr...

PRODUCTS OF ICICI BANK (A) SAVING ACCOUNT:- 1. Regular saving account 2. saving plus account 3. Salary account 4. Retail trust account (B) RECURRING ACCOUNT. (C) FIXED DEPOSIT. (D) LOANS:- 1. Personal loans 2. Home loans 3. Two wheeler loans 4. New car loans 5. Used car loans 6. Overdraft against car 7. Gold loans 8. Express loans (E) INSURANCE:- 1. Life insurance 2. General insurance 3. Health insurance 4. Home insurance (F) CARDS:- 1. Credit cards 2. Debit cards (G) CURRENT ACCOUNT:- 1. Roaming current account 2. Trade current account 3. Made to order current account

INTRODUCTION

SEGMENTATION AND BRAND BUILDING MARKET SEGMENTATION Introduction The purpose of market segmentation analysis is to understand where prospects are coming from. People engage in observed behaviors for many different reasons. They go swimming, walk the dog, take their car in for repair, and hire marketing research consultants for reasons that range from solving immediate problems to relishing some aspects of the activity itself. By developing their understanding of the Direct Customer Connection’s (DCCs) that lead to action, marketers guide product formulation and meaningfully participate in the tasks and interests of prospects. Some authors are on record as stating that market segmentation is a strategy of last resort —it is what firms do when they have a weak brand. If the brand isn’t strong enough to appeal to everyone, then perhaps it could appeal to someone. We disagree with this orientation. No brand can legitimately claim to be responsive to all of the DCCs that lie behind an observed action in any product category. No one winter coat can protect all people from the elements they experience, no one oxidizing chemical works for all household stains, and no one marketing research publication can be responsive to all the conditions in which management allocates funds to conduct marketing research. If it were true that market segmentation is a strategy of last resort, we wouldn’t see the extensive variety of offerings available in all product categories. Most obviously, the help that users can obtain from a product category ranges from strong (responsive to urgent or extreme versions of the underlying conditions) to mild or gentle (tailored to minimize the chance that the product’s effect could be harmful). Other authors have stated that market segmentation is a necessary evil that will diminish in importance as firms obtain more detailed records of household purchase transactions.

We again disagree. As noted, DCCs are not retrievable from purchase behavior, or even from noting the objective consumption environment. We actually learn very little from household purchase data beyond what people prefer and their sensitivity to variables such as price. While such information is useful for devising price promotions for existing offerings, it offers little guidance to any of the strategic questions. Market segmentation analysis is the discipline’s classic research approach to providing information relevant to devising, assessing, and possibly changing management’s product strategy and the accompanying communications message. It is firmly grounded in management’s search for guidance on product strategy to make the best use of its resources, with a view to obtaining a satisfactory return on investment (ROI). Management’s resources are used to best advantage when they build on the way people are bent on spending their resources. For this reason, market segmentation research is directed to understanding motivational influences as they already exist in the everyday lives of management’s prospects. It is a matter of plain common sense that resources are better allocated when management responds to pre-existing demand, rather than putting resources at risk by first trying to change the way people are ready to use their resources. Corresponding to each product category is a domain of activity (e.g., for packaged vacations, there is taking a week’s vacation away from home; for dog food, there is owning/caring for a dog). For each activity, prospects have a variety of orientations across individuals and, sometimes, within individuals over time (i.e., from one occasion of the activity to another). A prime task of management is to investigate, describe, and roughly quantify the specifics (i.e., personal and environmental elements) of each of these orientations in its product category. This is the basic function of market segmentation research. An implication of the present orientation is that segments of demand are identified, not imposed. What is at issue is identifying the naturally occurring kinds of demand—the conditions that preexist in the prospect’s world, predisposing them to spend their resources in a particular way. Management is identifying a diversity that already exists. Accordingly, imposing some extraneously determined segmentation scheme is not at issue. Analytic groups derived

from patterns of response to management strategy don’t qualify as naturally occurring segments of demand because (1) respondents are constrained to express demand in terms of options that management has provided and (2) while the analysis of such imposed groupings may be useful for pursuing tactical management objectives, they don’t address the strategic objective of deciding “what to offer to whom.” In our orientation, management defines its market and then selects from the natural diversity of demand that it finds therein, rather than imposing groupings determined outside the system or based on reactions to marketing efforts. The DCCs are considered fixed in the analysis for several reasons. First, they exist outside of the marketplace in the context of everyday life and work and are therefore difficult to influence. Also, the marketing concept, “make what people want to buy,” is built on the premise that it’s more profitable to tailor one offering to the prospect than to try to tailor the prospect to fit the offering. Understanding where people are coming from involves conceptualizing and quantifying the DCCs relevant to an activity. In our article, “No Brand Level Segmentation?” (Marketing Research, Spring 2002), we discuss measuring DCCs as the motivational component of an occasion for action. Motivating conditions are expressed as the concerns and interests that lead people to action, and examples are provided for the act of brushing teeth. In research with Sha Yang, we have found that the concerns and interests are predictive of relative brand preference and offer a useful basis variable for market segmentation. Moreover, in other research we find that they provide an opportunity to consider unmet demand in a product category. Once the DCCs are identified and measured, market segmentation analysis proceeds by assessing the state of want satisfaction for each kind of concern or interest. Conventional criteria for assessing segments of demand include characteristics such as “substantial” and “actionable.” While adjectives such as these are difficult to disagree with, they provide little substantive guidance as to how a firm should proceed. Target selection must consider the capability of the firm to meaningfully respond to some subset of the DCCs given its capabilities, actual and perceived, related to core competencies. Here, the analyst is organizing the information obtained in market segmentation.

BRAND BUILDING The strategic task of brand positioning refers to management’s selecting as its market targets (1) a subset of conditions (DCCs) to address with a responsive offering and (2) the individuals who experience such conditions. In contrast to studying where people are coming from, which is the purpose of market segmentation analysis, the purpose of brand positioning is to influence the brands prospects choose in the marketplace. Broadly speaking, product strategy has to do with designing a brand so that it can claim and deliver getting enough prospects to where they want to be to provide management with a satisfactory ROI. More specifically, brand positioning analysis involves further refining answers to the strategic questions in Exhibit 1 in light of the defined market, the state of want satisfaction, competing offerings, and best use of management’s resources. As a strategic task, brand positioning is based on management’s conducting an iterative evaluation of the inroads that an offering can achieve by designing it to respond to some region of the diverse kinds of demand as found. For each segment of demand, management reviews the current state of want satisfaction provided by existing offerings, with a view to assessing its ability profitably to improve on what is currently available. Such assessment takes account of the possible hegemony of the competitors in a segment. Segments of demand served by strong competitors are viewed as less attractive than those served by weak competitors. If a competing firm does not already have the segment locked up, specific levels of attributes are identified in response to the DCCs. Such attributes can be physical (e.g., breath freshening) and psychological (e.g., shows others one care about oneself). Management assesses likely credibility and attractiveness of the selling proposition as identified with the firm.

Now consider getting the brand’s message to its targets— those prospects with conditions that the brand has been tailored for. From the initial selection of communications medium (e.g., nationwide TV, print, or billboards), management chooses specific media vehicles within that broad range. Getting the message to the brand’s targets has to be thought of in two stages—choosing media vehicles that expose the message in the presence of prospects, and gaining the attention of targets among those prospects by what is shown and said in the advertising execution. In stage 1, the link between prospects and media vehicles can be made via demographics. That is, sellers of media vehicles use demographic information to describe their audiences, and management knows the demographic profile of its pros marketing pacts. Based on such a demographic matching, management seeks audiences that contain prospects disproportionately. In stage 2 (i.e., engaging the attention of its targets in such audiences), management must rely on how it constructs its advertising message to ensure that the ad portrays the conditions for which the brand has been tailored, and conveys the attributes that equip the brand to address those conditions. Specific answers to the remaining variables of price and exchange venue are so dependent on the particular situation— product category, status in the marketplace, and options actually available—that it is generally not possible to prescribe a sequence of steps to arrive at optimal answers to these final strategic questions. Management may have access to a favorable exchange venue, or a specific magazine or other media vehicle may exist that efficiently provides access to prospects. Such factors affect determining an optimal, profit maximizing price. Brand positioning and, indeed, finding the best answers to all the strategic questions in Exhibit 1, form a highly creative enterprise. By a process of successive approximation, it involves management’s choosing the most advantageous position on each of the variables where its actions have strategic implications. These are the classic domains of strategic choice, where management seeks the best use of its resources in selecting (1) whom to include in its market (prospects), (2) which DCCs found among prospects to target by building responsive features into its offering (product), (3) how best to get its brand’s message to its targets (promotion), (4) consistent with ROI, a minimal price in money terms (price), and (5) user-convenient arrangements for effecting exchange (place).

Taking an integrated approach to the tasks of market definition, market segmentation, and brand positioning offers a number of advantages. First, the approach highlights the strategic and tactical nature of variables such as prospects, product, price, place, and promotion. Price, for example, plays a dual role in marketing. The general price band of an offering is associated with market definition, and the specific value of price within the band is used to optimize profits for a brand— given that it is a player in the market. Initially, the product category determines which individuals in a given population management regards as prospects. The type of communications medium, exchange venue, and price band have strategic implications for which prospects and competition the market comprises, while the specific media vehicle (e.g., specific magazine), message (e.g., ad content and execution), exchange venue (e.g., specific department store), and specific attribute levels (e.g., 6x zoom lens) influence whether or not the offering is chosen sufficiently often to provide satisfactory ROI. Second, an integrated approach provides a context for considering answers to each of the major strategic questions that give due recognition to the user-producer interface. On the producer side, management starts with a geographic area in which it wants to do business and a product category of interest and selects relevant individuals from the population in its geographic area. Further defining its market, management puts in place the broad communications, exchange venue, and price bands of the venture. Taking that market as defined, it is then the role of market segmentation to study the conditions outside the marketplace that lead prospects to engage in the focal activity. We thus avoid circular definitions of consumer segments that are characterized in terms of their reaction to real or hypothetical offerings. Such analysis brings together the user and producer worlds prematurely. This leads to blurred understanding and a dilution of marketing’s ability to represent the world of the consumer and give equal treatment to the systematic roles of users and producers. Attempting to read consumer wants by studying what people choose is limited by the offerings that happen to be present in the marketplace. When market segmentation research is, as here, based on a description of prospects’ wants that is independent of marketplace offerings, it provides better guidance to firms to “make what people want to buy.”

Finally, the present integrated approach leads to substantive analysis of users and producers. The task of market definition sets up bounds on the range of users, producers, and interface variables to be studied. Market segmentation analysis focuses primarily on the user side of the market, and brand positioning explores producers’ product offerings and further productive capability in light of users’ diverse wants. ORGANIZATION OVERVIEW HISTORY ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE. After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal

banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction- banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity. ICICI Bank has formulated a Code of Business Conduct and Ethics for its directors and employees. ICICI BANK ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion (US$ 79 billion) at March 31, 2007 and profit after tax of Rs. 31.10 billion for fiscal 2007. ICICI Bank is the most valuable bank in India in terms of market capitalization and is ranked third amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalization. The Bank has a network of about 950 branches and 3,300 ATMs in India and presence in 17 countries. 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 specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance

Centre and representative offices in the United States, United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. Our UK subsidiary has established a branch in Belgium. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE). ECONOMIC OVERVIEW The year 2001 witnessed a continuation of the global economic slowdown that had begun to set in at the end of the year 2000. This recessionary trend deepened in the aftermath of the terrorist attacks in the United States in September 2001. This broad-based nature of the global slowdown, the most marked in recent times, impacted the outlook for emerging market economies in terms of reduced capital inflows and restricted access to funds from international capital markets. However, India remained relatively insulated from the global slowdown due to the lower significance of the external sector in its Gross Domestic Product (GDP). Despite the external environment, India’s real GDP recorded one of the highest growth rates among all the economies of the world. This also marked a recovery over the low growth in fiscal 2001, though still below the average growth rate of the previous five years. The overall GDP growth was supported mainly by agriculture and allied sectors and services. Services continued to fuel the economy, reflecting robust performance in financial services and technology. While consumer finance saw major growth, industrial growth witnessed a decline which may be attributed to various factors such as business and investment cycles, inherent adjustment lags of corporate restructuring, absence of investment demand, infrastructure constraints in power and transport and delays in establishing a credible institutional and regulatory framework for private participation in some key sectors. However, select infrastructure sectors, such as telecommunications and roads, saw significant success.

The implementation of the National Highways Development Programme (NHDP) “Golden Quadrilateral” project is expected to be completed on schedule. The port sector has witnessed progress in private investments in new container terminals and minor ports and in corporatization of port trusts. In the telecom sector, significant progress has been made by Telecom Regulatory Authority of India (TRAI) in opening up all segments of the sector to competition, reducing prices in both long distance and cellular services. However, railways, power and urban infrastructure are key areas requiring reforms. The Union Budget for fiscal 2003 takes these concerns into account as it emphasizes rationalization of user charges and increased public expenditure on infrastructure. The average annual rate of inflation in terms of the Wholesale Price Index (WPI) has declined significantly from 7.1% at the beginning of fiscal 2002 to 2.1% for the week ended July 8, 2002. This is in line with the deflationary trends experienced globally in commodity and manufactured product prices. Interest rates declined significantly during the year. Yields on Government securities declined, reflecting the ample liquidity in the system. The small savings rate was further lowered by 50 basis points in Reserve Bank of India’s (RBI) Monetary and Credit Policy announced in April 2002. This removed a key impediment for structurally lower interest rates. Reserve Bank of India has stated its preference for maintaining the current interest rate environment with a bias towards softer interest rate regime in the medium term, in order to create an environment that facilitates credit growth and investment activity in the economy. Fiscal 2002 was a volatile year for the Indian equity capital markets. The markets underwent major structural reforms including the introduction of compulsory rolling settlement in a large number of stocks, margin trading, derivative instruments and the first Exchange Traded Fund. At the same time, the worldwide recession and decline in technology stock prices impacted the markets. However, notwithstanding adverse developments, the year 2001 witnessed the highest FII investment in Indian equity. In the foreign exchange markets, other than occasional fluctuations caused by normal market forces, the exchange rate of the rupee in terms of the major currencies of the

world remained reasonably stable during the year, with close monitoring by RBI. The exchange rate policy has by and large focused on managing volatility with no fixed rate target. During the year, foreign exchange reserves (including gold and special drawing rights) grew significantly, reaching a record level of nearly USD 58.00 billion as of July 5, 2002. An increase in inflow of invisibles and a lower trade deficit resulted in the current account showing a surplus of USD 1.40 billion (0.3% of GDP) in fiscal 2002 compared to a deficit of USD 2.60 billion in fiscal 2001. Foreign investments grew 15.2% aided by a sharp rise in Foreign Direct Investment (FDI) inflows of 67%. Moreover, as a result of effective external debt management by the Government, India’s external debt situation improved significantly, as reflected in the declining external debt-to-GDP and debt service ratios. It is particularly noteworthy that for the first time, the World Bank has classified India as a less-indebted country. BUSINESS OVERVIEW The past year saw the process of financial sector reforms being carried forward with particular focus on banks and financial institutions. Considerable attention was given to asset classification and provisioning norms in banks. RBI announced guidelines on universal banking to facilitate the transformation of financial institutions into banks. It also granted licenses for two new private sector banks and reduced the cash reserve ratio in October 2001 and April 2002, bringing it down to 5.0%. The Union Budget for fiscal 2003 provided for higher tax deduction on provisions for bad debts. It also proposed the enactment of new legislation for banking sector reforms and foreclosure laws. The Union Budget also permitted incorporation of subsidiaries by foreign banks. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 has significantly strengthened the ability of lenders to resolve non-performing assets by granting them greater rights as to enforcement of security and recovery of dues. The setting up of a pilot asset reconstruction company is also expected to facilitate faster resolution of non-performing assets in the financial system. Fiscal 2002 saw measures designed to move towards a flexible interest rate regime. Measures such as reduction in interest rates and withdrawal of tax incentives across various small savings schemes, and benchmarking small savings rates to the average annual yields on Government securities of equivalent maturities are designed to make all

interest rates market linked and give banks greater flexibility in reprising their deposits. The introduction of floating rate deposits with reset at six-monthly intervals and the option to depositors to convert current fixed rate deposits to variable deposits is also designed to encourage better spread management for banks. The liquidity scenario during the past year was comfortable. RBI has indicated that the policy of active demand management of liquidity through open market operations and liquidity adjustment facility would be continued. Credit growth and investment demand would be supported by maintaining the bias towards soft interest rates. RBI has also given a significant boost to housing finance by reducing the risk weightage on residential housing loans and mortgage-backed securities pertaining to residential housing loans from 100% to 50%. MERGER OF ICICI WITH ICICI BANK ICICI Bank and ICICI, along with other ICICI group companies, were operating as a “virtual universal bank”, offering a wide range of financial products and services. The merger of ICICI and two of its subsidiaries with ICICI Bank has combined two organizations with complementary strengths and products and similar processes and operating architecture. The merger has combined the large capital base of ICICI with the strong deposit raising capability of ICICI Bank, giving ICICI Bank improved ability to increase its market share in banking fees and commissions, while lowering the overall cost of funding through access to lower-cost retail deposits. ICICI Bank would now be able to fully leverage the strong corporate relationships that ICICI has built, seamlessly providing the whole range of financial products and services to corporate clients. The merger has also resulted in the integration of the retail finance operations of ICICI, and its two merging subsidiaries, and ICICI Bank into one entity, creating an optimal structure for the retail business and allowing the full range of asset and liability products to be offered to all retail customers. The share exchange ratio approved for the merger was one fully paid-up equity share of ICICI Bank for two fully paid-up equity shares of ICICI. This was determined on the basis of a comprehensive valuation process incorporating international best practices,

carried out by two separate financial advisors and an independent accounting firm. The equity shares of ICICI Bank held by ICICI have not been cancelled in the merger. In accordance with the provisions of the Scheme of Amalgamation, these shares have been transferred to a Trust to be divested by appropriate placement. The proceeds of such divestment would accrue to the merged entity. With the merger taking effect, the paid-up share capital of the Bank has increased to Rs. 6.13 billion, comprising 613 million shares of Rs.10 each. The merger process was complex and posed significant challenges. The merger of a financial institution with a commercial bank to create the country’s first universal bank had significant implications for the entire financial system. It therefore involved extensive dialogue with the Government and Reserve Bank of India. The merger also posed the challenge of compliance with regulatory norms applicable to banks in respect of ICICI’s assets and liabilities, particularly the reserve requirements. This required resources of about Rs. 210.00 billion to be raised in less than six months for investment in Government securities and cash reserves, in addition to normal resource mobilization for ongoing business requirements. We leveraged our strong retail franchise, including the distribution network acquired in the merger of the erstwhile Bank of Madura Limited with ICICI Bank in fiscal 2001, to grow our retail deposit base. We also achieved significant success in securitizing loans and developing a market for securitized debt in India. We also adopted proactive strategies to minimize the duration of our Government securities portfolio, in order to mitigate the interest-rate risk arising from the acquisition of a portfolio of about Rs. 180.00 billion in five months. As both ICICI and ICICI Bank were listed in Indian and US markets, effective communication to a wide range of investors was a critical part of the merger process. It was equally important to communicate the rationale for the merger to international and domestic institutional lenders and to rating agencies. The merger process was required to satisfy legal and regulatory procedures in India as well as to comply with United States Securities and Exchange Commission requirements under US securities laws. The merger of India’s largest financial institution with its largest private sector bank also involved significant accounting complexities. In accordance with best practices in accounting, the merger has been accounted for under the purchase method of accounting under Indian GAAP. Consequently, ICICI’s assets have been fair-valued for their

incorporation in the books of accounts. The fair value of ICICI’s loan portfolio was determined by an independent values, while ICICI’s equity and related investment portfolio was fair-valued by determining its mark to- market value. The total additional provisions & write-offs required to reflect the fair values of ICICI’s assets determined at Rs. 37.80 billion have de-risked the loan and investment portfolio and created a significant cushion in the balance sheet, while maintaining healthy levels of capital adequacy. The merger was approved by the shareholders of both companies in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India (RBI) in April 2002. The challenge of mobilization of resources for compliance with statutory reserve requirements applicable to banks, on ICICI’s outstanding liabilities on merger, was met successfully within the target date of March 30, 2002. While the merger became effective on May 3, 2002, in accordance with the provisions of the Scheme of Amalgamation and the terms of approval of RBI, the Appointed Date for the merger was March 30, 2002. We believe that the structure of an organization needs to be dynamic, constantly evolving and responsive to changes both in the external and internal environments. Our organizational structure is designed to support our business goals, and is flexible while at the same time ensuring effective control and supervision and consistency in standards across business groups. The organization structure is divided into five principal groups – Retail Banking, Wholesale Banking, Project Finance & Special Assets Management, International Business and Corporate Centre. The Retail Banking Group comprises ICICI Bank’s retail assets business including various retail credit products, retail liabilities (including our own deposit accounts as well as distribution of third part liability products) and rural micro-banking. The Wholesale Banking Group comprises ICICI Bank’s corporate banking business including credit products and banking services, with separate dedicated groups for large corporate, Government and public sector entities and emerging corporate. Treasury, structured finance and credit portfolio management also form part of this group.

ICICI GROUP ICICI Bank also has banking subsidiaries in UK, Canada and Russia BOARD MEMBERS Mr. N. Vaghul, Chairman Mr. Sridhar Iyengar Mr. Lakshmi N. Mittal Mr. Narendra Murkumbi Mr. Anupam Puri Mr. Vinod Rai Mr. M.K. Sharma

Mr. P.M. Sinha Prof. Marti G. Subrahmanyam Mr. T.S. Vijayan Mr. V. Prem Watsa Mr. K.V. Kamath, Managing Director & CEO Ms. Chanda Kochhar, Joint Managing Director & Chief Financial Officer Ms. Madhabi Puri-Buch, Executive Director Mr. Sonjoy Chatterjee, Executive Director Mr. V. Vaidyanathan, Executive Director SERVICES OFFERED:- SERVICES PROVIDED BY ICICI BANK 1. 8 TO 8 BANKING 2. ANYWHERE BANKING 3. MOBILE BANKING 4. PHONE BANKNG 5. INTERNET BANKING 6. DOORSTEP BANKING 7. THIRD PARTY TRANSACTION 8. CASH AND CREDIT TRANSACTION 9. ELECTRONIC FUND TRANSFER

HISTORY OF CREDIT CARDS Section 0.1A credit card is an automatic way of offering credit to a consumer. Credit is a method of selling goods or services without the buyer having cash in hand. A credit card is only an automatic way of offering credit to a consumer. Today, every credit card carries an identifying number that speeds shopping transactions. Imagine what a credit purchase would be like without it, the sales person would have to record one identity, billing address, and terms of repayment. According to Encyclopedia Britannica, "the use of credit cards originated in the United States during the 1920s, when individual firms, such as oil companies and hotel chains, began issuing them to customers." However, references to credit cards have been made as far back as 1890 in Europe. Early credit cards involved sales directly between the merchant offering the credit and credit card, and that merchant's customer. Around 1938, companies started to accept each other's cards. Today, credit cards allow one to make purchases with countless third parties. (a) THE SHAPE OF CREDIT CARDS Credit cards were not always been made of plastic. There have been credit tokens made from metal coins, metal plates, and celluloid, metal, fiber, paper, and now mostly plastic cards. (b) FIRST BANK CREDIT CARD The inventor of the first bank issued credit card was John Biggins of the Flatbush National Bank of Brooklyn in New York. In 1946, Biggins invented the "Charge-It" program between bank customers and local merchants. Merchants could deposit sales slips into the bank and the bank billed the customer who used the card.

(c) DINERS CLUB CREDIT CARD In 1950, the Diners Club issued their credit card in the United States. The Diners Club credit card was invented by Diners' Club founder Frank McNamara and it was intended to pay restaurant bills. A customer could eat without cash at any restaurant that would accept Diners' Club credit cards. Diners' Club would pay the restaurant and the credit card holder would repay Diners' Club. The Diners Club card was at first technically a charge card rather than a credit card since the customer had to repay the entire amount when billed by Diners Club. American Express issued their first credit card in 1958. Bank of America issued the BankAmerica (now Visa) bank credit card later in 1958. (d) THE POPULARITY OF CREDIT CARDS Credit cards were first promoted to traveling salesmen (more common in that era) for use on the road. By the early 1960s, more companies offered credit cards, advertising them as a time-saving device rather than a form of credit. American Express and MasterCard became huge successes overnight. By the mid-'70s, the U.S. Congress begin regulating the credit card industry by banning such practices as the mass mailing of active credit cards to those who had not requested them. However, not all regulations have been as consumer friendly. In 1996, the U.S. Supreme Court in Smiley vs. Citibank lifted restrictions on the amount of late penalty fees a credit card company could charge. Deregulation has also allowed very high interest rates to be charged. GRACE PERIOD

A credit card's grace period is the time the customer has to pay the balance before interest is charged to the balance. Grace periods vary, but usually range from 20 to 30 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met. Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charge(s) incurred depends on the grace period and balance, with most credit cards there is no grace period if there's any outstanding balance from the previous billing cycle or statement (ie. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions. THE MERCHANT'S SIDE An example of street markets accepting credit cards. For merchants, a credit card transaction is often more secure than other forms of payment, such as checks, because the issuing bank commits to pay the merchant the moment the transaction is authorized, regardless of whether the consumer defaults on their credit card payment (except for legitimate disputes, which are discussed below, and can result in charge backs to the merchant). In most cases, cards are even more secure than cash, because they discourage theft by the merchant's employees. For each purchase, the bank charges a commission (discount fee), to the merchant for this service and there may be a certain delay before the agreed payment is received by the merchant. The commission is often a percentage of the transaction amount, plus a fixed fee. In addition, a merchant may be penalized or have their ability to receive payment using that credit card restricted if there are too many cancellations or reversals of charges as a result of disputes. Some small merchants require credit purchases to have a minimum amount (usually between $5 and $10) to compensate for the transaction costs, though this is not always allowed by the credit card consortium.

In some countries, like the Nordic countries, banks guarantee payment on stolen cards only if an ID card is checked and the ID card number/civic registration number is written down on the receipt together with the signature. In these countries merchants therefore usually ask for ID. Non-Nordic citizens, who are unlikely to possess a Nordic ID card or driving license, will instead have to show their passport, and the passport number will be written down on the receipt, sometimes together with other information. Some shops use the card's PIN code for identification, and in that case showing an ID card is not necessary. PARTIES INVOLVED • Cardholder: The owner of the card used to make a purchase; the consumer. • Card-issuing bank: The financial institution or other organization that issued the credit card to the cardholder. This bank bills the consumer for repayment and bears the risk that the card is used fraudulently. American Express and Discover were previously the only card-issuing banks for their respective brands, but as of 2007, this is no longer the case. • Merchant: The individual or business accepting credit card payments for products or services sold to the cardholder • Acquiring bank: The financial institution accepting payment for the products or services on behalf of the merchant. • Independent sales organization: Resellers (to merchants) of the services of the acquiring bank. • Merchant account: This could refer to the acquiring bank or the independent sales organization, but in general is the organization that the merchant deals with. • Credit Card association: An association of card-issuing banks such as Visa, MasterCard, Discover, American Express, etc. that set transaction terms for merchants, card-issuing banks, and acquiring banks. • Transaction network: The system that implements the mechanics of the electronic transactions. May be operated by an independent company, and one company may operate multiple networks. Transaction processing networks include:

Cardnet, Nabanco, Omaha, Payment, NDC Atlanta, Nova, Vital, Concord EFSnet, and VisaNet. • Affinity partner: Some institutions lend their name to an issuer to attract customers that have a strong relationship with that institution, and get paid a fee or a percentage of the balance for each card issued using their name. Examples of typical affinity partners are sports teams, universities and charities. (e) TRANSACTION STEPS • Authorization: In the event of a chargeback (when there's an error in processing the transaction or the cardholder disputes the transaction), the issuer returns the transaction to the acquirer for resolution. The acquirer then forwards the chargeback to the merchant, who must either accept the chargeback or contest it. (f) SECURED CREDIT CARDS A secured credit card is a type of credit card secured by a deposit account owned by the cardholder. Typically, the cardholder must deposit between 100% and 200% of the total amount of credit desired. Thus if the cardholder puts down $1000, he or she will be given credit in the range of $500–$1000. In some cases, credit card issuers will offer incentives even on their secured card portfolios. In these cases, the deposit required may be significantly less than the required credit limit, and can be as low as 10% of the desired credit limit. This deposit is held in a special savings account. Credit card issuers offer this as they have noticed that delinquencies were notably reduced when the customer perceives he has something to lose if he doesn't repay his balance. The cardholder of a secured credit card is still expected to make regular payments, as he or she would with a regular credit card, but should he or she default on a payment, the card issuer has the option of recovering the cost of the purchases paid to the merchants out of the deposit. The advantage of the secured card for an individual with negative or no credit history is that most companies report regularly to the major credit bureaus. This allows for building of positive credit history. Although the deposit is in the hands of the credit card issuer as security in the event of default by the consumer, the deposit will not be debited simply for missing one or two

payments. Usually the deposit is only used as an offset when the account is closed, either at the request of the customer or due to severe delinquency (150 to 180 days). This means that an account which is less than 150 days delinquent will continue to accrue interest and fees, and could result in a balance which is much higher than the actual credit limit on the card. In these cases the total debt may far exceed the original deposit and the cardholder not only forfeits their deposit but is left with an additional debt. Most of these conditions are usually described in a cardholder agreement which the cardholder signs when their account is opened. Secured credit cards are an option to allow a person with a poor credit history or no credit history to have a credit card which might not otherwise be available. They are often offered as a means of rebuilding one's credit. Secured credit cards are available with both Visa and MasterCard logos on them. Fees and service charges for secured credit cards often exceed those charged for ordinary non-secured credit cards, however, for people in certain situations, (for example, after charging off on other credit cards, or people with a long history of delinquency on various forms of debt), secured cards can often be less expensive in total cost than unsecured credit cards, even including the security deposit. Sometimes a credit card will be secured by the equity in the borrower's home. This is called a home equity line of credit (HELOC). (g) PREPAID CREDIT CARDS A prepaid credit card is not really a credit card, as no credit is offered by the card issuer: the card-holder spends money which has been "stored" via a prior deposit by the card-holder or someone else, such as a parent or employer. However, it carries a credit- card brand (Visa or MasterCard) and can be used in similar ways. As more consumers require a suitable solution to rebuilding credit, recent changes have allowed some credit card companies to offer pre-paid credit cards to help rebuild credit. They are hard to find and have higher APR fees and higher interest costs. After purchasing the card, the cardholder loads it with any amount of money and then uses the card to spend the money. Prepaid cards can be issued to minors since there is no credit line involved. The main advantage over secured credit cards is that one are not required to come up with $500 or more to open an account. Also most secured credit

cards still charge one interest even though one is not actually "borrowing" any money. With prepaid credit cards one are not charged any interest but one are often charged monthly fees after an arbitrary time period. Many other fees also usually apply to a prepaid card. Prepaid credit cards are often marketed to teenagers for shopping online without having their parents complete the transaction. Because of the many fees that apply to obtaining and using credit-card-branded prepaid cards, the Financial Consumer Agency of Canada describes them as "an expensive way to spend one own money" The agency publishes a booklet, "Pre-paid cards, which explains the advantages and disadvantages of this type of prepaid card. ICICI BANK CREDIT CARDS: KEY FEATURES

Bandhan | Balance Transfer | Global Emergency Assistance Service | Wide Acceptance | Statement by e-mail and mobile alerts | Earn while one spend - ICICI Bank Express Rewards Programme | Photo-Card | Self Set Limit | Cash Advance Facility | Other Benefits BANDHAN One can freely present a maximum of two add-on Cards to one wife, sister, brother, parents or children above 18 years of age. To apply for this add-on Card, referred to as "Bandhan", just call the ICICI Bank and place one request with an executive. A form will be sent. Also if one has linked Credit Card with one’s Internet banking User-id then one can also place one’s request for an add-on Card online. BALANCE TRANSFER FACILITY Transfer the balances from one’s Other Bank Credit Card to one ICICI Bank Credit Card and enjoy an interest rate as low as 0% on the transferred amount. Various attractive schemes like the 0% Balance Transfer offer and the Life Time Balance Transfer offer, along with the zero documentation and speedy draft delivery make ICICI Bank Credit Card balance Transfer Programme the best in the market. Just see how simple it is to transfer the balances: • Call up the 24-hour Customer Care Centre number and dial. • Give Other Bank Card details (no other documents required) to our phone banking officer. • On approval, one will receive the draft within 3 working days.

THERE ARE OTHER SIMPLE WAYS TO APPLY FOR A BALANCE TRANSFER: • SMS BT to 5676766 - and we will call one in a days time • Fill up this small Balance Transfer form and mail it across to us In both these cases we would give one a call within 1 working day. GLOBAL EMERGENCY ASSISTANCE SERVICE The next time one travel abroad please remember that one have the option of using the Global Emergency Assistance Services provided by VisaMaster for our cardholders. These can be availed for 1. Reporting lost/stolen credit cards, 2. Requesting for an emergency card replacement 3. Emergency cash advance 4. Miscellaneous enquiries. The toll free telephone numbers for accessing these emergency assistance Help lines are available in local telephone directories/yellow pages and other local listings in each country. For availing Visa Global Assistance Services, charges as applicable including telecom costs will be charged to one’s Card Account like Lost/Stolen Card reporting, Emergency Card replacement, Emergency Cash Disbursement and Miscellaneous Customer Service Enquiries. WIDE ACCEPTANCE ICICI Bank Blue Cards are welcomed at all Merchant Establishments displaying the VISA logo - over 1,10,000 and MasterCard logo - over 77,000 establishments across India and Nepal and the Silver and Gold Cards are accepted globally by over 22 million VISA Card and 22 million MasterCard accepting establishments.

STATEMENT BY E-MAIL AND MOBILE ALERTS Statement Online is a very simple, powerful and convenient way to view Credit Card statement details instantly without any postal delays. Just sign up for Statement Online and get faster, reliable access to Account Statement. A mobile alert from ICICI Bank provides one with information on the ICICI Bank Credit Card even when we are on the move. One would now no longer miss a payment or exhaust the credit limit without a warning. Currently customers having Internet Banking user-ids can subscribe to the alerts. EARN WHILE ONE SPEND - ICICI BANK XPRESS REWARDS PROGRAMME A special bonus plan that allows one to earn points every time one uses his Card, Every Rs. 200 that one spends earns to 1 point. The redemption of reward points can be done against the products, services in the rewards catalogue or against bank’s renewal fees. PHOTO-CARD One has the option of having his photograph and signature digitally imprinted on the front of the Card. This provides us extra security at any of the merchant establishments. In fact, it can be used as a proof of identification. In the interest of our own security, we strongly recommend that we opt for a photo-Card. If one had decided not to opt for a photo Card when applying, just call the ICICI Bank 24-hour Customer Care Centre and place one request with the executive. A form will be sent to one. One are then required to mail the completed form to us at: ICICI Bank Credit Card Operations, P.O. Box 7931, Tulsiwadi, PO, and Mumbai - 400 034. A photo-Card will be ones at no extra cost. SELF SET LIMIT The only Card that allows one to pre-define ones own credit limits. One can request for a limit lower than what one is eligible for. One can even preset the monthly spending limits on the "Bandhan" Card. Any transactions over the specified 'Spend Limit' will be declined. This monthly spending limit can be reset every billing cycle by just calling the ICICI Bank 24-hour Customer Care Centre and place ones request with the executive. One spend limit will be changed on-line and come in to force from the next billing cycle. CASH ADVANCE FACILITY

With an ICICI Bank Credit Card in one’s wallet, one will not be strapped for cash ever again. One can withdraw cash on one Card, 24-hours a day from any VISA and MasterCard participating member bank ATM. During banking hours one can also draw cash over-the-counter, from any ICICI Bank branch in cities where the ICICI Bank Credit Card has been introduced. OTHER BENEFITS • Internet Banking • Limited Lost Card Liability • Dial-A-Draft • Utility Payments • Revolving Credit Facility • Auto Debit Facility • Temporary Credit Limit Enhancement INTERNET BANKING Bank understands the pressure on time. To access information when one need it, where one need it, bank offers access to ICICI Bank Credit Card related information through the Internet. One can do transactions like accessing account information - current and last statement, getting one payment status, viewing one monthly statement by email, request for a duplicate PIN, record a change of address, order a draft, give auto debit instructions, request for a replacement Card or an add-on Card, access and redeem online from the Rewards catalogue, subscribe to statement by e-mail and mobile alerts. LIMITED LOST CARD LIABILITY

In case the Card is lost or stolen, call the ICICI Bank and report the loss of one Card. A new Card will be sent to one within 72 hours of reporting this loss. One are protected from any financial liability arising out of transactions done on one missing Card, from the time one report the loss to us. DIAL-A-DRAFT To order a draft from the convenience of one home, simply call the ICICI Bank 24-hour Customer Care Centre and ask for a draft, payable anywhere in India and favoring any company or individual (one can order a draft up to the available cash limit on one account). The draft will be delivered to one mailing address. For each draft request, a transaction fee of 2.5% of the amount withdrawn, subject to a minimum of Rs. 300, will be levied. In addition to the transaction fee, an interest charge will also be levied from the date of transaction to the date of repayment. The amount of the draft will be billed in one monthly Credit Card statement. UTILITY PAYMENTS One now have the convenience of paying one utility bills - telephone and mobile phone bills through one ICICI Bank Credit Card. ICICI BANK 24-HOUR CUSTOMER CARE CENTRE The ICICI Bank 24-hour Customer Care Centre is equipped with a state-of-the-art system that ensures one queries being handled efficiently and promptly. REVOLVING CREDIT FACILITY When one receives one bill, one need not pay the entire bill amount. One has the flexibility of selecting any of the following payment options: • Pay the total amount due. • Pay only the minimum amount due (5% of the bill amount subject to a minimum of Rs 100) and the balance can be carried forward to subsequent statements. • Pay any amount ranging from the minimum amount due to the total amount due. AUTO DEBIT FACILITY

If one have an account with any ICICI Bank branch, one have the option of making the payment of one monthly credit statement (either the minimum amount due or the total amount due) directly through one bank account. TEMPORARY CREDIT LIMIT ENHANCEMENT There will be times when one feel the need for an increase in one credit limit to enable one to make increased purchases on one Card. To avail of the temporary credit limit enhancement, all one need to do is to call our Customer Call Centre and make one request. The executive will be able to increase the limit on-line. Please note that this facility is available only after 9 months of membership and based on credit history. UNDERSTANDING THE PROCESS How card processing works: When a customer pays for products or services with a credit card, the card information is recorded- either by manual entry, a card imprinter, point-of- sale (POS) terminal, or virtual terminal - and then verified so that the merchant can receive payment for the transaction. This process involves the following parties: Cardholder: the owner of the card used to make a purchase. Merchant: the business accepting credit card payments for products or services sold to the cardholder. Acquirer: the financial institution or other organization that provides card processing services to the merchant. Card association: a network such as VISA® or MasterCard® (and others) that acts as a gateway between the acquirer and issuer for authorizing and funding transactions. Issuer: the financial institution or other organization that issued the credit card to the cardholder. The flow of information and money between these parties-always through the card associations-is known as the interchange, and it consists of a few steps:

Authorization: The cardholder pays for the purchase and the merchant submits the transaction to the acquirer. The acquirer verifies with the issuer-almost instantly-that the card number and transaction amount are both valid, and then processes the transaction. Batching: After the transaction is authorized it is then stored in a batch, which the merchant sends to the acquirer later to receive payment (usually at the end of the day). Clearing and settlement: The acquirer sends the transactions in the batch through the card association, which debits the issuers for payment and credits the acquirer. In effect, the issuers pay the acquirer for the transactions. Payment: Once the acquirer has been paid, the merchant receives payment. The amount the merchant receives is equal to the transaction amount minus the discount rate, which is the fee the merchant pays the acquirer for processing the transaction. SEGMENTATION CARRIED OUT BY ICICI WITH REGARD TO ICICI CREDIT CARDS

1. Market Research: - It is the primary step of segmentation which is carried out by ICICI with regard to credit cards. In this step bank carried out a survey of the potential market with internal as well as external research agencies for covering the entire potential market. 2. Identifying target customers: - In this step the collected information is processed and then the targeted customers were identified for the next level. 3. Profiling of the customers: - In this step the targeted customers were profiled on the basic of income, profession, occupation, etc. 4. Identifying The Companies For Co- Branding: - For providing the various co- related services to the customers ICICI gives great emphasis on co- branding. NUMBER AND TYPES OF CREDIT CARDS • PREMIUM CARDS • CLASSIC CARDS • VALUE FOR MONEY CARDS • CO BRANDED CARDS • AFFINITY CARDS • EMI CARD • PICTURE CARDS • PREFERRED CARDS

SEGMENTATION BY INCOME PREMIUM CARDS These cards are at the top level of the ICICI credit card segment this segment of credit cards is containing basically three types of cards these cards are basically targeted towards the premium segment of high profile customers these cards and their features are given below: 1. TITANIUM CARDS 2. PLATINUM CARDS 3. GOLD CARDS TITANIUM CARDS The cards in this segment are meant only for the (HNI’s) those customers are basically from the different professions like Doctors, C.A, and Entrepreneurs etc. The minimum requirement and the eligibility for this card is the client must be having the a/c balance of at least Rs.10,00,000 in ICICI Bank or the income of these clients must be above 5 to 10 lakhs monthly. These were the basic requirements from the side of the bank. This card is recently in the (New Product Development) segment. PLATINUM CARDS This card is basically meant for the clients from upper middle segment of the society, the target clients of this segment are those person who have the minimum a/c balance of 3 lakhs in ICICI Bank or those who are getting the monthly salary of at least 1 lakh. These are the basic requirements of the platinum card users.

GOLD CARDS This segment of ICICI Bank credit cards is segmented towards the middle income segment group of people. The holders of this particular card are basically those people having the monthly income of Rs.10, 000 and above. To penetrate in this income segment ICICI has adopted a very unique strategy to provide this gold card to every person who is having his income in this given slab, that’s why they have penetrated in this segment so well and got the maximum number of clients in this segment. SEGMENTATION BY INDUSTRY ASSOCIATION CO BRANDED CARDS The co branded cards are those cards which are basically associated with the other companies from the different sectors like (retail, fmcg, oil & gas, hospitality etc) to provide the clients a unique facility on verge of their service of credit cards. This segment of ICICI credit cards is basically meant for various segments. On account of these services go on smoothly ICICI Bank is having the corporate tie-up’s with different company’s. They are given below: • Big Bazaar • Decan Airways • Jet Airways • HP • India Times

These are the companies having tie-up’s with ICICI Bank in respect to credit cards, now those customers for whom the cards are meant, these client list is given below: • Those customers who are the regular byres from big bazaar are offered this co branded cards for making their purchase more convenient in regard to the paying facilities. • If we take the aviation industry ICICI Bank is having the tie-up with two companies (jet and decan) here ICICI has done the segmentation on the basic of the travelers of the two different categories in these two airways. These are the middle and upper middle segment people those who are using these services frequently. • If we take the example of the petroleum industry ICICI Bank is having the tie-up with Hindustan Petroleum to fulfill the needs of that segment which is generally doing their business in the transportation industry for their convenience by using their petro- cards. • This particular segmentation is for the youth brigade those who are using the services of India Times frequently and doing their payments on line.

SECTORAL SEGMENTATION EMI CARD: FOR AGRICULTURAL SECTOR This is the totally different segment where ICICI Bank penetrated; because 65 % to 70% population of our country is indulge in the agricultural business to attract these customers ICICI took the initiative to attract the people from this segment. The number of purchases the card holder makes he has to make the payments in the installments for ex: 5000, 10000 and up to 25000 as per the credit worthiness of the client. For this service the clients have to pay a minimal interest on emi of 2.95% monthly and service tax of 12.36%. These were the different cards of ICICI Bank with their features and requirements. This shows how well ICICI Bank segmented its market with the different set of Credit Card services. • CLASSIC CARDS • VALUE FOR MONEY CARDS • AFFINITY CARDS • PICTURE CARDS • PREFERRED CARDS These following cards are discontinued by ICICI Bank in the past.

DATA ANYLISIS INTRODUCTION This chapter includes the analysis of data collected from the officials of ICICI Bank and the secondary data is also there in these facts and figures. By 2004, ICICI had achieved remarkable growth figures. Nationwide ICICI had achieved cards sales worth US $ 3.3 billion. There was a rise of 13% in the volume of total card sales over 2004. The biggest challenge before ICICI was to maintain its brand leadership in feature in the face of threats from established brands like HSBC, CITI Bank and SBI. Industry observers believed that HSBC cards posed a grater threat to ICICI Credit cards. Now the facts and figures shown below will show that how ICICI credit cards established themselves in the marketplace in a very sophisticated manner.

Exhibit1: Retail Sales Volume 2006 of ICICI Credit Cards (in US $ million) Delhi 300 Mumbai 730 Kolkatta 120 Gujarat 890 Punjab 565 Chennai 465 Retail sales volume - 2006 (in us $ million) 900 800 700 600 500 400 300 200 100 0 Delhi Mumbai Kolkatta Gujrat Punjab Channai

Exhibit2: Retail Sales Volume Growth of ICICI Credit Cards (year over year percentage growth) Delhi 24% Mumbai 45% Kolkatta 12% Gujarat 67% Punjab 35% Chennai 29% Retail Sales Volume Growth (year over year percentage gain) 70% 60% 50% 40% 30% 20% 10% 0% Delhi Mumbai Kolkatta Gujrat Punjab Channai

Exhibit3: Number Of Credit Cards Of ICICI Bank in Major Cities of India In 78 143 45 257 132 120 Thousands Delhi 23% Mumbai 45% Kolkotta 14% Gujarat 67% Punjab 39% Chennai 31% Number of cards -2006 70% 60% 50% Delhi 40% Mumbai Kolkotta 30% Gujrat 20% Punjab Channai 10% 0% in thousands 78 143 45 257 132 120

Exhibit4: Growth Rate Of ICICI Credit Cards in India From 2004 - 2006 Year over Year Growth From 2004 - 2006 2004 11% 2005 13% 2006 17% Growth Rate 2004-2006 18% 16% 14% 12% 10% 8% 2004 6% 2005 4% 2006 2% 0% 11% 13% 17% year over year growth

FINDINGS 1. ICICI Bank has witnessed a many fold growth in all the business activities. The credit card business of bank has also progressed by leaps and bounds. 2. Effective segmentation through market research has been the key feature in launching of various credit cards by the bank. 3. Focused attention on target market through segmentation, has insured a top of the mind recall of ICICI brand in credit cards. 4. The target group has been well defined and a focused approach with benefits specific to the target market have been launched which have been a success.

RECOMMENDATION AND CONCLUSION  The bank is still needs to target the mass population by launching innovative offer directed at huge untapped market.  The sales volume and total number of credit cards has grown by 17% in 2006.  The bank has also put in immense efforts for effective brand building by utilizing various promotions and marketing vehicles to increase and enhance penetration.  The risk associated with rapid expansion also needs to be kept in mind.  There is a need to revise the interest rates to make the cards more affordable for the common man.  The bank needs to increase its efforts in brand building to insure more vulnerability and recall value amongst customers.

BIBLIOGRAPHY • Efficient capital market (a review of theory and empirical work) • Financial analysts Journal • www.bseindia.com • www.nseindia.com • www.religareonline.com • www.economicstimes.com • www.google.com • business today, business world • ICFAI journals and books

Importance of effective brand building and segmentation with respect of icici credit cards

by Hemanth CRPatna

Accessibility

Categories

Upload Details

Usage Rights

Statistics