FM, RBI come to ICICI Bank's aid

The Reserve Bank of India (RBI), Finance Minister P Chidambaram and the ICICI Bank top management had to step in today to cool the country's second largest bank's depositors' nerves thus helping the bank stock rebound smartly to gain 8% from 52-week lows. This comes on the back of rumours about customer withdrawals at some of its ATMs, prompting the bank management to issue yet another clarification.
It all started with a buzz of a run on some ICICI Bank ATMs resulted in a quick fall for the stock price. The bank's shares fell to a year's low of Rs 458.
But then, the RBI stepped in, dismissing rumours of a financial cruch at the bank.The central bank said ICICI Bank and its overseas units are well capitalised and have sufficient liquidity to meet the requirements of depositors.The RBI added it is monitoring developments and has arranged to provide adequate cash to ICICI Bank to meet the the demands of its customers at its branches/ATMs.This and a recovery in the market helped the stock rebound to Rs 534.Top officials of ICICI Bank also launched a damage control exercise, with Managing Director & CEO KV Kamath calling the rumours baseless and malicious.
He emphasised the banks fundamentals were strong, with profits of over Rs 4,000 crore in the last financial year. He also said the bank was comfortably leveraged and its investment portfolio will be able to absorb any fallout from the current volatile market conditions. ICICI Bank Joint MD Chanda Kochhar reiterated that the bank's capital base was strong to meet any contingencies.
Amid rumours about the financial health of ICICI Bank, the FM asked people not to give in to unfounded apprehensions as all Indian banks are well-capitalised and regulated.
"I think that some people are giving credence to rumours and unfounded apprehensions. I maintain and I repeat all our banks are well-capitalised and well regulated. No Indian depositor need be apprehensive," Chidambaram said.
The finance minister said ICICI Bank has come out with a statement that should reassure every depositor.
Time and again in recent days the ICICI Bank management has had to reiterate the bank's strengths. It recently issued clarifications on its exposure to the US sub-prime credit crisis. But with assurance coming from RBI itself, depositors can breathe easy about the bank's financial position.