The Indian industry should brace itself for a strong rupee, as the currency could strengthen by Re 1 to Rs 2 against the US dollar, and must diversify its revenue base, ICICI Bank [Get Quote] chief executive officer K V Kamath has said.
“The strengthening of the rupee is a long-run challenge. Rather than fight it, corporate India should prepare for the day,” Kamath, who was named the Forbes Asia Businessman of the Year, said on Wednesday.
The banker, who has been credited for ICICI’s growth, felt the industry should not wait for the government to step in.
“My message is: Prepare for a strong rupee, the industry has to help itself and cannot keep relying on others to help,” Kamath said.
He was confident that “corporate India can prepare to face the challenges and noted that it had to diversify its markets.
“The rupee is testing 38, we are playing in the 38-40 band. It has so far been a two-rupee band and the rupee could come to 35 vis a vis the dollar in some years,” he said, adding that he saw it strengthening maybe by Rs 1-2 against the greenback.
Commenting on the property market boom in India, Kamath noted that it had recorded a four fold increase in the last three years. “A correction is required, the supply of land in the market should increase to see a correction and for the land prices to come down,” Kamath had said.
He said the sub prime crisis has not impacted India. Asked about ICICI’s success story, Kamath said, “Our story is the India story.” India’s economic growth has happened years after the Japanese economy grew, the Tiger economies flourished and then China boomed, the banker said, adding that the India story was only 3-4 years old.
“This story was led through knowledge,” he felt unlike in other economies where man made distractions like war could have played a role.
Though the manufacturing sector in India was in the dumps, the BPO companies and the IT sector provided momentum “which took us from $500 to the $1,000 range per capita income which is a safe number today,” Kamath said.
With a hike in income, “the consumers started to aspire for things and that provided momentum to our bank,” he said.
ICICI’s assets have grown 40 per cent annually in the last three years to 93 billion dollars, propelled by a boom in Indian consumer credit where ICICI has a dominant one-third market share, ICICI officials said.
The banker said India had befitted largely by the revolution in the technology front. “India capitalised on the full evolution that was taking place,” he said.
Kamath said ICICI had benefited by capitalising on four drivers:
* The technology revolution;
* The knowledge revolution;
* The growth in manufacturing sector; and
* The rural engine.
“Banking in the rural sector where more than 600 million people who live in villages had never banked before. As they move up in per capita income, they rank, this is our rural engine,” Kamath said, adding that ICICI had been developing this sector for two years now.
He said the bank had a clear lead in banking the unbanked and had created a platform.
He said the knowledge revolution had given rise to a middle class with purchasing power. “Our story is capitalising on the four drivers and identifying these drivers early in the day,” he said before the award ceremony which was held at the sprawling Putrajaya Convention Centre.
Putrajaya is the administrative capital of Malaysia about 50 kms outside Kuala Lumpur.
“We have so far built the foundation. The super structure still needs to be built,” he added. He credited his team for the success of the bank.
(A Rediff Report)