‘Extra Rs 200 cr withdrawn’

How did the run on ICICI Bank start?On Thursday (April 10th), some customers approached our Valsad branch in Gujarat at around 7 pm to withd...

How did the run on ICICI Bank start?
On Thursday (April 10th), some customers approached our Valsad branch in Gujarat at around 7 pm to withdraw money. After our branch closed at 8 pm, longer than normal queues started forming in our ATMs in Valsad. On Friday evening, a local newspaper carried a story on a run on the ICICI Bank. This report ignited further rumours which resulted in a run on the bank in Valsad, Ahmedabad, Vadodara and in Surat. By Friday evening the entire top brass including managing director and CEO, K V Kamath were informed about the emerging crisis in Gujarat.

What immediate steps did you take to counter the rumour?
We did not go to the media since we did not want the rumour to spread. But we sent an e-mail to all staffers in the region saying that we will meet all our obligations. They were asked to paste it on all ATMs and bank branches. By the evening many customers withdrew cash which resulted in ATMs getting exhausted. There were even reports of rioting. Late evening, we also issued another statement saying that the bank is safe and sound which was reported by the media on Saturday.

When did the RBI get into the picture?
I spoke to the Reserve Bank of India deputy governors Vepa Kamesan, Muniappan and Executive director, Usha Thorat at 7 in the morning. By 9, the RBI issued a statement which was immediately flashed by TV and reported by newspapers on Sunday. The RBI statement was a big confidence building measure and we pasted this at all our branches. We also announced that our branches will remain open during the weekend so that customers can have confidence on the bank. We have a current account with the RBI and moved over Rs 200 crore from RBI’s currency chests in Ahmedabad to the our branches and ATMs. These measures convinced customers that this was just a rumour.

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What was the reaction from big investors?
We voluntarily spoke to all the corporate investors, foreign institutional investors and stock brokers about the rumours and the steps taken by us. Most of them understood and our stock price even moved up marginally by Rs 3 on Tuesday when the stock markets reopened.

How much money was withdrawn? How will you prevent this in the future?
On a normal day about Rs 120-150 crore is withdrawn from our ATMs. But last weekend almost Rs 200 crore extra was withdrawn due to the rumours. We have set up a one-man commission headed by former chief justice of India, P N Bhagwati, to enquire into the entire crisis. We are also planning to sue the newspaper for publishing wrong information about the bank.

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