With a view to cut cost in this time of slowdown, country's largest private lender, ICICI Bank plans to hold back on its retail lending via the route of direct sales agents (DSAs). The bank decides to replace this mode with its wide network of branches spread across the nation.

ICICI's MD & CEO, Ms Chanda Kochhar informed that the bank has received licenses from RBI to open 580 new branches and this would increase the branch network to around 2,000 by March 2010. An expansion in this front will help the bank to replace its direct sourcing of retail lending by branches.

Ms Kochhar said: "We are looking to maximize the productivity from our branches and trying to get the most out of them. The residual business will keep coming from DSAs. Our branches have the capability to sell a wide spectrum of products and services. In the current volatile scenario, we feel that the best customer is one who already has an account with us. We would directly lend to that customer through our branches, rather than through agents. Business for DSAs is going to be lower. We are distributing more and more through our branches as our on- the-ground presence has doubled."

Currently, the bank is sourcing one-third of its retail loans through DSAs and this method of marketing agency to enhance business proves to be costlier than expanding business directly through the branches. Therefore Ms Kochhar pointed that her bank has stooped enhancing its auto loans business through dealers and agents.

Emphasizing on its branch network, Ms Kochhar said, "When we started our retail operations, we had very few branches and had to rely on many other forms of distribution to grow and reach the customer. With a 1,400 strong branch network, there is a lot that our branches can now do."

The banker however informed that as a measure of cost cutting, ICICI has neither lay off any staff nor cut the salaries. The bank is resorting to other methods like rationalization of distribution and marketing expenses, negotiating with vendors for better rates, etc. to manage its costs. "We haven't had to and don't intend to retrench people. We have undertaken lot of productivity improvement in the processes which saved costs, and spared people for redeployments in other areas," said the CEO.

The bank's expenses on the direct marketing agents have come down to nearly Rs 145 crore in the second quarter of the fiscal against Rs 385 crore in the corresponding quarter last year. Ms Kochhar further said that the borrowers were taking home loans and auto loans but personal loans or credit cards segment reported some losses during the period.

Retail loans of ICICI account to around 55% of the bank's total loan portfolio that stood at Rs 2,22,000 at the end of the second quarter on September 2008.