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17th Annual Report and Accounts 2010-2011
ICICI BANK LIMITED
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400 051
www.icicibank.com
Innovative
solutions to enhance
customer experience
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Innovative solutions to
enhance customer experience
At ICICI Bank, we understand that consumers need access
to smart and efficient solutions to manage their financial
needs. By offering a bouquet of services, many of which
are the first of their kind in the industry, we have changed
the paradigm of banking in the country.
As a pioneer in the banking industry, we believe in
leveraging technology to make banking more accessible
and convenient to our customers. Through continuous
innovations across banking touch points such as ATMs,
Internet, Mobile and Call Centre, we have made financial
transactions faster, simpler and more secure.
Our adoption of innovative technology is a manifestation
of our philosophy of ‘Khayaal Aapka’. Offering convenience
through technology-led solutions is a reinforcement of
our commitment towards continuously improving and
deepening our relationship with our customers.
On April 1, 2011, Ms. Chanda Kochhar, Managing Director & CEO was awarded the prestigious Padma Bhushan
by the President of India
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Contents
Message from the Chairman ................................................................ 02
Letter from the Managing Director & CEO ............................................ 04
Board of Directors ................................................................................. 06
Board Committees ................................................................................ 06
Directors’ Report ................................................................................... 07
Auditors’ Certificate on Corporate Governance .................................... 33
Business Overview................................................................................ 34
Promoting Inclusive Growth.................................................................. 44
Management’s Discussion and Analysis .............................................. 49
Key Financial Indicators ......................................................................... 72
Particulars of Employees under
Section 217 (2A) of the Companies Act, 1956 ...................................... 73
FINANCIALS
Auditors’ Report .................................................................................... F1
Balance Sheet ....................................................................................... F2
Profit and Loss Account ........................................................................ F3
Cash Flow Statement ............................................................................ F4
Schedules .............................................................................................. F5
Statement pursuant to Section 212 of the
Companies Act, 1956 ............................................................................ F50
Consolidated Financial Statements of
ICICI Bank Limited and its Subsidiaries ................................................ F51
BASEL II - Pillar 3 Disclosures (Consolidated) ...................................... F92
ENCLOSURES
Notice
Attendance Slip and Form of Proxy
REGISTERED OFFICE
Landmark
Race Course Circle
Vadodara 390 007
CORPORATE OFFICE
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400 051
STATUTORY AUDITORS
S. R. Batliboi & Co.
Chartered Accountants
Express Towers, 6th Floor
Nariman Point, Mumbai 400 021
REGISTRAR AND TRANSFER
AGENTS
3i Infotech Limited
International Infotech Park, Tower 5, 3rd Floor,
Vashi Railway Station Complex,
Vashi, Navi Mumbai 400 703
K.V. KAMATH Chairman
Message from the Chairman
The year gone by has seen several developments
in the economic landscape in India and globally.
The United States has shown signs of recovery,
and global financial markets have been relatively
stable. At the same time, continuing concerns
over the fiscal position of countries in Europe,
events in the middle-east and north Africa,
rising oil prices and emerging inflationary trends
in many countries have emerged as challenges
impacting the global growth outlook.
Investment
India continues to be well-placed to achieve
robust economic growth, in a challenging
environment.
infrastructure,
urban development & rejuvenation, the growth
of the rural economy and financial inclusion will
be the key factors that will shape India in the
coming decade.
in
2
Investment in infrastructure will be a key driver
of India’s growth in the coming years. The
Government of India is targeting infrastructure
investment of USD 1 trillion between 2012
and 2017. This will cover the whole gamut of
infrastructure that forms the backbone of an
economy: power, communications, transport,
water resources management and so on. An
investment of this magnitude will have significant
positive implications for the economy, in terms
of improvement in productivity, demand for
various input goods and services, job creation
and income growth.
and
growth
Economic
in
infrastructure will drive urban development
and urban rejuvenation. This will take many
forms – modernisation and redevelopment
investment
large
cities;
existing
expansion
and
of
upgradation of existing second-tier cities that
are emerging as important engines of growth;
and the creation of new towns in corridors
industrial
of
investment. Growing urbanisation will spur
demand for a range of services and sectors and
improve standards of living.
infrastructure development and
Rural India has over the years emerged as an
important driver of India’s growth. The rural
economy has become diversified, and rural India
is now estimated to account for close to half
the country’s GDP. Thus, rural India contributes
significantly to the industrial and services sectors,
in addition to the agriculture sector. It also
represents a large and fast-growing market for
many goods and services. Government policies
and schemes introduced over the last few years
have enhanced the resilience of the rural economy.
The growth in per capita incomes in rural India will
lead to accelerated reduction in poverty and socio-
economic inclusion, and have significant positive
outcomes for the economy as a whole.
The engagement of a much larger section of our
population in the economic mainstream through
financial inclusion will be a key feature of our
growth going forward. Developments in low-cost
information and communications technology and
the unique identity initiative have the potential to
rapidly accelerate financial inclusion by reducing
the costs of providing access to basic financial
services, both in terms of initial enrolment and
ongoing servicing. Banks are already working on
business models to serve the un-banked segment
through deployment of innovative solutions, and
this will gain momentum in the coming years.
Investment in social infrastructure – healthcare and
education & training – is key to realising the benefits
of our demographic dividend and spreading the
benefits of growth. Here too, a range of initiatives
are being taken by both the government and the
private sector. There is recognition that building
capacity among the poor to lead healthy and
productive lives through access to basic healthcare
and relevant primary and vocational education is
essential for long-term, sustainable growth. It is
essential for Indian business to be competitive
and maintain healthy growth; and it is essential
to the larger national goal of inclusive growth
and prosperity.
There will no doubt be challenges along the way.
The most immediate issue that policymakers are
concerned with is inflation. This is in some ways
a global phenomenon that is accentuated in India
by our high economic growth and consequent
increase in demand. Various measures are being
put in place to address this, including monetary
measures to contain demand side pressures. The
results of these will be witnessed over time.
The ICICI Group is a key player in India’s economic
landscape. The management has in place a well
thought out strategy for each segment of the
financial services sector, catering to the diverse
needs of customers across
the spectrum.
This strategy is being executed within a sound
governance framework that seeks to balance the
interests of all stakeholders to ensure sustainable
value creation.
Let me end by saying that India is a land of great
opportunity. The rapid changes of the last decade
are only a precursor to the much greater growth
and prosperity that we can achieve in the coming
years. The ICICI Group is well placed to benefit
from these opportunities.
With best wishes,
K. V. Kamath
Annual Report 2010-2011 3
CHANDA KOCHHAR Managing Director & CEO
Letter from
the Managing Director & CEO
Dear Stakeholders,
In 2009, we had clearly set out our strategic
path for the next five years. The first stage of
this strategy was to reposition the balance
sheet for the next phase of growth. To this end,
in fiscal 2010, we focused on rebalancing our
asset and liability mix, improving cost efficiency
and reducing credit costs, while maintaining
a strong capital position. We had shared with
our stakeholders last year, our success in
these efforts. Based on this progress, we had
articulated our move to the next stage of our
strategy. Our strategy for fiscal 2011 was to
resume growth by capitalising on the emerging
opportunities in the Indian economy, while
maintaining and enhancing the more efficient
balance sheet structure that we achieved in
fiscal 2010.
It gives me great pleasure to share with you
that in fiscal 2011, we successfully executed
this strategy, with robust growth in our loan
portfolio; improved profitability; and continued
focus on key operating parameters.
• ICICI Bank’s total advances grew by 19.4% in
fiscal 2011. This was driven mainly by strong
growth in domestic corporate advances, as
well as in the lending to Indian companies
from our international branches. The retail
portfolio also stabilised and started growing
in the second half of the year after several
quarters of decline.
• The net profit after tax for fiscal 2011 was
` 51.51 bn, representing a 28% increase over
4
the previous year. The return on assets, or RoA,
improved substantially to 1.34% in fiscal 2011
from 1.13% in the previous year.
consolidated profit after tax, despite the impact
of regulatory changes and volatility in financial
markets on several businesses.
• The strong results achieved by the Bank
are reflected in the higher level of proposed
dividend of ` 14 per equity share compared to
` 12 per equity share in the previous year.
the
improvements achieved
• The above growth and profitability was
achieved on the back of sustaining and
enhancing
in
key operating metrics. The proportion of
in
current and savings account deposits
total deposits, which had already increased
from 28.7% at March 31, 2009 to 41.7% at
March 31, 2010, was further improved to 45.1% at
March 31, 2011. The net non-performing asset
ratio was reduced substantially from 1.87% at
March 31, 2010 to 0.94% at March 31, 2011.
The cost-to-asset ratio was contained at 1.7%
despite the expansion in the branch network
and increase in business volumes. The Bank’s
capital adequacy position continued to be very
strong, with total capital adequacy of 19.5% and
Tier-1 capital adequacy of 13.2%.
While executing our organic growth strategy, we
continued to focus on opportunities to further
strengthen our franchise and our platform for
capitalising on the growth opportunities in the
Indian economy. To this end, we undertook the
major strategic initiative of the merger of Bank of
Rajasthan with ICICI Bank during fiscal 2011. With
this merger, we created a combined network of
over 2,500 branches, substantially expanding our
presence not only in Rajasthan but also in other
major banking centres in the country. Following
receipt of regulatory approvals for the merger in
August 2010, we moved quickly to integrate the
Bank of Rajasthan franchise with ICICI Bank. We
have been able to achieve integration of human
resources and various aspects of operations
seamlessly in a short span of time. We believe
this provides us a powerful platform for pursuing
our objective of sustained profitable growth in the
coming years.
The ICICI Group has a unique diversified financial
services franchise in India, with leadership positions
across many segments of financial services. Our
non-banking businesses – insurance, securities,
asset management and private equity - continue
to build on their strong positions in their respective
businesses and realign their strategies to the
emerging market environment wherever required.
In fiscal 2011, we achieved a 30.5% increase in the
As the second-largest bank in India, we are also
conscious of our larger role in the growth and
development of the Indian economy. Our vision
encompasses not only participating in all aspects
of the Indian economy and its international
linkages, but also catalysing
India’s growth.
We are executing a focused financial inclusion
plan-leveraging
information & communications
technology and the enabling regulatory framework
to provide basic banking services to the unbanked.
Through the ICICI Foundation for Inclusive Growth,
we are seeking to improve the quality of school
education and primary healthcare in a number of
states, thereby playing our role in the strengthening
of the soft infrastructure that is critical to long-
term sustainable growth of our country. Through
our specialised technology finance practice, we
continue to support research & development in the
area of clean technology and energy efficiency to
mitigate climate change.
Looking ahead, we see strong fundamentals
driving sustained high growth in India for several
years to come. There would continue to be periodic
challenges on account of global developments,
volatility in capital flows, inflation and other
factors. However, the underlying momentum
of our demographic dividend and investment
potential will support robust growth over the long-
term. The ICICI Group therefore has a range of
growth opportunities across its businesses and
a strong platform to leverage these opportunities
and create value for its stakeholders. We are
committed to playing a proactive role in India’s
growth and also helping to achieve the national
goal of social & economic inclusion of the less
advantaged sections of our society.
We look forward to your continued support and
goodwill as we move forward.
With best wishes,
Chanda Kochhar
Annual Report 2010-2011 5
Board of Directors
K. V. Kamath
Chairman
Sridar Iyengar
Homi Khusrokhan
Anup K. Pujari
M. S. Ramachandran
Tushaar Shah
V. Sridar
V. Prem Watsa
Chanda Kochhar
Managing Director & CEO
N. S. Kannan
Executive Director & CFO
K. Ramkumar
Executive Director
Rajiv Sabharwal
Executive Director
Senior Management
Vijay Chandok
President
Zarin Daruwala
President
Pravir Vohra
President
Senior
General Managers
Sandeep Batra
Group Compliance Officer
& Company Secretary
Kumar Ashish
Sangeeta Mhatre
Suresh Badami
Suvek Nambiar
K M Jayarao
Rakesh Jha
Sanjay Chougule
Girish Nayak
Dhamodaran S
Anita Pai
Maninder Juneja
Sudhir Dole
Saurabh Singh
Shilpa Kumar
Pramod Rao
Ajay Gupta
G Srinivas
Mukeshkumar Jain
T K Srirang
Sachin Khandelwal
Rahul Vohra
Sanjeev Mantri
6
Board
Committees
Audit Committee
Sridar Iyengar, Chairman
Homi Khusrokhan, Alternate Chairman
M. S. Ramachandran
V. Sridar
Board Governance, Remuneration &
Nomination Committee
Sridar Iyengar, Chairman
K. V. Kamath
Homi Khusrokhan
V. Prem Watsa
Corporate Social Responsibility Committee
M. S. Ramachandran, Chairman
Anup K. Pujari
Tushaar Shah
Chanda Kochhar
Credit Committee
K.V. Kamath, Chairman
Homi Khusrokhan
M. S. Ramachandran
Chanda Kochhar
Customer Service Committee
K. V. Kamath, Chairman
M. S. Ramachandran
V. Sridar
Chanda Kochhar
Fraud Monitoring Committee
V. Sridar, Chairman
K. V. Kamath
Homi Khusrokhan
Anup K. Pujari
Chanda Kochhar
Rajiv Sabharwal
Risk Committee
K. V. Kamath, Chairman
Sridar Iyengar
Anup K. Pujari
V. Sridar
V. Prem Watsa
Chanda Kochhar
Share Transfer & Shareholders’/
Investors’ Grievance Committee
Homi Khusrokhan, Chairman
V. Sridar
N. S. Kannan
Committee Of Executive Directors
Chanda Kochhar, Chairperson
N. S. Kannan
K. Ramkumar
Rajiv Sabharwal
Directors’ Report
Your Directors have pleasure in presenting the Seventeenth Annual Report of ICICI Bank Limited with the
audited statement of accounts for the year ended March 31, 2011.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2011 is summarised in the following table:
` billion, except percentages
Fiscal 2010
Fiscal 2011
% change
Net interest income and other income
155.92
156.65
Provisions & contingencies1
Profit before tax
Profit after tax of the Bank
1. Excludes provision for taxes.
` billion, except percentages
Consolidated profit after tax
43.87
53.45
40.25
22.87
67.61
51.51
0.5%
(47.9)%
26.5%
28.0%
Fiscal 2010
Fiscal 2011
% change
46.70
60.93
30.5%
Appropriations
The profit after tax of the Bank for fiscal 2011 is ` 51.51 billion after provisions and contingencies (excluding
provision for taxes) of ` 22.87 billion and all expenses. The disposable profit is ` 86.15 billion, taking
into account the balance of ` 34.64 billion brought forward from the previous year. Your Directors have
recommended a dividend at the rate of ` 14 per equity share of face value ` 10 for the year and have
appropriated the disposable profit as follows:
` billion
Fiscal 2010
Fiscal 2011
To Statutory Reserve, making in all ` 73.75 billion1
To Special Reserve created and maintained in terms of Section 36(1) (viii) of
the Income-tax Act, 1961, making in all ` 31.69 billion
To Capital Reserve, making in all ` 21.46 billion
To/(from) Investment Reserve, making in all Nil
To General Reserve, making in all ` 49.80 billion
Dividend for the year (proposed)
– On equity shares @ ` 14 per share (@ ` 12 per share for fiscal 2010)2
– On preference shares (`)
– Corporate dividend tax
Leaving balance to be carried forward to the next year3
10.07
3.00
4.44
1.16
0.01
13.38
35,000
1.64
34.64
12.88
5.25
0.83
(1.16)
--
16.15
35,000
2.02
50.18
1. Includes ` 2.00 billion on amalgamation of The Bank of Rajasthan Limited with ICICI Bank Limited.
2.
3. After taking into account transfer to Reserve Fund ` 0.4 million for fiscal 2011, making in all ` 11.3 million.
Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date.
Annual Report 2010-2011 7
Internet Banking
Our comprehensive Internet Banking service is designed to give our
customers a convenient banking experience from the comfort of
their homes or offices.
Our Internet Banking offering has evolved over time not only to
enable basic online transactions but also to provide cutting edge
features.
Innovative features, such as applying for a new account, opening
a fixed deposit and the Money Manager, help our customers to
manage almost all their financial needs online. Further, our Internet
Banking service goes beyond fulfilling the routine banking needs of
customers by enabling them to buy mutual funds, insurance, forex
and gold online.
8
MERGER OF THE BANK OF RAJASTHAN LIMITED WITH ICICI BANK
The Bank of Rajasthan Limited (Bank of Rajasthan), a banking company incorporated
within the meaning of Companies Act, 1956 and licensed by Reserve Bank of India
(RBI) under the Banking Regulation Act, 1949 was amalgamated with ICICI Bank
Limited (ICICI Bank/the Bank) with effect from close of business on August 12, 2010
in terms of the Scheme of Amalgamation (the Scheme) approved by RBI vide its
order DBOD No. PSBD 2599/16.01.056/2010-11 dated August 12, 2010 under sub
section (4) of section 44A of the Banking Regulation Act, 1949. The consideration
for the amalgamation was 25 equity shares of ICICI Bank of the face value of ` 10
each fully paid-up for every 118 equity shares of ` 10 each of Bank of Rajasthan.
Accordingly, ICICI Bank allotted 31,323,951 equity shares to the shareholders of
Bank of Rajasthan on August 26, 2010 and 2,860,170 equity shares, which were
earlier kept in abeyance pending civil appeal, on November 25, 2010.
SUBSIDIARY COMPANIES
At March 31, 2011, ICICI Bank had 17 subsidiaries as listed in the following table:
Domestic Subsidiaries
International Subsidiaries
ICICI Prudential Life Insurance
Company Limited
ICICI Lombard General Insurance
Company Limited
ICICI Prudential Asset Management
Company Limited
ICICI Bank UK PLC
ICICI Bank Canada
ICICI Bank Eurasia
Limited Liability Company
ICICI Prudential Trust Limited
ICICI Securities Holdings Inc.2
ICICI Securities Limited
ICICI Securities Inc.3
ICICI Securities Primary Dealership Limited
ICICI International Limited
ICICI Venture Funds Management
Company Limited
ICICI Home Finance Company Limited
ICICI Investment Management
Company Limited
ICICI Trusteeship Services Limited
ICICI Prudential Pension Funds
Management Company Limited1
1. Subsidiary of ICICI Prudential Life Insurance Company Limited.
2. Subsidiary of ICICI Securities Limited.
3. Subsidiary of ICICI Securities Holdings Inc.
The Ministry of Corporate Affairs (MCA) vide its Circular No.51/12/2007-CL-III
dated February 8, 2011 has granted general exemption under Section 212(8) of
the Companies Act, 1956 to companies from attaching the accounts of their
subsidiaries in their annual reports subject to fulfillment of certain conditons
prescribed. The Board of Directors of the Bank at its Meeting held on April 28,
2011 noted the provisions of the circular of MCA and passed the necessary
resolution granting the requisite approvals for not attaching the balance sheet,
profit & loss account, report of the board of directors and report of the auditors of
each of the subsidiary companies to the accounts of the Bank for fiscal 2011. The
“Our strategy for fiscal 2011
was to pursue profitable
growth on the back of an
improved funding profile.
Accordingly, we articulated the
“5Cs” strategy for fiscal 2011
with sharp focus on Credit
growth, CASA mobilisation,
Cost optimisation, Credit
quality improvement and
Customer service. We have
made substantial progress
on all these parameters,
resulting in an improvement
in our Return on Assets (RoA)
and Return on Equity (RoE).
Going forward, our endeavour
will be to further build on the
growth momentum and to
continue our focus on the
5Cs. We are committed to
further expanding our RoA
and improving the RoE for our
shareholders.“
N. S. KANNAN
Executive Director and
Chief Financial Officer
Annual Report 2010-2011 9
Directors’ Report
Bank will make available these documents/details upon request by any Member
of the Bank. These documents/details will be available on the Bank’s website
(www.icicibank.com) and will also be available for inspection by any Member of
the Bank at its Registered Office and Corporate Office and also at the registered
offices of the concerned subsidiaries. As required by Accounting Standard-21
(AS-21) issued by the Institute of Chartered Accountants of India, the Bank’s
consolidated financial statements included in this Annual Report incorporate the
accounts of its subsidiaries and other consolidating entities. A summary of key
financials of the Bank’s subsidiaries is also included in this Annual Report.
DIRECTORS
The RBI vide its letter dated June 24, 2010 approved the appointment of Rajiv
Sabharwal as an Executive Director of the Bank. The Members approved his
appointment at the Sixteenth Annual General Meeting (AGM) held on June 28, 2010.
Narendra Murkumbi retired by rotation on June 28, 2010 at the last AGM and
did not seek re-appointment. The valuable guidance and contribution made by
Narendra Murkumbi was recognised by the Board.
Pursuant to the provisions of the Banking Regulation Act, 1949, M. K. Sharma
retired from the Board effective January 31, 2011 on completion of eight years
as a non-executive Director of the Bank. The Board placed on record its deep
appreciation and gratitude for his guidance and contribution to the Bank.
In terms of the provisions of the Companies Act, 1956 and the Articles of
Association of the Bank, V. Prem Watsa, M. S. Ramachandran and K. Ramkumar would
retire by rotation at the forthcoming AGM and are eligible for re-appointment.
M. S. Ramachandran and K. Ramkumar have offered themselves for re-appointment.
V. Prem Watsa has expressed his desire not to seek re-appointment as a Director
as his maximum permissible tenure of eight years as a non-executive Director
of the Bank would end on January 28, 2012. A Resolution is proposed to the
Members in the Notice of the current AGM to this effect and also not to fill up
the vacancy caused by the retirement of V. Prem Watsa at this meeting or any
adjourned meeting thereof.
AUDITORS
The auditors, S.R. Batliboi & Co., Chartered Accountants, will retire at the ensuing
AGM. As recommended by the Audit Committee, the Board has proposed the
appointment of S.R. Batliboi & Co., Chartered Accountants as statutory auditors for
fiscal 2012. Their appointment is subject to approval of RBI. You are requested to
consider their appointment.
PERSONNEL
As required by the provisions of Section 217(2A) of the Companies Act, 1956, read
with Companies (Particulars of Employees) Rules, 1975, as amended, the names and
other particulars of the employees are set out in the Annexure to the Directors’ Report.
APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF
ASSISTED COMPANIES
Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee directors on the
boards of certain borrower companies based on loan covenants, with a view to
enable monitoring of the operations of those companies. Subsequent to the merger
of ICICI with ICICI Bank, the Bank continues to nominate directors on the boards of
assisted companies. Apart from the Bank’s employees, experienced professionals
from various fields are appointed as nominee directors. At March 31, 2011,
ICICI Bank had 19 nominee directors of whom 16 were employees of the Bank, on
“During the last 18 months,
we have invested in
empowering our customer
facing staff and in building
a culture of ownership
and service orientation. All
ICICIans carry the conviction
of making Khayaal Aapka
come alive to our customers”
K. RAMKUMAR
Executive Director
10
Mobile Banking
Our innovations in Mobile Banking have transformed the mobile
phone into a personal banking assistant for our customers. Be it
simple SMS alerts, service requests using Instant Messaging or
the iMobile application, our wide range of Mobile Banking services
takes care of our customers’ varied needs.
Today, customers can use their mobile phones not only to check
account balances and transfer funds but also to apply for a loan.
Our innovative Mobile Banking service takes convenience to a
different level by enabling customers to buy flight and movie
tickets and also shop for apparels, books and flowers.
Annual Report 2010-2011 11
ATM
The ICICI Bank ATM is much more than just a money-dispensing
machine. Our state-of-the-art technology has led to redefining
convenience for the customer. With newly introduced innovative
features, our ATM is now equipped to take care of banking needs
that go beyond basic cash withdrawal. Today our ATMs offer
services such as opening fixed deposits, payment of credit card &
utility bills, payment of insurance premium, mobile re-charges
and ‘Ultra Fast Cash’ which facilitates withdrawal of ` 5,000 in a
single click.
We have used technology to transform our vast network of ATMs to
provide greater convenience & efficiency to our customers, thereby
almost making them a network of mini branches.
12
the boards of 34 assisted companies. The Bank has a Nominee Director Cell for
maintaining records of nominee directorships.
RISK MANAGEMENT FRAMEWORK
The Bank’s risk management strategy is based on a clear understanding of various
risks, disciplined risk assessment and measurement procedures and continuous
monitoring. The policies and procedures established for this purpose are continuously
benchmarked with international best practices. The Board of Directors has oversight
on all the risks assumed by the Bank. Specific Committees have been constituted to
facilitate focused oversight of various risks, as follows:
•
The Risk Committee of the Board reviews risk management policies of the Bank
in relation to various risks. The Risk Committee reviews various risk policies
pertaining to credit, market, liquidity, operational and outsourcing risks, review of
the Bank’s stress testing framework and group risk management framework. The
Committee reviews the risk profile of the Bank through periodic review of the key
risk indicators and risk profile templates and annual review of the Internal Capital
Adequacy Assessment Process. The Committee also reviews the risk profile
of its overseas banking subsidiaries annually. The Risk Committee reviews the
Bank’s compliance with risk management guidelines stipulated by the Reserve
Bank of India and of the status of implementation of the advanced approaches
under the Basel framework. The Risk Committee also reviews the stress-testing
framework as part of the Internal Capital Adequacy Assessment Process (ICAAP).
The stress testing frame work included a wide range of Bank-specific and market
(systemic) scenarios. Linkage of macroeconomic factors to stress test scenarios
was documented as a part of ICAAP. The ICAAP exercise covers the domestic and
overseas operations of the Bank, the banking subsidiaries and the material non-
banking subsidiaries. The Risk Committee also reviews the Liquidity Contingency
Plan (LCP) for the Bank and the threshold limits.
• Apart from sanctioning credit proposals, the Credit Committee of the Board
reviews developments in key industrial sectors and the Bank’s exposure to
these sectors as well as to large borrower accounts. The Credit Committee
also reviews the non-performing loans, accounts under watch, overdues and
incremental sanctions.
The Audit Committee of the Board provides direction to and also monitors
the quality of the internal audit function and also monitors compliance with
inspection and audit reports of RBI and statutory auditors.
The Asset Liability Management Committee is responsible for managing liquidity
and interest rate risk and reviewing the asset-liability position of the Bank.
•
•
A summary of reviews conducted by these committees are reported to the Board
on a regular basis.
Policies approved from time to time by the Board of Directors/Committees of the
Board form the governing framework for each type of risk. The business activities
are undertaken within this policy framework. Independent groups and sub-groups
have been constituted across the Bank to facilitate independent evaluation,
monitoring and reporting of various risks. These groups function independently of
the business groups/sub-groups.
The Bank has dedicated groups namely the Risk Management Group (RMG),
Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial
Crime Prevention and Reputation Risk Management Group (FCPRRMG), with a
mandate to identify, assess and monitor all of the Bank’s principal risks in accordance
with well-defined policies and procedures. RMG is further organised into Credit
Risk Management Group, Market Risk Management Group and Operational Risk
“We will continue to focus
on delivering the promise
of Khayaal Aapka to our
customers. Leveraging
technology for greater
customer convenience,
and enhancing the
service experience
across all channels will
be key elements of our
strategy. As part of our
value proposition, we
will continue to offer
appropriate credit products
to our customers and thus
sustain the momentum of
growth in our loan portfolio.
In addition to expanding
and deepening our urban
franchise, we will also
increase our penetration in
rural markets to enhance
financial inclusion.”
RAJIV SABHARWAL
Executive Director
Annual Report 2010-2011 13
Directors’ Report
Management Group. These groups are completely independent of all business
operations and coordinate with representatives of the business units to implement
ICICI Bank’s risk management policies and methodologies. The internal audit and
compliance groups are responsible to the Audit Committee of the Board.
CORPORATE GOVERNANCE
The corporate governance framework in ICICI Bank is based on an effective
independent Board, the separation of the Board’s supervisory role from the
executive management and the constitution of Board Committees, generally
comprising a majority of independent/non-executive Directors and chaired by
independent/non-executive Directors, to oversee critical areas.
I. Philosophy of Corporate Governance
ICICI Bank’s corporate governance philosophy encompasses not only regulatory and
legal requirements, such as the terms of listing agreements with stock exchanges,
but also several voluntary practices aimed at a high level of business ethics,
effective supervision and enhancement of value for all stakeholders. The corporate
governance framework adopted by the Bank already encompasses a significant
portion of the recommendations contained in the ‘Corporate Governance Voluntary
Guidelines 2009’ issued by the Ministry of Corporate Affairs, Government of India.
Whistle Blower Policy
ICICI Bank has formulated a Whistle Blower Policy. In terms of this policy, employees
of ICICI Bank and its group companies are free to raise issues, if any, on breach
of any law, statute or regulation by the Bank and on the accounting policies and
procedures adopted for any area or item and report them to the Audit Committee
through specified channels. This mechanism has been communicated and posted
on the Bank’s intranet.
ICICI Bank Code of Conduct for Prevention of Insider Trading
In accordance with the requirements of the Securities and Exchange Board of India
(SEBI) (Prohibition of Insider Trading) Regulations, 1992, ICICI Bank has instituted a
comprehensive code of conduct for prevention of insider trading.
Group Code of Business Conduct and Ethics
The Board of Directors has approved a Group Code of Business Conduct and
Ethics for Directors and employees of the ICICI Group. The Code aims at ensuring
consistent standards of conduct and ethical business practices across the
constituents of the ICICI Group. This Code is also available on the website of
the Bank (www.icicibank.com). Pursuant to Clause 49 of the Listing Agreement, a
confirmation from the Managing Director & CEO regarding compliance with the Code
by all the Directors and senior management is given on page 32 of the Annual Report.
CEO/CFO Certification
In terms of Clause 49 of the Listing Agreement, the certification by the Managing
Director & CEO and Executive Director & Chief Financial Officer on the financial
statements and internal controls relating to financial reporting has been obtained.
Board of Directors
ICICI Bank has a broad-based Board of Directors, constituted in compliance with
the Banking Regulation Act, 1949, the Companies Act, 1956 and listing agreements
entered into with stock exchanges, and in accordance with good corporate
governance practices. The Board functions either as a full Board or through
various committees constituted to oversee specific operational areas. The Board
has constituted nine committees, namely, Audit Committee, Board Governance,
14
Phone Banking
At ICICI Bank we have created one of Asia’s largest in-house Phone
Banking services that is available to our customers at any time of
the day.
To take convenience to a new level, we have harnessed technology
to offer evolved services, which not only enable our customers to
register banking queries efficiently but also carry out transactions.
Customers can now pay their utility and credit card bills through
our Interactive Voice Response system. What’s more, our Phone
Banking service is available in various regional languages, enables
instantaneous password generation for Internet Banking and
even has an ‘auto-dialer’ facility through which our customers can
request for a call back.
Annual Report 2010-2011 15
Directors’ Report
Remuneration & Nomination Committee, Corporate Social Responsibility Committee, Credit Committee,
Customer Service Committee, Fraud Monitoring Committee, Risk Committee, Share Transfer & Shareholders’/
Investors’ Grievance Committee and Committee of Executive Directors. These Board Committees other than
the Committee of Executive Directors mainly consist of independent/non-executive Directors and most of
the Committees are chaired by independent/non-executive Directors.
At March 31, 2011, the Board of Directors consisted of 12 members. There were nine Meetings of the Board
during fiscal 2011 - on April 24, April 30, May 18, May 23, June 28, July 31 and October 29 in 2010 and
January 24 and February 17-18 in 2011. The names of the Directors, their attendance at Board Meetings during
the year, attendance at last AGM and the number of other directorships and Board Committee memberships
held by them at March 31, 2011 are set out in the following table:
Name of Director
Non-Executive Director
K. V. Kamath
Independent Directors
Sridar Iyengar
Homi Khusrokhan
L. N. Mittal (upto May 2, 2010)
Narendra Murkumbi (upto June 28, 2010)
Anupam Puri (upto May 2, 2010)
Anup K. Pujari(a) (b)
M. S. Ramachandran(b)
Tushaar Shah(b) (w.e.f May 03, 2010)
M. K. Sharma (upto January 30, 2011)
V. Sridar
Marti G. Subrahmanyam(b) (upto May 2, 2010)
V. Prem Watsa
Wholetime Directors
Chanda Kochhar
N.S. Kannan
K. Ramkumar
Rajiv Sabharwal (w.e.f June 24, 2010)
Sandeep Bakhshi (upto July 31, 2010)
Sonjoy Chatterjee (upto April 29, 2010)
Board
Meetings
attended
during
the yearr
Attendance
at last
AGM
(June 28,
2010)
Number of other
directorships
Of Indian
companies1
Of other
companies2
Number
of other
committee3
memberships
9
7
9
—
3
1
2
6
5
8
8
1
1
9
9
9
5
6
—
Present
3
Present
Present
N.A.
Absent
N.A.
Present
Present
Present
Present
Present
N.A.
Absent
Present
Present
Present
Present
Present
N.A.
7
4
N.A.
N.A.
N.A.
—
4
—
N.A.
8
N.A.
—
4
4
2
3
N.A.
N.A.
1
5
4
N.A.
N.A.
N.A.
—
1
—
N.A.
3
N.A.
14
4
2
—
—
N.A.
N.A.
1
5(2)
4(1)
N.A.
N.A.
N.A.
—
2
—
N.A.
8(4)
N.A.
—
—
1
1
1
N.A.
N.A.
(a) Nominee of Government of India.
(b) Also participated in one Meeting through tele-conference.
1. Comprises companies as per the provisions of Section 278 of the Companies Act, 1956.
2. Comprises foreign companies and other companies that are excluded as per the provisions of Section 278 of the
Companies Act, 1956 but excludes foreign companies not for profit.
3. Comprises only Audit Committee and Share Transfer & Shareholders’/Investors’ Grievance Committee of all public
limited companies whether listed or not but excludes committees of private limited companies, foreign companies
and companies incorporated under Section 25 of the Companies Act, 1956. Figures in parentheses indicate
Committee Chairpersonships.
16
No Director of the Bank was a member of more than 10 committees or acted as Chairperson of more than
five committees across all companies in which he/she was a Director.
II. Audit Committee
Terms of Reference
The Audit Committee provides direction to the audit function and monitors the quality of internal and statutory
audit. The responsibilities of the Audit Committee include overseeing the financial reporting process to ensure
fairness, sufficiency and credibility of financial statements, recommendation of appointment and removal of
central and branch statutory auditors and chief internal auditor and fixation of their remuneration, approval of
payment to statutory auditors for other permitted services rendered by them, review of functioning of Whistle
Blower Policy, review of the quarterly and annual financial statements before submission to the Board, review of
the adequacy of internal control systems and the internal audit function, review of compliance with inspection
and audit reports and reports of statutory auditors, review of the findings of internal investigations, review of
statement of significant related party transactions, review of management letters/letters on internal control
weaknesses issued by statutory auditors, reviewing with the management, the statement of uses/application of
funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilised
for the purposes other than those stated in the offer document/prospectus/notice and the report submitted by
the monitoring agency, monitoring the utilisation of proceeds of a public or rights issue and making appropriate
recommendations to the Board to take steps in this matter, discussion on the scope of audit with external
auditors and examination of reasons for substantial defaults, if any, in payment to stakeholders. The Audit
Committee is also empowered to appoint/oversee the work of any registered public accounting firm, establish
procedures for receipt and treatment of complaints received regarding accounting and auditing matters and
engage independent counsel as also provide for appropriate funding for compensation to be paid to any firm/
advisors. In addition, the Audit Committee also exercises oversight on the regulatory compliance function of
the Bank. The Audit Committee is also empowered to approve the appointment of the CFO (i.e., the whole-time
Finance Director or any other person heading the finance function or discharging that function) after assessing
the qualifications, experience and background, etc. of the candidate.
Composition
The Audit Committee currently comprises four independent Directors and is chaired by Sridar Iyengar. There
were seven Meetings of the Committee during the year. The details of the composition of the Committee
and attendance at its Meetings are set out in the following table:
Name of Member
Sridar Iyengar, Chairman
M.K. Sharma, Alternate Chairman
(upto January 30, 2011)
Homi Khusrokhan, Alternate Chairman (Member w.e.f. April 24, 2010
and Alternate Chairman w.e.f. January 31, 2011)
Narendra Murkumbi
(upto April 24, 2010)
M.S. Ramachandran
(w.e.f. January 31, 2011)
V. Sridar
Number of meetings attended
7
6
6
1
N.A.
7
Annual Report 2010-2011 17
Directors’ Report
III. Board Governance, Remuneration & Nomination Committee
Terms of Reference
The functions of the Committee include recommendation of appointments to the Board, evaluation of the
performance of the Managing Director & CEO and wholetime Directors on predetermined parameters,
recommendation to the Board of the remuneration (including performance bonus and perquisites) to
wholetime Directors, approval of the policy for and quantum of bonus payable to the members of the staff,
framing of guidelines for the Employees Stock Option Scheme and recommendation of grant of ICICI Bank
stock options to the employees and wholetime Directors of ICICI Bank and its subsidiary companies.
Composition
The Board Governance, Remuneration & Nomination Committee currently comprises three non-executive
Directors and is chaired by Sridar Iyengar, an independent Director. There were seven Meetings of the
Committee during the year. The details of the composition of the Committee and attendance at its Meetings
are set out in the following table:
Name of Member
Number of meetings attended
M. K. Sharma, Chairman (upto January 30, 2011)
Sridar Iyengar, Chairman1 (Member w.e.f April 24, 2010 and
Chairman w.e.f. January 31, 2011)
K. V. Kamath
Anupam Puri (upto April 24, 2010)
Marti G. Subrahmanyam (upto April 24 , 2010)
V. Prem Watsa2 (w.e.f. April 24, 2010)
1. Also participated in two Meetings through tele-conference.
2. Also participated in one Meeting through tele-conference.
6
4
7
1
1
1
Remuneration policy
The Board Governance, Remuneration & Nomination Committee determines and recommends to the Board
the amount of remuneration, including performance bonus and perquisites, payable to the wholetime
Directors. The recommendations of the Committee are based on evaluation of the wholetime Directors on
certain parameters.
The following table sets out the details of remuneration (including perquisites and retiral benefits) paid
to wholetime Directors for fiscal 2011 and details of stock options granted for the three years ended
March 31, 2011:
Details of Remuneration (`)
Chanda
Kochhar
11,520,000
8,286,336
N.S.
Kannan
7,620,000
5,481,066
K. Ramkumar
7,620,000
5,481,066
Rajiv
Sabharwal1
6,533,233
4,978,520
Sandeep
Bakhshi2
2,980,000
2,143,514
Sonjoy
Chatterjee3
613,833
—
8,000,493
5,566,772
6,100,268
4,753,586
1,956,399
1,818,915
1,382,400
914,400
914,400
783,988
357,600
73,660
1,728,000
—
1,143,000
—
447,000
—
Basic
Performance
bonus for fiscal
20114
Allowances and
perquisites5
Contribution to
provident fund
Contribution to
superannuation
fund
18
Details of Remuneration (`)
Chanda
Kochhar
959,616
N.S.
Kannan
634,746
K. Ramkumar
634,746
Rajiv
Sabharwal1
544,218
Sandeep
Bakhshi2
248,234
Sonjoy
Chatterjee3
51,132
210,000
210,000
—
105,000
105,000
—
105,000
105,000
—
105,000
100,000
—
—
115,000
—
—
—
—
Contribution to
gratuity fund
Stock options
(Numbers)
Fiscal 20114
Fiscal 20106
Fiscal 2009
1. Appointed as wholetime Director effective June 24, 2010. The remuneration for the year includes the remuneration
paid prior to the appointment as wholetime Director. The performance bonus for the year includes the bonus
amount applicable to Rajiv Sabharwal during his designation as Senior General Manager prior to his appointment as
wholetime Director.
2. Remuneration paid upto July 31, 2010. Performance bonus applicable for the part of year during his tenure as Deputy
Managing Director.
3. Remuneration paid till April 29, 2010.
4. Subject to RBI approval.
5. Allowances and perquisites exclude valuation of the employee stock options exercised during fiscal 2011 as it does
not constitute remuneration for the purposes of Companies Act, 1956. However tax has been paid in accordance
with the provisions of the Income Tax Act.
6. Excludes special grant of stock options approved by RBI on January 17, 2011 aggregating to 250,000 for
Chanda Kochhar and 150,000 each for N. S. Kannan, K. Ramkumar, Rajiv Sabharwal and Sandeep Bakhshi.
Perquisites (evaluated as per Income-tax rules wherever applicable and otherwise at actual cost to the
Bank) such as the benefit of the Bank’s furnished accommodation, gas, electricity, water and furnishings,
club fees, group insurance, use of car and telephone at residence or reimbursement of expenses in lieu
thereof; medical reimbursement, leave and leave travel concession, education benefits, provident fund,
superannuation fund and gratuity, were provided in accordance with the scheme(s) and rule(s) applicable
from time to time. The Board at its meeting held on April 28, 2011 decided to revise and merge the present
cash allowances consisting of leave travel allowance, house rent allowance and medical reimbursement
under one head namely supplementary allowance for wholetime Directors. Consequently, the Managing
Director & CEO, Chanda Kochhar shall be paid supplementary allowance of ` 700,000 per month,
N. S. Kannan, Executive Director & CFO and K. Ramkumar, Executive Director shall each be paid a supplementary
allowance of ` 480,000 per month and Rajiv Sabharwal, Executive Director shall be paid a supplementary
allowance of ` 465,000 per month effective April 1, 2011, subject to approval of RBI and Members. Approval
of Members for the same is being sought at the current AGM.
As provided under Article 132 of the Articles of Association of the Bank, the fees payable to a Director (other
than to the nominee of Government of India) for attending a Meeting of the Board or Committee thereof
are decided by the Board of Directors from time to time within the limits prescribed by the Companies Act,
1956 or the Central Government. The Board of Directors has approved the payment of ` 20,000 as sitting
fees for each Meeting of Board or Committee attended. This amount is within the limits prescribed by the
Ministry of Corporate Affairs vide its Notification dated July 24, 2003. Approval of the Members for payment
of sitting fees to the Directors was obtained at the AGM held on August 20, 2005. The Board of Directors
has approved payment of remuneration of ` 2,000,000 per annum to K. V. Kamath plus payment of sitting
fees, maintaining a Chairman’s office at the Bank’s expense, bearing expenses for travel on official visits and
participation in various forums (both in India and abroad) as Chairman of the Bank and bearing travel/halting/
other expenses and allowances for attending to his duties as Chairman of the Bank. The Members of the
Company vide Resolution passed by way of postal ballot the result of which was declared on February 13,
2009 had approved the above payment of remuneration. RBI and the Central Government have vide their
letters dated March 12, 2009 and January 8, 2010 respectively approved the payment of above remuneration.
Annual Report 2010-2011 19
Directors’ Report
Information on the total sitting fees paid to each non-wholetime Director during fiscal 2011 for attending
Meetings of the Board and its Committees is set out in the following table:
Name of Director
K. V. Kamath
Sridar Iyengar
Homi Khusrokhan
L. N. Mittal
Narendra Murkumbi
Anupam Puri
M. S. Ramachandran
Tushaar Shah
M. K. Sharma
V. Sridar
Marti G. Subrahmanyam
V. Prem Watsa
Total
Amount (`)
1,060,000
460,000
460,000
-
140,000
40,000
640,000
140,000
1,060,000
480,000
60,000
60,000
4,600,000
The details of shares and convertible instruments of the Bank, held by the non-wholetime Directors as on
March 31, 2011 are set out in the following table:
Name of Director
K. V. Kamath
Sridar Iyengar
Homi Khusrokhan
Anup K. Pujari
M. S. Ramachandran
Tushaar Shah
V. Sridar
V. Prem Watsa
Instrument
Equity
—
Equity
—
Equity
—
—
—
No. of shares held
490,000
—
5001
—
500
—
—
—
1. 500 shares held jointly with relatives.
IV. Corporate Social Responsibility Committee
Terms of reference
The Board of Directors at its Meeting held on October 30, 2009 constituted the Corporate Social Responsibility
Committee. The Committee is empowered to review the corporate social responsibility initiatives undertaken
by the ICICI Group and the ICICI Foundation for Inclusive Growth, make recommendations to the Board with
respect to the corporate social responsibility initiatives, policies and practices of the ICICI Group and to
review and implement, if required, any other matter related to corporate social responsibility initiatives as
recommended/suggested by RBI or any other body.
Composition
The Corporate Social Responsibility Committee currently comprises four Directors including three independent
Directors and the Managing Director & CEO. The Committee is chaired by M. S. Ramachandran. Two
Meetings of the Committee were held during fiscal 2011. The details of the composition of the Committee
and attendance at its Meetings are set out in the following table:
20
Name of Member
Number of meetings attended
M. K. Sharma, Chairman (upto January 30, 2011)
M. S. Ramachandran, Chairman (Chairman w.e.f. January 31, 2011)
Anup K. Pujari
Tushaar Shah (w.e.f. July 31, 2010)
Chanda Kochhar
2
N.A.
Nil
2
2
V. Credit Committee
Terms of reference
The functions of the Committee include review of developments in key industrial sectors and approval of
credit proposals as per authorisation approved by the Board.
Composition
The Credit Committee currently comprises four Directors including three non-executive Directors and the
Managing Director & CEO. The Committee is chaired by K. V. Kamath. There were twenty-one Meetings
of the Committee during the year. The details of the composition of the Committee and attendance at its
Meetings are set out in the following table:
Name of Member
K. V. Kamath, Chairman
Homi Khusrokhan (w.e.f. January 31, 2011)
Narendra Murkumbi (upto April 24, 2010)
M.S. Ramachandran
M. K. Sharma (upto January 30, 2011)
Chanda Kochhar
Number of meetings attended
20
3
3
20
18
21
VI. Customer Service Committee
Terms of reference
The functions of this Committee include review of customer service initiatives, overseeing the functioning
of the Customer Service Council and evolving innovative measures for enhancing the quality of customer
service and improvement in the overall satisfaction level of customers.
Composition
The Customer Service Committee currently comprises four Directors including three non-executive Directors
and the Managing Director & CEO. It is chaired by K. V. Kamath. There were six Meetings of the Committee
during the year. The details of the composition of the Committee and attendance at its Meetings are set out
in the following table:
Name of Member
K. V. Kamath, Chairman
Narendra Murkumbi (upto June 28, 2010)
Anup K. Pujari (upto July 31, 2010)
M. S. Ramachandran
M.K. Sharma (upto January 30, 2011)
V. Sridar (w.e.f. January 31, 2011)
Chanda Kochhar
Number of meetings attended
6
Nil
Nil
6
4
1
5
Annual Report 2010-2011 21
Directors’ Report
VII. Fraud Monitoring Committee
Terms of reference
The Committee monitors and reviews all frauds involving an amount of ` 10.0 million and above so as to
identify the systemic lacunae, if any, that may have facilitated perpetration of the fraud and put in place
measures to rectify the same, identify the reasons for delay in detection, if any, report to top management of
the Bank and RBI, monitor progress of investigation, and recovery position, ensure that staff accountability
is examined at all levels in all the cases of frauds and action, if required, is completed quickly without
loss of time and review of efficacy of the remedial action taken to prevent recurrence of frauds, such as
strengthening of internal controls and putting in place other measures as may be considered relevant to
strengthen preventive measures against frauds.
Composition
The Fraud Monitoring Committee currently comprises six Directors, including four non-executive Directors.
The Committee is chaired by V. Sridar. There were six Meetings of the Committee during the year. The details
of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member
M.K. Sharma, Chairman (upto January 30, 2011)
V. Sridar, Chairman (Chairman w.e.f. January 31, 2011)
K. V. Kamath
Homi Khusrokhan (w.e.f. January 31, 2011)
Anup K. Pujari (w.e.f. July 31, 2010)
Chanda Kochhar
Sandeep Bakhshi (upto July 31, 2010)
Rajiv Sabharwal (w.e.f. July 31, 2010)
Number of meetings attended
4
4
6
1
Nil
6
2
4
VIII. Risk Committee
Terms of reference
The Committee is empowered to review ICICI Bank’s risk management policies in relation to various risks
(credit, market, liquidity, operational and reputation risks), investment policies and strategy and regulatory
and compliance issues in relation thereto. The Committee is also empowered to review risk return profile
of the Bank, capital adequacy based on risk profile of the Bank’s balance sheet, Basel-II implementation,
business continuity plan and disaster recovery plan, key risk indicators and significant risk exposures and
implementation of enterprise risk management.
Composition
The Risk Committee currently comprises six Directors including five non-executive Directors and the
Managing Director & CEO. It is chaired by K. V. Kamath. There were five Meetings of the Committee during
the year. The details of the composition of the Committee and attendance at its Meetings are set out in the
following table:
Name of Member
K. V. Kamath, Chairman
Sridar Iyengar
Anup K. Pujari
Marti G. Subrahmanyam (upto April 24, 2010)
V. Sridar (w.e.f. April 24, 2010)
V. Prem Watsa
Chanda Kochhar
22
Number of meetings attended
5
5
2
1
4
1
5
IX. Share Transfer & Shareholders’/Investors’ Grievance Committee
Terms of reference
The functions and powers of the Committee include approval and rejection of transfer or transmission
of equity shares, preference shares, bonds, debentures and securities, issue of duplicate certificates,
allotment of shares and securities issued from time to time, including those under stock options, review
and redressal of shareholders’ and investors’ complaints, delegation of authority for opening and operation
of bank accounts for payment of interest, dividend and redemption of securities and the listing of securities
on stock exchanges.
Composition
The Share Transfer & Shareholders’/Investors’ Grievance Committee is chaired by Homi Khusrokhan. The
Committee currently comprises three Directors including two independent Directors. There were five
Meetings of the Committee during the year. The details of the composition of the Committee and attendance
at its Meetings are set out in the following table:
Name of Member
Number of meetings attended
M.K.Sharma, Chairman (upto January 30, 2011)
Homi Khusrokhan, Chairman (Member w.e.f. April 24, 2010 and
Chairman w.e.f. January 31, 2011)
Narendra Murukumbi (upto April 24, 2010)
V. Sridar (w.e.f. January 31, 2011)
N. S. Kannan
5
4
Nil
Nil
5
Sandeep Batra, Senior General Manager is the Group Compliance Officer & Company Secretary. 111 shareholder
complaints received in fiscal 2011 were processed. At March 31, 2011, no complaints were pending.
X. Committee of Executive Directors
Terms of reference
The powers of the Committee include approval/renewal of credit proposals, restructuring and settlement as
per the authorisation approved by the Board, approval of detailed credit norms related to individual business
groups, approvals to facilitate introduction of new products and product variants, programme lending within
each business segment and asset or liability category, including permissible deviations. The Committee
also approves and reviews from time to time limits on exposure to any group or individual company as well
as approves underwriting assistance to equity or equity linked issues and subscription to equity shares or
equity linked products or preference shares. The Committee also exercises powers in relation to borrowing
and treasury operations as approved by the Board, empowers officials of the Bank or its Group Companies
through execution of Power of Attorney, if required under the Common Seal of the Bank and further exercises
powers in relation to premises and property related matters.
Composition
The Committee of Executive Directors currently comprises all four whole time Directors and is chaired
by Chanda Kochhar, Managing Director & CEO. The other Members are N. S. Kannan, K. Ramkumar and
Rajiv Sabharwal.
XI. Other Committees
In addition to the above, the Board has from time to time constituted various committees namely, Asset-
Liability Management Committee, Committee for Identification of Wilful Defaulters, Grievance Redressal
Annual Report 2010-2011 23
Directors’ Report
Committee for borrowers identified as Wilful Defaulters, Committee of Senior Management (comprising
certain wholetime Directors and executives) and Committee of Executives, Compliance Committee, Product
& Process Approval Committee, Regional Committees for India and overseas operations, Outsourcing
Committee, Operational Risk Management Committee and other Committees (all comprising executives).
These committees are responsible for specific operational areas like asset-liability management, approval
of credit proposals, approval of products and processes and management of operational risk, under
authorisation/supervision of the Board and its Committees.
XII. General Body Meetings
The details of General Body Meetings held in the last three years are given below:
General Body Meeting
Fourteenth AGM
Fifteenth AGM
Day, Date
Saturday, July 26, 2008
Monday, June 29, 2009
Extra-ordinary General
Meeting
Monday, June 21, 2010
Sixteenth AGM
Monday, June 28, 2010
Venue
Time
2.00 p.m.
1.30 p.m.
1.30 p.m.
1.30 p.m.
}
Professor Chandravadan Mehta
Auditorium, General Education
Centre, Opposite D. N. Hall Ground,
The Maharaja Sayajirao University,
Pratapgunj, Vadodara 390 002.
The details of the Resolution passed under Section 44A of the Banking Regulation Act, 1949 and Reserve Bank
of India’s guidelines for merger/amalgamation of private sector banks dated May 11, 2005 are given below.
General Body Meeting
Day, Date
Resolution
Extra-ordinary General
Meeting
Monday, June 21, 2010 Merger of The Bank of Rajasthan Limited with
ICICI Bank Limited (passed by requisite majority
as provided under Section 44A of the Banking
Regulation Act, 1949)
Postal Ballot
At present, no special resolution is proposed to be passed through postal ballot. No resolution was passed
through postal ballot during fiscal 2011.
XIII. Disclosures
1. There are no materially significant transactions with related parties i.e., directors, management,
subsidiaries, or relatives conflicting with the Bank’s interests. The Bank has no promoter.
2. Penalties or strictures imposed on the Bank by any of the stock exchanges, the Securities & Exchange
Board of India (SEBI) or any other statutory authority, for any non-compliance on any matter relating to
capital markets, during the last three years are detailed below:
• No penalties or strictures have been imposed on the Bank by any of the stock exchanges or SEBI for
any non-compliance on any matter relating to capital markets during the last three years.
• RBI, vide letter dated April 26, 2011, has imposed a penalty of ` 1.5 million on the Bank along with 18
other banks for violation of the guidelines on derivatives and extant instructions thereunder.
3.
In terms of the Whistle Blower Policy of the Bank, no employee of the Bank has been denied access to
the Audit Committee.
XIV. Means of Communication
It is ICICI Bank’s belief that all stakeholders should have access to complete information regarding its position
to enable them to accurately assess its future potential. ICICI Bank disseminates information on its operations
and initiatives on a regular basis. ICICI Bank‘s website (www.icicibank.com) serves as a key awareness facility
for all its stakeholders, allowing them to access information at their convenience. It provides comprehensive
24
information on ICICI Bank’s strategy, business segments, financial performance, operational performance,
share price movements and the latest press releases.
ICICI Bank’s dedicated investor relations personnel respond to specific queries and play a proactive role in
disseminating information to both analysts and investors. In accordance with SEBI and Securities Exchange
Commission (SEC) guidelines, all information which could have a material bearing on ICICI Bank’s share price
is released through leading domestic and global wire agencies. The information is also disseminated to the
National Stock Exchange of India Limited (NSE), the Bombay Stock Exchange Limited (BSE), New York Stock
Exchange (NYSE), Singapore Stock Exchange and Japan Securities Dealers Association from time to time.
As required by SEBI and the listing agreements, ICICI Bank files its financial and other information on the
Corporate Filing and Dissemination System.
ICICI Bank’s quarterly financial results are published either in the Financial Express (Mumbai, Pune,
Ahmedabad, Delhi, Lucknow, Chandigarh, Kolkata, Chennai, Bangalore, Hyderabad, Cochin editions) or the
Business Standard (Ahmedabad, Bangalore, Bhubaneshwar, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata,
Lucknow, Mumbai, New Delhi and Pune editions), and Vadodara Samachar (Vadodara). The financial results,
official news releases, analyst call transcripts and presentations are also available on the Bank’s website.
The Management’s Discussion & Analysis forms part of the Annual Report.
General Shareholder Information
General Body Meeting Day, Date & Time
Venue
Seventeenth AGM
Monday, June 27, 2011
1.30 p.m
Professor Chandravadan Mehta Auditorium,
General Education Centre, Opposite D. N. Hall
Ground, The Maharaja Sayajirao University,
Pratapgunj, Vadodara 390 002.
Financial Calendar
Book Closure
Dividend Payment Date
:
:
:
April 1 to March 31
June 4, 2011 to June 27, 2011
June 28, 2011
Listing of equity shares/ADSs on Stock Exchanges (with stock code)
Stock Exchange
Bombay Stock Exchange Limited (BSE)
Phiroze Jeejeebhoy Towers
Dalal Street, Mumbai 400 001
National Stock Exchange of India Limited (NSE)
Exchange Plaza, Bandra-Kurla Complex
Bandra (East), Mumbai 400 051
New York Stock Exchange (ADSs)2
11, Wall Street, New York, NY 10005, United States of America
1. FII segment of BSE.
2. Each ADS of ICICI Bank represents two underlying equity shares.
Code for ICICI Bank
532174
&
6321741
ICICIBANK
IBN
ICICI Bank has paid annual listing fees on its capital for the relevant periods to BSE and NSE where its equity
shares are listed and NYSE where its ADSs are listed.
Annual Report 2010-2011 25
Directors’ Report
Market Price Information
The reported high and low closing prices and volume of equity shares of ICICI Bank traded during fiscal 2011
on BSE and NSE are set out in the following table:
Month
April 2010
May 2010
June 2010
July 2010
BSE
NSE
High `
Low `
Volume
High `
Low `
Volume
Total Volume
on BSE and
NSE
997.95
918.10
12,535,994
997.80
918.00
84,117,665
96,653,659
937.90
809.40
15,992,523
936.90
809.35
94,701,942
110,694,465
902.00
816.90
14,254,026
900.40
817.50
84,532,263
98,786,289
926.50
840.10
9,682,699
928.70
840.05
63,169,412
72,852,111
August 2010
1,012.55
939.75
12,027,278 1,013.00
939.55
88,641,472
100,668,750
September 2010
1,128.40
994.60
10,715,288 1,127.75
995.00
73,668,966
84,384,254
October 2010
1,161.65 1,090.30
9,763,021 1,163.00 1,089.05
75,532,788
85,295,809
November 2010
1,269.70 1,117.25
9,667,547 1,273.35 1,116.25
90,120,342
99,787,889
December 2010
1,190.15 1,057.20
9,879,510 1,191.15 1,058.30
81,019,901
90,899,411
January 2011
1,143.60 1,000.70
15,682,632 1,144.85 1,001.15
99,452,527
115,135,159
February 2011
1,057.95
951.10
11,038,536 1,057.00
951.35
86,603,211
97,641,747
March 2011
1,112.75
996.45
10,776,829 1,116.20
996.60
82,174,857 92,951,686
Fiscal 2011
1,269.70
809.40 142,015,883 1,273.35
809.35 1,003,735,346 1,145,751,229
The reported high and low closing prices and volume of ADSs of ICICI Bank traded during fiscal 2011 on the
NYSE are given below:
Month
April 2010
May 2010
June 2010
July 2010
August 2010
September 2010
October 2010
November 2010
December 2010
January 2011
February 2011
March 2011
Fiscal 2011
Source: Google Finance
26
High (US$)
45.79
42.43
38.97
39.36
42.68
49.85
52.58
57.57
53.31
51.10
46.24
50.08
57.57
Low (US$) Number of ADS traded
49,881,511
57,646,086
47,010,422
36,067,211
44,429,157
39,079,340
44,074,372
42,044,662
34,502,499
63,181,108
44,328,567
48,336,203
550,581,138
40.81
34.85
34.96
35.77
40.73
42.98
49.45
50.04
46.46
43.32
42.31
44.20
34.85
The performance of the ICICI Bank equity share relative to the BSE Sensitive Index (Sensex), BSE Bank
Index (Bankex) and NYSE Financial Index during the period April 1, 2010 to March 31, 2011 is given in the
following chart:
Share Transfer System
ICICI Bank’s investor services are handled by 3i Infotech Limited (3i Infotech). 3i Infotech is a SEBI registered
Category I – Registrar to an Issue & Share Transfer (R&T) Agent. 3i Infotech is a global information technology
company providing technology solutions and in addition to R&T services provides software products,
managed IT Services, application software development & maintenance, payment solutions, business
intelligence, document imaging & digitization, IT consulting and various transaction processing services.
3i Infotech’s quality certifications include SEI CMMI Level 5 for software business, ISO 9001:2000 for BPO
(including R&T) and ISO 27001:2005 for infrastructure services.
ICICI Bank’s equity shares are traded mainly in dematerialised form. During the year, 2,822,691 equity shares
involving 9,533 certificates were dematerialised. At March 31, 2011, 99.19% of paid-up equity share capital
(including equity shares represented by ADS constituting 26.99% of the paid-up equity share capital) have
been dematerialised.
Physical share transfer requests are processed and the share certificates are returned normally within a
period of seven days from the date of receipt, if the documents are correct, valid and complete in all respects.
The number of equity shares of ICICI Bank transferred during the last three years (excluding electronic
transfer of shares in dematerialised form) is given below:
Number of transfer deeds
Number of shares transferred
Fiscal 2009
Fiscal 2010
Fiscal 2011
3,408
367,813
2,018
282,433
2,429
368,234
As required under Clause 47(c) of the listing agreements entered into by ICICI Bank with stock exchanges,
a certificate is obtained every six months from a practising Company Secretary that all transfers have been
completed within the stipulated time. The certificates are forwarded to BSE and NSE.
In terms of SEBI’s circular no. D&CC/FITTC/CIR-16 dated December 31, 2002, as amended vide circular
no. CIR/MRD/DP/30/2010 dated September 6, 2010 an audit is conducted on a quarterly basis by a firm of
Chartered Accountants, for the purpose of, inter alia, reconciliation of the total admitted equity share capital
Annual Report 2010-2011 27
Directors’ Report
with the depositories and in the physical form with the total issued/paid up equity capital of ICICI Bank.
Certificates issued in this regard are placed before the Share Transfer & Shareholders’/Investors’ Grievance
Committee and forwarded to BSE and NSE, where the equity shares of ICICI Bank are listed.
Physical Share Disposal Scheme
With a view to mitigate the difficulties experienced by physical shareholders in disposing off their shares,
ICICI Bank, in the interest of investors holding shares in physical form (upto 50 shares) has instituted a
Physical Share Disposal Scheme. The scheme was started in November 2008 and continues to remain open.
Interested shareholders may contact the R & T Agent, 3i Infotech Limited for further details.
Registrar and Transfer Agents
The Registrar and Transfer Agent of ICICI Bank is 3i Infotech Limited. Investor services related queries/
requests/complaints may be directed to L.N. Rajan at the address as under:
3i Infotech Limited
International Infotech Park
Tower 5, 3rd Floor
Vashi Railway Station Complex
Vashi, Navi Mumbai 400 703
Maharashtra, India
Tel No. :
Fax No. :
E-mail :
+91-22-6792 8000
+91-22-6792 8099
investor@icicibank.com
Queries relating to the operational and financial performance of ICICI Bank may be addressed to:
Rakesh Jha/Anindya Banerjee/Rakesh Mookim
ICICI Bank Limited
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400 051
Tel No. :
Fax No. :
E-mail :
+91-22-2653 1414
+91-22-2653 1175
ir@icicibank.com
Information on Shareholding
Shareholding pattern of ICICI Bank at March 31, 2011
Shareholder Category
Shares % holding
Deutsche Bank Trust Company Americas (Depositary for ADS holders)
310,840,032
FIIs, NRIs, Foreign Banks, Foreign Companies, OCBs and Foreign Nationals
454,726,046
26.99
39.48
16.64
4.02
0.08
7.32
5.47
191,667,710
46,276,533
898,069
84,308,179
63,055,803
1,151,772,372
100.00
Insurance Companies
Bodies Corporate
Banks & Financial Institutions
Mutual Funds
Individuals
Total
28
No. of shares % to total no.
of shares
26.99
310,840,032
Shareholders of ICICI Bank with more than one per cent holding at March 31, 2011
Name of the Shareholder
Deutsche Bank Trust Company Americas (Depositary for ADS holders)
Life Insurance Corporation of India
Allamanda Investments Pte. Limited
Government of Singapore
Aberdeen Asset Managers Limited A/c Aberdeen International India
Opportunities Fund (Mauritius) Limited
New Perspective Fund.INC.
Europacific Growth Fund
Carmignac Geston A/c Carmignac Patrimone
Bajaj Allianz Life Insurance Company Limited
Abu Dhabi Investment Authority - Gulab
IVY Funds Inc Asset Strategy Fund
Bajaj Holdings and Investments Limited
Total
107,847,146
57,586,922
17,152,264
17,080,000
17,072,207
16,981,777
13,900,000
13,831,757
13,018,858
12,667,088
12,176,817
610,154,868
Distribution of shareholders of ICICI Bank at March 31, 2011
Range - Shares
Upto 1,000
1,001 to 5,000
5,001 – 10,000
10,001 – 50,000
50,001 & above
Total
No. of Folios
663,805
4,271
502
650
782
670,010
%
99.07
0.64
0.07
0.10
0.12
100.00
No. of Shares
47,657,274
8,563,592
3,523,231
15,904,277
1,076,123,998
1,151,772,372
Disclosure with respect to shares lying in suspense account
Particulars
Aggregate number of shareholders and the outstanding shares in the
suspense account lying at the beginning of the year
Number of shareholders who approached ICICI Bank for transfer of shares
from suspense account during the year
Number of shareholders to whom shares were transferred from suspense
account during the year
Aggregate number of shareholders and the outstanding shares in the
suspense account lying at the end of the year
Shareholders
701
65
63
638
9.36
5.00
1.49
1.48
1.48
1.47
1.21
1.20
1.13
1.10
1.06
52.97
%
4.14
0.74
0.31
1.38
93.43
100.00
Shares
38,251
3,958
3,910
34,341
The voting rights on the shares lying in suspense account are frozen till the rightful owner of such shares
claims the shares.
Outstanding GDRs/ADSs/Warrants or any Convertible Debentures, conversion date and likely impact
on equity
ICICI Bank has 155.42 million ADS (equivalent to 310.84 million equity shares) outstanding, which constituted
26.99% of ICICI Bank’s total equity capital at March 31, 2011. Currently, there are no convertible debentures
outstanding.
Annual Report 2010-2011 29
Directors’ Report
Plant Locations – Not applicable
Address for Correspondence
Sandeep Batra
Group Compliance Officer & Company Secretary
or
Ranganath Athreya
General Manager & Joint Company Secretary
& Head Compliance - Capital Markets and Non-Banking Subsidiaries
ICICI Bank Limited
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400 051
Tel No. :
Fax No. :
E-mail :
The Bank has complied with the mandatory and majority of non-mandatory requirements mentioned in the
listing agreement, with respect to corporate governance.
91-22-2653 1414
91-22-2653 1230
companysecretary@icicibank.com
ANALYSIS OF CUSTOMER COMPLAINTS
a) Customer complaints in fiscal 20111,2,3
Number of complaints pending at the beginning of the period/year
Number of complaints pending with erstwhile The Bank of Rajasthan Limited at August 12, 2010
Number of complaints received during the period/year
Number of complaints redressed during the period/year
Number of complaints pending at the end of the period/year
1. Post merger open/received complaints, received from erstwhile The Bank of Rajasthan Limited have been included
2,102
57
155,475
154,610
3,024
from August 12, 2010
2. Does not include complaints redressed within 1 working day.
3. The complaints in year ended March 31, 2011 have increased, as ICICI Bank has started considering all critical
requests as complaints from October 2009.
b) Awards passed by the Banking Ombudsman in fiscal 2011
Number of unimplemented awards at the beginning of the period/year
Number of unimplemented awards at the beginning of the period/year with erstwhile The Bank of
Rajasthan Limited as on August 12, 2010
Number of awards passed by the Banking Ombudsman during the period/year
Number of awards implemented during the period/year
Number of unimplemented awards at the end of the period/year
0
2*
0
0
0
* The two unimplemented awards had become null & void as the appeal preferred before Appellate Authority for the
same has been upheld.
COMPLIANCE CERTIFICATE OF THE AUDITORS
ICICI Bank has annexed to this report, a certificate obtained from the statutory auditors, S.R. Batliboi & Co.,
Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in Clause 49
of the listing agreement.
EMPLOYEE STOCK OPTION SCHEME
In fiscal 2000, ICICI Bank instituted an Employee Stock Option Scheme (ESOS) to enable the employees and
Directors of ICICI Bank and its subsidiaries to participate in future growth and financial success of the Bank. As per
the ESOS, as amended from time to time, the maximum number of options granted to any employee/Director in a
year is limited to 0.05% of ICICI Bank’s issued equity shares at the time of the grant, and the aggregate of all such
options is limited to 5% of ICICI Bank’s issued equity shares on the date of the grant (equivalent to 57.59 million
shares at April 28, 2011).
30
Options granted for fiscal 2003 and earlier years vest in a graded manner over a three-year period, with 20%,
30% and 50% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant.
Options granted for fiscal 2004 to 2008 vest in a graded manner over a four-year period, with 20%, 20%, 30% and
30% of the grants vesting in each year, commencing not earlier than 12 months from the date of grant. Options
granted in April 2009 vest in a graded manner over a five year period with 20%, 20%, 30% and 30% of grant
vesting each year commencing from the end of 24 months from the date of grant.
Options granted in April 2010 vest in a graded manner over a four year period with 20%, 20%, 30% and 30% of
the grant vesting each year commencing from the end of 12 months from the date of grant.
On the basis of the recommendation of the Board Governance, Remuneration and Nomination Committee
(BGRNC), the Board at its Meeting held on October 29, 2010 approved a grant of approximately 3.1 million options
as a special measure to eligible employees and wholetime Directors of ICICI Bank and certain of its subsidiaries.
Each option confers on the beneficiary a right to apply for one equity share of face value of ` 10 of ICICI Bank at
` 967.00 which was the average closing price of the ICICI Bank stock on the stock exchange during the six months
up to October 28, 2010. 50% of the options granted would vest on April 30, 2014 and the balance 50% on April 30,
2015. The Bank has received approval of RBI for the above grant of options to wholetime Directors of the Bank.
The Board further at its meeting held on April 28, 2011 approved a grant of approximately 4.25 million options for
fiscal 2011 to eligible employees and wholetime Directors (options granted to wholetime Directors being subject
to RBI approval). Each option confers on the employee a right to apply for one equity share of face value of ` 10 of
ICICI Bank at ` 1,106.85 which was closing price on the stock exchange which recorded the highest trading volume
in ICICI Bank shares on April 27, 2011. These options would vest over a four year period, with 20%, 20%, 30% and
30% respectively of the grant of vesting each year commencing from the end of 12 months from the date of grant.
Options can be exercised within 10 years from the date of grant or five years from the date of vesting, whichever
is later. The price of the options granted prior to June 30, 2003 is the closing market price on the stock exchange,
which recorded the highest trading volume on the date of grant. The price for options granted on or after June
30, 2003 till July 21, 2004 is equal to the average of the high and low market price of the equity shares in the
two week period preceding the date of grant of the options, on the stock exchange which recorded the highest
trading volume during the two week period. The price for options granted on or after July 22, 2004 (other than the
grants made on October 29, 2010) is equal to the closing price on the stock exchange which recorded the highest
trading volume preceding the date of grant of options. The above disclosure is in line with the SEBI guidelines, as
amended from time to time.
Particulars of options granted by ICICI Bank upto April 28, 2011 are given below:
Options granted till April 28, 20111 (excluding options forfeited/lapsed)
Options forfeited/lapsed
Options exercised
Total number of options in force
Options vested
Number of shares allotted pursuant to exercise of options
Extinguishment or modification of options
Amount realised by exercise of options (` )
1. Includes Options granted to wholetime Directors pending RBI approval
53,152,313
9,087,542
28,693,881
24,458,432
42,706,923
28,693,881
Nil
6,734,413,993
No employee was granted options during any one year equal to or exceeding 0.05% of the issued equity
shares of ICICI Bank at the time of the grant.
The diluted earnings per share (EPS) pursuant to issue of shares on exercise of options calculated in
accordance with AS-20 was ` 45.06 in fiscal 2011 against basic EPS of ` 45.27. The Bank recognised a
compensation cost of ` 2.9 million in fiscal 2011 based on the intrinsic value of options. However if ICICI
Bank had used the fair value of options based on binomial tree model, compensation cost in the year ended
March 31, 2011 would have been higher by ` 905.8 million and proforma profit after tax would have been
` 50.60 billion. On a proforma basis, ICICI Bank’s basic and diluted earnings per share would have been
` 44.47 and ` 44.27 respectively.
Annual Report 2010-2011 31
Directors’ Report
The key assumptions used to estimate the fair value of options granted during the year ended
March 31, 2011 are given below.
Risk-free interest rate
Expected life
Expected volatility
Expected dividend yield
In respect of options granted in fiscal 2011, the weighted average exercise price of the options and the
weighted average fair value of the options were ` 972.00 per option and ` 535.87 per option respectively.
5.26% to 8.42%
6.35 to 6.87 years
48.38% to 49.82%
1.10% to 1.33%
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO, UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956.
The provisions of Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and
technology absorption do not apply to the Bank. The Bank has, however, used information technology
extensively in its operations.
IMPLEMENTATION OF CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON “GREEN
INITIATIVES IN CORPORATE GOVERNANCE”
The Bank has implemented the ‘Green Initiative’ as per Circular No. 17/2011 dated April 21, 2011 and Circular
No. 18/2011 dated April 29, 2011 issued by the Ministry of Corporate Affairs to enable electronic delivery of
notices/documents and annual reports to shareholders.
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable accounting standards have been followed,
along with proper explanation relating to material departures;
2. that they have selected such accounting policies and applied them consistently and made judgements
and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of
the Bank at the end of the financial year and of the profit or loss of the Bank for that period;
3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in
accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 1956 for
safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; and
4. that they have prepared the annual accounts on a going concern basis.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, RBI, SEBI and overseas regulators for their continued co-
operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international
banking community, rating agencies and stock exchanges for their support.
ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers
for their continued patronage. The Directors express their deep sense of appreciation of all the employees,
whose outstanding professionalism, commitment and initiative has made the organisation’s growth and
success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to
the Members for their trust and support.
May 13, 2011
For and on behalf of the Board
K. V. Kamath
Chairman
Compliance with the Group Code of Business Conduct and Ethics
I confirm that all Directors and members of the senior management have affirmed compliance with Group
Code of Business Conduct and Ethics for the year ended March 31, 2011.
Chanda Kochhar
Managing Director & CEO
May 13, 2011
32
Auditor’s Certificate
on Corporate Governance
To the Members of ICICI Bank Limited
We have examined the compliance of conditions of corporate governance by ICICI Bank Limited (“the Bank”)
for the year ended on 31 March 2011, as stipulated in Clause 49 of the Listing Agreement of the said
Company with stock exchanges.
The compliance of conditions of corporate governance is the responsibility of the management. Our
examination was limited to procedures and implementation thereof, adopted by the Bank for ensuring the
compliance of the conditions of the Corporate Governance. It is neither an audit nor an expression of opinion
on the financial statements of the Bank.
In our opinion, and to the best of our information and according to the explanations given to us, we certify that
the Bank has complied with the conditions of Corporate Governance as stipulated in the above mentioned
Listing Agreement.
We state that such compliance is neither an assurance as to the future viability of the Bank nor the efficiency
or effectiveness with which the management has conducted the affairs of the Bank.
Mumbai
May 13, 2011
For S R Batliboi & Co
Chartered Accountants
Firm’s Registration No.: 301003E
Shrawan Jalan
Partner
Membership No: 102102
Annual Report 2010-2011 33
Business Overview
ECONOMIC OUTLOOK
The long-term fundamentals of the Indian economy continue to be strong. These include favourable demographics,
rising incomes, growing consuming class and a large investment pipeline. These growth drivers are expected to be
sustained over the medium-to-long term. The growth of the economy is being driven primarily by domestic investment
and consumption, with limited dependence on exports or the demand situation in other economies. In addition, the
growing economic activity in rural India and the emergence of smaller cities as important growth drivers are key
positive developments.
At the same time, there are some concerns, particularly with regard to inflation. Inflationary pressures emerging from
commodity and food prices have shown signs of becoming more generalised, leading to the containing of inflation
becoming the key priority of policy makers. In addition, the global economic environment continues to remain
uncertain with slow recovery and fiscal concerns in developed markets.
We believe that while these challenges may have an impact in the short term and cause periodic volatility, the strong
underlying fundamentals of the Indian economy would sustain high rates of growth over the medium to long term.
For a discussion of recent economic and regulatory developments, please refer to “Management’s Discussion &
Analysis”.
BUSINESS REVIEW
During fiscal 2011, the Bank focused on 5Cs strategy – Credit growth, CASA mobilisation, Cost optimization, Credit
quality improvement and Customer centricity. We believe that we have achieved substantial success on all the
parameters of this strategy and are well placed to leverage on the growth opportunities in the economy.
RETaIL BaNKINg
After significant moderation in previous years, retail credit growth in the system picked up pace in fiscal 2011. As per
data published by RBI for the period up to March 25, 2011, year-on-year retail credit growth was about 17%.
We continue to believe that retail credit in India has robust long-term growth potential, driven by sound fundamentals
of rising income levels and favorable demographic profile. We will continue to focus on select retail asset segments
like housing and vehicle loans where we expect significant demand over the medium to long term. We are also seeing
smaller markets beyond the large urban centres emerging as important drivers of growth in this segment. In addition,
customer segments are now maturing given the increase in incomes. These distinct customer segments, with widely
different requirements and risk-reward characteristics, require specialised strategies. We believe that our knowledge
of the customer and insights into the Indian market position us well to take advantage of these opportunities.
Our branches are the key points of customer acquisition and service. Accordingly, our organisation structure has
been shaped to provide greater empowerment to our branches. The branch network is expected to serve as an
integrated channel for deposit mobilisation, selected retail asset origination and distribution of third party products as
well as the focal point for customer service. The outbound sales teams have been strengthened and brought under
branch supervision. They are supported by the operations and phone banking teams to deliver high quality service,
customer retention and up-selling; and by a strategic product and service design team to design product and service
strategies for different customer segments. We have deepened our engagement and relationship with customers and
created more opportunities for cross-selling other products by introducing dedicated privilege banking areas, which
are manned by specially trained privilege bankers, and exclusive wealth branches for our high net worth customers.
The Bank’s focus during the year was on delivering superior customer service in line with its articulated Khayaal Aapka
proposition.
During the year, we acquired The Bank of Rajasthan which substantially enhanced our branch network and strengthened
our presence in northern and western India. The merger of Bank of Rajasthan added over 450 branches to our network.
Including these, our branch network has increased from 1,707 branches at March 31, 2010 to 2,529 branches at March 31,
2011. We also increased our ATM network from 5,219 ATMs at March 31, 2010 to 6,055 ATMs at March 31, 2011.
34
During fiscal 2011, we continued our focus on increasing the proportion of low-cost retail deposits in our funding base.
Our current and savings account (CASA) deposits as a percentage of total deposits increased from 41.7% at March
31, 2010 to 45.1% at March 31, 2011.
During the year, our retail disbursements increased as we focused on opportunities in residential mortgages, vehicle
finance and construction equipment finance. The realignment of our retail sales and service architecture helped
us increase our reach while simultaneously bringing focus towards customer service. We sourced an increasing
proportion of our mortgage business through our branch network. In addition to mortgages, we also saw traction in
auto loans, commercial vehicle financing and construction equipment business in fiscal 2011.
We also continued to focus on cross-selling new products and products of our life and general insurance subsidiaries
to our existing customers. Cross-sell allows us to deepen our relationship with our existing customers and earn fee
income. We will continue to focus on cross-sell as a means to improve profitability and offer a complete suite of
products to our customers.
SMaLL ENTERPRISES
Medium & small enterprises are important engines of growth and reflect India’s entrepreneurial energy. We offer
complete banking solutions to small and medium enterprises across industry segments. We support the growth of
the small and medium enterprises sector while adopting a cluster based financing approach for enterprises with a
homogeneous profile in industries such as infrastructure, engineering, information technology, education, life-sciences
and agri-based businesses. We also offer supply chain financing solutions to the channel partners of large corporates.
During fiscal 2011, we strengthened the sales and relationship coverage by increasing our presence with greater
empowerment at zonal levels. This has allowed us to deepen our customer relationships and supplement the customer
acquisition by leveraging our branch network along with our commercial banking franchise. The Bank also contributes
significantly to the SME eco-system through multiple initiatives such SME CEOs Knowledge Series, Emerging India
Awards, SME Expos and the SME Toolkit - an online business and advisory resource.
We have a long tradition of partnering entrepreneurs early in their growth phase, building lasting and mutually beneficial
relationships that deliver recurring value. We will continue to further strengthen our proposition and penetration in this
segment.
CORPORaTE BaNKINg
Our corporate banking strategy is based on providing comprehensive and customised financial solutions to our
corporate customers. We offer a comprehensive suite of corporate banking products including rupee and foreign
currency debt, working capital credit, structured financing, loan syndication and commercial banking products and
services. Our corporate and investment banking franchise is built around a core relationship team that has strong
relationships with almost all of the country’s corporate houses. The relationship team is product agnostic and is
responsible for managing banking relationships with clients. We have also put in place product specific teams with
a view to focus on designing financial solutions for clients spread across structured finance, project finance, loan
syndication and markets. The Structured Finance Group is responsible for working with the relationship team in India
and our international subsidiaries and branches for structuring and execution of investment banking mandates and
other transactions.
We have a Commercial Banking Group working closely with the Corporate Banking Group for growing this business
through identified branches. Our strategy for growth in commercial banking, i.e. of meeting the regular banking
requirements of companies for transactions and trade, is based on leveraging our strong client relationships and
focusing on enhancing client servicing capability at the operational level.
We have enhanced our client servicing capability by the effective use of “Mega Branches” spread across all major
commercial centres across the country catering to specialised commercial banking needs of clients. These branches
have highly cohesive and dedicated customer focused transaction teams, led by senior branch heads, to service
customers and provide a better transactional experience to the client. An efficient central operations team complements
the service delivery capability.
Annual Report 2010-2011 35
Business Overview
The relationship team also works with our Markets Group to assist customers in devising and executing risk
management strategies to address foreign currency, interest rate and liquidity risks. Our loan syndication franchise
enables us to structure, underwrite and syndicate rupee and foreign currency debt with Indian and offshore investors.
We have built robust sector specific syndication skills across project finance, M&A financing and structured finance to
provide optimal financing solutions.
The continuing expansion of Indian companies provides significant opportunities for our corporate banking business.
Our expertise lies in structuring client specific solutions coupled with seamless delivery for an enriching customer
experience. We will continue to focus on increasing the granularity and stability of our revenue streams by executing
our transaction banking and trade services strategy, while keeping a close watch on credit quality and further deepening
our client relationships.
PROJECT FINaNCE
With strong momentum in the Indian economy, there has been a significant increase in investment activity with capacity
additions across sectors such as infrastructure, power, oil & gas, urban development and manufacturing. We expect a
significant increase in infrastructure financing requirements going forward. The power sector will witness the execution
of large projects given the energy needs of the country and the government’s energy expansion programmes. Besides
requirements arising out of capacity additions, significant investments are also projected in inter-regional and regional
transmission corridors for strengthening the national grid. Further, we also expect substantial development in the
renewable energy segment. With the scale-up in gas production there is a need to connect India’s various regional
gas pipeline systems and as such, significant investments in trunk pipeline networks are expected. The improved
gas availability and pipeline connectivity is also expected to drive the expansion of the city gas network. In the
transportation sector, roads and ports have seen activity. The momentum is expected to increase as the government
has been bidding out new projects for development of national and state highways. With the government promoting
an inclusive maritime infrastructure in the ports sector, there has been increased private participation in projects
for berths and terminal development, channel deepening, port connectivity and modernisation of equipment. The
railway sector is also expected to witness modernisation of railway stations, logistics development and expansion of
dedicated corridors for freight. The telecom sector is expected to see continued growth due to decline in tariffs and
increased focus on rural markets. Further, we also expect increased private sector investments in the development of
water supply, education and healthcare infrastructure.
Our long tradition of project finance and our ability to offer structured and customised solutions position us uniquely
to capitalise on these opportunities and cater to the financing requirements in the infrastructure sector. It will be our
constant endeavour to add value to projects through financial structuring to ensure bankability. These services are
backed by innovative structuring capabilities, sectoral expertise and sound due diligence.
INTERNaTIONaL BaNKINg
Our international strategy is focused on meeting the foreign currency needs of our Indian corporate clients and
partnering them in their global expansion, taking select trade finance exposures linked to imports to India, and
achieving the status of the preferred non-resident Indian (NRI) community bank in key markets. We also seek to build
stable wholesale funding sources and strong syndication capabilities to support our corporate and investment banking
business, and to expand private banking operations for India-centric asset classes. ICICI Bank currently has subsidiaries
in the United Kingdom, Russia and Canada, branches in the United States, Singapore, Bahrain, Hong Kong, Sri Lanka,
Dubai International Finance Centre and Qatar Financial Centre and representative offices in the United Arab Emirates,
China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. We opened our first retail branch in Singapore in
fiscal 2011, after being granted Qualified Full Banking (QFB) privileges. The Bank’s wholly owned subsidiary ICICI Bank
UK PLC has eleven branches in the United Kingdom and a branch each in Belgium and Germany. ICICI Bank Canada
has nine branches. ICICI Bank Eurasia Limited Liability Company has one branch.
In fiscal 2011, global economic activity picked up at differential rates with emerging markets experiencing strong
growth and developed markets continuing to face a phase of slow recovery. However, as the overall global economic
environment improved, the pace of recovery in international trade and capital flows strengthened significantly. Exports
from India crossed USD 200 billion and have reached an all-time high. In this changing environment, we continued to
maintain adequate capital and focused on risk containment and liquidity management in our international operations.
We also focused on improving the funding profile in our international operations. We became the first Indian bank to
36
issue 10-year senior bonds in the international markets. We also focused on establishing and growing relationships
with global multinationals that are increasingly entering and expanding in Indian markets.
We also strengthened our market position and share in remittances during fiscal 2011 and continued to develop
products and service offerings to meet the requirements of the Non Resident Indian (NRI) community. The emphasis
was on improving account operation via remote channels in order to cater to the customers’ needs when overseas.
We launched I-Express, an instant cross-border money transfer option for NRIs through our select partners in the
Middle East. The I-Express facility offers the remitter an option of visiting any partner outlet for instant credit into
the beneficiary account maintained with ICICI Bank in India, at no extra cost. We also launched ‘Fixed Rupee’ on
Money2India.com – a facility that enables NRIs to send the exact rupee amount remittance to India since the exchange
rate is confirmed at the time of initiating the remittance.
INCLUSIVE & RURaL BaNKINg
In accordance with the ICICI Group’s vision of combining a sustainable business model with a social and human
development agenda, the Bank has undertaken several initiatives to meet the financial services needs of the rural
market. These include offering credit through our branches and dedicated field teams and financial inclusion through
business correspondents. We continued to focus on improving our product and service offerings to meet the
requirements of all participants in the rural market including farmers, traders, commission agents, small processors
and other medium agri-corporates.
In March 2010, our Board approved a three-year financial inclusion plan that envisaged the opening of no-frill savings
accounts and expanding our rural reach over the next three years along with the provision of credit to select individuals
in the target segment through various product lines comprising micro-credit, kisan credit card, farm equipment loan
and loan against jewellery. In fiscal 2011, we focused on building capacity to implement our financial inclusion plan
and our progress against the plan targets during the year has been satisfactory. We have also focused on opening
accounts for routing benefit payments under various government schemes and have received the mandate for opening
accounts of individuals under these schemes in certain states.
The Bank has also identified 23 Business Correspondents having a network of 208 customer service points, to service
these customers. We tied up with Vodafone and Aircel for extending basic financial services through the mobile
platform. The plan is to leverage the penetration and the distribution infrastructure of the mobile network operators.
We have also built lending capability in over 1,000 of our branches for products targeted towards individual customers
in the agri-value chain. We also increased our product offerings in rural India by relaunching farm equipment finance
with strategic tie-ups with tractor manufacturers. New product initiatives were also undertaken during the year to
enhance credit flow towards the micro and small enterprises sector.
Going forward, we will continue to focus on leveraging our branch network and the network of our Business
Correspondent partners to enhance financial inclusion by offering banking facilities to the unbanked, and growing
our relationships with these customers over time. We will seek to play a significant role in the channeling of
payments under government schemes to the beneficiaries through their bank accounts with us. We will also leverage
the emerging initiatives and infrastructure, such as the Unique Identity initiative of the Government, that support
financial inclusion in the country. We will seek to scale up our offerings of credit products in rural areas and across the
agricultural value chain by leveraging our extensive branch network and developing appropriate product propositions
for these segments.
RISK MaNagEMENT
Risk is an integral part of the banking business and we aim at delivering superior shareholder value by achieving
an appropriate trade-off between risk and returns. The key risks are credit risk, market risk and operational risk.
Our risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and
measurement procedures and continuous monitoring.
The key principles underlying our risk management framework are as follows:
The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted
to facilitate focused oversight of various risks. Our Risk Committee reviews our risk management policies in relation
Annual Report 2010-2011 37
Business Overview
to various risks and regulatory compliance issues relating thereto. It reviews key risk indicators covering areas such
as credit risk, interest rate risk, liquidity risk and foreign exchange risk and the limits framework, including stress
test limits for various risks. It also carries out an assessment of the capital adequacy based on the risk profile of our
balance sheet and reviews the status with respect to implementation of Basel norms. Our Credit Committee reviews
developments in key industrial sectors and our exposure to these sectors and reviews major portfolios on a periodic
basis. Our Audit Committee provides direction to and also monitors the quality of the internal audit function. Our Asset
Liability Management Committee is responsible for managing the balance sheet within the risk parameters laid down
by the Board/Risk Committee and reviewing our asset-liability position.
Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework
for each type of risk. The business activities are undertaken within this policy framework.
Independent groups and sub-groups have been constituted across the Bank to facilitate independent evaluation,
monitoring and reporting of various risks. These groups function independently of the business groups/sub-groups.
We have dedicated groups namely the Risk Management Group, Compliance Group, Corporate Legal Group, Internal
Audit Group and the Financial Crime Prevention & Reputation Risk Management Group, with a mandate to identify,
assess and monitor all of the Bank’s principal risks in accordance with well-defined policies and procedures. These
groups are completely independent of all business operations and coordinate with representatives of the business
units to implement ICICI Bank’s risk management methodologies. The Internal Audit Group and Compliance Group are
responsible to the Audit Committee of the Board.
Credit Risk
Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. All credit risk related
aspects are governed by a credit and recovery policy which outlines the type of products that can be offered, customer
categories, targeted customer profile and the credit approval process and limits. The credit and recovery policy is
approved by our Board of Directors.
In order to assess the credit risk associated with any corporate financing proposal, we assess a variety of risks relating
to the borrower and the relevant industry. We have a structured and standardised credit approval process which
includes a well established procedure of comprehensive credit appraisal and credit rating. We have developed internal
credit rating methodologies for rating obligors. The rating factors in quantitative and qualitative issues and credit
enhancement features specific to the transaction. The rating serves as a key input in the approval as well as post-
approval credit processes. A risk based asset review framework has also been put in place wherein the frequency
of asset review would be higher for cases with higher exposure and/or lower credit rating. Industry knowledge is
constantly updated through field visits and interactions with clients, regulatory bodies and industry experts.
The Bank has a strong framework for the appraisal and execution of project finance transactions that involves a detailed
evaluation of technical, commercial, financial, marketing and management factors and the sponsor’s financial strength
and experience. The Bank identifies the project risks, mitigating factors and residual risks associated with the project.
As a part of the due diligence process, the Bank appoints consultants, including technical advisors, business analysts,
legal counsel and insurance consultants, wherever considered necessary, to advise the lenders. Risk mitigating factors
in these financings include creation of debt service reserves and channelling project revenues through a trust and
retention account. The Bank’s project finance loans are generally fully secured and have full recourse to the borrower.
In some cases, the Bank also takes additional credit comforts such as corporate or personal guarantees from one or
more sponsors of the project or a pledge of the sponsors’ equity holding in the project company. The Bank’s practice
is to normally disburse funds after the entire project funding is committed and all necessary contractual arrangements
have been entered into.
In case of retail loans, sourcing and approval are segregated to achieve independence. The Credit Risk Management
Group has oversight on the credit risk issues for retail assets including vetting of all credit policies/operating notes
proposed for approval by the Board of Directors or forums authorised by the Board of Directors. The Credit Risk
Management Group is also involved in portfolio monitoring for all retail assets and suggesting/implementing policy
changes. The Retail Credit and Policy Group is an independent unit which focuses on policy formulation and portfolio
tracking and monitoring. In addition, we also have a Business Intelligence Unit to provide support for analytics, score
card development and database management. Our Credit Administration Unit services various retail business units.
38
Our credit officers evaluate retail credit proposals on the basis of the product policy approved by the Committee of
Executive Directors and the risk assessment criteria defined by the Credit Risk Management Group. These criteria
vary across product segments but typically include factors like the borrower’s income, the loan-to-value ratio and
demographic parameters. The technical valuations in case of residential mortgages are carried out by empanelled
valuers or technical teams. External agencies such as field investigation agencies and credit processing agencies are
used to facilitate a comprehensive due diligence process including visits to offices and homes in the case of loans
to individual borrowers. Before disbursements are made, the credit officer checks a centralised delinquent database
and reviews the borrower’s profile. In making our credit decisions, we also draw upon reports from credit information
bureaus. We also use the services of certain fraud control agencies operating in India to check applications before
disbursement.
In addition, the Credit and Treasury Middle Office Groups and the Operations Group monitor operational adherence to
regulations, policies and internal approvals. We have centralised operations to manage operational risk in most back
office processes of the Bank’s retail loan business. The Fraud Prevention Group manages fraud related risks through
forensic audits and recovery of fraud losses. The segregation of responsibilities and oversight by groups external to
the business groups ensure adequate checks and balances.
Our credit approval authorisation framework is laid down by our Board of Directors. We have established several
levels of credit approval authorities for our corporate banking activities like the Credit Committee of the Board of
Directors, the Committee of Executive Directors, the Committee of Senior Management, the Committee of Executives
(Credit) and the Regional Committee (Credit). Retail Credit Forums, Small Enterprise Group Forums and Corporate
Agriculture Group Forums have been created for approval of retail loans and credit facilities to small enterprises and
agri based enterprises respectively. Individual executives have been delegated with powers in case of policy based
retail products to approve financial assistance within the exposure limits set by our Board of Directors.
Market Risk
Market risk is the possibility of loss arising from changes in the value of a financial instrument as a result of changes
in market variables such as interest rates, exchange rates and other asset prices. The prime source of market risk for
the Bank is the interest rate risk we are exposed to as a financial intermediary. In addition to interest rate risk, we are
exposed to other elements of market risk such as liquidity or funding risk, price risk on trading portfolios, exchange
rate risk on foreign currency positions and credit spread risk. These risks are controlled through limits such as duration
of equity, earnings at risk, value-at-risk, stop loss and liquidity gap limits. The limits are stipulated in our Investment
Policy, ALM Policy and Derivatives Policy which are reviewed and approved by our Board of Directors.
The Asset Liability Management Committee, which comprises wholetime Directors and senior executives meets on
a regular basis and reviews the trading positions, monitors interest rate and liquidity gap positions, formulates views
on interest rates, sets benchmark lending and base rates and determines the asset liability management strategy in
light of the current and expected business environment. The Market Risk Management Group recommends changes
in risk policies and controls and the processes and methodologies for quantifying and assessing market risks. Risk
limits including position limits and stop loss limits for the trading book are monitored on a daily basis by the Treasury
Middle Office Group and reviewed periodically.
Foreign exchange risk is monitored through the net overnight open foreign exchange limit. Interest rate risk of the overall
balance sheet is measured through the use of re-pricing gap analysis and duration analysis. Interest rate gap sensitivity
gap limits have been set up in addition to limits on the duration of equity and earnings at risk. Risks on trading positions
are monitored and managed by setting VaR limits and stipulating daily and cumulative stop-loss limits.
The Bank uses various tools for measurement of liquidity risk including the statement of structural liquidity, dynamic
liquidity gap statements, liquidity ratios and stress testing. We maintain diverse sources of liquidity to facilitate
flexibility in meeting funding requirements. Incremental operations in the domestic market are principally funded by
accepting deposits from retail and corporate depositors. The deposits are augmented by borrowings in the short-term
inter-bank market and through the issuance of bonds. Loan maturities and sale of investments also provide liquidity.
Our international branches are primarily funded by debt capital market issuances, syndicated loans, bilateral loans and
bank lines, while our international subsidiaries raise deposits in their local markets.
Annual Report 2010-2011 39
Business Overview
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from
external events. It includes legal risk but excludes strategic and reputation risks. Operational risks in the Bank are
managed through a comprehensive system of internal controls, systems and procedures to monitor transactions,
key back-up procedures and undertaking regular contingency planning. The control framework is designed based
on categorisation of all functions into front-office, comprising business groups; mid-office, comprising credit
and treasury mid-offices; back-office, comprising operations; and corporate and support functions. ICICI Bank’s
operational risk management governance and framework is defined in the Operational Risk Management Policy,
approved by the Board of Directors. While the policy provides a broad framework, detailed standard operating
procedures for operational risk management processes are established. The policy is applicable across the Bank
including overseas branches and aims to ensure clear accountability, responsibility and mitigation of operational
risk. We have constituted an Operational Risk Management Committee (ORMC) to oversee the operational risk
management in the Bank. The policy specifies the composition, roles and responsibilities of the ORMC. The
framework comprises identification and assessment of risks and controls, new products and processes approval
framework, measurement through incidents and exposure reporting, monitoring through key risk indicators and
mitigation through process and control enhancement and insurance. We have formed an independent Operational
Risk Management Group for design, implementation and enhancement of the operational risk framework and to
support business and operation groups in the operational risk management on an on-going basis.
TREaSURY
Our treasury operations are structured along the balance sheet management function, the client-related corporate
markets business and the proprietary trading activity.
During fiscal 2011, financial markets remained volatile. The government bond markets witnessed increase in
benchmark yields following the emergence of inflationary concerns and the tightening monetary policy stance
which impacted our government securities portfolio. Further, since October 2010, equity markets continued to
remain volatile with the NIFTY declining by nearly 17% from October to February which offset the equity capital
gains made during the first part of the year. These factors had an adverse impact on the Bank’s proprietary trading
gains. The Bank continued to focus on the corporate bonds segment to offset this impact, and remained among
the top two arrangers according to the Prime database. In respect of primary issues for the private sector, the Bank
was ranked first in league table rankings. Over the last year, the Bank strengthened its relationship with the top 10
issuers and focused on increasing its distribution reach by adding over 300 provident fund trusts. The Bank also
increased its geographical coverage through manpower addition at key locations.
Our balance sheet management function continued to actively manage the government securities portfolio held
for compliance with SLR norms to optimise the yield on this portfolio, while maintaining an appropriate portfolio
duration given the interest rate environment.
We provide foreign exchange and derivative products and services to our customers through our Markets Group.
These products and services include foreign exchange products for hedging currency risk, foreign exchange and
interest rate derivatives like options and swaps and bullion transactions. We also hedge our own market risks
related to these products with banking counterparties.
HUMaN RESOURCES
ICICI Bank seeks to nurture a mutually beneficial relationship with its employees. This relationship is characterised
by the investment which the Bank makes in its employees by providing challenging roles and assignments,
opportunities for personal growth, relevant and timely performance support, training and an enabling environment.
The Bank seeks to create a workplace which combines achievement orientation with care for employees. On
January 5, our Founder’s Day, we formalised this employee value proposition through launch of the “Saath Aapka”
campaign. Through Saath Aapka, the Bank has clearly and in a transparent manner articulated what employees
can expect from the organisation. At the same time, the Bank has defined the desired competencies at various
40
levels in the organization as “DNA anchors” which communicate to employees what the organisation expects from
them. The key elements of the “Saath Aapka” proposition are:
• Opportunities for personal growth and learning for employees, as they work towards the organisation’s growth
and success.
•
•
•
•
An enabling work culture that facilitates the achievement of aspirational goals.
A merit-oriented organisation, setting high performance standards and linking rewards to performance.
Standing by employees in their hour of need just as employees go the extra mile for the organisation whenever
there is a need for the same.
A winning organisation that is conscious of its larger role in society and in nation building.
During the year, the integration of Bank of Rajasthan into the Bank was a major exercise which was successfully
completed. The integration process focused both on business as well as cultural integration. The people and cultural
integration was achieved through well-planned communication of the Bank’s values and culture. The Bank reached
out to all employees of Bank of Rajasthan and addressed their expectations and concerns. This was achieved through
communication from the top management of the Bank, open house sessions jointly conducted by senior managers
from Bank of Rajasthan and ICICI Bank and one-on-one sessions wherever required. Further, to align the skill sets of
Bank of Rajasthan employees, special training programs were designed and conducted by the Bank.
To further augment the Bank’s efforts in providing best-in-class service to its customers, the Bank has ensured that
more experienced and seasoned employees are placed in leadership roles at branches. The Bank has also ensured
that the average banking experience and vintage of customer service staff at branches are enhanced, despite an
increase in the number of branches. The Bank also continued its efforts in training its branch staff and other employees
to increase their banking related knowledge. Through an innovative programme called Skill Through Drill, our branch
staff have been trained in service skills required to deliver the Khayaal Aapka promise to our customers. The Bank
has also introduced an innovative programme called the Service Assessor Programme wherein our staff is video-
recorded live and feedback on service behaviors is given. This year the Bank also introduced a rigorous evaluation
and certification process for all employees in customer service roles to ensure employees engaged in servicing the
customers have thorough knowledge of banking regulations, processes and product features.
INFORMaTION TECHNOLOgY
Our information technology strategy focuses on increasing customer convenience, reducing customer complaints
and increasing turnaround and resolution timeframes. During the year, we enhanced customer offerings on self-
service channels, such as value added services through ATMs, new mobile application for smart phones and a
comprehensive online personal finance tool ”Money Manager”. We have also created facilities for customers to buy
investment products, gold and foreign exchange through our online channel. Pursuant to the merger of the Bank of
Rajasthan, we also enabled seamless transactions for the customers of Bank of Rajasthan in a short timeframe and
combined the ATM and branch networks and technology infrastructure. To enable better customer service, our branch
staff has been equipped with a comprehensive and single view of customer relationships. We have also enhanced our
Interactive Voice Response system at our call centres to support regional Indian languages.
In fiscal 2011, we retained focus on information security and deployed new systems for robust authentication and
fraud detection for on-line customers. A comprehensive network access control solution to prevent unauthorised
entry into our networks was also implemented. We also continued to improve existing processes and capabilities.
The monitoring of electronic devices at our branches was also centralised to enable better productivity and faster
resolution times. We also built a state-of-the-art, high density, high availability data centre that is designed to flexibly
handle different types of equipment. It has also been designed for scalability to handle our future requirements.
Simultaneously, we have also implemented next generation system management tools which allow us to proactively
monitor critical data centre and system parameters.
Annual Report 2010-2011 41
Business Overview
KEY SUBSIDIaRIES
ICICI Prudential Life Insurance Company (ICICI Life):
ICICI Life maintained its market leadership in the private sector with an overall market share of 7.3% based on retail
new business weighted received premium in fiscal 2011. Effective September 1, 2010, the Insurance Regulatory and
Development Authority specified changes such as cap on surrender charges, charges applicable from the sixth year
of policy, an increase in minimum premium paying term and introduction of minimum guaranteed returns on pension
products. ICICI Life’s total premium increased by 8.2% to ` 178.81 billion in fiscal 2011. ICICI Life’s new business
annualised premium equivalent was ` 39.75 billion in fiscal 2011. ICICI Life achieved a profit after tax of ` 8.08 billion
in fiscal 2011. The expense ratio, defined as the ratio of expenses (excluding commission and front line sales cost) to
total premium, has decreased from 19.5% in fiscal 2010 to 17.3% in fiscal 2011. ICICI Life’s unaudited New Business
Profit in fiscal 2011 was ` 7.13 billion.
ICICI Lombard General Insurance Company (ICICI General)
ICICI General maintained its leadership in the private sector with an overall market share of 9.6% in fiscal 2011. ICICI
General’s gross written premium grew by 28.5% from ` 34.31 billion in fiscal 2010 to Rs. 44.08 billion during fiscal
2011. As per Insurance Regulatory and Development Authority’s order dated March 12, 2011, all general insurance
companies were required to provide for losses on the third party motor pool, a multilateral reinsurance arrangement
covering third party risk of commercial vehicles, at a provisional rate of 153% over fiscal 2008 to fiscal 2011 compared
to the earlier loss rate of 122%-127%. The impact of the same on ICICI General was ` 2.72 billion. As a result of the
negative impact on this account, ICICI General recorded a loss of ` 0.80 billion in fiscal 2011.
ICICI Prudential Asset Management Company (ICICI AMC)
ICICI AMC is the third largest asset management company in India with an average AUM of ` 734.66 billion for the
quarter ended March 31, 2011. ICICI AMC achieved a profit after tax of ` 0.72 billion in fiscal 2011.
ICICI Venture Funds Management Company Limited (ICICI Venture)
ICICI Venture maintained its leadership position as a specialist alternative assets manager based in India. ICICI Venture
achieved a profit after tax of ` 0.72 billion in fiscal 2011.
ICICI Securities Limited and ICICI Securities Primary Dealership Limited
ICICI Securities achieved a profit after tax of ` 1.13 billion in fiscal 2011. ICICI Securities Primary Dealership achieved a
profit after tax of ` 0.53 billion in fiscal 2011.
ICICI Bank UK PLC (ICICI Bank UK)
ICICI Bank UK is a full service bank that offers retail, corporate and investment banking and private banking services
in the United Kingdom and Europe. During the year, ICICI Bank UK focused on liquidity management, enhancing
profitability and risk containment through balance sheet consolidation. ICICI Bank UK’s profit after tax for fiscal 2011
was USD 36.6 million. At March 31, 2011, ICICI Bank UK had total assests of USD 6.4 billion. ICICI Bank UK’s capital
position continued to be strong with a capital adequacy ratio of 23.1% at March 31, 2011.
ICICI Bank Canada
ICICI Bank Canada is a full-service direct bank that offers a wide range of financial solutions to cater to personal,
commercial, corporate, investment, treasury and trade requirements. ICICI Bank Canada’s profit after tax for fiscal 2011
was CAD 32.4 million. At March 31, 2011, ICICI Bank Canada had total assets of CAD 4.5 billion. ICICI Bank Canada had
a capital adequacy ratio of 26.3% at March 31, 2011.
KEY RISKS
We have included statements in this annual report which contain words or phrases such as ‘will’, ‘expected to’,
etc., and similar expressions or variations of such expressions, may constitute ‘forward-looking statements’. These
forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results,
opportunities and growth potential to differ materially from those suggested by the forward-looking statements. These
risks and uncertainties include, but are not limited to, the actual growth in demand for banking and other financial
42
products and services in the countries that we operate or where a material number of our customers reside, our ability
to successfully implement our strategy, including our use of the Internet and other technology, our rural expansion,
our exploration of merger and acquisition opportunities both in and outside of India, our ability to integrate recent or
future mergers or acquisitions into our operations and manage the risks associated with such acquisitions to achieve
our strategic and financial objectives, our ability to manage the increased complexity of the risks we face following
our rapid international growth, future levels of impaired loans, our growth and expansion in domestic and overseas
markets, the adequacy of our allowance for credit and investment losses, technological changes, investment income,
our ability to market new products, cash flow projections, the outcome of any legal, tax or regulatory proceedings
in India and in other jurisdictions we are or become a party to, the future impact of new accounting standards, our
ability to implement our dividend policy, the impact of changes in banking regulations and other regulatory changes in
India and other jurisdictions on us, the state of the global financial system and other systemic risks, the bond and loan
market conditions and availability of liquidity amongst the investor community in these markets, the nature of credit
spreads, interest spreads from time to time, including the possibility of increasing credit spreads or interest rates, our
ability to roll over our short-term funding sources and our exposure to credit, market and liquidity risks.
CREDIT RaTINgS
ICICI Bank’s credit ratings by various credit rating agencies at March 31, 2011 are given below:
agency
Moody’s Investor Service (Moody’s)
Standard & Poor’s (S&P)
Credit Analysis & Research Limited (CARE)
Investment Information and Credit Rating Agency (ICRA)
CRISIL Limited
Japan Credit Rating Agency (JCRA)
1. Senior foreign currency debt ratings.
PUBLIC RECOgNITION
The Bank received several awards during fiscal 2011 in India and abroad.
Rating
Baa21
BBB-1
CARE AAA
LAAA
AAA
BBB+1
•
•
•
•
•
•
•
•
•
•
•
•
“Most Trusted Brand“ among private sector banks in 2010 by Economic Times – Brand Equity Most Trusted
Brands and ranked 7th in the list of Top 50 service brands
Ranked 2nd in the “Most Respected Company Awards 2011” in financial services sector by Business World
Ranked 1st in the “Banking and Finance category “and 9th overall in the “2010 Best Companies To Work For” by
Business Today
“Best Financial Inclusion Initiative” and runner up for “Best Online Bank” ,”Best Use Of Business Intelligence”, and
“Technology Bank Of The Year” in the Banking Technology Awards 2010 by Indian Banks Association
Special Citation for the Fully Electronic Branch Service Channel at the Financial Insights Innovation Awards held
in conjunction with Asian Financial Services Congress
“Most Tech-friendly Bank Award” by Business World
Ranked 70th in the Brandirectory league tables of the “World’s most valuable brands” by The BrandFinance®
Banking 500
“Excellence in Remittance Business” (Worldwide), “Excellence in NRI Services” (Worldwide) and “Excellence in
Private Banking Business”(APAC) by World Finance
“Best Trade Finance Bank” and “Best Foreign Exchange Bank” (India) by Finance Asia Country Awards for Achievement
“Best Trade Finance Bank” (India), by Asset Triple A
“Best Trade Finance Bank” (South Asia) by Global Trade Review
“Best Banking Security System” by Asian Banker
Annual Report 2010-2011 43
Promoting Inclusive Growth
1. Background
For over five decades, the ICICI Group has partnered India in its economic growth and development. Promoting
inclusive growth has been a priority area for the Group from both a social and business perspective. We strive
to make a difference to our customers, to the society and to the nation’s development directly through our
products and services, as well as through our development initiatives and community outreach.
2.
ICICI Foundation for Inclusive Growth
ICICI Foundation for Inclusive Growth (ICICI Foundation) was founded by the ICICI Group in early 2008 to carry
forward and build upon its legacy of promoting inclusive growth. ICICI Foundation works with government
authorities and specialised grassroots organisations to support developmental work in identified focus areas. It
is committed to investing in long-term efforts to support inclusive growth through effective interventions. The
objective of the Foundation is articulated in its Mission Statement:
“To empower the poor to participate in and benefit from the Indian growth process through integrated action
in the fields of primary health, elementary education, financial inclusion and sustainable livelihood. This will be
achieved through active collaboration with the government and independent organisations.”
Areas of focus:
a) Primary health: ICICI Foundation works to strengthen public health delivery systems to improve the
health of mothers and children in the poorest communities across India in the states of Bihar, Jharkhand,
Chattisgarh, Odisha and Maharashtra. It strives to develop solutions to enable the government health
systems to become more effective. Some of the key interventions in the field of primary health are:
i. District Health Action Plans: In Bihar, ICICI Foundation has worked with Public Health Resource
Network and the National Health Systems Resource Centre to support preparation of District Health
Action Plans for the entire state for the third consecutive year. These plans enable proper assessment
of the healthcare required and the available resources so that the central government funding can be
allocated on an informed basis and focussed actions can be undertaken.
ii. Nutrition Security Programme: This initiative aims to improve nutrition of children aged between six
months and three years by enlisting and training the Mitanin (community health workers) to change
dietary practices and attitudes in communities. The programme has been undertaken in partnership
with the Chhattisgarh State Health Resource Centre in 23 blocks across 11 districts in Chhattisgarh. 9,000
Mitanins were trained in nutrition related issues. The intervention has resulted in improved enrolments
in the anganwadis for accessing healthcare and increase in the distribution of food supplements. The
household feeding practices have also improved through addition of locally available nurtritious food
to the diet.
iii. Maternal Nutrition Project: ICICI Foundation supports the Mumbai Maternal Nutrition Project, a
randomised controlled trial on mother and child health. The project is designed to empower women to
independently improve their, as well as, their children’s nutrition. The project succeeded in achieving
its target of enrolling more than a 1,000 pregnant women and documenting nearly 700 births. The
study tests the impact of enhancing micronutrient quality in women’s diets from before conception to
delivery, by examining women’s health, foetal growth and their children’s development.
iv. State Village Health Committee and Sahiyya Resource Centre: Under the National Rural Health
Mission (NRHM), Sahiyyas (community health workers) play a key role in linking their communities
with public health systems and act as agents for community mobilisation. The Jharkhand State Village
Health Committee and Sahiyya Resource Centre was created through an innovative partnership with
the Jharkhand state government, central government institutions and civil society organisations. It
facilitates the implementation of the Sahiyya and Village Health Committee programmes under the
NRHM. The centre has till date trained nearly 41,000 Sahiyyas.
44
v. Outpatient Health Care Project: ICICI Foundation is partnering with ICICI Lombard General Insurance
Company to design, part fund and implement the delivery of India’s first outpatient healthcare product
for low income households. The project will offer outpatient insurance and will complement the
Government of India’s national health insurance scheme for inpatient care, the Rashtriya Swasthya
Bima Yojana (RSBY). To begin with, this insurance product will be offered through a pilot project in Puri
district in Odisha and one district in Gujarat.
b) Elementary education: In the field of elementary education, ICICI Foundation seeks to improve the quality
of public education by strengthening the state and district-level institutional bodies. Some of the key
projects undertaken are:
i. Quality Education Programme: The Quality Education Programme is a collaborative initiative of ICICI
Foundation and its partner resource organisations – Digantar, Jaipur and Vidya Bhawan Society, Udaipur
– that supports government efforts to improve the quality of elementary education in Rajasthan’s Baran
district. The major objectives of the project were to strengthen Baran’s District Institute of Educational
Training (DIET), work with the Sarva Shiksha Abhyan (SSA) team to provide adequate academic support
in the district and support selected cluster resource centres to develop model schools. This initiative
targeted 125 master trainers, 4,000 teachers from the 1,498 government schools and 144,971 students.
The programme has helped in improvement in the quality of in-service training and classroom teaching
practices. The teacher and student attendance has also improved in the schools that were part of the
project.
ii. Consultative meeting to improve quality of education: ICICI Foundation organised a consultative
meeting to share its work, emerging strategies and long-term plans with various stakeholders at India
Habitat Centre, New Delhi. The meeting was attended by the Foundation’s long-standing partner
organisations, representatives of the Central Government and the State Governments with whom
the Foundation works or has plans to work, and independent experts and resource persons. The
deliberations helped ICICI Foundation in formulating its proposed state-wide interventions for quality
improvement in school education in Rajasthan and Odisha.
iii. State-wide programme for improvements in schools education and teacher training: In Odisha, ICICI
Foundation in partnership with the Government of Odisha, plans to launch a programme to improve the
practices of in-service (current teachers) and pre-service (trainee teachers) teacher training in the state.
The programme will build the professional capacity of teachers and educators, as well as strengthen
the state’s teacher performance management mechanism. ICICI Foundation will work with the state
education functionaries to facilitate reforms in line with 2005 National Curriculum Framework, including
updating curricula, developing teacher training material and designing research and academic support
material. The scope of this programme will cover the training of 300 master trainers who will train 4,500
teacher trainers who in turn will train 100,000 in-service teachers and 10,000 pre-service teachers.
In Rajasthan, based on the success of its Quality Education Programme, ICICI Foundation has been
invited by the Government of Rajasthan to work with the State Institute of Education Research and
Training (SIERT), to revamp the state’s teacher training curriculum. The proposed project seeks to
revise the pre-service teacher training curriculum, build professional capacity of teacher educators,
including the SIERT and DIET faculty and strengthen and improve co-ordination amongst the multi-tier
academic support structure. The programme will also develop one block (in one intervention district)
as an e-learning hub for supplementing in-service teachers’ training and work on development of all
schools in two blocks in two districts so that the schools can become compliant with the Right to
Education Act. The overall goal is to train 500 master trainers, 80-100 nodal head masters, 20,000
student teachers, 250 key resource persons and 210,000 in-service teachers, which will impact about 8
million students across the state.
Annual Report 2010-2011 45
Promoting Inclusive Growth
c) Access to finance: ICICI Foundation facilitates financial inclusion by supporting the development of new
models for delivering financial services viz. credit, savings, remittance and insurance to low-income
households. In addition to the ICICI Group’s direct work in the area of financial inclusion, ICICI Foundation
partners with ICICI Group companies to provide greater access to, and create awareness of finance in
communities where it has established health and education programmes.
d) Sustainable livelihoods: ICICI Foundation has broadened the scope of its work to include sustainable
livelihoods in order to address the urgent need for adequate training for rural youth. Skill development
training for the youth, particularly those below the poverty line, is required in order to make them employable
or equip them to become entrepreneurs. The Foundation has taken up the mandate to strengthen two Rural
Self-Employment Training Institutes (RSETIs) in Udaipur and Jodhpur engaged in providing training for
skill development. The Foundation will focus on providing training that is culturally relevant and locally in
demand, and where the input costs are low whereas the returns are relatively high and self-sustaining. It
will also facilitate supply chain, credit and marketing linkages, impart basic financial training and provide
placement support.
3. Serving communities in partnership with civil society
Besides grassroot level interventions undertaken by ICICI Foundation as mentioned above, the ICICI Group
companies also undertake certain other projects for the benefit of society, alongwith ICICI Foundation. These
include:
a) Read to Lead – Phase II: In Phase II of the Read to Lead programme, ICICI Bank has supported the
establishment of 63 libraries that will reach out to approximately 7,200 children in the rural areas of the
Jagdalpur block of Bastar district in Chhattisgarh. The programme includes building libraries, sourcing
books and conducting various interactive activities to make the library a dynamic centre for learning.
b)
ICICI Fellows: The ICICI Fellows programme, launched in November 2009, aims to create a cadre of socially
responsible leaders for India. The two-year programme includes experiential learning in rural or semi-
urban India, as well as management training and leadership development through personalised coaching
and mentorship. The first batch joined in August 2010 and are currently gaining first hand experience
through working with the partner NGOs.
c) Healthy Lokshakti: Through this initiative, ICICI Lombard works towards improving the health of mothers
and children (0-1 year) in Trimbak and Peint tribal blocks of Maharashtra, in partnership with government
healthcare systems. In order to reduce neo-natal and child mortality, it works to ensure that women receive
good healthcare during and after their pregnancy and medical assistance during delivery.
d) Muktangan Education Initiative: ICICI Securities supports the Mumbai-based NGO Doorstep School which
enriches the schooling experience of 1,265 socio-economically disadvantaged children and supports
enrollment and sustenance through activities such as reading promotion, study class, mental health
support and extracurricular activities. ICICI Securities also continues to support the Muktangan Education
Initiative, a partnership between the Paragon Charitable Trust and the Municipal Corporation of Greater
Mumbai. Muktangan seeks to provide affordable, community-based inclusive education to underprivileged
children.
e) Payroll giving: Since 2003, ICICI Bank has facilitated employee donations to social causes through GiveIndia.
Close to 6,000 employees participate in the payroll-giving programme.
f)
Employee volunteering: The “Changemakers” programme enables employees to contribute their time
and talent for social change. “ChangeMakers” at one of the teams of ICICI Bank delivered employability
and life-skills sessions to underprivileged youth enrolled in vocational training at Kherwadi Social Welfare
Association, an NGO.
46
g) Blood donation: In order to reduce the blood shortage in India, ICICI Foundation organised a blood
donation camp at ICICI Bank Towers in Mumbai together with State Blood Transfusion Council (SBTC), the
autonomous regulatory authority for blood banks in Maharashtra set up under the Ministry of Health. The
camp received an overwhelming response from the employees and the blood donated went to SBTC’s
premiere blood bank, Mahanagar Rakthpedhi (MR). MR provides safe blood and its components at the
least expensive price in Mumbai. This makes blood more accessible to people from all socio-economic
backgrounds. MR also regularly provides blood for free to 150 children with thalesemia and sickle cell
disease. SBTC issues every a donor card that makes them eligible for one free unit of blood in the state
within the next two years. The blood donation drive will now be extended across all offices of the ICICI
Group in India.
h) Speak for Smiles: Together with Toofles Foundation and CNBC-TV18, Speak for Smiles, an initiative where
young students get an opportunity to interact with business leaders and learn from their experiences was
launched. The events are aired on CNBC-TV18 and the proceeds generated by way of contribution from
ICICI Foundation are donated to an NGO, nominated by the leaders.
4.
Improving access to financial services
ICICI Bank has partnered with Unique Identification Authority of India (UIDAI) for a pilot in Hazaribagh, Jharkhand.
Under this pilot, enrollment and opening of Aadhar enabled bank accounts was undertaken and the testing of
transactions has been successfully completed. ICICI Bank and ICICI Foundation participated in RBI’s outreach
programme at Doba village in Jharkhand’s Lohardagga district. The outreach programme sought to raise
awareness about financial inclusion and banking opportunities available to people in rural areas. ICICI Bank has
formulated a financial literacy programme that educates customers on the basics of finance. The Bank conducted
finance-themed street plays in Jharkhand and will extend the programme to other parts of the country. ICICI
Bank has also been chosen by the Bill and Melinda Gates Foundation as one of the five international banks for
their “Gateway Financial Innovation for Savings” project to promote useful savings behaviour by poor.
ICICI Prudential Life Insurance Company (ICICI Life) provides micro-insurance to India’s low-income population,
as a part of a socially responsible business model. Its micro insurance product for people in rural areas, Sarv
Jana Suraksha, provides insurance for a minimal premium of only ` 50 per annum. ICICI Life has successfully
piloted a unique poverty-alleviation project in collaboration with the Micro Insurance Innovation Facility of the
International Labour Organization. The project reaches out to the tea workers in Assam. ICICI Prudential Life
has also set up and nurtured a Community Video Unit, JAWA at Dimakusi in Assam with Video Volunteer, an
NGO. The unit produced videos, conducted several screenings, campaigns and street plays, which educated
2,000 households on preventive measures against malaria, educated 45,000 workers on financial savings and
trained 45 tea workers on financial literacy who then conducted ten mass awareness campaigns covering 10,000
workers.
ICICI Lombard General Insurance Company (ICICI General) has partnered with several central and state
government ministries/agencies to offer insurance coverage under various schemes of the government.
Under the Rashtriya Swasthya Bima Yojana (RSBY), below poverty line workers in the unorganized
sector in Uttar Pradesh, Bihar, Odisha, Gujarat, Maharashtra, Haryana and Punjab have been covered
for health insurance. Biometric smart cards issued to each family capture biometric details of the family
and the beneficiaries can check the balance sum insured, family details, policy details and coverage at
any time during the policy period. ICICI General has also provided a unique health insurance product
for weavers and their families. Over 1.6 million families have been covered through this scheme.
A special policy to provide health insurance to women involved in silkworm cultivation and their families is also
operational. ICICI General is also working with a number of financial intermediaries to deliver weather insurance
solutions for farmers through Weather Based Crop Insurance Scheme (WBCIS). Till date, ICICI General has
insured close to 2.8 million hectares of land and 28 crop varieties through the WBCIS product.
Annual Report 2010-2011 47
Promoting Inclusive Growth
5. Clean technology initiatives
ICICI Bank’s Technology Finance Group (TFG) implements multilateral programmes on behalf of the Government
of India in the areas of collaborative research and development, energy, environment and healthcare. TFG’s
initiatives include efforts to attract and channel private financing into cleaner technologies, to create public-
private partnerships to mitigate greenhouse gas emissions through energy efficiency and to promote sustainable
development.
TFG assisted the introduction of environmental management codes (ISO 14000) in India. It supported clean coal
concepts like coal washeries and coal bed methane for the first time in India. TFG supported the development
of the first electric passenger car in India, currently being exported to several countries. It also supported the
introduction of municipal shared savings concept through the energy service company (ESCO) route, which
help save expenditure for street lighting and water pumping. Another significant initiative was the introduction
of green ratings for buildings (which helps save energy, water and emissions) through the establishment of
Confederation of Indian Industry’s Green Business Centre.
In fiscal 2011, TFG in collaboration with leading institutes, has assisted various projects in the areas of solar
energy, nuclear energy and drug discovery. This includes assistance to The Energy Resource Institute (TERI) for
its project to build capacities of select laboratories for promoting sustainable development in energy efficiency.
The laboratories would be equipped with capabilities for developing biomass energy systems, decentralised
electricity solutions, waste material characterisation and solar power systems. The laboratories will also promote
energy efficiency in the industry through various means including certification of solar lighting products.
48
Management’s Discussion & Analysis
BUSINESS ENVIRONMENT
The Bank’s financial condition, loan portfolio and results of operations have been and are in the future expected
to be influenced by economic and financial conditions in India as well as globally, developments affecting the
business activities of our corporate customers including increase in international commodity prices and regulatory
developments in the financial sector.
During fiscal 2011, the recovery in economic activity witnessed in fiscal 2010 was sustained. Gross Domestic Product
(GDP) increased by 8.6% during the first nine months of fiscal 2011, compared to a growth of 7.4% in the corresponding
period of fiscal 2010. In addition, growth was fairly broad-based across the agriculture, industry and services sectors.
Growth in the agriculture sector recovered to 5.7% during the first nine months of fiscal 2011 compared to 0.2% in
the corresponding period of fiscal 2010. The services sector continued to grow at over 9.0% during the year. Industrial
growth remained strong during the first half of fiscal 2011 with the Index of Industrial Production (IIP) recording an
average growth of over 10.0%. However, there was some moderation during the subsequent months, partly due to an
adverse base effect. During April 2010 to February 2011, total exports increased by 31.4% on a year-on-year basis. In
view of the continued momentum in economic activity, the Central Statistical Organisation has estimated GDP to grow
by 8.6% in fiscal 2011 compared to a growth of 8.0% in fiscal 2010.
Inflationary pressures continued to persist through fiscal 2011, with an increase in the latter part of the fiscal year due to
higher than anticipated rise in food and oil prices. Inflation, measured by the Wholesale Price Index (WPI), after declining
from a high of 11.0% in April 2010 to about 8.1% in November 2010 continued to remain at elevated levels of about
8.0% for the remaining part of the fiscal year. Inflationary pressures, though largely emanating from food and fuel prices,
became broad based as manufactured products inflation showed an increase from February 2011. In view of the above,
Reserve Bank of India (RBI) continued its policy tightening and liquidity management stance. During fiscal 2011, the
cash reserve ratio (CRR) was increased by 25 basis points from 5.75% to 6.00%, the repo rate by 175 basis points from
5.00% to 6.75%, and the reverse repo rate by 225 basis points from 3.50% to 5.75%. In its annual policy statement for
fiscal 2012, RBI further increased the repo rate by 50 basis points to 7.25% and set the reverse repo rate at 1.0% below
the repo rate. In addition, during certain periods, liquidity was also impacted by events such as the auction of telecom
spectrum and lower than anticipated government spending. Liquidity in the system continued to remain in deficit for a
large part of fiscal 2011, particularly in the second half of the fiscal year. Banks remained net borrowers from RBI under
the Liquidity Adjustment Facility (LAF) with average borrowings of about ` 640.00 billion on a daily basis between June
1, 2010 and March 31, 2011. The yields on 10 year government securities increased by about 17 basis points to 7.99% at
March 31, 2011 as compared to 7.82% at March 31, 2010. During the latter part of fiscal 2011, RBI initiated several
measures to ease systemic liquidity including decreasing the Statutory Liquidity Ratio (SLR) by 100 basis points from
25.0% to 24.0% in December 2010, providing additional liquidity support under the LAF window, operation of a
second LAF on a daily basis, and open market operations for purchase of government securities.
In response to tight systemic liquidity and the rising interest rate environment, scheduled commercial banks increased
their deposit rates for various maturities by 75-250 basis points between April 2010 and January 2011. The impact
of rising cost of funds for banks was also reflected in lending rates with banks increasing their base rates by 95-165
basis points during the year. Banking system credit growth, after remaining subdued during fiscal 2010 recovered in
fiscal 2011, following the improvement in economic activity. Non-food credit growth was 21.2% at March 25, 2011
on a year-on-year basis, compared to 17.1% at March 26, 2010. Based on sector-wise data, growth in non-food credit
on a year-on-year basis till February 25, 2011 was 22.8%, which was largely driven by growth in credit to industry at
26.5% and to the services sector at 24.2%. Within industry, loans to the infrastructure sector increased by 39.7% led
by power and telecommunications. During the year, there was also some recovery in growth in the personal loans
segment with a year-on-year increase of 16.2% at February 25, 2011. However, deposit growth lagged credit growth
in the system with total deposits increasing by 15.8% on a year-on-year basis at March 25, 2011 compared to 17.2%
at March 26, 2010. The slower growth in deposits was largely due to the decline in demand deposits by 1% on a year-
on-year basis at March 25, 2011 as compared to a growth of 23.4% at March 26, 2010.
Equity markets, while appreciating during fiscal 2011, continued to remain volatile as various events such as increased
inflationary concerns, the European sovereign debt crisis and political events in the Middle East and North Africa
impacted investor sentiments. On an overall basis, the benchmark equity index, the BSE Sensex, increased by 10.9%
from 17,528 at March 31, 2010 to 19,445 at March 31, 2011. Foreign institutional investment flows into India continued
to remain strong during the first ten months of the year before declining significantly during the last quarter of fiscal
2011. In addition, continued revival in external trade contributed to a surplus of US$ 11.0 billion in India’s balance of
Annual Report 2010-2011 49
Management’s Discussion & Analysis
payments during the nine months of fiscal 2011. The rupee appreciated by 1.1% against the US dollar from ` 45.14 per
US dollar at March 31, 2010 to ` 44.65 per US dollar at March 31, 2011.
Tight liquidity and the rising interest rate environment combined with the impact of regulatory changes, led to lower
mobilisation under savings and investment products during fiscal 2011. First year retail premium underwritten in the
life insurance sector decreased by 8.5% (on weighted received premium basis) to ` 503.68 billion in fiscal 2011 from
` 550.24 billion in fiscal 2010. The average assets under management of mutual funds decreased by 6.3% from `
7,475.25 billion in March 2010 to ` 7,005.38 billion in March 2011. However, gross premium of the non-life insurance
sector (excluding specialised insurance institutions) grew by 21.7% to ` 425.69 billion in fiscal 2011.
There were a number of key regulatory developments in the Indian financial sector during fiscal 2011:
•
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•
•
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•
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In December 2010, RBI imposed a regulatory ceiling on the loan-to-value ratio in respect of housing loans at 80%.
However, small value loans of less than ` 2.0 million were permitted to have a loan to value ratio not exceeding
90%. Further, the risk weight for residential loans of ` 7.5 million and above was set at 125% irrespective of the
loan to value ratio, as against the earlier mandated 100% for a loan to value ratio of above 75%. With respect to
loans outstanding under special housing loan products with lower interest rates in initial years, the standard asset
provisioning was increased from 0.4% to 2.0%.
In February 2011, RBI issued guidelines declassifying loans sanctioned to non-banking finance companies
(NBFCs) for on-lending to individuals and entities against gold jewellery as direct agriculture lending under priority
sector requirements. Similarly, investments made by banks in securitised assets originated by NBFCs, where the
underlying assets were loans against gold jewellery and purchase/assignment of gold loan portfolio from NBFCs
were also made ineligible for classification under agriculture sector lending.
RBI advised banks to henceforth not issue Tier-1 and Tier-2 capital instruments with step-up options so that these
instruments remain eligible for inclusion in the new definition of regulatory capital under the Basel III framework.
In the Union Budget for fiscal 2012, the government enhanced priority sector eligibility ceiling for housing loans for
dwelling units from ` 2.0 million to ` 2.5 million.
In May 2010, RBI permitted infrastructure NBFCs to avail of external commercial borrowings for on-lending to
the infrastructure sector. Further, in July 2010, guidelines were issued to permit take-out financing arrangement
through the external commercial borrowing route for refinancing of rupee loans availed for financing infrastructure
projects particularly in the areas of seaports, airports, roads and power. In the Union Budget for fiscal 2012, the
limit for investment by Foreign Institutional Investors (FIIs) in corporate bonds with residual maturity of over five
years issued by companies in infrastructure sector, was raised by US$ 20 billion, taking the limit to US$ 25 billion.
Further, it was also proposed to create special vehicles in the form of notified infrastructure debt funds with lower
withholding tax on their interest payments and tax exemptions on their incomes.
In August 2010, the RBI issued a discussion paper on entry of new banks in the private sector. In January 2011, RBI
also released a discussion paper on the presence of foreign banks in India.
In June 2010, the Insurance Regulatory and Development Authority (IRDA) introduced revisions to the regulations
governing unit linked insurance products such as increase in the lock-in period from three years to five years,
increase in minimum mortality cover, cap on surrender and other charges and minimum guaranteed return on
pension annuity products.
In March 2011, IRDA conducted an audit of the third party motor insurance pool and concluded that the
pool reserves needed to be enhanced significantly. Accordingly, IRDA stipulated that all general insurance
companies should increase these reserves based on a provisional loss ratio of 153% for the pool for all years
commencing from the year ended March 31, 2008, with the final loss ratio to be determined through a further
review in fiscal 2012.
Introduction of Base Rate system
Historically, interest rates on loans extended by banks were linked to the prime lending rate (PLR) of each bank. With
effect from July 1, 2010, RBI implemented a new base rate mechanism, requiring each bank to set and publicly disclose
its minimum rate or “Base Rate” for all new loans and advances and renewal of existing facilities, subject to certain
limited exceptions. While existing loans based on the Benchmark Prime Lending Rate (BPLR) system would continue
50
to be linked to BPLR till their maturity, the existing borrowers have an option to migrate to the Base Rate system
before the expiry of existing contracts on mutually agreed terms. Except certain categories of loans as specified by
RBI, banks are not allowed to lend below the Base Rate. Under the regulation, banks must review their base rates at
least once every quarter.
The Asset Liability Management Committee (ALCO) of the Bank at its meeting on June 30, 2010, set the Base Rate of
ICICI Bank, called “I-Base”, at 7.50% p.a. with effect from July 1, 2010. I-Base was increased by 175 basis points, in
four phases, the last such increase being to 9.25% p.a. with effect from May 7, 2011.
Change in Methodology for Computing Interest Payable on Savings Deposits
RBI had prescribed an interest rate of 3.50% on savings deposits and upto March 31, 2010 banks were required to pay
this interest on the minimum outstanding balance in a savings deposit account between the tenth day and the end of
the month. Effective April 1, 2010, RBI changed the methodology of computation of the interest payable and banks
were required to pay interest on the daily average balance maintained in a savings deposit account. The change in
methodology resulted in increase in cost of savings account deposits for banks. RBI has increased the interest rate on
savings account deposits to 4.00% with effect from May 3, 2011.
Amalgamation of The Bank of Rajasthan
On May 23, 2010, the Board of Directors of ICICI Bank and the Board of Directors of The Bank of Rajasthan Limited
(Bank of Rajasthan), an old private sector bank, at their respective meetings approved an all-stock amalgamation
of Bank of Rajasthan with ICICI Bank at a share exchange ratio of 25 shares of ICICI Bank for 118 shares of Bank of
Rajasthan. The shareholders of ICICI Bank and Bank of Rajasthan approved the scheme of amalgamation at their
respective extra-ordinary general meetings. RBI approved the scheme of amalgamation with effect from close of
business on August 12, 2010.
We have issued 31.3 million shares in August 2010 and 2.9 million shares in November 2010 to shareholders of Bank
of Rajasthan. The total assets of Bank of Rajasthan represented 4.0% of total assets of ICICI Bank at August 12, 2010.
At August 12, 2010, Bank of Rajasthan had total assets of ` 155.96 billion, deposits of ` 134.83 billion, loans of ` 65.28
billion and investments of ` 70.96 billion. It incurred a loss of ` 1.02 billion in fiscal 2010. The results for fiscal 2011
include results of Bank of Rajasthan for the period from August 13, 2010 to March 31, 2011. The assets and liabilities of
Bank of Rajasthan have been accounted at the values at which they were appearing in the books of Bank of Rajasthan
at August 12, 2010 and provisions were made for the difference between the book values appearing in the books of
Bank of Rajasthan and the fair value as determined by ICICI Bank.
The amalgamation was part of our strategy to expand our branch network with a view to growing our deposit base.
We believe that the combination of Bank of Rajasthan’s branch franchise with our strong capital base would enhance
the ability of the combined entity to capitalise on the growth opportunities in the Indian economy.
STANDALONE FINANCIALS AS PER INDIAN GAAP
Summary
During fiscal 2011, we focused on leveraging our rebalanced funding mix and strong capital position to grow our loan
portfolio, while substantially reducing our provisions for loan losses to improve our profitability.
Our profit after tax increased by 28.0% from ` 40.25 billion in fiscal 2010 to ` 51.51 billion in fiscal 2011. The increase
in profit after tax was mainly due to a 47.9% decrease in provisions and contingencies (excluding provisions for tax)
from ` 43.87 billion in fiscal 2010 to ` 22.87 billion in the fiscal 2011. The decrease in provisions and contingencies
(excluding provisions for tax) was primarily due to a reduction in provisions for retail non-performing loans, as
accretion to retail non-performing loans declined sharply in fiscal 2011. Net interest income increased by 11.1% from
` 81.14 billion in fiscal 2010 to ` 90.17 billion in fiscal 2011.
The decrease in provisions and contingencies and increase in net interest income was partly offset by an 11.1%
decrease in non-interest income from ` 74.78 billion in fiscal 2010 to ` 66.48 billion in fiscal 2011. The decrease in
non-interest income was primarily due to a decrease in income from treasury-related activities by ` 13.96 billion from
a gain of ` 11.81 billion in fiscal 2010 to a loss of ` 2.15 billion in fiscal 2011. The higher income from treasury-related
activities in fiscal 2010 included reversal of provision against credit derivatives due to softening of credit spreads and
Annual Report 2010-2011 51
Management’s Discussion & Analysis
higher realised profit on government securities and other fixed income positions. Fee income increased by 13.6% from
` 56.50 billion in fiscal 2010 to ` 64.19 billion in fiscal 2011.
In fiscal 2011, non-interest expenses increased by 12.9% from ` 58.60 billion in fiscal 2010 to ` 66.17 billion in fiscal 2011
primarily due to an increase in employee expenses partly offset by a decrease in other administrative expenses.
Total assets increased by 11.8% from ` 3,634.00 billion at March 31, 2010 to ` 4,062.34 billion at March 31, 2011. Total
deposits increased by 11.7% from ` 2,020.17 billion at March 31, 2010 to ` 2,256.02 billion at March 31, 2011. Current
and savings account (CASA) deposits increased by 20.7% from ` 842.16 billion at March 31, 2010 to ` 1,016.47 billion at
March 31, 2011 while term deposits increased marginally from ` 1,178.01 billion at March 31, 2010 to ` 1,239.55 billion
at March 31, 2011. The ratio of CASA deposits to total deposits increased from 41.7% at March 31, 2010 to 45.1% at
March 31, 2011. Total advances increased by 19.4% from ` 1,812.06 billion at March 31, 2010 to ` 2,163.66 billion at
March 31, 2011 primarily due to an increase in domestic corporate loans, overseas corporate loans and loans taken
over from Bank of Rajasthan. Net non-performing assets decreased by 37.0% from ` 39.01 billion at March 31, 2010
to ` 24.58 billion at March 31, 2011 and the net non-performing asset ratio decreased from 1.9% at March 31, 2010 to
0.9% at March 31, 2011.
We continued to expand our branch network in India. Our branch network in India increased from 1,707 branches and
extension counters at March 31, 2010 to 2,529 branches and extension counters at March 31, 2011. We also increased
our ATM network from 5,219 ATMs at March 31, 2010 to 6,104 ATMs at March 31, 2011. These include branches and
ATMs of Bank of Rajasthan.
The total capital adequacy ratio of ICICI Bank on a standalone basis at March 31, 2011 in accordance with the RBI
guidelines on Basel II was 19.5% with a tier I capital adequacy ratio of 13.2% compared to a total capital adequacy of
19.4% and tier I capital adequacy of 14.0% at March 31, 2010.
Operating results data
The following table sets forth, for the periods indicated, the operating results data.
` in billion, except percentages
Fiscal 2010
Fiscal 2011
% change
Interest income
Interest expense
Net interest income
Non-interest income
- Fee income1
- Treasury income
- Lease and other income
Operating income
Operating expenses
Direct marketing agency (DMA) expense2
Lease depreciation, net of lease equalisation
Operating profit
Provisions, net of write-backs
Profit before tax
Tax, net of deferred tax
Profit after tax
` 257.07
` 259.74
175.93
81.14
56.50
11.81
6.47
155.92
55.93
1.25
1.42
97.32
43.87
53.45
13.20
169.57
90.17
64.19
(2.15)
4.44
156.65
63.81
1.57
0.79
90.48
22.87
67.61
16.10
1.0%
(3.6)
11.1
13.6
-
(31.4)
0.5
14.1
25.6
(44.4)
(7.0)
(47.9)
26.5
22.0
` 40.25
` 51.51
28.0%
Includes merchant foreign exchange income and margin on customer derivative transactions.
1.
2. Represents commissions paid to DMAs for origination of retail loans. These commissions are expensed upfront.
3. All amounts have been rounded off to the nearest ` 10.0 million.
4. Prior period figures have been re-grouped/re-arranged, where necessary.
52
Key ratios
The following table sets forth, for the periods indicated, the key financial ratios.
Return on average equity (%)1
Return on average assets (%)2
Earnings per share (`)
Book value per share (`)
Fee to income (%)
Cost to income (%)3
Fiscal 2010
Fiscal 2011
7.9
1.1
36.14
463.01
36.6
37.0
9.6
1.3
45.27
478.31
41.2
41.9
1. Return on average equity is the ratio of the net profit after tax to the quarterly average equity share capital and reserves.
2. Return on average assets is the ratio of net profit after tax to average assets. The average balances are the averages of daily
balances, except averages of foreign branches which are calculated on a monthly basis till October 31, 2010 and on a fortnightly
basis thereafter.
3. Cost represents operating expense including DMA cost which is expensed upfront but excluding lease depreciation. Income
represents net interest income and non-interest income and is net of lease depreciation.
Net interest income and spread analysis
The following table sets forth, for the periods indicated, the net interest income and spread analysis.
Interest income
Interest expense
Net interest income
Average interest-earning assets1
Average interest-bearing liabilities1
Net interest margin
Average yield
Average cost of funds
Interest spread
` in billion, except percentages
Fiscal 2010
Fiscal 2011
% change
` 257.07
` 259.74
175.93
` 81.14
3,259.66
3,054.87
2.5%
7.9%
5.8%
2.1%
169.57
` 90.17
3,418.59
3,168.26
2.6%
7.6%
5.4%
2.2%
1.0%
(3.6)
11.1
4.9
3.7%
--
--
--
--
1. The average balances are the averages of daily balances, except averages of foreign branches which are calculated on monthly
basis till October 31, 2010 and on a fortnightly basis thereafter.
2. All amounts have been rounded off to the nearest ` 10.0 million.
Net interest income increased by 11.1% from ` 81.14 billion in fiscal 2010 to ` 90.17 billion in fiscal 2011 reflecting
an increase in net interest margin from 2.5% in fiscal 2010 to 2.6% in fiscal 2011 and a 4.9% increase in the average
volume of interest-earning assets.
Net interest margin increased from 2.5% in fiscal 2010 to 2.6% in fiscal 2011 primarily due to a decrease in cost of
deposits from 5.8% in fiscal 2010 to 4.9% in fiscal 2011, offset, in part by decrease in yield on interest-earning assets
from 7.9% in fiscal 2010 to 7.6% in fiscal 2011.
Annual Report 2010-2011 53
Management’s Discussion & Analysis
The following table sets forth, for the periods indicated, the trend in yield, cost, spread and margin.
Yield on interest-earning assets
- On advances
- On investments
- On SLR investments
- On other investments
- On other interest-earning assets
Cost of interest-bearing liabilities
- Cost of deposits
- Current and savings account (CASA) deposits
- Term deposits
- Cost of borrowings
Interest spread
Net interest margin
Fiscal 2010
Fiscal 2011
7.9%
7.6%
9.1
6.2
6.4
5.8
6.3
5.8
5.8
2.0
7.7
5.6
2.1
8.5
6.4
6.3
6.6
6.5
5.4
4.9
2.5
6.5
6.1
2.2
2.5%
2.6%
Yield on interest-earning assets decreased from 7.9% in fiscal 2010 to 7.6% in fiscal 2011 primarily due to a decrease
in yield on advances. The decrease in yield on advances was primarily due to a decrease in the proportion of the high-
yielding unsecured retail portfolio in total advances and decrease in yield on domestic non-retail advances reflecting
the declining trend in interest rates during fiscal 2010 which continued in the first half of fiscal 2011.
Yield on average interest-earning investments increased to 6.4% in fiscal 2011 compared to 6.2% in fiscal 2010
primarily due to an increase in yield on average interest-earning non-SLR investments, offset, in part, by a marginal
decrease in yield on average SLR investments. The yield on average interest-earning non-SLR investments increased
from 5.8% in fiscal 2010 to 6.6% in fiscal 2011, primarily due to an increase in investment in higher-yielding credit
substitutes like corporate bonds and debentures, certificate of deposits and commercial paper.
Interest income also includes interest on income tax refund of ` 1.65 billion in fiscal 2011 compared to ` 1.21 billion in
fiscal 2010. The receipt, amount and timing of such income depends on the nature and timing of determinations by tax
authorities and is not consistent or predictable.
RBI increased the CRR by 75 basis points to 5.75% in February 2010 and further by 25 basis points to 6.00% effective
April 24, 2010. As CRR balances do not earn any interest income, these increases had a negative impact on yield on
interest-earning assets in fiscal 2011. During fiscal 2011, interest income was also impacted by losses on securitised
pools of assets (including credit losses on pools securitised in earlier years) of ` 5.49 billion as compared to ` 5.09
billion in fiscal 2010.
The cost of funds decreased from 5.8% in fiscal 2010 to 5.4% in fiscal 2011 primarily due to decrease in cost of
deposits, offset, in part by an increase in cost of borrowings.
The decrease in cost of deposits in fiscal 2011 as compared to fiscal 2010 was due to the higher proportion of low-
cost current and savings deposits and reduction in cost of term deposits. The proportion of current and savings
accounts deposits to total deposits increased from 41.7% at March 31, 2010 to 45.1% at March 31, 2011. Cost of
term deposits decreased from 7.7% in fiscal 2010 to 6.5% in fiscal 2011. The cost of savings deposits increased due
to RBI guidelines requiring banks to pay interest on the daily average balances in savings account deposits. Cost of
borrowings increased from 5.6% in fiscal 2010 to 6.1% in fiscal 2011 primarily on account of an increase in cost of call
and term borrowings and bond borrowings.
Interest rates moved up significantly during fiscal 2011, especially in the second half of the year. In response to tight
systemic liquidity and the rising interest rate environment, scheduled commercial banks increased their deposit rates
for various maturities. The full impact of increase in deposit rates will reflect in fiscal 2012. The increase in deposit rates
also reflected in an increase in lending rates in the banking system. During the year, we increased the base rate (I-Base)
from 7.50% at July 1, 2010 to 8.75% at March 31, 2011 and further to 9.25%, with effect from May 7, 2011.
54
The following table sets forth, for the period indicated, the trend in average interest-earning assets and average
interest-bearing liabilities:
Advances
Interest-earning investments
Other interest-earning assets
Total interest-earning assets
Deposits
Borrowings3
` in billion, except percentages
Fiscal 2010
Fiscal 2011
% change
` 1,915.39
` 1,926.52
1,046.05
298.22
3,259.66
1,970.60
1,084.27
1,237.42
254.65
3,418.59
2,046.04
1,122.23
0.6%
18.3
(14.6)
4.9
3.8
3.5
Total interest-bearing liabilities
` 3,054.87
` 3,168.26
3.7%
1. Average investments and average borrowings include average short-term re-purchase transactions.
2. Average balances are the averages of daily balances, except averages of foreign branches which are calculated on a monthly
basis till October 31, 2010 and on a fortnightly basis thereafter.
3. Borrowings exclude preference share capital.
The average volume of interest-earning assets increased by 4.9% from ` 3,259.66 billion in fiscal 2010 to ` 3,418.59
billion in fiscal 2011. The increase in average interest-earning assets was primarily on account of an increase in average
interest-earning investments by ` 191.37 billion.
Average interest-earning investments increased by 18.3% from ` 1,046.05 billion in fiscal 2010 to ` 1,237.42 billion
in fiscal 2011, primarily due to an increase in average interest-earning non-SLR investments by 45.4% from ` 313.21
billion in fiscal 2010 to ` 455.34 billion in fiscal 2011. Average SLR investments increased by 6.7% from ` 732.84 billion
in fiscal 2010 to ` 782.07 billion in fiscal 2011. Interest-earning non-SLR investments primarily include investments in
corporate bonds and debentures, certificates of deposits, commercial paper, Rural Infrastructure Development Fund
(RIDF) and other related investments and investments in liquid mutual funds to deploy excess liquidity.
Average advances increased marginally from ` 1,915.39 billion in fiscal 2010 to ` 1,926.52 billion in fiscal 2011 which
includes advances taken over from Bank of Rajasthan. Retail advances increased by 5.8% from ` 790.62 billion at
March 31, 2010 to ` 836.75 billion at March 31, 2011. In US dollar terms, the net advances of overseas branches
increased by 22.8% from US$ 10.1 billion at March 31, 2010 to US$ 12.4 billion at March 31, 2011. In rupee terms, the
net advances of overseas branches increased by 22.1% from ` 451.37 billion at March 31, 2010 to ` 550.97 billion at
March 31, 2011.
Average interest-bearing liabilities increased by 3.7% from ` 3,054.87 billion in fiscal 2010 to ` 3,168.26 billion in
fiscal 2011 on account of increase of ` 75.44 billion in average deposits and an increase of ` 37.96 billion in average
borrowings. The increase in average deposits was primarily due to increase in average CASA deposits. The ratio of
average CASA deposits to average deposits increased from about 32.5% in fiscal 2010 to about 39.1% in fiscal 2011.
The increase in average borrowings was due to an increase in average capital eligible borrowings, in the nature of
subordinated debt, by ` 64.66 billion.
Non-interest income
The following tables set forth, for the periods indicated, the principal components of non-interest income.
Fee income1
Income from treasury-related activities
Lease and other income
Total other income
` in billion, except percentages
Fiscal 2010
Fiscal 2011
% change
` 56.50
11.81
6.47
` 74.78
` 64.19
(2.15)
4.44
` 66.48
13.6%
-
(31.4)
(11.1)%
1.
Includes merchant foreign exchange income and income on customer derivative transactions.
Annual Report 2010-2011 55
Management’s Discussion & Analysis
Non-interest income primarily includes fee and commission income, income from treasury-related activities and lease
and other income. During fiscal 2011, the decrease in non-interest income was primarily on account of a decrease in
income from treasury-related activities. During fiscal 2011, there was an increase in fee income and income by way of
dividends included in lease and other income. Overall there was a net decrease in non-interest income by 11.1% from
` 74.78 billion in fiscal 2010 to ` 66.48 billion in fiscal 2011.
Fee income
Fee income primarily includes fees from corporate clients such as loan processing fees, transaction banking fees and
structuring fees and fees from retail customers such as loan processing fees, fees from credit cards business, account
service charges and third party referral fees. Fee income increased from ` 56.50 billion in fiscal 2010 to ` 64.19 billion
in fiscal 2011 primarily due to an increase in corporate fees, offset, in part, by decline in retail fees. Higher credit
demand and increased business activity in the corporate sector due to economic recovery resulted in an increase in
loan processing fees and transaction banking related fees from corporate clients.
Income from foreign exchange transactions with clients and from margins on derivatives transactions with clients
increased by 17.3% from ` 6.78 billion in fiscal 2010 to ` 7.95 billion in fiscal 2011.
Profit/(loss) on treasury-related activities (net)
Income from treasury-related activities includes income from sale of investments and revaluation of investments
on account of changes in unrealised profit/(loss) in the fixed income, equity and preference share portfolio, units of
venture funds and security receipts.
Profit on treasury-related activities decreased from a gain of ` 11.81 billion in fiscal 2010 to a loss of ` 2.15 billion in
fiscal 2011. Treasury income for fiscal 2011 primarily includes loss on investments in government of India securities
and loss on security receipts, offset, in part, by gains on equity investments. The higher income from treasury-related
activities in fiscal 2010 included reversal of provision against credit derivatives due to softening of credit spreads,
higher profit on government of India securities and other fixed income instruments and in equity investments offset,
in part, by a loss on mark-to-market/realised loss on security receipts.
During fiscal 2010, we had capitalised on certain market opportunities to realise gains from sale of our government
and other domestic fixed income positions. During fiscal 2011, the government securities portfolio was impacted by
increase in interest rates which resulted in a loss for fiscal 2011 as compared to gains in fiscal 2010.
The equity markets remained volatile due to global and domestic developments including the political unrest in the
Middle East and concerns on global recovery due to possible impact on crude oil prices, and continued high levels of
inflation in India and resultant monetary tightening. These factors impacted market sentiment resulting in decline in
realised/unrealised profit on equity investments for fiscal 2011 as compared to fiscal 2010.
During fiscal 2010, softening of credit spreads had resulted in reversal of provision held against the credit derivatives
portfolio amounting to ` 3.97 billion. During fiscal 2011, there was a profit on credit derivatives portfolio amounting
to ` 0.15 billion.
At March 31, 2011, we had an outstanding net investment of ` 28.31 billion in security receipts issued by asset
reconstruction companies in relation to sale of non-performing assets. At the end of each reporting period, security
receipts issued by asset reconstruction companies are valued as per net asset value obtained from the asset
reconstruction company from time to time. During fiscal 2011, the impact of these security receipts on the income
from treasury-related activities was a loss of ` 2.31 billion compared to a loss of ` 2.12 billion in fiscal 2010.
Lease and other income
Lease and other income primarily includes dividend from subsidiaries, lease rentals and profit on sale of fixed assets.
Lease and other income decreased from ` 6.47 billion in fiscal 2010 to ` 4.44 billion in fiscal 2011. During fiscal 2010, the
Bank and First Data, a global leader in electronic commerce and payment services, formed a merchant acquiring alliance
and a new entity, 81.0% owned by First Data. This entity acquired ICICI Bank’s merchant acquiring operations through
transfer of assets, primarily comprising fixed assets, receivables and payables, and assumption of liabilities, for a total
consideration of ` 3.74 billion. We realised a profit of ` 2.03 billion from this transaction in fiscal 2010.
56
Non-interest expense
The following chart depicts the trends in cost to average assets over the last three years.
Cost / average assets
2.0%
1.8%
1.5%
1.3%
Fiscal 2009
Fiscal 2010
Fiscal 2011
The following table sets forth, for the periods indicated, the principal components of non-interest expense.
` in billion, except percentages
Fiscal 2010
Fiscal 2011
% change
Payments to and provisions for employees
` 19.26
` 28.17
46.3%
Depreciation on own property (including non banking assets)
Other administrative expenses
Total non-interest expense (excluding lease depreciation and
direct marketing agency expenses)
Depreciation (net of lease equalisation) on leased assets
Direct marketing agency expenses
Total non-interest expense
4.78
31.89
55.93
1.42
1.25
4.84
30.80
63.81
0.79
1.57
` 58.60
` 66.17
1.3
(3.4)
14.1
(44.4)
25.6
12.9%
Non-interest expenses primarily include employee expenses, depreciation on assets, direct marketing agency
expenses and other administrative expenses. In fiscal 2011, non-interest expenses increased by 12.9% from ` 58.60
billion in fiscal 2010 to ` 66.17 billion in fiscal 2011 primarily due to an increase in employee expenses partly offset by
a decrease in other administrative expenses and a decrease in depreciation on leased assets.
Payments to and provisions for employees
Employee expenses increased by 46.3% from ` 19.26 billion in fiscal 2010 to ` 28.17 billion in fiscal 2011. Employee
expenses increased primarily due to addition of employees of Bank of Rajasthan, annual increase in salaries and
provision for payment of performance bonus and performance-linked retention pay during the period and increase in
the employee base, including sales executives, employees on fixed term contracts and interns, from 41,068 employees
at March 31, 2010 to 56,969 employees at March 31, 2011 (including employees of Bank of Rajasthan).
Depreciation
Depreciation on owned property increased by 1.3% from ` 4.78 billion in fiscal 2010 to ` 4.84 billion in fiscal 2011
primarily due to increase in the branch and ATM network and capitalisation of the Bank’s new building in Hyderabad,
offset, in part, by sale of assets of merchant acquiring operations and other properties. Depreciation on leased assets
decreased from ` 1.42 billion in fiscal 2010 to ` 0.79 billion in fiscal 2011 due to a reduction in leased assets.
Other administrative expenses
Other administrative expenses primarily include rent, taxes and lighting, advertisement and publicity, repairs and
maintenance and other expenditure. Other operating expenses decreased by 3.4% from ` 31.89 billion in fiscal 2010 to
` 30.80 billion in fiscal 2011. The decrease in other operating expenses was primarily due to our overall cost reduction
Annual Report 2010-2011 57
Management’s Discussion & Analysis
initiatives. There was a reduction in retail business expenses, law charges and expenses on account of postage
and communication expenses in fiscal 2011 which was partly offset by an increase in rent, taxes and lighting and
repairs and maintenance expenses due to an increase in our branch and ATM network. The number of branches and
extension counters (excluding foreign branches and offshore banking units) increased from 1,707 at March 31, 2010
to 2,529 at March 31, 2011. We also increased our ATM network from 5,219 ATMs at March 31, 2010 to 6,104 ATMs at
March 31, 2011. These figures include branches and ATMs of Bank of Rajasthan.
Direct marketing agency expenses
Direct marketing agency expenses increased from ` 1.25 billion in fiscal 2010 to ` 1.57 billion in fiscal 2011. The increase
in direct marketing expenses was primarily due to higher retail loan disbursements. We use marketing agents, called
direct marketing agents or associates, for sourcing our retail assets. We include commissions paid to these direct
marketing agents in non-interest expense. In line with the RBI guidelines, these commissions are expensed upfront
and not amortised over the life of the loan.
Provisions and contingencies (excluding provisions for tax)
The following tables set forth, for the periods indicated, the components of provisions and contingencies.
` in billion, except percentages
Fiscal 2010
Fiscal 2011
% change
Provision for investments (including credit substitutes) (net)
` (0.03)
Provision for non-performing and other assets1
Provision for standard assets
Others
43.62
-
0.28
-
(54.7)%
` 2.04
19.77
-
1.06
Total provisions and contingencies (excluding provisions for tax)
` 43.87
` 22.87
(47.9)%
1.
Includes restructuring related provision.
Provisions are made by us on standard, sub-standard and doubtful assets at rates prescribed by RBI. Loss assets and
unsecured portions of doubtful assets are provided/written off as required by extant RBI guidelines. Subject to the
minimum provisioning levels prescribed by RBI, provisions on retail non-performing loans are made at the borrower
level in accordance with our retail assets provisioning policy. The specific provisions on retail loans held by us are
higher than the minimum regulatory requirement.
Provisions and contingencies (excluding provisions for tax) decreased by 47.9% from ` 43.87 billion in fiscal 2010 to
` 22.87 billion in fiscal 2011 primarily due to a reduction in provisions for retail non-performing loans. The reduction
in provision against retail non-performing loans was primarily due to a sharp reduction in accretion to retail non-
performing loans in fiscal 2011.
In the second quarter review of monetary policy for fiscal 2010, RBI directed banks to ensure that their total provisioning
coverage ratio was not less than 70% by end-September 2010. On December 1, 2009, RBI issued detailed guidelines
on provisioning coverage for advances by banks. In March 2010, RBI permitted us to reach the stipulated provisioning
coverage ratio of 70% in a phased manner by March 2011. Our provisioning coverage ratio at March 31, 2011 computed
as per the above mentioned RBI guidelines was 76.0%.
No additional general provision was required on standard assets during fiscal 2011. RBI guidelines do not permit write-
back of excess provisions already made and therefore we held a cumulative general provision of ` 14.80 billion at
March 31, 2011 compared to the general provision requirement as per the revised guidelines of about ` 10.86 billion.
Tax expense
The income tax expense (including wealth tax) increased by 22.0% from ` 13.20 billion in fiscal 2010 to ` 16.10 billion
in fiscal 2011. The effective tax rate of 23.8% in fiscal 2011 was lower compared to the effective tax rate of 24.7% in
fiscal 2010 primarily due to change in mix of taxable profits with a higher component of exempt income in the current
fiscal year and tax benefits from the amalgamation of Bank of Rajasthan.
58
Financial Condition
Assets
The following table sets forth, at the dates indicated, the principal components of assets.
` in billion, except percentages
At March 31, 2010
At March 31, 2011
% change
Assets
Cash and bank balances
Investments
- SLR investments1
- RIDF and other related investments2
- Equity investment in subsidiaries
- Other investments
Advances
- Domestic
- Overseas
Fixed assets (including leased assets)
Other assets
Total Assets
` 388.73
1,208.93
684.04
101.10
122.00
301.79
1,812.06
1,360.69
451.37
32.13
192.15
` 340.90
1,346.86
641.61
150.80
124.53
429.92
2,163.66
1,612.69
550.97
47.44
163.48
` 3,634.00
` 4,062.34
(12.3)%
11.4
(6.2)
49.2
2.1
42.5
19.4
18.5
22.1
47.7
(14.9)
11.8%
1. Government and other approved securities qualifying for SLR. Banks in India are required to maintain a specified percentage,
currently 24.0%, of their net demand and time liabilities by way of liquid assets like cash, gold or approved unencumbered
securities.
Investments made in RIDF and other such entities in lieu of shortfall in the amount required to be lent to certain specified sectors
called priority sector as per RBI guidelines.
2.
3. All amounts have been rounded off to the nearest ` 10.0 million.
The total assets increased by 11.8% from ` 3,634.00 billion at March 31, 2010 to ` 4,062.34 billion at March 31,
2011 (including ` 155.96 billion of Bank of Rajasthan at August 12, 2010), primarily due to increase in investments
and advances. Investments increased by 11.4% from ` 1,208.93 billion at March 31, 2010 to ` 1,346.86 billion at
March 31, 2011. The net advances increased by 19.4% from ` 1,812.06 billion at March 31, 2010 to ` 2,163.66 billion
at March 31, 2011.
Cash and cash equivalents
Cash and cash equivalents include cash in hand and balances with RBI and other banks, including money at call
and short notice. Cash and cash equivalents decreased from ` 388.73 billion at March 31, 2010 to ` 340.90 billion at
March 31, 2011. The decrease was primarily due to a decrease in balances with RBI from ` 241.73 billion at March 31,
2010 to ` 171.23 billion at March 31, 2011 due to higher than stipulated CRR balance maintained at March 31, 2010.
Investments
Total investments increased by 11.4% from ` 1,208.93 billion at March 31, 2010 to ` 1,346.86 billion at March 31,
2011 (including ` 70.96 billion of Bank of Rajasthan at August 12, 2010), primarily due to an increase in investment
in corporate bonds and debentures by ` 125.1 1 billion, RIDF and other related investments in lieu of shortfall in
directed lending requirements by ` 49.70 billion (including ` 21.34 billion of Bank of Rajasthan at August 12, 2010)
and investments in commercial paper and certificate of deposits by ` 31.21 billion. The investment in pass-through
certificates decreased by ` 15.93 billion at March 31, 2011 compared to March 31, 2010. At March 31, 2011, we had
an outstanding net investment of ` 28.31 billion in security receipts issued by asset reconstruction companies in
relation to sale of non-performing assets compared to ` 33.94 billion at March 31, 2010. At March 31, 2011, we had a
gross portfolio of funded credit derivatives of ` 10.60 billion and non-funded credit derivatives of ` 28.17 billion, which
includes ` 0.22 billion as protection bought by us.
Advances
Net advances increased by 19.4% from ` 1,812.06 billion at March 31, 2010 to ` 2,163.66 billion at March 31, 2011
primarily due to increase in domestic corporate loans, overseas corporate loans and loans taken over from Bank of
Rajasthan amounting to ` 65.28 billion at August 12, 2010. Net retail advances increased by 5.8% from ` 790.62 billion
at March 31, 2010 to ` 836.75 billion at March 31, 2011. In rupee terms, net advances of overseas branches (including
offshore banking unit) increased by 22.1% from ` 451.37 billion at March 31, 2010 to ` 550.97 billion at March 31, 2011.
Annual Report 2010-2011 59
Management’s Discussion & Analysis
Fixed and other assets
Fixed assets increased by 47.7% from ` 32.13 billion at March 31, 2010 to ` 47.44 billion at March 31, 2011 (including
` 5.15 billion of Bank of Rajasthan at August 12, 2010) primarily due to part capitalisation of the Bank’s new building
in Hyderabad and increase in the branch network and other offices. Other assets decreased by 14.9% from ` 192.15
billion at March 31, 2010 to ` 163.48 billion at March 31, 2011.
Liabilities
The following table sets forth, at the dates indicated, the principal components of liabilities (including capital and reserves).
` in billion, except percentages
Liabilities
Equity share capital
Reserves
Deposits
- Savings deposits
- Current deposits
- Term deposits
Borrowings (excluding sub-ordinated debt and preference
share capital)
- Domestic
- Overseas
Subordinated debt (included in Tier-1 and Tier-2 capital)1
- Domestic1
- Overseas
Preference share capital
Other liabilities
Total liabilities
At March 31, 2010
At March 31, 2011 % change
11.15
505.03
2,020.17
532.18
309.98
1,178.01
609.47
140.21
469.26
329.672
314.472
15.20
3.50
155.01
11.52
539.39
2,256.02
668.69
347.78
1,239.55
728.13
192.75
535.38
363.91
348.80
15.11
3.50
159.87
3.3
6.8
11.7
25.7
12.2
5.2
19.5
37.5
14.1
10.4
10.9
(0.6)
-
3.1
` 3,634.00
` 4,062.34
11.8%
Included in Schedule 4 - “Borrowings” of the balance sheet.
Includes application money of ` 25.00 billion received towards subordinated debt issued on April 5, 2010.
1.
2.
3. All amounts have been rounded off to the nearest ` 10.0 million.
Total liabilities (including capital and reserves) increased by 11.8% from ` 3,634.00 billion at March 31, 2010 to
` 4,062.34 billion at March 31, 2011 (including ` 155.96 billion of Bank of Rajasthan at August 12, 2010), primarily due
to an increase in deposits and borrowings. Deposits increased from ` 2,020.17 billion at March 31, 2010 to ` 2,256.02
billion at March 31, 2011.
Deposits
The following chart depicts the trends in current and savings account deposits over the last three years.
` billion
1200.00
1000.00
800.00
600.00
400.00
200.00
60
CASA Deposits
41.7%
45.1%
28.7%
March 2009
March 2010
March 2011
Deposits increased by 11.7% from ` 2,020.17 billion at March 31, 2010 to ` 2,256.02 billion at March 31, 2011
(including ` 134.83 billion of Bank of Rajasthan at August 12, 2010). Term deposits increased from ` 1,178.01 billion
at March 31, 2010 to ` 1,239.55 billion at March 31, 2011 (including ` 88.02 billion of Bank of Rajasthan at August 12,
2010), while savings deposits increased from ` 532.18 billion at March 31, 2010 to ` 668.69 billion at March 31, 2011
(including ` 34.48 billion of Bank of Rajasthan at August 12, 2010) and current deposits increased from ` 309.98 billion at
March 31, 2010 to ` 347.78 billion at March 31, 2011 (including ` 12.32 billion of Bank of Rajasthan at August 12,
2010). Total deposits at March 31, 2011 formed 67.4% of the funding (i.e. deposits and borrowings, other
than preference share capital). During fiscal 2010 and fiscal 2011, we focussed on our strategy of increasing
the share of current and savings account deposits in total deposits and re-balancing our funding mix. The
current and savings account deposits increased from ` 842.16 billion at March 31, 2010 to ` 1,016.47 billion at
March 31, 2011 (including ` 46.80 billion of Bank of Rajasthan at August 12, 2010) and the ratio of current and
savings account deposits to total deposits increased from 41.7% at March 31, 2010 to 45.1% at March 31, 2011.
Borrowings (including sub-ordinated debt and preference share capital)
Borrowings increased by 16.2% from ` 942.64 billion at March 31, 2010 to ` 1,095.54 billion at March 31, 2011
primarily due to an increase in call and term borrowings and an increase in capital-eligible borrowings in the nature of
sub-ordinated debt. The capital-eligible borrowings in the nature of sub-ordinated debt increased to ` 363.91 billion
at March 31, 2011 compared to ` 329.67 billion at March 31, 2010. RBI issued guidelines, effective April 1, 2010,
which require market repurchase transactions (previously accounted for as sale and repurchase) to be accounted
for as borrowing and lending. The transactions with RBI under LAF which are accounted for as sale and purchase
transactions.
Equity share capital and reserves
Equity share capital and reserves increased from ` 516.18 billion at March 31, 2010 to ` 550.91 billion at March 31,
2011 (including statutory reserve of ` 2.00 billion taken over from Bank of Rajasthan at August 12, 2010) primarily
due to allotment of shares to the shareholders of Bank of Rajasthan and annual accretion to reserves out of profit.
Excess of paid-up value of equity shares issued over the fair value of the net assets acquired in the amalgamation
and amalgamation expenses, amounting to ` 2.10 billion have been adjusted against the securities premium account.
Off balance sheet items, commitments and contingencies
The following table sets forth, for the periods indicated, the principal components of contingent liabilities.
Claims against the Bank, not acknowledged as debts
Liability for partly paid investments
` in billion
March 31, 2010 March 31, 2011
` 33.57
0.13
` 17.02
0.13
Notional principal amount of outstanding forward exchange contracts
1,660.69
2,468.62
Guarantees given on behalf of constituents
Acceptances, endorsements and other obligations
Notional principal amount of currency swaps
Notional principal amount of Interest rate swaps and currency options
Other items for which the Bank is contingently liable
Total
618.36
321.22
524.79
4,012.14
99.94
826.27
393.34
561.28
4,903.90
60.66
` 7,270.84
` 9,231.22
We enter into foreign exchange forwards, options, swaps and other derivative products to enable customers to
transfer, modify or reduce their foreign exchange and interest rate risk and to manage our own interest rate and foreign
exchange positions. We manage our foreign exchange and interest rate risk with reference to limits set by RBI as well
as those set internally. An interest rate swap does not entail exchange of notional principal and the cash flow arises
on account of the difference between interest rate pay and receive legs of the swaps which is generally much smaller
than the notional principal of the swap. With respect to the transactions entered into with customers, we generally
enter into off-setting transactions in the inter-bank market. This results in generation of a higher number of outstanding
transactions and hence a large value of gross notional principal of the portfolio, while the net market risk is low. For
example, if a transaction entered into with a customer is covered by an exactly opposite transaction entered into with
counter-party, the net market risk of the two transactions will be zero whereas the notional principal which is reflected
as an off-balance sheet item will be the sum of both the transactions.
Annual Report 2010-2011 61
Management’s Discussion & Analysis
As a part of project financing and commercial banking activities, we have issued guarantees to support regular business
activities of clients. These generally represent irrevocable assurances that we will make payments in the event that the
customer fails to fulfill its financial or performance obligations. Financial guarantees are obligations to pay a third party
beneficiary where a customer fails to make payment towards a specified financial obligation. Performance guarantees
are obligations to pay a third party beneficiary where a customer fails to perform a non-financial contractual obligation.
The guarantees are generally for a period not exceeding ten years The credit risks associated with these products, as
well as the operating risks, are similar to those relating to other types of financial instruments. In majority of the cases,
we have collateral available to reimburse potential losses on the guarantees. Cash margins available to reimburse
losses realised under guarantees amounted to ` 24.39 billion at March 31, 2011 and ` 17.69 billion at March 31, 2010.
Other property or security may also be available to us to cover losses under guarantees.
The table below sets forth, for the periods indicated, the principal components of guarantees.
Financial guarantees
Performance guarantees
Total guarantees
1. Outstanding is net of cash margin.
At March 31, 2010 At March 31, 2011 % change
` in billion, except percentages
` 159.79
458.57
` 618.36
` 230.27
44.1%
596.00
30.0
` 826.27
33.6%
At March 31, 2011, total guarantees amounted to ` 826.27 billion comprising ` 230.27 billion of financial guarantees
and ` 596.00 billion of performance guarantees.
Claims against the Bank, not acknowledged as debts represents demands made in certain tax and legal matters against
the Bank in the normal course of business. In accordance with our accounting policy and Accounting Standard 29,
we have reviewed the demands and classified such disputed tax issues as possible obligation based on legal opinion/
judicial precedents. No provision in excess of provisions already made in the financial statements is considered
necessary.
We are obligated under a number of capital contracts. Capital contracts are job orders of a capital nature, which have
been committed. Estimated amounts of contracts remaining to be executed on capital account in domestic operations
aggregated to ` 3.58 billion at March 31, 2011 compared to ` 5.28 billion at March 31, 2010 primarily on account of
new branches and capitalisation of the Bank’s new building in Hyderabad.
Capital Resources
We actively manage our capital to meet regulatory norms and current and future business needs considering the risks
in our businesses, expectations of rating agencies, shareholders and investors and the available options for raising
capital. Our capital management framework is administered by the Finance Group and the Risk Management Group
under the supervision of the Board and the Risk Committee. The capital adequacy position and assessment is reported
to the Board and the Risk Committee periodically.
Regulatory capital
We are subject to the Basel II capital adequacy guidelines stipulated by RBI with effect from March 31, 2008. RBI
guidelines on Basel II require us to maintain a minimum capital to risk-weighted assets ratio of 9.0% and a minimum
Tier-1 capital adequacy ratio of 6.0% on an ongoing basis. Under Pillar 1 of the RBI guidelines on Basel II, we follow
the Standardised approach for measurement of credit and market risks and Basic Indicator approach for measurement
of operational risk.
RBI has also stipulated that banks shall maintain capital at higher of the minimum capital required as per Basel II or
80% of the minimum capital required as per Basel I. At March 31, 2011, the prudential floor at 80% of the minimum
capital requirement under Basel I was ` 283.84 billion and was lower than the minimum capital requirement of ` 307.35
billion under Basel II. Hence, we have maintained capital adequacy at March 31, 2011 as per the Basel II norms.
62
The following table sets forth, at the dates indicated, the capital adequacy ratios computed in accordance with the RBI
guidelines on Basel I and Basel II.
Tier-I capital
Tier-II capital
Total capital
Credit Risk — Risk Weighted Assets (RWA)
Market Risk — RWA
Operational Risk — RWA
Total RWA
Total capital adequacy ratio
Tier-I capital adequacy ratio
Tier-II capital adequacy ratio
` in billion
As per RBI
guidelines on Basel I
As per RBI
guidelines on Basel II
At March 31,
2010
At March 31,
2011
At March 31,
2010
At March 31,
2011
` 432.61
` 463.99
` 410.62
` 449.75
181.57
231.00
694.99
160.41
571.03
217.50
667.25
614.18
2,899.15
309.28
--
3,389.35
2,485.59
2,909.79
552.84
--
221.06
235.16
255.52
249.67
` 3,208.43
` 3,942.19
` 2,941.81
` 3,414.98
19.1%
13.5%
5.6%
17.6%
11.8%
5.8%
19.4%
14.0%
5.4%
19.5%
13.2%
6.3%
Movement in our capital funds and risk weighted assets from March 31, 2010 to March 31, 2011 (as per RBI
guidelines on Basel II)
During the year ended March 31, 2011, capital funds increased by ` 96.22 billion primarily due to profit after tax earned
for the year of ` 51.51 billion, incremental notional tax payable on special reserves of ` 1.74 billion, the issuance of
lower Tier II debt capital of ` 59.79 billion and reduction in deduction on account of securitization exposures of ` 25.06
billion, offset, in part, by an increase in deduction on account of deferred tax assets of ` 6.14 billion and proposed
dividend for the year.
Credit risk RWA increased by ` 424.20 billion from ` 2,485.59 billion at March 31, 2010 to ` 2,909.79 billion at
March 31, 2011 primarily due to increase of ` 310.19 billion in RWA for loans and advances and increase of ` 115.99
billion in RWA for off-balance sheet credit exposures (including increase of ` 105.99 billion in RWA for non-fund based
facilities and increase of ` 29.39 billion in RWA for undrawn commitments).
Market risk RWA increased by ` 34.46 billion from ` 221.06 billion at March 31, 2010 to ` 255.52 billion at
March 31, 2011. The general market risk RWA increased by ` 42.86 billion (capital charge of ` 3.86 billion) primarily
due to increase in the investment book and duration of interest rate related instruments.
The operational risk RWA at March 31, 2011 was ` 249.67 billion (capital charge of ` 22.47 billion). The operational risk
capital charge is computed based on 15% of average of previous three financial years’ gross income and is revised
on an annual basis at June 30.
Internal assessment of capital
Our capital management framework includes a comprehensive internal capital adequacy assessment process
conducted annually, which determines the adequate level of capitalisation necessary to meet regulatory norms
and current and future business needs, including under stress scenarios. The internal capital adequacy assessment
process is formulated at both the standalone bank level and the consolidated group level. The process encompasses
capital planning for a certain time horizon, identification and measurement of material risks and the relationship
between risk and capital.
The capital management framework is complemented by the risk management framework, which includes a
comprehensive assessment of all material risks. Stress testing, which is a key aspect of the capital assessment
process and the risk management framework, provides an insight into the impact of extreme but plausible scenarios
on the risk profile and capital position. Based on our Board-approved stress testing framework, we conduct stress
Annual Report 2010-2011 63
Management’s Discussion & Analysis
tests on our various portfolios and assess the impact on our capital ratios and the adequacy of our capital buffers
for current and future periods. We periodically assess and refine our stress tests in an effort to ensure that the stress
scenarios capture material risks as well as reflect possible extreme market moves that could arise as a result of market
conditions. Internal capital adequacy assessment process at the consolidated level integrates the business and capital
plans and the stress testing results of the group entities.
Based on the internal capital adequacy assessment process, we determine our capital needs and the optimum level of
capital by considering the following in an integrated manner:
•
•
•
•
•
•
strategic focus, business plan and growth objectives;
regulatory capital requirements as per RBI guidelines;
assessment of material risks and impact of stress testing;
perception of credit rating agencies, shareholders and investors;
future strategy with regard to investments or divestments in subsidiaries; and
evaluation of options to raise capital from domestic and overseas markets, as permitted by RBI from time to time.
We formulate our internal capital level targets based on the internal capital adequacy assessment process and
endeavour to maintain the capital adequacy level in accordance with the targeted levels at all times.
Basel III
In order to strengthen the resilience of the banking sector to potential future shocks, together with ensuring adequate
liquidity in the banking system, the Basel Committee on Banking Supervision (BCBS) issued the Basel III proposals
on December 17, 2009. Following a consultation phase on these proposals, the final set of Basel III rules were issued
on December 16, 2010. The Basel III rules on capital consist of measures on improving the quality, consistency and
transparency of capital, enhancing risk coverage, introducing a supplementary leverage ratio, reducing pro-cyclicality
and promoting countercyclical buffers, and addressing systemic risk and interconnectedness. The Basel III rules on
liquidity consist of a measure of short-term liquidity coverage ratio aimed at building liquidity buffers to meet stress
situations, and a measure of long-term net stable funding ratio aimed at promoting longer term structural funding.
Some of the Basel III measures will be phased-in between January 1, 2013 and January 1, 2019. BCBS has stipulated
a phased implementation of the Basel III framework between January 1, 2013 and January 1, 2019
Guidlines on Basel III framework for the Indian banking system are awaited from RBI. We continue to monitor
developments on the Basel III framework and believe that our current robust capital adequacy position, adequate
headroom currently available to raise hybrid/debt capital, demonstrated track record of access to domestic and
overseas markets for capital raising and adequate flexibility in our balance sheet structure and business model will
enable us to adapt to the Basel III framework along with any amendments by RBI, as and when they are implemented.
ASSET QUALITY AND COMPOSITION
Loan Concentration
We follow a policy of portfolio diversification and evaluate our total financing in a particular sector in light of our
forecasts of growth and profitability for that sector. Between 2003 and 2006, the banking system as a whole saw
significant expansion of retail credit, with retail loans contributing for a major part of overall systemic credit growth.
Accordingly, during these years, we increased our focus on retail finance. In view of high asset prices and the
increase in interest rates since the second half of fiscal 2008, we followed a conscious strategy of moderation of retail
disbursements, especially in the unsecured retail loans segment. Following this trend, our gross retail finance loans
and advances declined from 49.3% of our total gross loans and advances at year-end fiscal 2009 to 44.4% at year-end
fiscal 2010 and further to 39.7% at March 31, 2011.
Our Credit Risk Management Group monitors all major sectors of the economy and specifically tracks sectors in which
we have loans outstanding. We seek to respond to any economic weakness in an industrial segment by restricting new
exposures to that segment and any growth in an industrial segment by increasing new exposures to that segment,
resulting in active portfolio management.
64
The following tables set forth, at the dates indicated, the composition of our gross advances (net of write-offs).
March 31, 2010
March 31, 2011
` in billion, except percentages
Retail finance1
Services – non-finance
Services – finance
Crude petroleum/refining and petrochemicals
Advances
` 831.19
135.21
64.56
132.86
Road, ports, telecom, urban development and
other infrastructure
103.94
Power
Iron/steel and products
Food and beverages
Wholesale/retail trade
Electronics and engineering
Mining
Construction
Chemical and fertilizers
Textiles
Other industries2
Total
56.49
86.26
61.54
44.47
31.54
4.57
17.91
46.27
19.16
237.17
` 1,873.14
% of total
advances
Advances
% of total
advances
44.4%
` 890.74
39.7%
7.2
3.4
7.1
5.5
3.0
4.6
3.3
2.4
1.7
0.2
1.0
2.5
1.0
173.36
161.43
141.83
129.54
98.11
94.88
70.63
52.00
44.72
41.49
36.43
29.24
21.01
7.7
7.2
6.3
5.8
4.4
4.2
3.2
2.3
2.0
1.9
1.6
1.3
0.9
12.7
258.74
100.0%
` 2,244.15
11.5
100.0%
1.
Includes home loans, automobile loans, commercial business loans, two wheeler loans, personal loans and credit cards. Also
includes dealer funding portfolio and developer financing portfolio.
2. Other industries primarily include automobiles, cement, drugs and pharmaceuticals, FMCG, gems and jewellery, manufacturing
products excluding metal, metal and products (excluding iron and steel) and shipping etc.
The following table sets forth, at the dates indicated, the composition of our gross (net of write-offs) outstanding retail
finance portfolio.
Home loans1
Automobile loans
Commercial business
Two-wheeler loans
Personal loans
Credit cards
Loans against securities and others2
` in billion, except percentages
March 31, 2010
March 31, 2011
Retail
advances
% of total
retail advances
Retail
advances
% of total
retail advances
` 474.72
85.13
136.75
4.65
57.14
59.33
13.47
57.1%
` 541.26
10.2
16.5
0.6
6.9
7.1
1.6
85.81
152.86
2.09
40.31
48.51
19.90
60.8%
9.6
17.2
0.2
4.5
5.5
2.2
Total retail finance portfolio
` 831.19
100.0%
` 890.74
100.0%
1. Includes developer financing.
2. Includes dealer financing portfolio.
Annual Report 2010-2011 65
Management’s Discussion & Analysis
Directed Lending
RBI requires banks to lend to certain sectors of the economy. Such directed lending comprises priority sector lending,
export credit and housing finance.
RBI guidelines require banks to lend 40.0% of their adjusted net bank credit, or credit equivalent amount of off-balance
sheet exposure, whichever is higher, to certain specified sectors called priority sectors. The definition of adjusted net
bank credit does not include certain exemptions and includes certain investments and is computed with reference to the
outstanding amount at March 31 of the previous year. Priority sector includes small enterprises, agricultural sector, food
and agri-based industries, small businesses and housing finance up to certain limits. Out of the 40.0%, banks are required
to lend a minimum of 18.0% of their adjusted net bank credit to the agriculture sector and the balance to certain specified
sectors, including small enterprises (defined as enterprises engaged in manufacturing/production, processing and
services businesses with a certain limit on investment in plant and machinery), small road and water transport operators,
small businesses, professional and self-employed persons, all other service enterprises, micro credit, education loans
and housing loans up to ` 2.0 million to individuals for purchase/construction of a dwelling unit per family.
In its letter dated April 26, 2002 granting its approval for the amalgamation of ICICI Limited and ICICI Bank Limited,
RBI stipulated that since the loans of erstwhile ICICI Limited (ICICI) transferred to us were not subject to the priority
sector lending requirement, we are required to maintain priority sector lending of 50.0% of our adjusted net bank
credit on the residual portion of our advances (i.e. the portion of our total advances excluding advances of ICICI at
year-end fiscal, 2002, referred to as “residual adjusted net bank credit”). This method of computation will apply until
such time as our aggregate priority sector advances reach a level of 40.0% of our adjusted net bank credit or review of
this stipulation by RBI. As required by RBI guidelines, we are also required to lend 10.0% of the residual adjusted net
bank credit or credit equivalent amount of off-balance sheet exposures, whichever is higher, to weaker sections. RBI’s
existing instructions on sub-targets under priority sector lending and eligibility of certain types of investments/funds
for qualification as priority sector advances apply to us.
We are required to comply with the priority sector lending requirements at the last ‘reporting Friday’ of each fiscal year.
The shortfall in the amount required to be lent to the priority sectors and weaker sections may be required to be
deposited with government sponsored Indian development banks like the National Bank for Agriculture and Rural
Development, the Small Industries Development Bank of India and the National Housing Bank. These deposits have
a maturity of up to seven years and carry interest rates lower than market rates. At year-end fiscal 2011, our total
investments in such bonds were ` 150.80 billion (including ` 21.34 billion of Bank of Rajasthan at August 12, 2010).
At March 25, 2011, the last reporting Friday for fiscal 2011, our priority sector loans were ` 551.73 billion, constituting
53.1% of our residual adjusted net bank credit against the requirement of 50.0%. At that date, qualifying agriculture
loans were 14.0% of our residual adjusted net bank credit as against the requirement of 18.0%. Our advances to
weaker sections were ` 34.43 billion constituting 3.3% of our residual adjusted net bank credit against the requirement
of 10.0%. The Bank has based its classifications of priority sector loans, including loans to weaker sections and
agriculture loans, in accordance with the guidelines and certain clarifications received from RBI during the year.
Classification of loans
We classify our assets as performing and non-performing in accordance with RBI guidelines. Under these guidelines,
an asset is classified as non-performing if any amount of interest or principal remains overdue for more than 90 days,
in respect of term loans. In respect of overdraft or cash credit, an asset is classified as non-performing if the account
remains out of order for a period of 90 days and in respect of bills, if the account remains overdue for more than 90
days. In compliance with regulations governing the presentation of financial information by banks, we report non-
performing assets net of cumulative write-offs in our financial statements.
RBI has separate guidelines for restructured loans. A fully secured standard asset can be restructured by re-
schedulement of principal repayments and/or the interest element, but must be separately disclosed as a restructured
asset. The diminution in the fair value of the loan, if any, measured in present value terms, is either written off or a
provision is made to the extent of the diminution involved. Similar guidelines apply to sub-standard loans. The sub-
standard or doubtful accounts which have been subject to restructuring, whether in respect of principal installment
or interest amount are eligible to be upgraded to the standard category only after the specified period, i.e., a period
of one year after the date when first payment of interest or of principal, whichever is earlier, falls due, subject to
satisfactory performance during the period.
66
The following table sets forth, at March 31, 2010 and March 31, 2011, information regarding the classification of our
gross customer assets (net of write-offs, interest suspense and derivatives income reversal).
Standard assets
- Of which: Restructured loans
Non-performing assets
- Of which: Sub-standard assets
- Doubtful assets
- Loss assets
Total customer assets1
` in billion
March 31, 2010 March 31, 2011
` 2,057.29
` 2,608.30
55.87
96.27
50.20
40.30
5.77
20.64
101.14
17.92
74.00
9.22
` 2,153.56
` 2,709.44
1. Customer assets include advances, lease receivables and credit substitutes like debentures and bonds but exclude preference
shares.
2. All amounts have been rounded off to the nearest ` 10.0 million.
The following table sets forth, at the dates indicated, information regarding our non-performing assets (NPAs).
Year ended
March 31, 2009
March 31, 2010
March 31, 2011
` in billion, except percentages
Gross NPA1
Net NPA Net customer
assets
% of net NPA to net
customer assets2
` 98.03
96.27
` 101.14
` 46.19
39.01
` 24.58
` 2,358.24
2,091.22
` 2,628.16
1.96%
1.87
0.94%
1. Net of write-offs, interest suspense and derivatives income reversal.
2. Customer assets include advances and credit substitutes like debentures and bonds but exclude preference shares.
3. All amounts have been rounded off to the nearest ` 10.0 million.
At March 31, 2011, the gross non-performing assets (net of write-offs, interest suspense and derivatives income
reversal) were ` 101.14 billion compared to ` 96.27 billion at March 31, 2010. The increased level of non-performing
assets was after taking into consideration the additions to gross NPA (` 4.11 billion) arising out of the amalgamation
of Bank of Rajasthan with effect from close of business at August 12, 2010. Net non-performing assets were ` 24.58
billion at March 31, 2011 compared to ` 39.01 billion at March 31, 2010. The ratio of net non-performing assets to net
customer assets decreased from 1.87% at March 31, 2010 to 0.94% at March 31, 2011. During fiscal 2011, we wrote-off
NPAs, including retail NPAs, with an aggregate outstanding of ` 2.29 billion against ` 28.48 billion during fiscal 2010.
The following chart depicts the trends in the net non-performing assets ratio over the last three years.
Net NPA Ratio
2.5%
2.0%
1.5%
1.0%
0.5%
0.0%
March 2009
March 2010
March 2011
Annual Report 2010-2011 67
Management’s Discussion & Analysis
Our provision coverage ratio (i.e. total provisions made against non-performing assets as a percentage of gross non-
performing assets), at year-end fiscal 2011 was 76.0%. We have been permitted by RBI to achieve the stipulated level
of provision coverage ratio of 70% in a phased manner by March 31, 2011, which was achieved at December 31, 2010.
At March 31, 2011, total general provision held against standard assets was ` 14.80 billion compared to the general
provision requirement as per the RBI guidelines of about ` 10.86 billion. The excess provision was not reversed in line
with the RBI guidelines.
At March 31, 2011, the net non-performing loans in the retail portfolio were 1.5% of net retail loans as compared with
3.1% at March 31, 2010. The decrease in the ratio was primarily on account of sharp decline in accretion to retail NPAs
and higher provisioning against retail loans. At March 31, 2011, the net non-performing loans in the collateralised retail
portfolio were 1.2% of the net collateralised retail loans and net non-performing loans in the non-collateralised retail
portfolio (including overdraft financing against automobiles) were about 5.6% of net non-collateralised retail loans.
Our aggregate investments in security receipts issued by asset reconstruction companies were ` 28.31 billion at
March 31, 2011 as compared to ` 33.94 billion at March 31, 2010.
Classification of Non-Performing Assets by Industry
The following table sets forth, at March 31, 2010 and March 31, 2011, the composition of gross non-performing assets
by industry sector.
Retail finance1
Wholesale/retail trade
Food and beverages
Services – finance
Textiles
Chemicals and fertilisers
Metal and metal products
Electronics and engineering
Automobiles
Paper and paper products
Services – non finance
Power
Iron/steel and products
Shipping
Other Industries2
Total
` in billion, except percentages
March 31, 2010
March 31, 2011
Amount
` 64.73
%
67.2%
Amount
` 66.35
%
65.6%
2.17
1.62
2.43
1.90
2.47
0.68
0.69
0.59
0.03
0.38
0.14
1.43
0.01
17.00
` 96.27
2.3
1.7
2.5
2.0
2.6
0.7
0.7
0.6
0.0
0.4
0.1
1.5
0.0
17.7
3.85
2.88
2.30
2.25
2.05
1.30
0.68
0.55
0.46
0.38
0.18
0.17
0.06
17.68
100.0%
` 101.14
3.8
2.9
2.3
2.2
2.0
1.3
0.7
0.5
0.5
0.4
0.2
0.2
0.1
17.3
100.0%
1.
Includes home loans, automobile loans, commercial business loans, two wheeler loans, personal loans and credit cards. Also
includes NPAs in dealer funding and developer finance portfolios.
2. Other industries primarily include construction, drugs and pharmaceuticals, agriculture and allied activities, FMCG, gems and
jewellery, manufacturing products excluding metal, crude petroleum/refining and petrochemicals, mining, cement, etc.
3. All amounts have been rounded off to the nearest ` 10.0 million.
Segment Information
RBI in its guidelines on “segmental reporting” has stipulated specified business segments and their definitions, for the
purposes of public disclosures on business information for banks in India.
68
The standalone segmental report for the year ended March 31, 2011, based on the segments identified and defined by
RBI, has been presented as follows:
•
Retail Banking includes exposures of the Bank, which satisfy the four qualifying criteria of ‘regulatory retail portfolio’
as stipulated by the RBI guidelines on the Basel II framework.
• Wholesale Banking includes all advances to trusts, partnership firms, companies and statutory bodies, by the Bank
which are not included in the Retail Banking segment, as per the RBI guidelines for the Bank.
•
Treasury includes the entire investment portfolio of the Bank.
• Other Banking includes hire purchase and leasing operations and other items not attributable to any particular
business segment of the Bank.
Framework for Transfer Pricing
All liabilities are transfer priced to a central treasury unit, which pools all funds and lends to the business units
at appropriate rates based on the relevant maturity of assets being funded after adjusting for regulatory reserve
requirements and directed lending requirements.
Retail Banking Segment
The loss in the retail banking segment decreased from ` 13.34 billion in fiscal 2010 to ` 5.14 billion in fiscal 2011,
primarily due to decline in provisions for loan losses in the unsecured portfolio, partly offset by decline in net interest
income and fee income.
Net interest income decreased by 11.7% from ` 37.59 billion in fiscal 2010 to ` 33.20 billion in fiscal 2011 primarily due
to reduction in the retail loan portfolio and the impact of increased cost of savings account deposits with effect from
April 1, 2010.
Non-interest income decreased by 19.2% from ` 26.19 billion in fiscal 2010 to ` 21.16 billion in fiscal 2011, primarily
due to reduction in credit card related fees following our conscious strategy of reducing the portfolio. Further, during
fiscal 2010, we had sold our merchant acquiring operations through a transfer of assets, primarily comprising fixed
assets, receivables and payables and assumption of liabilities to ICICI Merchant Services resulting in profit of ` 2.03
billion in our Retail Banking segment. Further, the fees from distribution of third-party products were impacted by
regulatory changes in the life insurance sector which led to decline in market volumes, changes in product mix and
lower distributor payouts.
Provisions decreased by 58.9% from ` 33.56 billion in fiscal 2010 to ` 13.81 billion in fiscal 2011, primarily due to
decline in provisions for loan losses in the unsecured retail portfolio. We have been taking various measures to contain
the non-performing asset (NPA) accretion in retail portfolio over the last two years. This has reflected in a sharp
reduction in provision requirements.
Wholesale Banking Segment
Profit before tax of the wholesale banking segment increased from ` 36.45 billion in fiscal 2010 to ` 49.00 billion in
fiscal 2011 primarily due to increase in fee income and decline in provisions offset, in part, by increase in non-interest
expenses.
Net interest income increased by 8.5% from ` 31.07 billion in fiscal 2010 to ` 33.72 billion in fiscal 2011 primarily due
to higher business volumes.
Non-interest income increased by 41.9% from ` 28.08 billion in fiscal 2010 to ` 39.85 billion in fiscal 2011. Fee income
increased due to our increased participation in financing to corporates for their term loan, working capital and project
financing requirements. During the year, there was an increase in loan processing related fees and transaction banking
related fees from corporate clients.
Provisions decreased from ` 10.34 billion in fiscal 2010 to ` 6.34 billion in fiscal 2011. Provisions were higher for fiscal
2010 on account of the significantly higher restructuring of corporate loans during the period.
Treasury Banking Segment
Profit before tax of the treasury segment decreased from ` 27.89 billion in fiscal 2010 to ` 22.01 billion in fiscal 2011,
primarily due to lower gains from treasury-related activities, offset, in part, by increase in net interest income.
Annual Report 2010-2011 69
Management’s Discussion & Analysis
Other Banking Segment
Profit before tax of other banking segment decreased from ` 2.45 billion in fiscal 2010 to ` 1.74 billion in fiscal 2011.
CONSOLIDATED FINANCIALS AS PER INDIAN GAAP
The consolidated profit after tax including the results of operations of our subsidiaries and other consolidating
entities increased from ` 46.70 billion in fiscal 2010 to ` 60.93 billion in fiscal 2011 mainly due to improved financial
performance of ICICI Bank and ICICI Prudential Life Insurance Company Limited offset, in part, by decline in profits of
certain subsidiaries and net loss of ICICI Lombard General Insurance Company Limited. The consolidated return on
average equity increased from 9.6% in fiscal 2010 to 11.6% in fiscal 2011.
Profit after tax of ICICI Bank UK PLC decreased marginally from ` 1.76 billion in fiscal 2010 to ` 1.67 billion in fiscal 2011
primarily due to decrease in fee income, lower mark-to-market (MTM) gains on derivatives and lower gains realised
on buyback of bonds in fiscal 2011, offset, in part, by increase in net interest income due to an increase in net interest
margin and lower operating expenses.
Profit after tax of ICICI Bank Canada decreased marginally from ` 1.54 billion in fiscal 2010 to ` 1.45 billion in fiscal 2011
primarily due to decrease in non-interest income offset, in part, by increase in net interest income due to an increase
in net interest margin and lower operating expenses.
Profit after tax of ICICI Bank Eurasia Limited Liability Company decreased from ` 0.53 billion in fiscal 2010 to ` 0.21 billion in
fiscal 2011 primarily due to decrease in net interest income, non-interest income and reduction in overall business levels.
Profit after tax of ICICI Prudential Life Insurance Company Limited increased from ` 2.58 billion in fiscal 2010 to ` 8.08
billion in fiscal 2011 due to an increase in net premium earned, fund management fees and policy fees and lower
operating and commission expenses. Net premium earned increased by 8.1% from ` 164.76 billion in fiscal 2010 to
` 178.17 billion in fiscal 2011 primarily due to increase in single premium business from ` 2.75 billion in fiscal 2010
to ` 21.69 billion in fiscal 2011. Operating expenses (other than staff cost) decreased by 18.6% from ` 14.17 billion in
fiscal 2010 to ` 11.53 billion in fiscal 2011 due to space rationalisation initiatives, decrease in policy related expenses
and other branch related expenses.
ICICI Lombard General Insurance Company Limited had a loss of ` 0.80 billion in fiscal 2011 as compared to a profit of
` 1.44 billion in fiscal 2010. In accordance with IRDA guidelines, ICICI Lombard General Insurance Company Limited,
together with all other general insurance companies participates in the Indian Motor Third Party Insurance Pool (‘the
Pool’), administered by the General Insurance Corporation of India (‘GIC’) from April 1, 2007. The Pool covers reinsurance
of third party risks of commercial vehicles. Based on an analysis of the performance of the Pool by an independent
consultant, IRDA has instructed all general insurance companies to provide at a higher provisional loss ratio of 153.0%
(for each of the four years from fiscal 2008 to fiscal 2011) in the financial results for fiscal 2011. Accordingly, the loss
before tax of ICICI General for fiscal 2011 includes the impact of the additional pool losses of ` 2.72 billion.
Profit after tax of ICICI Securities Limited decreased marginally from ` 1.23 billion in fiscal 2010 to ` 1.13 billion in fiscal
2011 primarily due to decrease in brokerage income on account of market conditions and increase in staff cost.
Profit after tax of ICICI Securities Primary Dealership Limited decreased from ` 0.85 billion in fiscal 2010 to ` 0.53 billion
in fiscal 2011 as fixed income markets offered limited opportunities for trading profits during fiscal 2011 and higher
funding costs reduced the net interest income.
Profit after tax of ICICI Home Finance Company Limited increased from ` 1.61 billion in fiscal 2010 to ` 2.33 billion in
fiscal 2011 primarily due to increase in net interest income following an increase in net interest margin and decrease
in staff cost, administrative costs and lower provisions. Provisions on loans and advances decreased by 20.7% from
` 0.29 billion in fiscal 2010 to ` 0.23 billion in fiscal 2011 primarily due to decrease in the size of the loan book.
Profit after tax of ICICI Prudential Asset Management Company Limited decreased from ` 1.28 billion in fiscal 2010 to
` 0.72 billion in fiscal 2011 primarily due to the decrease in management fees on account of decrease in average assets
under management and higher administrative expenses.
Profit after tax of ICICI Venture Funds Management Company Limited increased from ` 0.51 billion in fiscal 2010 to
` 0.74 billion in fiscal 2011 primarily due to increase in management fees on account of increase in carry income from
funds and lower marketing and financial expenses in fiscal 2011.
70
Consolidated assets of the Bank and its subsidiaries and other consolidating entities increased from ` 4,893.47 billion
at year-end fiscal 2010 to ` 5,337.68 billion at March 31, 2011. Consolidated advances of the Bank and its subsidiaries
increased from ` 2,257.78 billion at March 31, 2010 to ` 2,560.19 billion at March 31, 2011.
The following table sets forth, for the periods indicated, the profit/(loss) of our principal subsidiaries.
Company
ICICI Bank UK PLC
ICICI Bank Canada
ICICI Bank Eurasia Limited Liability Company
ICICI Prudential Life Insurance Company Limited
ICICI Lombard General Insurance Company Limited
ICICI Securities Limited
ICICI Securities Primary Dealership Limited
ICICI Home Finance Company Limited
ICICI Prudential Asset Management Company Limited
ICICI Venture Funds Management Company Limited
` in billion
Fiscal 2010
Fiscal 2011
` 1.76
1.54
0.53
2.58
1.44
1.23
0.85
1.61
1.28
` 1.67
1.45
0.21
8.08
(0.80)
1.13
0.53
2.33
0.72
` 0.51
` 0.74
INTERNATIONAL FINANCIAL REPORTING STANDARDS
Convergence with International Financial Reporting Standards (IFRS), issued by the International Accounting Standards
Board (IASB) is gaining the attention of companies, regulators and investing communities across the world.
Based on the recommendations of a Core Group set up to facilitate IFRS convergence in India, the Ministry of Corporate
Affairs (MCA), in consultation with RBI, has announced the approach and timelines for achieving convergence by
financial institutions including banks, insurance companies and NBFCs. As per the roadmap, all scheduled commercial
banks will need to convert their opening balance sheet as at April 1, 2013 in compliance with the IFRS converged
Indian Accounting Standards. MCA has recently placed 35 Indian Accounting Standards (IND AS), converged with
IFRS, on its website.
Currently, IASB has undertaken a project which will replace the current standards on financial instruments, particularly
IAS 39, in a phased manner. As a part of this project, IASB has issued IFRS 9 – “Financial Instruments” which introduces
a new classification and measurement regime for financial assets within its scope. Additionally, the IASB has released
exposure drafts on various aspects related to financial instruments which include ‘amortised cost and impairment
of financial assets’, ‘derecognition’, ‘fair value option for financial liabilities’, ‘hedge accounting’, ‘asset and liability
offsetting’ and ‘fair value measurement’. These revisions are expected to be significantly different from existing IAS
39 as issued by IASB and AS 30 as issued by ICAI. To enable the Indian banks to transition to IFRS converged Indian
Accounting Standards, RBI is working actively with the banks in such areas as identifying the major impact areas for
banking industry, impact on existing regulatory guidelines and arriving at an industry-wide common approach to
transition issues to the extent possible.
Currently, we report our financials under Indian GAAP and also report a reconciliation of shareholders’ equity and net
profit under Indian GAAP to US GAAP. We are awaiting further clarity on the final transition to IFRS in order to assess
the impact on our accounting systems and processes and financial reporting.
Annual Report 2010-2011 71
Key financial indicators
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
Fiscal
2003
2004
2005
2006
2007
2008
2009
2010
2011
` in billion, except per share data
Net interest income
14.45
21.85
29.32
39.07
56.37
73.04
83.67
81.14
90.17
Fee income1
8.47
12.89
22.03
34.47
50.12
66.27
65.24
56.50
64.19
Profit before tax
7.80
19.02
25.27
30.96
36.48
50.56
51.17
53.45
67.61
Profit after tax
12.06
16.37
20.05
25.40
31.10
41.58
37.58
40.25
51.51
Dividend per share
7.50
7.50
8.50
8.50
10.00
11.00
11.00
12.00
14.002
Earnings per share (Basic)
19.68
26.66
27.55
32.49
34.84
39.39
33.76
36.14
45.27
Earnings per share (Diluted)
19.65
26.44
27.33
32.15
34.64
39.15
33.70
35.99
45.06
Includes merchant foreign exchange income and margin on customer derivative transactions.
1.
2. Represents proposed dividend.
2003
2004
2005
2006
2007
2008
2009
2010
2011
At year–end fiscal
` in billion
Advances
532.79
626.48
914.05
1,461.63
1,958.66
2,256.16
2,183.11
1,812.06
2,163.66
Deposits
481.69
681.09
998.19
1,650.83
2,305.10
2,444.31
2,183.48
2,020.17
2,256.02
Total assets
1,068.12
1,252.29
1,676.59
2,513.89
3,446.58
3,997.95
3,793.01
3,634.00
4,062.34
Equity capital &
reserves
Total capital
adequacy ratio
69.33
80.10
125.50
222.06
243.13
464.71
495.33
516.18
550.91
11.1%
10.4%
11.8%
13.4%
11.7% 14.0%1
15.5%1
19.4%1
19.5%1
1. Total capital adequacy ratio has been calculated as per Basel ll framework.
72
Section 217
Statement pursuant to Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 (forming
part of the Directors` Report for the year ended March 31, 2011) in respect of employees of ICICI Bank Limited
Desig./
Nature of
Duties**
Remuneration
Receieved `
Gross
`
Net
`
Expe-
rience
(in
years)
Date of
Commence-
ment of
Employ-
ment
Last employment
Name,Qualifications and Age (in years)
Employees posted in India
Agarwal Vikas, B.Com, CA, (40)
Agrawal Mayank, BE, PGDM,(40)
Arora Rajiv, BE, MBA, (44)
Ashish Kumar, MA, MMS, (39)
Athreya Ranganath, B.Sc. BGL, ACS (45)
Badami Suresh, B.Sc., PGDM, (39)
Bakhshi Sandeep, BE, PGDM (50)*+
Banerjee Abonty (Ms.), B.Sc., MBA, (39)
Banerjee Anindya, B.Com, CA, (35)
Batra Mohit, BE, MS, (45)*
Batra Sandeep, B.Com, CA, CS, (45)
Bhargava Anuj, B.Com, CA,(35)
Bhat Sham, B.Sc., PGDM, (38)
Bhatia Piyush, BE, MBA,(39)
Bhobe Prathit, B.Com, MMS,(40)*
Chandok Vijay, B.Tech, MMS, (43)
Chatterjee Sonjoy, BE, PGDM,(43)*+
Chaudhuri Ripujit, BE, MMS, (42)
Chougule Sanjay ( Dr.), BE, MMS, LLB, Ph.D, (47)
Daruwala Zarin ( Ms.), B.Com, CA, CS, (46)
Deshpande Charudatta, B.Pharma, (55)
Dhamodaran S., B.Sc., CAIIB, (56)
Dhawan Amit, BE, MBA, (38)*
Ganguli Sujit, B.Sc., PGDM, (39)*
Gune Smita (Ms.), B.Com, CA, CIA, (52)*
Gupta Ajay, B.Com, CA, (44)
Isaac Robi, BA, LLB, (35)
Isser Utpal, BA, PGDRM, (36)
Jain Mukesh, B.Com, CAIIB, PGDBM, DBANKM, (51)
Jayaraman Mohan, B.Com, ICWAI, (37)*
Jayarao K. M., BE, (55)
Jha Rakesh, BE, PGDM, (39)
Jogani Vandana Suresh (Ms.), BE, MMS, (41)
Juneja Maninder, BE, PGDM, (45)
Kamani Anirudh, B.Com, CA, (41)
Kannan N. S, BE, PGDM, CFA (45) +
Kant Vishnu, BE, MBA, (40) *
Kaul Anil, BSc, MBA, (45)*
Khandelwal Rajendra, B.Com, CA, CS, (38)
Khandelwal Sachin, BE, MBA, (44)
Kikani Kalpesh, BE, MBA, CFA,(38)
DGM
JGM
JGM
GM
JCS
GM
DMD
JGM
JGM
SGM
6,302,390
8,631,379
7,128,986
10,567,770
8,191,416
9,688,820
7,995,633
6,857,954
7,931,830
6,409,550
GCO & CS
11,383,397
4,732,202
6,433,401
5,356,545
8,508,121
6,159,017
7,113,568
5,760,311
5,260,200
5,792,566
4,816,500
8,241,546
5,560,937
4,699,939
4,667,504
5,130,504
7,357,204
6,332,888
6,109,077
6,946,714
18,668,010
16,329,315
4,438,540
7,674,683
3,434,255
5,686,374
8,293,283
6,624,170
13,352,241
10,045,977
7,106,178
10,428,206
4,371,416
4,500,466
5,108,203
8,641,023
7,179,996
6,185,627
10,601,388
5,511,671
12,082,828
11,446,377
6,809,443
11,258,280
7,666,706
5,443,312
7,610,828
3,383,068
3,326,741
3,949,670
6,363,597
5,286,097
4,644,754
8,026,848
4,204,823
8,911,316
8,474,822
5,092,848
8,274,430
5,850,694
16,460,168
11,944,066
5,159,540
5,917,607
6,045,852
6,994,365
12,461,998
4,131,425
4,425,537
4,648,284
5,510,769
9,328,147
JGM
DGM
DGM
GM
GE
ED
JGM
SGM
GE
GM
SGM
DGM
GM
GM
GM
JGM
DGM
SGM
JGM
SGM
DYCFO
JGM
SGM
JGM
EDCFO
JGM
GM
DGM
SGM
SGM
17
17
22
17
22
17
28
15
13
19
23
13
22
15
16
20
18
19
24
21
16
36
15
16
27
20
14
12
31
17
31
14
17
20
21
24
16
19
16
19
16
27
23
15
21
24
18
15
16
15-Dec-98 Analyst, Anand Rathi Group
10-Apr-95 Management Trainee, IPCL
23-Apr-93 Project Officer, IFCI Limited
11-Oct-99 Regional Manager, Ceat Financial Services Limited
1-Apr-09 Executive Vice-President - Compliance, Legal & Company
Secretary - ICICI Prudential Asset Management Company Limited
16-Oct-02 Head Region-Business Dev., Max Ateev Limited
1-May-09 Managing Director & CEO, ICICI Lombard General Insurance
Co. Limited
4-Nov-99 Associate, Research Director, ORG-MARG Research Limited
7-Oct-98 -
24-Apr-92 -
8-Nov-06 Executive Vice-President and CFO,ICICI Prudential Life Insurance
Co. Limited
15-Oct-98 Vice-President, ICICI Securities Limited
2-Sep-02 Senior Manager, IDBI Bank Limited
1-Jun-95 -
16-Jul-10 Head of Commercial Banking, Global Consumer Group, Citibank
31-May-93 Production Executive, ITC Group - VST Industries
25-Apr-94 Marketing Executive, HCL-HP
5-Sep-01 Manager, Enron India Private Limited & Broadbank Solutions
Private Limited
1-Jun-87 Junior Engineer, RCF Limited
21-Jun-89 -
21-Jul-05 Senior General Manager, Mahindra & Mahindra
4-Apr-94 Officer MII , State Bank of India
03-Jun-96 -
01-Sep-10 Senior Vice-President & Head Marketing, ICICI Prudential Life
Insurance Co. Limited
12-Oct-98 Assistant General Manager, Tata Finance
25-Nov-91 Article Clerk, A.F.Ferguson Co.
3-Sep-07 Resident Partner, Kochhar & Co.
1-Oct-01 Senior Research Executive, Indian Mark Research Bureau
29-Mar-94 Officer, Canara Bank
02-Dec-02 Assistant General Manager, FISAF
22-Mar-82 Junior Executive, BHEL, Hyderabad
3-Jun-96 -
7-Mar-05 Assistant Vice-President, GE Countrywide Consumer Finance
5-Apr-99 Head Agency Business,DGP Windsor
1-Feb-05 Manager Supply Chain, Becton Dickinson India Limited
1-May-09 Executive Director, ICICI Prudential Life Insurance Co. Limited
28-May-10 Director, Standard Chartered Bank
02-Aug-10 Head of Brokerage, Bank Muscat
4-Oct-95 -
10-Dec-99 Honda Siel Cars
1-Jun-95 -
17-Apr-84 -
26-Aug-04 Chief Manager, Global Trust Bank
19-Apr-99 Senior Systems Analyst, Infosys Technologies
1-Jun-89 -
18-Jul-94 Deputy Manager, United Bank of India
1-Jun-95 Graduate Engineering Trainee,Larson & Toubro Limited
20-Aug-01 Manager, Orix Auto Fin(I) Limited.
1-Oct-03 Deputy Head - Corp Banking,BNP Paribas
Annual Report 2010-2011 73
Kochhar Chanda (Ms.), BA, MMS, ICWAI, (49)+
MDCEO
26,283,759
19,646,157
Kodaganti Leelanand, B.Sc., CCCL,(46)
Konda Vasudeva, B.Tech., PGDM, (37)
Kumar Shilpa, (Ms.), B.Com, PGDM, (44)
Kumar Sushant, MA, CAIIB, (50)
Limaye Niranjan, BE, PGDM,(41)
Madhavan Anish, B.Com, CA,(39)
Mantri Sanjeev, B.Com, CA, (40)
DGM
JGM
SGM
GM
JGM
JGM
GM
7,415,939
7,063,815
12,560,044
8,252,786
6,513,228
6,096,695
9,749,736
5,418,343
5,308,206
9,405,758
6,117,206
4,964,380
4,627,688
7,274,533
Desig./
Nature of
Duties**
Remuneration
Receieved `
Gross
`
Net
`
Expe-
rience
(in
years)
Date of
Commence-
ment of
Employ-
ment
Last employment
JGM
SGM
JGM
GM
JGM
JGM
JGM
GM
DGM
GM
GM
SGM
SGM
GM
DGM
JGM
JGM
SGM
DGM
GM
ED
DGM
SGM
JGM
GM
ED
JGM
JGM
GM
JGM
DGM
SGM
GM
GM
JGM
DGM
JGM
JGM
GM
JGM
JGM
GM
GM
JGM
JGM
DGM
AGM
DGM
GCTO
GM
7,005,598
9,050,681
5,284,788
6,837,969
7,806,256
5,854,787
6,516,317
6,371,850
6,582,241
7,545,537
6,181,101
6,801,087
7,987,899
8,741,486
2,763,376
9,258,685
4,903,119
4,767,101
4,962,882
5,677,437
4,754,850
5,027,898
6,073,851
6,618,589
2,274,427
6,906,390
8,334,725
6,185,514
6,890,940
6,430,026
6,340,253
2,549,445
6,747,027
7,796,831
5,144,094
4,875,765
4,478,145
2,021,219
5,112,218
5,931,166
18,293,414
13,724,502
6,054,274
11,300,536
7,171,036
5,801,126
12,615,025
7,644,799
7,665,761
2,792,443
6,692,271
6,904,600
10,653,509
4,809,757
3,562,371
6,503,217
6,825,009
12,079,612
8,091,702
10,377,476
6,571,563
7,345,281
10,110,267
10,633,021
5,759,595
7,651,007
6,315,926
6,198,612
6,228,008
4,548,802
8,509,959
5,454,758
4,348,741
9,331,859
5,669,772
5,916,733
2,242,801
4,982,984
5,131,042
8,154,167
3,657,792
2,730,845
4,859,531
5,080,626
8,682,400
5,998,547
7,775,659
4,968,553
5,971,530
7,383,715
7,733,632
4,376,589
5,767,624
4,810,547
4,515,253
4,808,035
17,991,659
13,945,951
6,261,844
4,826,242
14
25
19
14
20
16
17
37
17
24
18
35
20
15
19
14
13
25
21
25
26
17
15
18
15
21
18
18
40
13
15
19
18
23
15
10
17
20
19
14
18
20
15
13
17
17
8
14
36
18
23-Sep-02 Senior Officer, Hindustan Petroleum Corporation
12-Jun-89 Junior Officer, Price Waterhouse
22-Oct-96 Assistant Manager, Oriental Bank of Commerce
19-Jun-02 Vice-President, Oyster Solutions
19-Aug-08 Marketing & Strategy Head, Castrol India Limited
17-Jan-07 Vice-President, ING Vysya Bank
16-Aug-00 Relationship Manager, ANZ Grindlays Bank
1-May-00 General Manager,Bank of Madura Limited
24-Sep-04 Emerson Network Power India Pvt. Limited
17-Apr-00 Regional Manager, Eicher Motors Limited
2-May-94 Software Engineer, Mastek Limited
01-Dec-75 -
1-Apr-10 Executive Vice-President, ICICI Prudential Life Insurance
Co. Limited
7-May-08 Senior Vice-President, Sales & Distribution, ICICI Prudential Life
Insurance Co. Limited
18-Jul-05 Senior Manager, Union Bank of India
4-Jul-05 Senior Manager - HR, Novartis
4-May-98 -
03-Jan-11 Executive Director, Societe Generale Bank
24-Dec-01 Vice-President-Mutual Fund, CRISIL
2-Aug-99 GE Capital TFS Limited
2-Jul-01 General Manager (HR), ICI India Limited
18-Dec-00 Assistant Manager, Bharati Mobile Limited
1-Aug-96 Mulla & Mulla
14-May-93 -
23-Jul-10 Director & Partner, INCValue Advisors
1-Apr-10 Executive Director, Sequoia Capital India Advisors Pvt. Limited
21-Jun-03 Assistant Vice-President, GE Capital
7-Aug-06 Business Manager, ICI Paints
28-Aug-96 Senior Manager, Bank of Maharashtra
30-Mar-99 Executive, S.R.Batliboi & Co.
21-Nov-05 Consultant, I-flex Solution
1-Jun-02 American Express Bank Limited
03-Jun-96 Officer, Bharat Petroleum
19-Aug-98 Manager Finance, Countrywide
1-Jun-98 Engineer, Essar Steel Limited
25-Sep-06 Manager, ITC Limited
1-Jul-99 Manager, IDBI Limited
26-Sep-03 Manager, BNP Paribas
31-Dec-99 Manager HRD,Tata Liebert
10-Jan-00 Product Manager, Godrej GE Appliances
15-Mar-00 Group Manager, Birla Global Finanance Limited
8-Jun-93 Management Trainee, IFCI Limited
29-Oct-01 Area HR Manager, Coco-Cola India Limited
19-Apr-10 Senior Vice-President & Head Agency, ICICI Prudential Life
Insurance Co. Limited
3-Jun-94 -
3-Dec-01 Assistant Manager, IDBI Bank Limited
5-May-03 -
22-Aug-02 Manager - HR, ITC Limited
28-Jan-00 Vice-President, Times Bank
1-Feb-06 Associate Director, KPMG
Name,Qualifications and Age (in years)
Mattagajasingh Soumendra, BA, MA (IR&PM),(39)
Mhatre Sangeeta ( Ms.), B.Com,CA, (47)
Mishra Lok, BA, CAIIB, MBA, (41)
Misra Manish, B.Tech, PGDM, (40)
Mitra Ronita (Ms.), B.Com, MMS,(41)
Mittal Ajay, B.Com, ICWAI, CA, PGDTFM,(40)
Mulla Parvez, BE, PGDM, (40)
Nachiappan V., B.Sc., CAIIB, PGDBA, (57)
Nagpal Vikas, DEE, PGDBA,(37)
Narayanan N.R., BE, PGDM, (48)
Nayak Girish, B.Tech., PGDM, (40)
Nirula Ramni (Ms.), BA, MBA, (58)*
Pai Anita (Ms.), B.Com, MBA(43)
Palta Amit, BE, PGDBM, (39)
Parmar Anilkumar, BBA, CAIIB, (39)
Prabhune Sunil, B.Com, PGDM, (35)
Prasad Jayant, BE, PGDM, (37)
Rahul Vohra, B.Com, MBA, (48)*
Ramachandran G (Dr.), M.Sc., M.Phil., Ph.D., INS, (49)
Ramakrishnan Murali, B.Tech, PGDM, (48)
Ramkumar Krishnaswamy, B.Sc., PGDPM & IR, (49) +
Ranganathan Sridhar, B.Sc.,(38)
Rao Pramod, BA, LLB, (37)
Rastogi Yogesh, BE, PGPM, (42)
Roy Kusal, B.Tech. PGDM, (40)*
Sabharwal Rajiv, B.Tech., PGDM (45) +
Saha Anup, B.Tech., PGPM, (40)
Saha Avijit, BE, PGDM, (42)
Sahasrabuddhe Vidyadhar, B.Sc., LLB, (58)*
Sanghai Anubhuti (Ms.), BA, CA,(37)
Sanyal Goutam, B.Sc., M.Sc., Ph.D.(47)
Saraf Ajay, B.Com, ICWAI, ACA, (41)
Sehrawat Sanjeev, B.Sc., MBA, PGDM, (42)*
Seshadri Vishwanath, B.Com,ACA, (49)*
Sethi Amit, BE, MBA,(38)
Shah Anand , B.Com, CA,(33)
Sharma Sudershan, B.Com, CS, CA, (41)
Shetty Supritha (Ms.), B.Com, CA, (45)
Singh Saurabh, MA, MMS, (44)
Singhal Raghav, BA, PGDM, (36)
Singhvi Sanjay, B.Sc., CA, (41)
Srinivas G, B.Tech., PGDM, (43)
Srirang T.K., BE, MBA, (39)
Srivastava Rishi, BA, MA, PGDBA, (38)*
Suresh P., BE, PGDM, (39)
Trivedi Praveen, B.Com, CA, (38)
Vajjula Sravan Kumar, BE, PGDM, (30)
Verma Prashant, B.Com, MPM,(36)
Vohra Pravir, CAIIB, MA, (56)
Vora Hemant, BE, MS (43)
74
Name,Qualifications and Age (in years)
Desig./
Nature of
Duties**
Remuneration
Receieved `
Gross
`
Net
`
Expe-
rience
(in
years)
Date of
Commence-
ment of
Employ-
ment
Last employment
Employees posted at branches and offices abroad
Bafna Ashish, B.Sc., MBA,(38)
Chakravarti Arnab, B.Com, CA, CTM, PGDTFM, FRM, PGDASU, (32)
Dhir Virendra, B.Tech, PGDM, (39)
Ganjoo Pankaj, B.Sc., CAIIB, (47)
Guliani Harpreet, B.Com, DBF, PGDBA, (35)
Gupta Rakhee (Ms.), BA, MIB, (34)
Hussain Omer, B.Sc., (45)
Iyer B.K., B.Sc., PGDIM, (56)
Kumar Manish, B.Com, CA,(39)
Ramesh G.V.S., B.Com, CA, (47)
Sharma Vikash, B.Com, ICWAI, CA, CTM, (37)
Wong Lai Chun (Ms.), Bachelor of Accountancy, (51)
AGM
AGM
AGM
DGM
AGM
AGM
DGM
GM
DGM
JGM
DGM
JGM
6,869,990
6,774,402
4,911,237
4,922,993
6,806,988
6,037,069
8,589,399
8,589,399
6,269,592
5,890,770
6,736,195
5,823,166
7,328,460
4,242,356
13,144,053
12,029,445
6,967,272
6,396,527
9,939,835
7,047,628
7,170,044
6,652,694
9,298,155
8,188,322
16
8
13
27
11
13
13
22
16
24
13
34
7-Jun-01 Deputy Manager,OTCEI
25-Feb-08 Associate Director, Standard Chartered Bank
30-Sep-05 Manager Sales & Credit, Standard Chartered Bank
1-Apr-00 Manager Operations, Indusind Bank
15-Nov-02 Deputy Manager, Centurion Bank
16-Feb-04 Manager, ABN Amro Bank
6-Nov-07 Chief Compliance Officer, National Bank of Pakistan
1-Jul-03 Senior Director & Head Trade Banking, American Express Bank
28-Dec-99 Manager, Meta Strips Limited
29-Jun-92 Systems Manager, Wipro Systems
31-Dec-04 Assistant Manager, Indian Oil Corporation Limited
9-Jun-03 Head of Finance & Risk, AIB Govett (Asia) Limited
*
+
**
Indicates part of the year.
Nature of employment contractual, other employees are in the permanent employment of the Bank, governed by its rules and conditions of service.
Designation/Nature of duties - Abbreviations
MDCEO
EDCFO
GCTO
DYCFO
SGM
- Managing Director and Chief Executive Officer
- Executive Director and CFO
- Group Chief Technology Officer (now redesignated as President)
- Senior General Manager and Deputy Chief Financial Officer
- Senior General Manager
GM
DGM
- General Manager
- Deputy General Manager
DMD
ED
GE
GCO & CS
JCS
JGM
AGM
- Deputy Managing Director
- Executive Director
- Group Executive (now redesignated as President)
- Senior General Manager & Group Compliance Officer & Company Secretary
- General Manager - Joint Company Secretary & Head Compliance -
Capital Markets and Non-Banking Subsidiaries
- Joint General Manager
- Assistant General Manager
Note :
1. Gross remuneration for employees posted in India includes salary and other benefits and employer’s contribution to provident, superannuation and gratuity funds.It excludes valuation of the employee
stock options exercised during fiscal 2011 as it does not constitute remuneration for the purposes of Companies Act, 1956.
2. Gross remuneration for employees posted at branches and offices abroad includes salary and other benefits paid in foreign currency which is converted into Indian currency at the exchange rate as on
March 31, 2011.
3. Net remuneration for employees posted in India represents gross remuneration less profession tax and income tax.
4. Net remuneration for employees posted at branches and offices abroad represents gross remuneration less applicable tax/statutory deductions as applicable to the respective countries.
5. None of the employees mentioned above is a relative of any Director.
6. Designation/nature of duties are as on March 31, 2011 and remuneration is for the year ended on that date.
May 13, 2011
For and on behalf of the Board
K. V. Kamath
Chairman
Annual Report 2010-2011 75
financials
auditors’ report
To the Members of ICICI Bank Limited
1. We have audited the attached balance sheet of ICICI Bank Limited (the ‘Bank’) as at 31 March 2011 and also the profit and
loss account and cash flow statement for the year ended on that date annexed thereto. These financial statements are
the responsibility of the Bank’s management. Our responsibility is to express an opinion on these financial statements
based on our audit. Incorporated in the said financial statements are the returns of the Singapore, Bahrain and Hong
Kong branches of the Bank, audited by other auditors.
2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3.
The balance sheet and profit and loss account are drawn up in conformity with Forms A and B (revised) of the Third
Schedule to the Banking Regulation Act, 1949, read with Section 211 of the Companies Act, 1956.
4. We did not audit the financial statements of Singapore, Bahrain and Hong Kong branches, whose financial statements
reflect total assets of ` 850,507.9 million as at 31 March 2011, the total revenue of ` 42,480.8 million for the year ended
31 March 2011 and net cash flows amounting to ` 39,302.7 million for the year ended 31 March 2011. These financial
statements have been audited by other auditors, duly qualified to acts as auditors in the country of incorporation of the
said branches, whose reports have been furnished to us, and our opinion is based solely on the report of other auditors.
5. We report that:
a) We have obtained all the information and explanations, which to the best of our knowledge and belief were
necessary for the purposes of our audit and have found them to be satisfactory;
b)
c)
In our opinion, the transactions of the Bank which have come to our notice have been within its powers;
In our opinion, proper books of account as required by law have been kept by the Bank so far as appears from our
examination of those books and proper returns adequate for the purposes of our audit have been received from
branches not visited by us. The Branch Auditor’s Report(s) have been forwarded to us and have been appropriately
dealt with;
d) The balance sheet, profit and loss account and cash flow statement dealt with by this report are in agreement with
the books of account;
e)
In our opinion, the balance sheet, profit and loss account and cash flow statement dealt with by this report comply
with the accounting standards referred to in sub section (3C) of Section 211 of the Companies Act, insofar as they
apply to the Bank;
f) On the basis of written representations received from the directors, as on 31 March 2011, and taken on record by
the Board of Directors, we report that none of the directors is disqualified from being appointed as a director in
terms of clause (g) of sub section (1) of Section 274 of the Companies Act, 1956;
g)
In our opinion and to the best of our information and according to the explanations given to us, the said accounts
give the information required by the Companies Act, 1956 in the manner so required for banking companies, and
give a true and fair view in conformity with the accounting principles generally accepted in India;
i.
ii.
in case of the balance sheet, of the state of the affairs of the Bank as at 31 March 2011;
in case of the profit and loss account, of the profit for the year ended on that date; and
iii.
in case of of cash flow statement, of the cash flows for the year ended on that date.
For S.R. Batliboi & Co.
Firm registration number: 301003E
Chartered Accountants
per Shrawan Jalan
Partner
Membership No.: 102102
Mumbai
April 28, 2011
F1
balance sheet
at March 31, 2011
(` in ‘000s)
Schedule
At
31.03.2011
At
31.03.2010
CAPITAL AND LIABILITIES
Capital ............................................................................................
Employees stock options outstanding .........................................
Reserves and surplus ....................................................................
Deposits .........................................................................................
Borrowings ....................................................................................
Other liabilities and provisions .....................................................
TOTAL CAPITAL AND LIABILITIES ..............................................
ASSETS
Cash and balances with Reserve Bank of India ...........................
Balances with banks and money at call and short notice ...........
Investments ...................................................................................
Advances .......................................................................................
Fixed assets ...................................................................................
Other assets ...................................................................................
1
2
3
4
5
6
7
8
9
10
11
11,518,200
11,148,892
2,929
—
539,388,244
505,034,767
2,256,021,077
2,020,165,972
1,095,542,771
942,635,686
159,863,467
155,011,834
4,062,336,688
3,633,997,151
209,069,703
275,142,920
131,831,128
113,594,020
1,346,859,630
1,208,928,005
2,163,659,014
1,812,055,971
47,442,551
32,126,899
163,474,662
192,149,336
TOTAL ASSETS .............................................................................
4,062,336,688
3,633,997,151
Contingent liabilities ......................................................................
12
9,231,216,140
7,270,840,587
Bills for collection ..........................................................................
85,300,273
64,749,539
Significant accounting policies and notes to accounts ...............
17 & 18
The schedules referred to above form an integral part of the Balance Sheet.
As per our Report of even date.
FOR S.R. BATLIBOI & Co.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAn JALAn
Partner
Membership no.: 102102
Place : Mumbai
Date : April 28, 2011
F2
For and on behalf of the Board of Directors
K. V. KAMATH
Chairman
SRIDAR IyEngAR
CHAnDA KOCHHAR
Director Managing Director & CEO
n. S. KAnnAn
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
SAnDEEP BATRA
group Compliance Officer &
Company Secretary
RAKESH JHA
Deputy Chief
Financial Officer
balance sheet
profit and loss account
for the year ended March 31, 2011
Schedule
13
14
15
16
I.
II.
III.
INCOME
Interest earned .......................................................................
Other income .........................................................................
TOTAL INCOME ....................................................................
EXPENDITURE
Interest expended .................................................................
Operating expenses ..............................................................
Provisions and contingencies ..............................................
TOTAL EXPENDITURE ..........................................................
PROFIT/(LOSS)
net profit for the year ............................................................
Profit brought forward ...........................................................
TOTAL PROFIT/(LOSS) .........................................................
IV. APPROPRIATIONS/TRANSFERS
Transfer to Statutory Reserve ...............................................
Transfer to Reserve Fund ......................................................
Transfer to Capital Reserve ...................................................
Transfer to/(from) Investment Reserve Account ..................
Transfer to general Reserve .................................................
Transfer to Special Reserve ..................................................
Dividend (including corporate dividend tax)
for the previous year paid during the year ...........................
Proposed equity share dividend ...........................................
Proposed preference share dividend ...................................
Corporate dividend tax ........................................................
Balance carried over to balance sheet .................................
TOTAL ...................................................................................
Year ended
31.03.2011
259,740,528
66,478,925
326,219,453
169,571,515
66,172,492
38,961,684
274,705,691
51,513,762
34,643,807
86,157,569
12,880,000
360
832,500
(1,160,000)
2,584
5,250,000
21,658
16,125,811
35
2,022,784
50,181,837
86,157,569
(` in ‘000s)
Year ended
31.03.2010
257,069,331
74,776,500
331,845,831
175,925,704
58,598,327
57,071,971
291,596,002
40,249,829
28,096,510
68,346,339
10,070,000
2,170
4,440,000
1,160,000
10,369
3,000,000
929
13,378,604
35
1,640,425
34,643,807
68,346,339
Significant accounting policies and notes to accounts
Earnings per share (refer note 18.2)
Basic (`) .................................................................................
Diluted (`) ...............................................................................
Face value per share (`) ................................................................
17 & 18
The schedules referred to above form an integral part of the Profit and Loss Account
45.27
45.06
10.00
36.14
35.99
10.00
As per our Report of even date.
FOR S.R. BATLIBOI & Co.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAn JALAn
Partner
Membership no.: 102102
Place : Mumbai
Date : April 28, 2011
For and on behalf of the Board of Directors
K. V. KAMATH
Chairman
SRIDAR IyEngAR
CHAnDA KOCHHAR
Director Managing Director & CEO
n. S. KAnnAn
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
SAnDEEP BATRA
group Compliance Officer &
Company Secretary
RAKESH JHA
Deputy Chief
Financial Officer
F3
cash flow statement
for the year ended March 31, 2011
PARTICULARS
Cash flow from operating activities
net profit before taxes ....................................................................................
Adjustments for:
Depreciation and amortisation .......................................................................
net (appreciation)/depreciation on investments ............................................
Provision in respect of non-performing assets
(including prudential provision on standard assets) .....................................
Provision for contingencies & others ..............................................................
Income from subsidiaries, joint ventures and consolidated entities ............
(Profit)/loss on sale of fixed assets .................................................................
Employee Stock Options grants ....................................................................
Adjustments for:
(Increase)/decrease in investments ................................................................
(Increase)/decrease in advances ....................................................................
Increase/(decrease) in borrowings .................................................................
Increase/(decrease) in deposits ......................................................................
(Increase)/decrease in other assets ................................................................
Increase/(decrease) in other liabilities and provisions ..................................
Refund/(payment) of direct taxes ...................................................................
Net cash flow from operating activities ....................................................... (A)
Cash flow from investing activities ...............................................................
Investments in subsidiaries and/or joint ventures (including application money)
Income from subsidiaries, joint ventures and consolidated entities
Purchase of fixed assets..................................................................................
Proceeds from sale of fixed assets .................................................................
(Purchase)/sale of held to maturity securities ................................................
Net cash from investing activities ................................................................
Cash flow from financing activities ...............................................................
Proceeds from issue of share capital (including ESOPs) net of issue expenses
net proceeds/(repayment) of bonds (including subordinated debt) ............
Dividend and dividend tax paid ......................................................................
Net cash generated from financing activities...............................................
Effect of exchange fluctuation on translation reserve .................................
Net cash and cash equivalents taken over from erstwhile The Bank of
(E)
Rajasthan Limited on amalgamation ............................................................
Net increase/(decrease) in cash and cash equivalents (A)+(B)+(C)+(D)+(E)
Cash and cash equivalents at beginning of the year ...................................
Cash and cash equivalents at end of the year .............................................
(C)
(D)
(B)
Year ended
31.03.2011
(` in ‘000s)
Year ended
31.03.2010
67,607,025
53,453,218
6,779,203
13,498,447
19,769,127
1,061,083
(4,358,221)
(411,695)
2,929
103,947,898
(56,232,153)
(310,048,851)
102,920,003
100,567,606
24,232,654
(15,973,315)
(154,534,056)
(18,503,060)
(69,089,218)
(2,516,000)
4,358,221
(4,557,106)
552,792
(18,926,154)
(21,088,247)
1,404,886
44,680,138
(15,025,283)
31,059,741
(490,685)
11,772,300
(47,836,109)
388,736,940
340,900,831
7,550,323
6,242,755
43,621,629
273,494
(3,933,959)
(1,345,173)
—
105,862,287
(243,844,179)
327,300,630
(17,220,942)
(163,312,277)
54,586,538
(28,694,588)
(71,184,818)
(15,985,360)
18,692,109
(1,113,156)
3,933,959
(5,101,617)
3,164,763
60,623,375
61,507,324
610,429
26,946,780
(13,731,041)
13,826,168
(4,954,299)
—
89,071,302
299,665,638
388,736,940
Significant accounting policies and notes to accounts (refer schedule 17 & 18).
The schedules referred to above form an integral part of the Balance Sheet.
As per our Report of even date.
For and on behalf of the Board of Directors
FOR S.R. BATLIBOI & Co.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAn JALAn
Partner
Membership no.: 102102
Place : Mumbai
Date : April 28, 2011
F4
K. V. KAMATH
Chairman
SRIDAR IyEngAR
CHAnDA KOCHHAR
Director Managing Director & CEO
n. S. KAnnAn
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
SAnDEEP BATRA
group Compliance Officer &
Company Secretary
RAKESH JHA
Deputy Chief
Financial Officer
schedules
forming part of the Balance Sheet
SCHEDULE 1 - CAPITAL
Authorised capital
(` in ‘000s)
At
31.03.2011
At
31.03.2010
1,275,000,000 equity shares of ` 10 each (March 31, 2010: 1,275,000,000 equity
shares of ` 10 each).............................................................................................................
12,750,000
12,750,000
15,000,000 shares of ` 100 each
(March 31, 2010: 15,000,000 shares of ` 100 each)1 .........................................................
1,500,000
1,500,000
350 preference shares of ` 10 million each
(March 31, 2010: 350 preference shares of ` 10 million each) 2 .......................................
3,500,000
3,500,000
Equity share capital
Issued, subscribed and paid-up capital
1,114,845,314 equity shares of ` 10 each
(March 31, 2010: 1,113,250,642 equity shares of ` 10 each) ...........................................
11,148,453
11,132,506
Add: 34,184,121 equity shares of ` 10 each fully paid up issued to shareholders of
erstwhile The Bank of Rajasthan Limited ...........................................................................
Less: 200 equity shares of the Bank, earlier held by erstwhile The Bank of Rajasthan
Limited, extinguished on amalgamation ............................................................................
Add: 2,743,137 equity shares of ` 10 each fully paid up (March 31, 2010: 1,594,672
equity shares) issued pursuant to exercise of employee stock options ...........................
Less: Calls unpaid ..............................................................................................................
Add: 111,603 equity shares forfeited (March 31, 2010: 111,603 equity shares) ..............
341,841
(2)
—
—
27,431
15,947
11,517,723
11,148,453
(293)
770
(331)
770
TOTAL CAPITAL ..................................................................................................................
11,518,200
11,148,892
1.
2.
These shares will be of such class and with such rights, privileges, conditions or restrictions as may be determined by the Bank in
accordance with the Articles of Association of the Bank and subject to the legislative provisions in force for the time being in that behalf.
Pursuant to RBI circular no. DBOD.BP.BC no.81/ 21.01.002/2009-10, the issued and paid-up preference shares are grouped under
Schedule 4 - ”Borrowings”.
F5
schedules
forming part of the Balance Sheet (Contd.)
(` in ‘000s)
At
31.03.2011
At
31.03.2010
58,863,807
48,793,807
SCHEDULE 2 - RESERVES AND SURPLUS
I.
Statutory reserve
Opening balance ........................................................................................................
Additions during the year [includes ` 2,002.7 million (March 31, 2010: nil)]
on amalgamation during the year ended March 31, 2011. ......................................
Deductions during the year .......................................................................................
Closing balance ..........................................................................................................
II.
Special reserve
Opening balance ........................................................................................................
Additions during the year ..........................................................................................
Deductions during the year .......................................................................................
Closing balance ..........................................................................................................
III. Securities premium
14,882,712
—
73,746,519
26,440,000
5,250,000
—
31,690,000
Opening balance .......................................................................................................
Additions during the year1 .........................................................................................
Deductions during the year2 ......................................................................................
Closing balance ..........................................................................................................
313,511,817
1,595,956
2,097,974
313,009,799
IV.
V.
Investment reserve account
Opening balance ........................................................................................................
Additions during the year ..........................................................................................
Deductions during the year3 ......................................................................................
Closing balance ..........................................................................................................
Capital reserve
Opening balance ........................................................................................................
Additions during the year4 .........................................................................................
Deductions during the year .......................................................................................
Closing balance ..........................................................................................................
VI. Foreign currency translation reserve
Opening balance ........................................................................................................
Additions during the year ..........................................................................................
Deductions during the year .......................................................................................
Closing balance ..........................................................................................................
VII. Reserve fund
Opening balance ........................................................................................................
Additions during the year5 .........................................................................................
Deductions during the year .......................................................................................
Closing balance ..........................................................................................................
VIII. Revenue and other reserves
Opening balance .......................................................................................................
Additions during the year6 .........................................................................................
Deductions during the year .......................................................................................
Closing balance ..........................................................................................................
IX. Balance in profit and loss account .............................................................................
1,160,000
—
1,160,000
—
20,630,000
832,500
—
21,462,500
(19,999)
—
490,691
(510,690)
10,919
360
—
11,279
49,794,416
2,584
—
49,797,000
50,181,837
10,070,000
—
58,863,807
23,440,000
3,000,000
—
26,440,000
312,917,382
594,435
—
313,511,817
—
1,160,000
—
1,160,000
16,190,000
4,440,000
—
20,630,000
4,966,797
—
4,986,796
(19,999)
8,749
2,170
—
10,919
49,784,047
10,369
—
49,794,416
34,643,807
TOTAL RESERVES AND SURPLUS
539,388,244
505,034,767
Includes ` 1,391.3 million (March 31, 2010: ` 568.3 million) on exercise of employee stock options.
1.
2. Represents excess of paid up value of equity shares issued over the fair value of the net assets acquired and amalgamation expenses.
3. Represents the amount utilised for provision made during the year towards depreciation in investments in AFS and HFT categories.
4. Represents profit on sale of investments in HTM category, net of taxes and transfer to Statuory Reserve. Also includes profit on sale of
land and buildings, net of taxes and transfer to Statutory Reserve, for the year ended March 31, 2011.
5. Represents appropriation of 5% of net profit by Sri Lanka branch to meet the requirements of Section 20 of Sri Lankan Banking Act no.30
of 1988.
6. Refer item 9 in Schedule-18.
F6
schedules
forming part of the Balance Sheet (Contd.)
(` in ‘000s)
At
31.03.2011
At
31.03.2010
SCHEDULE 3 - DEPOSITS
A.
I. Demand deposits
From banks ...................................................................................................
i)
ii) From others ...................................................................................................
II. Savings bank deposits .........................................................................................
III. Term deposits
20,175,805
327,599,485
668,689,461
From banks ...................................................................................................
i)
ii) From others ...................................................................................................
TOTAL DEPOSITS ..............................................................................................................
153,559,266
1,085,997,060
2,256,021,077
B.
I. Deposits of branches in India ..............................................................................
II. Deposits of branches outside India .....................................................................
TOTAL DEPOSITS ..............................................................................................................
2,141,804,854
114,216,223
2,256,021,077
SCHEDULE 4 - BORROWINGS
Borrowings in India
I.
i) Reserve Bank of India .........................................................................................
ii) Other banks ..........................................................................................................
iii) Other institutions and agencies
a) government of India .....................................................................................
b) Financial institutions .....................................................................................
iv) Borrowings in the form of Bonds and debentures
(excluding subordinated debt)1 ...........................................................................
v) Application money-bonds2 ..................................................................................
vi) Capital instruments
Innovative Perpetual Debt Instruments (IPDI)
2,050,000
37,229,750
299,581
47,140,042
11,268,671
—
14,855,980
295,118,656
532,183,675
88,149,385
1,089,858,276
2,020,165,972
1,921,759,603
98,406,369
2,020,165,972
—
25,000,000
687,491
54,405,331
26,136,955
25,000,000
(qualifying as Tier l capital) ..................................................................................
13,010,000
13,010,000
Hybrid debt capital instruments issued as bonds/debentures
(qualifying as upper Tier II capital) ......................................................................
Redeemable non-Cumulative Preference Shares (RnCPS)
(Redeemable non-Cumulative Preference Shares of ` 10 million each
issued to preference share holders of erstwhile ICICI Limited on
amalgamation, redeemable at par on April 20, 2018) ........................................
Unsecured redeemable debentures/bonds
(subordinated debt included in Tier II capital) ....................................................
TOTAL BORROWINGS IN INDIA .......................................................................................
98,188,633
97,502,000
3,500,000
3,500,000
197,473,236
410,159,913
138,547,481
383,789,258
II.
Borrowings outside India
i) Capital instruments
Innovative Perpetual Debt Instruments (IPDI)
(qualifying as Tier l capital) ..................................................................................
Hybrid debt capital instruments issued as bonds/debentures
(qualifying as upper Tier II capital) ......................................................................
ii) Bonds and notes ..................................................................................................
iii) Other borrowings3................................................................................................
TOTAL BORROWINGS OUTSIDE INDIA ...........................................................................
TOTAL BORROWINGS
15,106,107
15,199,979
40,135,500
278,368,421
351,772,830
685,382,858
1,095,542,771
40,410,000
250,570,342
252,666,107
558,846,428
942,635,686
Includes borrowings guaranteed by government of India of ` 4,367.5 million (March 31, 2010: ` 8,355.0 million).
1.
2. Application money received towards subordinated debt.
3.
4. Secured borrowings in I and II above are nil (March 31, 2010: nil) except borrowings of ` 1.2 million (March 31, 2010: nil) under Collateralised
Includes borrowings guaranteed by government of India for the equivalent of ` 16,515.0 million (March 31, 2010: ` 17,252.7 million).
Borrowing and Lending Obligation and/or market repurchase transactions with banks and financial institutions.
F7
schedules
forming part of the Balance Sheet (Contd.)
(` in ‘000s)
At
31.03.2011
At
31.03.2010
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I.
II.
Bills payable ................................................................................................................
34,304,793
27,069,240
Inter-office adjustments (net credit) ..........................................................................
—
244,147
III.
Interest accrued ..........................................................................................................
26,398,543
24,421,815
IV. Sundry creditors .........................................................................................................
31,879,286
39,664,039
V.
Provision for standard assets.....................................................................................
14,796,004
14,360,648
VI. Others1 .......................................................................................................................
52,484,841
49,251,945
TOTAL OTHER LIABILITIES AND PROVISIONS ...............................................................
159,863,467
155,011,834
1.
Includes:
a) Proposed dividend amounting to ` 16,125.8 million (March 31, 2010: ` 13,378.6 million).
b) Corporate dividend tax payable amounting to ` 2,022.8 million (March 31, 2010: ` 1,640.4 million).
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I.
II.
Cash in hand (including foreign currency notes) ......................................................
37,843,512
33,410,225
Balances with Reserve Bank of India in current accounts ........................................
171,226,191
241,732,695
TOTAL CASH AND BALANCES WITH RESERVE BANK OF INDIA ................................
209,069,703
275,142,920
SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
I.
In India
i) Balances with banks
a)
In current accounts .......................................................................................
4,996,213
9,595,803
b)
In other deposit accounts .............................................................................
39,418,419
36,076,344
ii) Money at call and short notice
a) With banks ....................................................................................................
b) With other institutions ..................................................................................
9,600,000
1,999,606
70,000
—
TOTAL ...............................................................................................................................
56,014,238
45,742,147
II. Outside India
i)
In current accounts ..............................................................................................
20,331,714
15,722,069
ii)
In other deposit accounts ....................................................................................
11,187,780
44,241,179
iii) Money at call and short notice ............................................................................
44,297,396
7,888,625
TOTAL ...............................................................................................................................
75,816,890
67,851,873
TOTAL BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE .........
131,831,128
113,594,020
F8
schedules
forming part of the Balance Sheet (Contd.)
(` in ‘000s)
SCHEDULE 8 - INVESTMENTS
I.
Investments in India [net of provisions]
i) government securities ........................................................................................
ii) Other approved securities ...................................................................................
iii) Shares (includes equity and preference shares) ...............................................
iv) Debentures and bonds .......................................................................................
v) Subsidiaries and/or joint ventures1 .....................................................................
vi) Others (commercial paper, mutual fund units, pass through certificates,
security receipts, certificate of deposits, RIDF and other related
investments etc.) .................................................................................................
TOTAL INVESTMENTS IN INDIA ......................................................................................
II.
Investments outside India [net of provisions]
i) government securities ........................................................................................
ii) Subsidiaries and/or joint ventures abroad
(includes equity and preference shares) ............................................................
iii) Others ...................................................................................................................
TOTAL INVESTMENTS OUTSIDE INDIA ..........................................................................
TOTAL INVESTMENTS ......................................................................................................
B.
A.
Investments in India
gross value of investments .......................................................................................
Less: Aggregate of provision/depreciation ...............................................................
net investments..........................................................................................................
Investments outside India
gross value of investments .......................................................................................
Less: Aggregate of provision/depreciation ...............................................................
net investments..........................................................................................................
TOTAL INVESTMENTS ......................................................................................................
Includes application money amounting to ` 50.7 million (March 31, 2010: ` 1,000.0 million).
1.
SCHEDULE 9 - ADVANCES [net of provisions]
A.
i) Bills purchased and discounted ..........................................................................
ii) Cash credits, overdrafts and loans repayable on demand ................................
iii) Term loans ............................................................................................................
iv) Securitisation, finance lease and hire purchase receivables ............................
TOTAL ADVANCES ............................................................................................................
i) Secured by tangible assets (includes advances against book debts) ...............
B.
ii) Covered by bank/government guarantees .........................................................
iii) Unsecured ............................................................................................................
TOTAL ADVANCES ............................................................................................................
C.
I. Advances in India
i) Priority sector ................................................................................................
ii) Public sector ..................................................................................................
iii) Banks .............................................................................................................
iv) Others ............................................................................................................
TOTAL ADVANCES IN INDIA ............................................................................................
II. Advances outside India
At
31.03.2011
At
31.03.2010
641,287,140
325,363
28,134,073
161,462,866
64,796,927
683,991,406
45,009
27,557,381
36,353,907
62,226,766
356,934,417
1,252,940,786
307,378,383
1,117,552,852
8,862,278
1,645,046
66,026,356
19,030,210
66,005,026
23,725,081
93,918,844
1,346,859,630
91,375,153
1,208,928,005
1,272,423,922
19,483,136
1,252,940,786
94,499,793
580,949
93,918,844
1,346,859,630
58,480,555
302,123,773
1,690,225,268
112,829,418
2,163,659,014
1,679, 661,354
27,057,409
456,940,251
2,163,659,014
534,015,609
13,788,639
1,810,607
1,063,077,445
1,612,692,300
1,129,332,338
11,779,486
1,117,552,852
91,756,742
381,589
91,375,153
1,208,928,005
44,531,591
255,552,276
1,375,739,502
136,232,602
1,812,055,971
1,336,426,827
21,202,426
454,426,718
1,812,055,971
539,773,871
3,201,088
41,790
817,672,519
1,360,689,268
i) Due from banks ............................................................................................
ii) Due from others
37,410,346
13,515,963
a) Bills purchased and discounted .............................................................
b) Syndicated and term loans .....................................................................
c) Others ......................................................................................................
TOTAL ADVANCES OUTSIDE INDIA ................................................................................
TOTAL ADVANCES ............................................................................................................
4,572,713
494,699,999
14,283,656
550,966,714
2,163,659,014
15,060,877
412,037,485
10,752,378
451,366,703
1,812,055,971
F9
schedules
forming part of the Balance Sheet (Contd.)
(` in ‘000s)
At
31.03.2011
At
31.03.2010
SCHEDULE 10 - FIXED ASSETS
I.
Premises
At cost at March 31 of preceding year .....................................................................
Additions during the year1 .........................................................................................
Deductions during the year .......................................................................................
Depreciation to date ..................................................................................................
net block2 ....................................................................................................................
II. Other fixed assets (including furniture and fixtures)
At cost at March 31 of preceding year .....................................................................
Additions during the year1 .........................................................................................
Deductions during the year .......................................................................................
Depreciation to date ..................................................................................................
net block ....................................................................................................................
III. Assets given on lease
At cost at March 31 of preceding year .....................................................................
Additions during the year ..........................................................................................
Deductions during the year .......................................................................................
Depreciation to date, accumulated lease adjustment and provisions ....................
net block .....................................................................................................................
TOTAL FIXED ASSETS .......................................................................................................
23,122,359
15,480,495
(605,659)
(5,799,328)
32,197,867
30,468,293
6,048,746
(739,661)
(23,103,046)
12,674,332
17,550,500
—
(250,413)
(14,729,735)
2,570,352
47,442,551
1.
2.
Includes assets acquired from erstwhile The Bank of Rajasthan Limited during the year ended March 31, 2011.
Includes assets amounting to nil (March 31, 2010: ` 446.1 million) which are in the process of being sold.
SCHEDULE 11 - OTHER ASSETS
Inter-office adjustments (net) .....................................................................................
I.
II.
Interest accrued ..........................................................................................................
III. Tax paid in advance/tax deducted at source (net) ....................................................
IV.
Stationery and stamps ...............................................................................................
non-banking assets acquired in satisfaction of claims1 ...........................................
V.
VI. Advances for capital assets ......................................................................................
VII. Deposits ......................................................................................................................
VIII. Deferred tax asset (net) ..............................................................................................
IX. Others .........................................................................................................................
TOTAL OTHER ASSETS ......................................................................................................
207,829
39,216,054
34,885,203
109,751
730,338
1,131,955
11,868,646
26,900,252
48,424,634
163,474,662
24,110,318
777,682
(1,765,641)
(4,781,332)
18,341,027
32,575,569
1,599,686
(3,706,962)
(20,216,373)
10,251,920
17,751,174
—
(200,674)
(14,016,548)
3,533,952
32,126,899
—
32,528,366
37,793,206
641
674,945
11,744,493
17,976,859
20,756,703
70,674,123
192,149,336
1.
Includes certain non-banking assets acquired in satisfaction of claims which are in the process of being transferred in the Bank's name.
SCHEDULE 12 - CONTINGENT LIABILITIES
I.
II.
III.
IV. guarantees given on behalf of constituents
Claims against the Bank not acknowledged as debts ..............................................
Liability for partly paid investments ..........................................................................
Liability on account of outstanding forward exchange contracts1 ...........................
a) In India ...................................................................................................................
b) Outside India .........................................................................................................
V.
Acceptances, endorsements and other obligations .................................................
VI. Currency swaps1 .........................................................................................................
Interest rate swaps,currency options and interest rate futures1 ..............................
VII.
VIII. Other items for which the Bank is contingently liable2 .............................................
TOTAL CONTINGENT LIABILITIES ...................................................................................
1. Represents notional amount.
2.
17,022,222
128,050
2,468,618,342
33,568,263
128,126
1,660,687,240
647,336,491
178,935,843
393,340,369
561,284,711
4,903,897,090
60,653,022
9,231,216,140
489,280,827
129,084,608
321,224,087
524,786,068
4,012,141,159
99,940,209
7,270,840,587
Includes an amount of ` 1,653.8 million pertaining to government securities settled after the Balance Sheet date, which are accounted
as per settlement date method pursuant to RBI guidelines issued during the year ended March 31, 2011.
F10
schedules
forming part of the Profit and Loss Account
(` in ‘000s)
Year ended
31.03.2011
Year ended
31.03.2010
SCHEDULE 13 - INTEREST EARNED
I.
Interest/discount on advances/bills ...........................................................................
II.
III.
Income on investments ..............................................................................................
Interest on balances with Reserve Bank of India and other inter-bank funds .........
IV. Others1, 2 ......................................................................................................................
164,247,832
173,727,325
79,051,918
3,667,668
12,773,110
64,663,488
6,249,906
12,428,612
TOTAL INTEREST EARNED .......................................................................................
259,740,528
257,069,331
1. Includes interest on income tax refunds amounting to ` 1,646.3 million (March 31, 2010: ` 1,208.3 milion).
2. Includes interest and amortisation of premium on non-trading interest rate swaps and foreign currency swaps.
SCHEDULE 14 - OTHER INCOME
I.
II.
Commission, exchange and brokerage ....................................................................
Profit/(loss) on sale of investments (net) ...................................................................
55,146,367
2,176,146
III. Profit/(loss) on revaluation of investments (net) .......................................................
(4,610,137)
IV.
V.
Profit/(loss) on sale of land, buildings and other assets (net)1 .................................
Profit/(loss) on exchange transactions (net) .............................................................
VI.
Income earned by way of dividends, etc. from subsidiary companies and/or joint
ventures abroad/in India ............................................................................................
VII. Miscellaneous income (including lease income) .....................................................
411,695
9,168,753
4,113,468
72,633
48,308,087
5,464,210
1,852,196
1,345,173
11,060,537
3,692,716
3,053,581
VIII. TOTAL OTHER INCOME ............................................................................................
66,478,925
74,776,500
1.
Includes profit/(loss) on sale of assets given on lease.
SCHEDULE 15 - INTEREST EXPENDED
Interest on deposits ....................................................................................................
100,708,579
115,134,716
Interest on Reserve Bank of India/inter-bank borrowings ........................................
III. Others (including interest on borrowings of erstwhile ICICI Limited) .....................
12,482,351
56,380,585
11,951,326
48,839,662
TOTAL INTEREST EXPENDED ...........................................................................................
169,571,515
175,925,704
SCHEDULE 16 - OPERATING EXPENSES
Payments to and provisions for employees .............................................................
28,169,342
19,257,929
I.
II.
I.
II.
III.
Rent, taxes and lighting .............................................................................................
Printing and stationery ..............................................................................................
IV. Advertisement and publicity .....................................................................................
V.
Depreciation on Bank's property .............................................................................
VI. Depreciation (including lease equalisation) on leased assets ................................
VII. Directors' fees, allowances and expenses................................................................
VIII. Auditors' fees and expenses .....................................................................................
IX.
X.
Law charges ...............................................................................................................
Postages, telegrams, telephones, etc. ......................................................................
XI. Repairs and maintenance .......................................................................................
XII.
Insurance ...................................................................................................................
XIII. Direct marketing agency expenses .........................................................................
XIV. Other expenditure ....................................................................................................
TOTAL OPERATING EXPENSES .......................................................................................
6,537,415
932,907
1,487,541
4,835,223
789,135
4,635
22,254
422,060
1,637,677
5,045,437
2,064,252
1,570,315
5,924,256
915,957
1,108,010
4,778,512
1,416,505
4,193
22,500
987,406
2,007,720
4,724,642
2,005,645
1,254,784
12,654,299
66,172,492
14,190,268
58,598,327
F11
schedules
forming part of the Accounts (Contd.)
SCHEDULE 17
Significant accounting policies
OVERVIEW
ICICI Bank Limited (ICICI Bank or the Bank), incorporated in Vadodara, India is a publicly held banking company engaged in
providing a wide range of banking and financial services including commercial banking and treasury operations. ICICI Bank is
a banking company governed by the Banking Regulation Act, 1949.
Basis of preparation
The financial statements have been prepared in accordance with requirements prescribed under the Third Schedule of the
Banking Regulation Act, 1949. The accounting and reporting policies of ICICI Bank used in the preparation of these financial
statements conform to generally Accepted Accounting Principles in India (Indian gAAP), the guidelines issued by Reserve
Bank of India (RBI) from time to time, the Accounting Standards (AS) issued by the Institute of Chartered Accountants of India
(ICAI) and notified by the Companies (Accounting Standards) Rules, 2006 to the extent applicable and practices generally
prevalent in the banking industry in India. The Bank follows the accrual method of accounting, except where otherwise stated,
and the historical cost convention.
The preparation of financial statements requires the management to make estimates and assumptions which are considered
in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the financial statements
and the reported income and expenses during the reporting period. Management believes that the estimates used in the
preparation of the financial statements are prudent and reasonable. Future results could differ from these estimates.
SIGNIFICANT ACCOUNTING POLICIES
1.
Revenue recognition
a)
b)
c)
Loan processing fee is accounted for upfront when it becomes due.
Interest income is recognised in the profit and loss account as it accrues except in the case of non-performing assets
(nPAs) where it is recognised upon realisation, as per the income recognition and asset classification norms of RBI.
Income from hire purchase operations is accrued by applying the implicit interest rate to outstanding balances.
Income from leases is calculated by applying the interest rate implicit in the lease to the net investment outstanding
on the lease over the primary lease period. Leases entered into till March 31, 2001 have been accounted for as
operating leases.
Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.
d)
e) Dividend is accounted on an accrual basis when the right to receive the dividend is established.
f)
g) Project appraisal/structuring fee is accounted for on the completion of the agreed service.
h) Arranger fee is accounted for as income when a significant portion of the arrangement/syndication is completed.
i) Commission received on guarantees issued is amortised on a straight-line basis over the period of the guarantee.
j) All other fees are accounted for as and when they become due.
k) net income arising from sell-down/securitisation of loan assets prior to February 1, 2006 has been recognised
upfront as interest income. With effect from February 1, 2006, net income arising from securitisation of loan assets
is amortised over the life of securities issued or to be issued by the special purpose vehicle/special purpose entity
to which the assets are sold. net income arising from sale of loan assets through direct assignment with recourse
obligation is amortised over the life of underlying assets sold and net income from sale of loan assets through direct
assignment, without any recourse obligation, is recognised at the time of sale. net loss arising on account of the
sell-down/securitisation and direct assignment of loan assets is recognised at the time of sale.
l) The Bank deals in bullion business on a consignment basis. The difference between price recovered from customers
and cost of bullion is accounted for at the time of sales to the customers. The Bank also deals in bullion on a
borrowing and lending basis and the interest paid/received is accounted on accrual basis.
Investments
Investments are accounted for in accordance with the extant RBI guidelines on investment classification and valuation
as given below.
a) All investments are classified into ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’. Reclassifications,
if any, in any category are accounted for as per RBI guidelines. Under each classification, the investments are further
categorised as (a) government securities, (b) other approved securities, (c) shares, (d) bonds and debentures,
(e) subsidiaries and joint ventures and (f) others.
‘Held to Maturity’ securities are carried at their acquisition cost or at amortised cost, if acquired at a premium over
the face value. Any premium over the face value of fixed rate and floating rate securities acquired is amortised over
the remaining period to maturity on a constant yield basis and straight line basis respectively.
‘Available for Sale’ and ‘Held for Trading’ securities are valued periodically as per RBI guidelines. Any premium
over the face value of fixed rate and floating rate investments in government securities, classified as ‘Available for
b)
c)
2.
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schedules
forming part of the Accounts (Contd.)
Sale’, is amortised over the remaining period to maturity on constant yield basis and straight line basis respectively.
Quoted investments are valued based on the trades/quotes on the recognised stock exchanges, subsidiary general
ledger account transactions, price list of RBI or prices declared by Primary Dealers Association of India jointly with
Fixed Income Money Market and Derivatives Association (FIMMDA), periodically.
The market/fair value of unquoted government securities which are in the nature of Statutory Liquidity Ratio (SLR)
securities included in the ‘Available for Sale’ and ‘Held for Trading’ categories is as per the rates published by
FIMMDA. The valuation of other unquoted fixed income securities wherever linked to the yield-to-Maturity (yTM)
rates, is computed with a mark-up (reflecting associated credit risk) over the yTM rates for government securities
published by FIMMDA.
Unquoted equity shares are valued at the break-up value, if the latest balance sheet is available, or at ` 1, as per RBI
guidelines.
Securities are valued scrip-wise and depreciation/appreciation is aggregated for each category. net appreciation in
each category, if any, being unrealised, is ignored, while net depreciation is provided for.
d) Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged
to the profit and loss account.
e) Equity investments in subsidiaries/joint ventures are categorised as ‘Held to Maturity’ in accordance with RBI
guidelines. The Bank assesses these investments for any permanent diminution in value and appropriate provisions
are made.
f) Profit on sale of investments in the ‘Held to Maturity’ category is credited to the profit and loss account and is
thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit on
sale of investments in ‘Available for Sale’ and ‘Held for Trading’ categories is credited to profit and loss account.
g) Market repurchase and reverse repurchase transactions are accounted for as borrowing and lending transactions in
accordance with the extant RBI guidelines. Transactions with the RBI under Liquidity Adjustment Facility (LAF) are
accounted for as sale and purchase transactions.
h) Broken period interest (the amount of interest from the previous interest payment date till the date of purchase/sale
of instruments) on debt instruments is treated as a revenue item.
i) At the end of each reporting period, security receipts issued by the asset reconstruction company are valued in
accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly,
in cases where the cash flows from security receipts issued by the asset reconstruction company are limited to the
actual realisation of the financial assets assigned to the instruments in the concerned scheme, the Bank reckons the
net asset value obtained from the asset reconstruction company from time to time, for valuation of such investments
at each reporting period end.
j) The Bank follows trade date method of accounting for purchase and sale of investments, except government
securities where settlement date method of accounting is followed from January 1, 2011 in accordance with RBI
guidelines.
3. Provisions/write-offs on loans and other credit facilities
a) All credit exposures, including advances at the overseas branches and overdues arising from crystallised derivative
contracts, are classified as per RBI guidelines, into performing and nPAs. Further, nPAs are classified into sub-
standard, doubtful and loss assets based on the criteria stipulated by RBI.
In the case of corporate loans, provisions are made for sub-standard and doubtful assets at rates prescribed by RBI.
Loss assets and the unsecured portion of doubtful assets are provided/written off as per the extant RBI guidelines.
For advances booked in overseas branches, provisions are made at the higher of the provision required at the
overseas branch as per the host country regulations and provision required as per extant RBI guidelines. Provisions
on homogeneous retail loans, subject to minimum provisioning requirements of RBI, are assessed at a borrower
level on the basis of days past due.
The Bank holds specific provisions against non-performing loans, general provision against performing loans and
floating provision taken over from erstwhile Bank of Rajasthan upon amalgamation. The assessment of incremental
specific provisions is made after taking into consideration the existing specific provision held. The specific provisions
on retail loans held by the Bank are higher than the minimum regulatory requirements.
b) Provision on assets restructured/rescheduled is made in accordance with the applicable RBI guidelines on
restructuring of advances by Banks.
In respect of non-performing loan accounts subjected to restructuring, the account is upgraded to standard only
after the specified period i.e. a period of one year after the date when first payment of interest or of principal,
whichever is earlier, falls due, subject to satisfactory performance of the account during the period.
c) Amounts recovered against debts written off in earlier years and provisions no longer considered necessary in the
context of the current status of the borrower are recognised in the profit and loss account.
d) In addition to the specific provision on nPAs, the Bank maintains a general provision on performing loans. The
general provision covers the requirements of the RBI guidelines.
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schedules
forming part of the Accounts (Contd.)
e)
In addition to the provisions required to be held according to the asset classification status, provisions are held for
individual country exposures (other than for home country exposure). The countries are categorised into seven risk
categories namely insignificant, low, moderate, high, very high, restricted and off-credit and provisioning is made
on exposures exceeding 180 days on a graded scale ranging from 0.25% to 100%. For exposures with contractual
maturity of less than 180 days, provision is required to be held at 25% of the rates applicable to exposures exceeding
180 days. If the country exposure (net) of the Bank in respect of each country does not exceed 1% of the total
funded assets, no provision is required on such country exposure.
Transfer and servicing of assets
The Bank transfers commercial and consumer loans through securitisation transactions. The transferred loans are
de-recognised and gains/losses are accounted for only if the Bank surrenders the rights to benefits specified in the
underlying securitised loan contract. Recourse and servicing obligations are accounted for net of provisions.
In accordance with the RBI guidelines for securitisation of standard assets, with effect from February 1, 2006, the Bank
accounts for any loss arising from securitisation immediately at the time of sale and the profit/premium arising from
securitisation is amortised over the life of the securities issued or to be issued by the special purpose vehicle to which
the assets are sold. In the case of loans sold to an asset reconstruction company, the excess provision is not reversed
but is utilised to meet the shortfall/loss on account of sale of other financial assets to securitisation company (SC)/
reconstruction company (RC).
Fixed assets and depreciation
Premises and other fixed assets are carried at cost less accumulated depreciation. Cost includes freight, duties, taxes and
incidental expenses related to the acquisition and installation of the asset. Depreciation is charged over the estimated
useful life of a fixed asset on a straight-line basis. The rates of depreciation for fixed assets, which are not lower than the
rates prescribed in Schedule XIV of the Companies Act, 1956, are given below:
Asset
Premises owned by the Bank
Improvements to leasehold premises
ATMs
Plant and machinery like air conditioners, photo-copying
machines, etc.
Computers
Furniture and fixtures
Motor vehicles
Others (including Software and system development expenses)
Depreciation Rate
1.63%
1.63% or over the lease period, whichever is higher
12.50%
10.00%
33.33%
15.00%
20.00%
25.00%
a. Depreciation on leased assets and leasehold improvements is recognised on a straight-line basis using rates
determined with reference to the primary period of lease or rates specified in Schedule XIV to the Companies Act,
1956, whichever is higher.
b. Assets purchased/sold during the year are depreciated on a pro-rata basis for the actual number of days the asset
c.
d.
has been put to use.
Items costing upto ` 5,000 are depreciated fully over a period of 12 months from the date of purchase.
In case of revalued/impaired assets, depreciation is provided over the remaining useful life of the assets with
reference to revised assets values.
Transactions involving foreign exchange
Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing
on the date of the transaction. Income and expenditure items of integral foreign operations (representative offices) are
translated at daily closing rates, and income and expenditure items of non-integral foreign operations (foreign branches
and offshore banking units) are translated at quarterly average closing rates.
Monetary foreign currency assets and liabilities of domestic and integral foreign operations are translated at closing
exchange rates notified by Foreign Exchange Dealers’ Association of India (FEDAI) at the balance sheet date and the
resulting profits/losses are included in the profit and loss account.
Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated
at closing exchange rates notified by FEDAI at the balance sheet date and the resulting profits/losses from exchange
differences are accumulated in the foreign currency translation reserve until the disposal of the net investment in the
non-integral foreign operations.
The premium or discount arising on inception of forward exchange contracts that are entered into to establish the
amount of reporting currency required or available at the settlement date of a transaction is amortised over the life of
the contract. All other outstanding forward exchange contracts are revalued at the exchange rates notified by FEDAI
for specified maturities and at interpolated rates for contracts of interim maturities. The contracts of longer maturities
4.
5.
6.
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schedules
forming part of the Accounts (Contd.)
where exchange rates are not notified by FEDAI, are revalued at the forward exchange rates implied by the swap curves
in respective currencies. The resultant gains or losses are recognised in the profit and loss account.
Contingent liabilities on account of guarantees, endorsements and other obligations denominated in foreign currencies
are disclosed at the closing exchange rates notified by FEDAI at the balance sheet date.
7.
Accounting for derivative contracts
The Bank enters into derivative contracts such as foreign currency options, interest rate and currency swaps, credit
default swaps and cross currency interest rate swaps.
The swap contracts entered to hedge on-balance sheet assets and liabilities are structured such that they bear an
opposite and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments
is correlated with the movement of underlying assets and accounted pursuant to the principles of hedge accounting.
Hedged swaps are accounted for on an accrual basis.
Foreign currency and rupee derivative contracts entered into for trading purposes are marked to market and the resulting
gain or loss (net of provisions, if any) is accounted for in the profit and loss account. Pursuant to RBI guidelines, any
receivables under derivative contracts which remain overdue for more than 90 days and mark-to-market gains on other
derivative contracts with the same counter-parties are reversed through profit and loss account.
8. Employee Stock Option Scheme (ESOS)
The Employees Stock Option Scheme (the Scheme) provides for grant of equity shares of the Bank to wholetime
directors and employees of the Bank and its subsidiaries. The Scheme provides that employees are granted an option
to subscribe to equity shares of the Bank that vest in a graded manner. The options may be exercised within a specified
period. The Bank follows the intrinsic value method to account for its stock-based employee compensation plans.
Compensation cost is measured as the excess, if any, of the fair market price of the underlying stock over the exercise
price on the grant date. The fair market price is the latest closing price, immediately prior to the grant date, which is
generally the date of the Board of Directors meeting in which the options are granted, on the stock exchange on which
the shares of the Bank are listed. If the shares are listed on more than one stock exchange, then the stock exchange
where there is highest trading volume on the said date is considered.
9. Staff Retirement Benefits
Gratuity
ICICI Bank pays gratuity to employees who retire or resign after a minimum prescribed period of continuous service
and in case of employees at overseas locations as per the rules in force in the respective countries. ICICI Bank makes
contributions to five separate gratuity funds, for employees inducted from erstwhile ICICI Limited (erstwhile ICICI),
employees inducted from erstwhile Bank of Madura Limited (erstwhile Bank of Madura), employees inducted from
erstwhile The Sangli Bank Limited (erstwhile Sangli Bank), employees inducted from erstwhile The Bank of Rajasthan
Limited (erstwhile Bank of Rajasthan) and employees of ICICI Bank other than those inducted from erstwhile ICICI,
erstwhile Bank of Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan.
Separate gratuity funds for employees inducted from erstwhile ICICI, erstwhile Bank of Madura, erstwhile Sangli Bank
and erstwhile Bank of Rajasthan are managed by ICICI Prudential Life Insurance Company Limited.
The gratuity fund for employees of ICICI Bank, other than employees inducted from erstwhile ICICI, erstwhile Bank of
Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan is administered by Life Insurance Corporation of India
(LIC) and ICICI Prudential Life Insurance Company Limited.
Actuarial valuation of the gratuity liability for all the above funds is determined by an actuary appointed by the Bank.
Actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary
growth, mortality and staff attrition as per the projected unit credit method.
Superannuation Fund
ICICI Bank contributes 15.0% of the total annual basic salary of certain employees to a superannuation fund for ICICI
Bank employees. The employee gets an option on retirement or resignation to commute one-third of the total credit
balance in his/her account and receive a monthly pension based on the remaining balance. In the event of death of an
employee, his or her beneficiary receives the remaining accumulated balance. ICICI Bank also gives an option to its
employees, allowing them to receive the amount contributed by ICICI Bank along with their monthly salary during their
employment.
Up to March 31, 2005, the superannuation fund was administered solely by LIC. Subsequent to March 31, 2005, both LIC
and ICICI Prudential Life Insurance Company Limited are administering separate funds. Employees have the option to
decide on an annual basis, the insurance company for management of that year’s contribution towards superannuation
fund.
Pension
The Bank provides for pension, a deferred retirement plan covering certain employees of erstwhile Bank of Madura,
erstwhile Sangli Bank and erstwhile Bank of Rajasthan. The plan provides for pension payment on a monthly basis to
these employees on their retirement based on the respective employee’s years of service with the Bank and applicable
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schedules
forming part of the Accounts (Contd.)
salary. For erstwhile Bank of Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan employees in service,
separate pension funds are managed in-house and the liability is funded as per actuarial valuation. The pension payments
to retired employees of erstwhile Bank of Madura and erstwhile Sangli Bank are being administered by ICICI Prudential
Life Insurance Company Limited and pension payments to retired employees of erstwhile Bank of Rajasthan are being
administered by LIC and ICICI Prudential Life Insurance Company Limited from whom the Bank has purchased master
annuity policies. Employees covered by the pension plan are not eligible for benefits under the provident fund plan.
Provident Fund
ICICI Bank is statutorily required to maintain a provident fund as a part of retirement benefits to its employees. There are
separate provident funds for employees inducted from erstwhile Bank of Madura, erstwhile Sangli Bank, erstwhile Bank
of Rajasthan and for other employees of ICICI Bank. In-house trustees manage these funds. Each employee contributes
12.0% of his or her basic salary (10.0% for certain staff of erstwhile Sangli Bank) and ICICI Bank contributes an equal
amount. The funds are invested according to the rules prescribed by the government of India.
Leave encashment
The Bank provides for leave encashment benefit, which is a defined benefit scheme, based on actuarial valuation
conducted by an independent actuary.
10.
Income Taxes
Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Bank. The current
tax expense and deferred tax expense is determined in accordance with the provisions of the Income Tax Act, 1961 and as
per Accounting Standard 22 - Accounting for Taxes on Income issued by the Institute of Chartered Accountants of India,
respectively. Deferred tax adjustments comprise changes in the deferred tax assets or liabilities during the year. Deferred
tax assets and liabilities are recognised on a prudent basis for the future tax consequences of timing differences arising
between the carrying values of assets and liabilities and their respective tax basis, and carry forward losses. Deferred tax
assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted at the
balance sheet date. The impact of changes in deferred tax assets and liabilities is recognised in the profit and loss account.
Deferred tax assets are recognised and re-assessed at each reporting date, based upon management’s judgement as to
whether their realisation is considered as reasonably certain.
11.
Impairment of Assets
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset with future net discounted cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment is recognised by debiting the profit and loss account and is
measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
12. Provisions, contingent liabilities and contingent assets
The Bank estimates the probability of any loss that might be incurred on outcome of contingencies on the basis of
information available up to the date on which the financial statements are prepared. A provision is recognised when
an enterprise has a present obligation as a result of a past event and it is probable that an outflow of resources will be
required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based
on management estimates of amounts required to settle the obligation at the balance sheet date, supplemented by
experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the current
management estimates. In cases where the available information indicates that the loss on the contingency is reasonably
possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made in the financial
statements. In case of remote possibility neither provision nor disclosure is made in the financial statements. The Bank
does not account for or disclose contingent assets, if any.
13. Earnings per share (EPS)
Basic and diluted earnings per share are computed in accordance with Accounting Standard-20 – Earnings per share.
Basic earnings per share is calculated by dividing the net profit or loss after tax for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share reflect the potential dilution that could occur if contracts to issue equity shares were exercised
or converted during the year. Diluted earnings per equity share is computed using the weighted average number of
equity shares and dilutive potential equity shares outstanding during the year, except where the results are anti-dilutive.
14. Lease transactions
Lease payments for assets taken on operating lease are recognised as an expense in the profit and loss account over
the lease term.
15. Cash and cash equivalents
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short notice.
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schedules
forming part of the Accounts (Contd.)
SCHEDULE 18
NOTES FORMING PART OF THE ACCOUNTS
The following additional disclosures have been made taking into account the requirements of Accounting Standards (ASs)
and Reserve Bank of India (RBI) guidelines in this regard.
1. Amalgamation of The Bank of Rajasthan Limited
The Bank of Rajasthan Limited (Bank of Rajasthan), a banking company incorporated under the Companies Act, 1956
and licensed by RBI under the Banking Regulation Act, 1949 was amalgamated with ICICI Bank Limited (ICICI Bank) with
effect from close of business of August 12, 2010 in terms of the Scheme of Amalgamation (the Scheme) approved by
the RBI vide its order DBOD No. PSBD 2603/16.01.128/2010-11 dated August 12, 2010 under sub section (4) of section
44A of the Banking Regulation Act, 1949. The consideration for the amalgamation was 25 equity shares of ICICI Bank of
the face value of ` 10 each fully paid-up for every 118 equity shares of ` 10 each of Bank of Rajasthan. Accordingly, ICICI
Bank allotted 31,323,951 equity shares to the shareholders of Bank of Rajasthan on August 26, 2010 and 2,860,170 equity
shares which were earlier kept in abeyance pending civil appeal, on November 25, 2010.
ICICI Bank is also a banking company incorporated under the Companies Act, 1956 and licensed by RBI under the
Banking Regulation Act, 1949.
As per the Scheme, the undertaking of Bank of Rajasthan including all its assets and liabilities stood transferred/deemed
to be transferred to and vested in ICICI Bank as a going concern.
The amalgamation has been accounted for as per the Scheme. Accordingly, the assets and liabilities of Bank of Rajasthan
have been accounted at the values at which they were appearing in the books of Bank of Rajasthan at August 12, 2010
and provisions were made for the difference between the book values appearing in the books of Bank of Rajasthan and
the fair value as determined by ICICI Bank.
In the books of ICICI Bank, an amalgamation expenses provision account was credited by an amount determined for the
expenses and costs of the Scheme arising as a direct consequence on account of any changes in the business or operations
of Bank of Rajasthan proposed or considered necessary by the Board of Directors of ICICI Bank (including but not limited
to rationalisation, upgradation and enhancement of human resources and expenses relating to modifying signage,
modifying stationery, branding, changing systems and network, communication including media costs, impairment of
technology and fixed assets, conducting general meetings, payment of listing fees and other statutory and regulatory
charges, travel in relation to the consolidation contemplated in the Scheme, valuation, due diligence, investment banking
expenses and charges relating to preparation of the Scheme, consultations in relation to the consolidation contemplated
in the Scheme and training), and other extraordinary expenses on integration and consolidation under the Scheme, to
be incurred by ICICI Bank and the balance in such account has been debited to the securities premium account.
Accordingly, the excess of the paid up value of shares issued over the fair value of the net asset acquired (including
Statutory Reserves) of ` 1,440.1 million and amalgamation expenses of ` 657.8 million have been debited to the securities
premium account. The computation of this amount is detailed in the table below:
Particulars
34,184,121 equity shares of face value of ` 10 each issued to the shareholders
of Bank of Rajasthan
Less:
Net assets of Bank of Rajasthan at August 12, 20101
Fair value adjustments
Reserves taken over on amalgamation
Total fair value of the net assets acquired (including Statutory Reserves) of
Bank of Rajasthan at August 12, 2010
Excess of paid-up value of equity shares issued over the fair value of the net
assets acquired
Amalgamation expenses2
Amount
3,608.0
(2,703.6)
(2,002.7)
` in million
Amount
341.8
(1,098.3)
1,440.1
657.8
1.
2.
Includes ` 50.8 million received subsequent to August 12, 2010 against shares kept in abeyance pending civil appeal.
Net of provision for amalgamation expenses amounting to ` 32.2 million no longer required.
As per the accounting done for amalgamation in terms of the Scheme, the identity of reserves of Bank of Rajasthan is
not required to be preserved in the books of ICICI Bank. However, the balance in Statutory Reserve Account of Bank of
Rajasthan at August 12, 2010 has been added to the Statutory Reserves of ICICI Bank. As a result, the balance in Statutory
Reserves is higher to the extent of ` 2,002.7 million. The excess of the paid up value of shares issued over the fair value
of the net asset acquired (including Statutory Reserves) and amalgamation expenses has been debited to the Securities
Premium account of ICICI Bank. As a result, the balance in Securities Premium is lower to the extent of ` 2,097.9 million.
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forming part of the Accounts (Contd.)
2. Earnings per share
Basic and diluted earnings per equity share are computed in accordance with AS 20 – Earnings per share. Basic earnings
per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding
during the year. The diluted earnings per equity share is computed using the weighted average number of equity shares
and dilutive potential equity shares outstanding during the year.
The following table sets forth, for the periods indicated, the computation of earnings per share.
` in million, except per share data
Year ended
Year ended
March 31, 2011
March 31, 2010
Basic
Weighted average no. of equity shares outstanding .........................................
1,137,988,639
1,113,737,557
Net profit ..............................................................................................................
Basic earnings per share (`) ...............................................................................
51,513.8
45.27
40,249.8
36.14
Diluted
Weighted average no. of equity shares outstanding .........................................
1,143,267,823
1,118,224,665
Net profit ..............................................................................................................
51,513.8
40,249.8
Diluted earnings per share (`) ............................................................................
Nominal value per share (`) ................................................................................
45.06
10.00
35.99
10.00
The dilutive impact is due to options granted to employees by the Bank.
3. Business/information ratios
The following table sets forth, for the periods indicated, the business/information ratios.
(i)
Interest income to working funds1 ............................................................
(ii) Non-interest income to working funds1 ....................................................
(iii) Operating profit to working funds1 ............................................................
(iv) Return on assets2 ........................................................................................
(v)
Profit per employee (` in million)3 .............................................................
(vi) Business (average deposits plus average advances)
per employee3, 4 (` in million) .....................................................................
Year ended
March 31, 2011
Year ended
March 31, 2010
6.80%
1.74%
2.37%
1.35%
1.0
73.5
7.19%
2.09%
2.72%
1.13%
0.9
76.5
1.
2.
3.
4.
For the purpose of computing the ratio, working funds represent the average of total assets as reported in Form X to RBI under
Section 27 of the Banking Regulation Act, 1949.
For the purpose of computing the ratio, assets represent average total assets as reported to RBI in Form X under Section 27 of
the Banking Regulation Act, 1949.
The number of employees includes sales executives, employees on fixed term contracts and interns.
The average deposits and the average advances represent the simple average of the figures reported in Form A to RBI under
Section 42(2) of the Reserve Bank of India Act, 1934.
4. Capital adequacy ratio
The Bank is subject to the Basel II capital adequacy guidelines stipulated by the Reserve Bank of India (RBI) with effect
from March 31, 2008. The RBI guidelines on Basel II require the Bank to maintain a minimum capital to risk-weighted
assets ratio (CRAR) of 9.0% and a minimum Tier-1 CRAR of 6.0% on an ongoing basis.
RBI has also stipulated that banks shall maintain capital at higher of the minimum capital required as per Basel II or 80%
of the minimum capital required as per Basel I. At March 31, 2011, the prudential floor at 80% of the minimum capital
requirement under Basel I was ` 283,837.8 million and was lower than the minimum capital requirement of ` 307,348.2
million under Basel II. Hence, the Bank has maintained capital adequacy at March 31, 2011 as per the Basel II norms.
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forming part of the Accounts (Contd.)
The following table sets forth, for the dates indicated, computation of capital adequacy.
As per Basel I framework
As per Basel II framework
At
At
At
At
March 31, 2011
March 31, 2010
March 31, 2011
March 31, 2010
` in million
Tier-1 capital ..........................................................
463,987.9
432,614.3
449,749.1
410,615.1
(Of which Lower Tier-1) .........................................
28,116.1
28,210.0
28,116.1
28,210.0
Tier-2 capital ..........................................................
231,007.0
181,569.1
217,501.5
160,409.9
(Of which Upper Tier-2) .........................................
138,248.5
137,912.0
138,248.5
137,912.0
Total capital ............................................................
694,994.9
614,183.4
667,250.6
571,025.0
Total risk weighted assets .....................................
3,942,191.1
3,208,425.4
3,414,979.5
2,941,805.8
CRAR (%) ...............................................................
17.63%
19.14%
19.54%
19.41%
CRAR – Tier-1 capital (%) ......................................
11.77%
13.48%
13.17%
13.96%
CRAR – Tier-2 capital (%) ......................................
5.86%
5.66%
6.37%
5.45%
During the year ended March 31, 2011, the Bank raised subordinated debt qualifying for Tier-2 capital amounting to
` 59,790.0 million (March 31, 2010: ` 62,000.0 million). This included an issuance of ` 25,000.0 million, wherein the funds
were received in March 2010 but were not considered for Tier-2 capital pending allotment.
5.
Information about business and geographical segments
Business Segments
Pursuant to the guidelines issued by RBI on Accounting Standard 17 – (Segment Reporting) - Enhancement of Disclosures
dated April 18, 2007, effective from year ended March 31, 2008, the following business segments have been reported.
•
Retail Banking includes exposures which satisfy the four criteria of orientation, product, granularity and low value
of individual exposures for retail exposures laid down in Basel Committee on Banking Supervision document
“International Convergence of Capital Measurement and Capital Standards: A Revised Framework”.
• Wholesale Banking includes all advances to trusts, partnership firms, companies and statutory bodies, which are
•
•
not included under Retail Banking.
Treasury includes the entire investment portfolio of the Bank.
Other Banking includes hire purchase and leasing operations and other items not attributable to any particular
business segment.
Income, expenses, assets and liabilities are either specifically identified with individual segments or are allocated to
segments on a systematic basis.
All liabilities are transfer priced to a central treasury unit, which pools all funds and lends to the business units at appropriate
rates based on the relevant maturity of assets being funded after adjusting for regulatory reserve requirements.
F19
schedules
forming part of the Accounts (Contd.)
The following tables set forth, for the periods indicated, the business segment results on this basis.
Particulars
Retail
Banking
For the year ended March 31, 2011
Wholesale
Banking
Treasury
Revenue
1
Less: Inter-segment revenue .......................................
2
Total revenue (1)–(2) .....................................................
3
Segment results ...........................................................
4
Unallocated expenses ..................................................
5
Income tax expenses (net of deferred tax credit) .......
6
Net profit (4)–(5)–(6) ....................................................
7
Segment assets ............................................................
8
Unallocated assets1 ......................................................
9
10
Total assets (8)+(9) .....................................................
11 Segment liabilities ........................................................
12 Unallocated liabilities ..................................................
13
Total liabilities (11)+(12) .............................................
14 Capital expenditure ......................................................
15 Depreciation .................................................................
1.
2.
159,734.9
193,232.7
237,441.8
(5,141.9)
48,997.0
22,006.9
668,933.1 1,600,956.9
1,715,322.5
1,543,417.3
795,560.7 1,717,399.32
13,467.8
3,478.5
7,749.5
1,307.3
206.3
21.8
Includes tax paid in advance/tax deducted at source (net) and deferred tax asset (net).
Includes share capital and reserves and surplus.
For the year ended March 31, 2010
Particulars
Retail
Banking
Wholesale
Banking
Treasury
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
1.
2.
192,541.3
177,244.1
(13,335.1)
Revenue ......................................................................
Less: Inter-segment revenue .....................................
Total revenue (1)–(2) ...................................................
Segment results .........................................................
Unallocated expenses ................................................
Income tax expenses (net of deferred tax credit) .....
Net profit (4)–(5)–(6) ..................................................
Segment assets ..........................................................
Unallocated assets1 ....................................................
Total assets (8)+(9) ....................................................
Segment liabilities ......................................................
Unallocated liabilities .................................................
Total liabilities (11)+(12) ...........................................
635.8
Capital expenditure ....................................................
Depreciation ...............................................................
996.4
Includes tax paid in advance/tax deducted at source (net) and deferred tax asset (net).
Includes share capital and reserves and surplus.
737,339.9 1,184,314.3
1,721.0
3,749.0
1,186,393.0
915,021.2
36,451.0
247,978.0
27,886.4
1,642,098.9
1,525,898.62
2.9
16.3
` in million
Total
Other
Banking
Business
4,303.1
1,745.0
594,712.5
268,493.0
326,219.5
67,607.0
—
16,093.2
51,513.8
14,616.3 3,999,828.8
62,507.9
4,062,336.7
4,986.3 4,061,363.6
973.1
4,062,336.7
21,529.2
5,624.4
105.6
816.8
` in million
Total
Other
Banking
Business
4,375.7
2,450.9
622,139.1
290,293.3
331,845.8
53,453.2
—
13,203.4
40,249.8
10,676.8 3,574,429.9
59,567.3
3,633,997.2
5,970.5 3,633,283.3
713.9
3,633,997.2
2,377.3
6,195.0
17.6
1,433.3
Geographical segments
The Bank reports its operations under the following geographical segments.
•
•
The following table sets forth, for the years indicated, geographical segment revenues.
Domestic operations comprise branches in India
Foreign operations comprise branches outside India and offshore banking unit in India.
Revenue
Domestic operations ............................................................................................
Foreign operations ................................................................................................
Total ......................................................................................................................
Year ended
March 31, 2011
286,909.7
39,309.8
326,219.5
` in million
Year ended
March 31, 2010
287,247.7
44,598.1
331,845.8
The following table sets forth geographical segment assets for the year ended March 31, 2011 and March 31, 2010.
Assets
Domestic operations ............................................................................................
Foreign operations ...............................................................................................
Total ......................................................................................................................
At
March 31, 2011
3,303,115.9
697,435.3
4,000,551.2
` in million
At
March 31, 2010
2,963,616.4
611,827.7
3,575,444.1
F20
schedules
forming part of the Accounts (Contd.)
The following tables set forth, for the years indicated, capital expenditure and depreciation thereon under the following
geographical segments
Domestic operations ........................
Foreign operations ...........................
Total ..................................................
Capital expenditure incurred during
Depreciation provided during
Year ended
March 31, 2011
21,484.51
44.7
21,529.2
Year ended
March 31, 2010
2,341.0
36.3
2,377.3
Year ended
March 31, 2011
5,590.1
34.3
5,624.4
Year ended
March 31, 2010
6,147.6
47.4
6,195.0
` in million
1.
Includes assets acquired from erstwhile The Bank of Rajasthan Limited during the year ended March 31, 2011.
6. Maturity pattern
In compiling the information of maturity pattern, certain estimates and assumptions have been made by the management.
Assets and liabilities in foreign currency exclude off-balance sheet assets and liabilities.
•
•
a) The following table sets forth, the maturity pattern of assets and liabilities of the Bank at March 31, 2011.
Maturity buckets
Loans &
Advances 2
Investment
securities2
Day 11 ................................................
9,280.7
49,614.9
Deposits2 Borrowings2,3 Total foreign
currency
assets
57,011.6
45,279.5
913.1
` in million
Total foreign
currency
liabilities
35,628.8
12,637.9
14,881.9
26,058.4
149,170.8
190,491.4
260,740.5
889,201.1
342,603.1
268,593.1
2 to 7 days1 ........................................
8 to 14 days1 ......................................
15 to 28 days .....................................
29 days to 3 months ..........................
3 to 6 months .....................................
6 months to 1 year ............................
1 to 3 years ........................................
3 to 5 years ........................................
Above 5 years ....................................
Total ..................................................
1.
3,028.3
7,270.2
23,284.7
92,328.3
108,229.9
138,828.8
229,022.1
110,920.2
381,717.2
2,163,659.0 1,346,859.6 2,256,021.1 1,095,542.8
6,388.6
8,654.3
16,578.0
78,777.9
114,994.8
153,395.3
202,968.1
80,851.3
138,821.6
837,058.7
The aforesaid disclosure is in accordance with the revised maturity buckets as per the RBI circular no. DBOD.BP.BC.22/21.04.018/2009-10
dated July 1, 2009.
Includes foreign currency balances.
Includes borrowings in the nature of subordinated debts and preference shares as per RBI guidelines vide circular no.
DBOD.BP.BC no. 81/21.01.002/2009-10.
63,935.7
18,462.6
54,938.5
24,073.6
64,625.1
92,754.3
212,721.9
96,887.8
178,717.0
76,649.1
120,666.5
374,534.2
359,736.2 1,177,196.9
33,946.6
106,907.7
50,125.7
401,106.8
27,144.3
11,484.9
13,578.6
58,021.5
29,419.1
53,188.7
214,539.8
131,949.7
170,112.0
766,450.2
2.
3.
b) The following table sets forth the maturity pattern of assets and liabilities of the Bank at March 31, 2010.
Maturity buckets
Day 11 ................................................
2 to 7 days1 .......................................
8 to 14 days1 .....................................
15 to 28 days ....................................
29 days to 3 months .........................
3 to 6 months ....................................
6 months to 1 year ...........................
1 to 3 years .......................................
3 to 5 years .......................................
Above 5 years ...................................
Total .................................................
Loans &
Advances2
Investment
securities2
157,239.2
12,256.1
12,895.5
74,070.6
98,926.0
71,931.7
97,333.9
5,611.1
14,761.9
11,134.4
20,104.7
131,799.4
148,751.8
248,066.9
713,445.1
292,216.2
226,164.5
32,042.0
59,269.5
96,406.6
50,419.0
265,944.0
188,743.9
276,686.1
295,899.3 1,030,992.7
15,503.1
39,413.6
4,159.1
348,962.1
1,812,056.0 1,208,928.0 2,020,166.0
Deposits2 Borrowings2,3 Total foreign
currency
assets
35,810.8
8,507.6
9,116.6
17,080.5
38,366.8
26,502.9
39,432.1
218,294.1
106,911.0
153,711.3
653,733.7
391.9
1,306.2
11,072.9
11,213.4
80,480.7
74,597.9
76,724.4
302,987.4
88,361.1
295,499.8
942,635.7
` in million
Total foreign
currency
liabilities
18,545.8
6,922.2
12,425.4
18,698.5
78,145.4
85,551.5
69,197.5
223,871.9
85,270.9
82,846.3
681,475.4
1.
2.
3.
The aforesaid disclosure is in accordance with the revised maturity buckets as per the RBI circular no. DBOD.BP.BC
no.22/21.04.018/2009-10 dated July 1, 2009.
Includes foreign currency balances.
Includes borrowings in the nature of subordinated debt and preference shares as per RBI guidelines vide circular no. DBOD.BP.BC
no. 81/21.01.002/2009-10.
F21
schedules
forming part of the Accounts (Contd.)
7. Preference shares
Certain government securities amounting to ` 2,563.8 million at March 31, 2011 (March 31, 2010: ` 2,405.2 million)
have been earmarked against redemption of preference shares issued by the Bank, which fall due for redemption on
April 20, 2018, as per the original issue terms.
8. Employee Stock Option Scheme (ESOS)
In terms of the ESOS, as amended, the maximum number of options granted to any eligible employee in a financial year
shall not exceed 0.05% of the issued equity shares of the Bank at the time of grant of the options and aggregate of all
such options granted to the eligible employees shall not exceed 5% of the aggregate number of the issued equity shares
of the Bank on the date(s) of the grant of options. Under the stock option scheme, eligible employees are entitled to apply
for equity shares. Options granted for fiscal 2003 and earlier years vest in a graded manner over a three-year period,
with 20%, 30% and 50% of the grants vesting in each year commencing from the end of 12 months from the date of
grant. Options granted for fiscal 2004 to 2008 vest in a graded manner over a four-year period, with 20%, 20%, 30% and
30% of the grants vesting in each year commencing from the end of 12 months from the date of grant. Options granted
in April 2009 vest in a graded manner over a five year period with 20%, 20%, 30% and 30% of grant vesting each year,
commencing from the end of 24 months from the date of grant. Options granted in March 2010 onwards would vest in
a graded manner over a four year period with 20%, 20%, 30% and 30% of grant vesting each year, commencing from
the end of 12 months from the date of grant. The options can be exercised within 10 years from the date of grant or five
years from the date of vesting, whichever is later. As per the scheme, the exercise price of ICICI Bank’s options is the
last closing price on the stock exchange, which recorded highest trading volume preceding the date of grant of options.
Hence, there was no compensation cost based on intrinsic value of options.
In February 2011, the Bank granted 3,035,000 options to eligible employees and whole-time Directors of ICICI Bank and
certain of its subsidiaries at an exercise price of ` 967. Of these options granted, 50% would vest on April 30, 2014 and
the balance 50% would vest on April 30, 2015. Based on intrinsic value of options, compensation cost of ` 2.9 million
was recognised during the year ended March 31, 2011.
If ICICI Bank had used the fair value of options based on binomial tree model, compensation cost in the year ended
March 31, 2011 would have been higher by ` 905.8 million and proforma profit after tax would have been ` 50.60
billion. On a proforma basis, ICICI Bank’s basic and diluted earnings per share would have been ` 44.47 and ` 44.27
respectively. The key assumptions used to estimate the fair value of options granted during the year ended March 31,
2011 are given below.
Risk-free interest rate ...................................................................................................................
5.26% to 8.42%
Expected life ................................................................................................................................
Expected volatility .......................................................................................................................
6.35 to 6.87 years
48.38% to 49.82%
Expected dividend yield ..............................................................................................................
1.10% to 1.33%
The weighted average fair value of options granted during the year ended March 31, 2011 is ` 535.87
(March 31, 2010: ` 199.91).
A summary of the status of the Bank’s stock option plan is given below.
` except number of options
Stock options outstanding
Year ended March 31, 2011
Year ended March 31, 2010
Particulars
Number of
options
Weighted
Average
Exercise Price
Outstanding at the beginning of the year ..........................
18,763,460
Add: Granted during the year ............................................
Less: Lapsed during the year, net of re-issuance ..............
Less: Exercised during the year ........................................
5,514,600
1,005,536
2,743,137
Outstanding at the end of the year ....................................
20,529,387
Options exercisable ............................................................
10,197,137
689.50
972.00
871.95
517.21
779.72
682.72
Number of
options
18,992,504
1,731,000
365,372
1,594,672
18,763,460
10,104,780
Weighted
Average
Exercise Price
685.05
434.78
661.78
366.38
689.50
609.18
In terms of the Scheme, 20,529,387 options (March 31, 2010: 18,763,460 options) granted to eligible employees were
outstanding at March 31, 2011.
F22
schedules
forming part of the Accounts (Contd.)
A summary of stock options outstanding at March 31, 2011 is given below.
Range of exercise price (` per share)
105-299 ..................................................................
300-599 ..................................................................
600-999 ..................................................................
1,000-1,399 ............................................................
Number of shares
arising out of options
95,086
6,906,951
13,426,350
101,000
Weighted average
exercise price
(` per share)
137.13
466.85
942.54
1,084.59
Weighted average
remaining contractual
life (Number of years)
1.07
5.30
7.78
7.94
A summary of stock options outstanding at March 31, 2010 is given below.
Range of exercise price (` per share)
105-299 ..................................................................
300-599 ..................................................................
600-999 ..................................................................
1,000-1,399 ............................................................
Number of shares
arising out of
options
117,601
9,339,639
9,238,220
68,000
Weighted average
exercise price
(` per share)
146.21
462.04
923.24
1,114.57
Weighted average
remaining contractual
life (Number of years)
2.03
6.08
7.61
7.65
The options were exercised regularly throughout the period and weighted average share price as per NSE price volume
data during the year ended March 31, 2011 was ` 1,014.96 (March 31, 2010: ` 853.80).
9. Reconciliation of nostro account
In terms of RBI circular no. DBOD.BP.BC.No. 133/21.04.018/2008-09 dated May 11, 2009, ` 2.6 million (March 31, 2010:
` 10.4 million) representing outstanding credit balances of individual value less than US$ 2,500 or equivalent lying in
nostro account, which were originated up to March 31, 2002, was transferred to profit and loss account during the year
ended March 31, 2011 and has been subsequently appropriated to General Reserve.
10. Subordinated debt
During the year ended March 31, 2011, the Bank raised subordinated debt qualifying for Tier II capital amounting to
` 59,790.0 million. The following table sets forth, the details of these bonds:
Particulars
Lower Tier II ...............................................
Lower Tier II ...............................................
Lower Tier II ...............................................
Total ...........................................................
Date of Issue
Coupon Rate (%)
April 05, 2010 8.88%(semi-annually)
8.90% (annually)
9.11% (annually)
September 29, 2010
January 13, 2011
Tenure
10 years
15 years
10 years
` in million
Amount
25,000.01
14,790.0
20,000.0
59,790.0
1.
During the year ended March 31, 2010, Bank had raised an amount of ` 25,000.0 million towards application money on subordinated
debt bonds which was pending for allotment at March 31, 2010 and was subsequently allotted on April 5, 2010.
During the year ended March 31, 2010, the Bank raised subordinated debt qualifying for Tier II capital amounting to
` 62,000.0 million. The following table sets forth, the details of these bonds.
Date of Issue
Particulars
April 22, 2009
Lower Tier II ................................................
Upper Tier II ................................................
August 31, 2009
Lower Tier II ................................................ December 9, 2009
January 12, 2010
Upper Tier II ...............................................
Upper Tier II ...............................................
January 29, 2010
Total ...........................................................
Coupon Rate (%)
9.30% (annually)
8.92% (semi-annually)1
8.75% (annually)
8.90% (annually)2
8.81% (semi-annually)3
Tenure
10 years
15 years1
10 years
15 years2
15 years3
` in million
Amount
15,000.0
10,000.0
13,200.0
7,800.0
16,000.0
62,000.0
1.
2.
3.
50 basis points over and above the coupon rate payable semi-annually for the balance years after August 30, 2019, if the call
option is not exercised by the Bank; call option exercisable on August 31, 2019 with RBI approval.
50 basis points over and above the coupon rate payable annually for the balance years after February 27, 2020, if the call option
is not exercised by the Bank; call option exercisable on February 28, 2020 with RBI approval.
50 basis points over and above the coupon rate payable annually for the balance years after February 27, 2020, if the call option
is not exercised by the Bank; call option exercisable on February 28, 2020 with RBI approval.
F23
schedules
forming part of the Accounts (Contd.)
11. Repurchase transactions
Till March 31, 2010, the Bank used to account for market repurchase and reverse repurchase transactions in government
securities and corporate debt securities, if any, as “sale and repurchase” transactions. However, as per RBI circular
no. RBI/2009-2010/356 IDMD/ 4135/11.08.43/2009-10 dated March 23, 2010, the Bank has started accounting for such
transactions as “borrowing and lending” transactions, effective April 1, 2010. If the Bank had continued to account the
repurchase and reverse repurchase transactions as “sale and repurchase” at March 31, 2011, the investments would
have been higher by ` 122.8 million and the ‘Balances with Banks and Money at call and short notice’ and ‘Borrowings’
would have been lower by ` 124.0 million and ` 1.2 million respectively.
The following table sets forth, for the periods indicated, the details of securities sold and purchased under repo and reverse repo.
Government Securities .......................................
Corporate Debt Securities ...................................
Government Securities .......................................
Corporate Debt Securities ...................................
Year ended March 31, 2011
Securities sold under Repo
i.
ii.
Securities purchased under Reverse Repo
i.
ii.
Year ended March 31, 2010
Securities sold under Repo
i.
ii.
Securities purchased under Reverse Repo
i.
ii.
Government Securities .......................................
Corporate Debt Securities ...................................
Government Securities .........................................
Corporate Debt Securities ....................................
Minimum
outstanding
balance during
the year
Maximum
outstanding
balance during
the year
Daily average
outstanding
balance during
the year
` in million
Outstanding
balance at
1.1
—
—
—
7.6
—
—
—
214,553.6
—
41,177.3
—
7,817.1
250.0
282.2
3.4
1.2
—
124.0
—
294,964.7
—
153,396.0
—
27,194.4
—
827.8
—
233.5
—
84.2
—
1.
2.
The above figures do not include securities sold and purchased under Liquidity Adjustment Facility (LAF) of RBI.
Amounts reported are based on face value of securities under repo and reverse repo.
12. Investments
The following table sets forth, for the periods indicated, the details of investments and the movement of provision held
towards depreciation on investments of the Bank.
Particulars
1.
(i)
(ii)
Value of Investments
Gross value of investments
In India ....................................................................................................
a)
b) Outside India ...........................................................................................
Provision for depreciation
a)
In India ....................................................................................................
b) Outside India ...........................................................................................
(iii) Net value of investments
At
March 31, 2011
` in million
At
March 31, 2010
1,272,423.9
94,499.8
1,129,332.3
91,756.8
(19,483.1)
(581.0)
(11,779.5)
(381.6)
a)
In India ....................................................................................................
b) Outside India ...........................................................................................
1,252,940.8
93,918.8
1,117,552.8
91,375.2
2. Movement of provisions held towards depreciation on investments
(i)
Opening balance ...........................................................................................
(ii) Add: Provisions made during the year ........................................................
(iii)
Less: Write-off/write back of excess provisions during the year ................
(iv) Closing balance .............................................................................................
12,161.1
8,612.71
(709.7)
20,064.1
14,317.7
4,647.5
(6,804.1)
12,161.1
1.
Includes provision created at the time of acquisition of investments from erstwhile The Bank of Rajasthan on amalgamation.
F24
schedules
forming part of the Accounts (Contd.)
13. Investment in securities, other than government and other approved securities (Non-SLR investments)
i)
a)
Issuer composition of investments in securities, other than government and other approved securities
The following table sets forth, the issuer composition of investments of the Bank in securities, other than government and other
approved securities at March 31, 2011.
Sr.
No.
Issuer
Amount
Extent of
private
placement2
PSUs ..............................................................
FIs ..................................................................
Banks ............................................................
Private corporates......................................
Subsidiaries/ Joint ventures ....................
Others7 ..........................................................
Provision held towards depreciation ....
Total ..............................................................
20,171.7
13,505.6
113,605.3
177,554.6
135,463.8
254,175.9
(17,900.7)
696,576.2
(a)
12,613.0
10,250.0
79,810.7
152,122.0
—
44,898.0
—
299,693.7
Extent of
‘below investment
grade’ securities3
(b)
—
—
2,069.1
283.0
—
31,934.5
—
34,286.6
Extent of
‘unrated’
securities 4,5
` in million
Extent of
‘unlisted’
securities 4,6
(c)
—
—
3,601.2
9,761.4
—
—
—
13,362.6
(d)
14.4
—
8,488.4
17,828.9
—
—
—
26,331.7
Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive.
Includes ` 900.0 million of application money towards corporate bonds/debentures.
Excludes investments in non-Indian government securities by branches amounting to ` 1,220.5 million.
Excludes investments, amounting to ` 6,359.0 million in preference shares of subsidiaries and ` 4,529.8 million in subordinated
bonds of subsidiaries, namely ICICI Bank UK PLC and ICICI Bank Canada. This also excludes investments in non-Indian government
securities of ` 8,862.3 million made by overseas branches.
Excludes equity shares, units of equity-oriented mutual fund and units of venture capital fund.
Excludes equity shares, units of equity-oriented mutual fund, units of venture capital fund, pass through certificates, security
receipts, commercial papers and certificates of deposit.
Other investments include deposits under RIDF and other related investments amounting to ` 150,795.6 million. Other investments
exclude investments in non-Indian government securities of ` 8,862.3 million made by overseas branches.
Collateralised debt obligations securities have been included in the above data based on the arranger of such instruments.
The following table sets forth, the issuer composition of investments of the Bank in securities, other than government and other
approved securities at March 31, 2010.
Sr.
No.
Issuer
Amount
PSUs .....................................................
FIs ..........................................................
Banks .....................................................
Private corporates ................................
Subsidiaries/ Joint ventures ................
Others7 ..................................................
Provision held towards depreciation ...
Total .....................................................
9,394.5
5,458.7
105,435.6
60,293.2
132,687.9
222,074.1
(12,097.3)
523,246.7
Extent of
private
placement
(a)
3,035.0
2,022.4
63,704.4
41,292.4
324.1
69,687.8
—
180,066.1
Extent of ‘below
investment grade’
securities2
(b)
13.5
—
2,375.7
—
—
37,352.5
—
39,741.7
Extent of
‘unrated’
securities 3,4,5
(c)
—
987.8
5,623.8
9,142.2
—
224.5
—
15,978.3
` in million
Extent of
‘unlisted’
securities 3,4,6
(d)
—
1,068.5
11,595.5
10,906.2
—
224.5
—
23,794.7
Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive.
Excludes investments in non-Indian government securities by branches amounting to ` 1,279.5 million.
Excludes ` 11,499.8 million of application money towards corporate bonds/debentures.
Excludes investments, amounting to ` 6,226.9 million, in preference shares of subsidiaries and ` 4,456.1 million in subordinated
bonds of subsidiaries, namely ICICI Bank UK PLC and ICICI Bank Canada. This also excludes investments in non-Indian government
securities of ` 1,645.0 million made by overseas branches.
Excludes equity shares, units of equity-oriented mutual fund and units of venture capital fund.
Excludes equity shares, units of equity-oriented mutual fund, units of venture capital fund, pass through certificates, security
receipts, commercial paper and certificates of deposit.
Other investments include deposits with RIDF and other related investments amounting to ` 101,096.8 million.
Collateralised debt obligations securities have been included in the above data based on the arranger of such instruments.
F25
1
2
3
4
5
6
7
1.
2.
3.
4.
5.
6.
7.
8.
b)
1
2
3
4
5
6
7
1.
2.
3.
4.
5.
6.
7.
8.
schedules
forming part of the Accounts (Contd.)
ii) Non-performing investments in securities, other than government and other approved securities
The following table sets forth, for the periods indicated, the movement in gross non-performing investments in
securities, other than government and other approved securities.
Particulars
Opening balance ...................................................................................................
Additions during the year .....................................................................................
Reduction during the year ....................................................................................
Closing balance .....................................................................................................
Total provision held ...............................................................................................
14. Settlement date accounting for government securities
Year ended
March 31, 2011
5,219.3
1,024.5
(1,320.0)
4,923.8
4,302.2
` in million
Year ended
March 31, 2010
3,829.1
2,626.3
(1,236.1)
5,219.3
3,599.8
Pursuant to RBI circular DBOD.No.BP.BC.58/21.04.141/2010-11 dated November 4, 2010, the Bank has changed the
accounting for purchase and sale of government securities from trade date basis to settlement date basis with effect
from January 1, 2011. Under settlement date accounting, the purchase and sale of securities are recognised in the
books on the date of settlement. The changes in fair value of investments between trade date and settlement date are
recognised in case of purchased securities while such changes are ignored in case of securities sold. In case the Bank
had continued to follow the trade date accounting, investments portfolio at March 31, 2011 would have been lower by
` 655.2 million (net), the other assets would have been higher by ` 1,153.6 million, other liabilities would have been
higher by ` 500.2 million and the impact on the profit and loss account would have been ` Nil.
15. CBLO transactions
Collateralised Borrowing and Lending Obligation (CBLO) is a discounted money market instrument, developed by The
Clearing Corporation of India Limited (CCIL) and approved by RBI which involves secured borrowings and lending
transactions. At March 31, 2011, the Bank had outstanding borrowings amounting to Nil (March 31, 2010: Nil) and
outstanding lending of ` 1,999.6 million (March 31, 2010: Nil) in the form of CBLO. The amortised book value of securities
given as collateral by the Bank to CCIL for availing the CBLO facility was ` 51,841.1 million at March 31, 2011 (March 31,
2010: ` 44,699.4 million).
16. Derivatives
ICICI Bank is a major participant in the financial derivatives market. The Bank deals in derivatives for balance sheet
management and market making purposes whereby the Bank offers derivative products to its customers, enabling them
to hedge their risks.
Dealing in derivatives is carried out by identified groups in the treasury of the Bank based on the purpose of the transaction.
Derivative transactions are entered into by the treasury front office. Treasury middle office conducts an independent
check of the transactions entered into by the front office and also undertakes activities such as confirmation, settlement,
accounting, risk monitoring and reporting and ensures compliance with various internal and regulatory guidelines.
The market making and the proprietary trading activities in derivatives are governed by the Investment Policy and the
Derivative Policy of the Bank, which lay down the position limits, value at risk limits, stop loss limits as well as other risk
limits. The Risk Management Group (RMG) lays down the methodology for computation and monitoring of risk. The Risk
Committee of the Board (RCB) reviews the Bank’s risk management policies in relation to various risks including Credit
and recovery policy, Investment Policy, Derivative Policy, ALM Policy and Operational Risk Management Policy. The RCB
comprises independent directors and the Managing Director and CEO.
The Bank measures and monitors risk of its derivatives portfolio using such risk metrics as Value at Risk (VAR), stop
loss limits and relevant greeks for options. Risk reporting on derivatives forms an integral part of the management
information system.
The use of derivatives for hedging purposes is governed by the hedge policy approved by Asset Liability Management
Committee (ALCO). Subject to prevailing RBI guidelines, the Bank deals in derivatives for hedging fixed rate, floating
rate or foreign currency assets/liabilities. Transactions for hedging and market making purposes are recorded separately.
For hedge transactions, the Bank identifies the hedged item (asset or liability) at the inception of the hedge itself. The
effectiveness is assessed at the time of inception of the hedge and periodically thereafter.
Hedge derivative transactions are accounted for pursuant to the principles of hedge accounting. Derivatives for market
making purpose are marked to market and the resulting gain/loss is recorded in the profit and loss account. The premium
on option contracts is accounted for as per Foreign Exchange Dealers Association of India (FEDAI) guideline.
Derivative transactions are covered under International Swaps and Derivatives Association (ISDA) master agreements
with the respective counter parties. The exposure on account of derivative transactions is computed as per RBI guidelines
and is marked against the credit limits approved for the respective counter-parties.
F26
schedules
forming part of the Accounts (Contd.)
The following tables set forth the details of derivative positions at March 31, 2011.
Sr.
No.
Particulars
1
2
3
4
5
Derivatives (Notional principal amount)
a) For hedging .............................................................................................
b) For trading ..............................................................................................
Marked to market positions3
a) Asset (+) .................................................................................................
b) Liability (-) ...............................................................................................
Credit exposure4 .........................................................................................
Likely impact of one percentage change in interest rate (100*PV01)5
a) On hedging derivatives6 .........................................................................
b) On trading derivatives ............................................................................
Maximum and minimum of 100*PV01 observed during the year
a) On hedging6
Maximum ................................................................................................
Minimum .................................................................................................
b) On trading
Maximum ................................................................................................
Minimum .................................................................................................
` in million
At March 31, 2011
Currency
derivatives1
Interest rate
derivatives 2
4,105.4
1,306,661.0
279,739.8
3,866,544.9
7,062.9
—
119,912.5
39.8
854.4
(39.8)
(69.1)
(802.2)
(1,532.5)
—
(21.4)
96,389.0
9,828.1
1,898.0
(6,126.5)
(10,546.1)
5,407.4
1,572.2
1.
2.
3.
4.
5.
6.
Options and cross currency interest rate swaps and currency futures are included in currency derivatives.
Foreign currency interest rate swaps, forward rate agreements and swaptions are included in interest rate derivatives.
For trading portfolio including accrued interest. Represents net positions.
Includes accrued interest and has been computed based on Current Exposure method.
Amounts given are absolute values on a net basis, excluding options.
The swap contracts entered for hedging purpose would have an opposite and offsetting impact with the underlying on-balance
sheet items.
Sr.
No.
Particulars
1
2
3
4
5
Derivatives (Notional principal amount)
a) For hedging ............................................................................................
b) For trading .............................................................................................
Marked to market positions3
a) Asset (+) ................................................................................................
b) Liability (-) ..............................................................................................
Credit exposure4 ........................................................................................
Likely impact of one percentage change in interest rate (100*PV01)5
a) On hedging derivatives6 ........................................................................
b) On trading derivatives ...........................................................................
Maximum and minimum of 100*PV01 observed during the year
a) On hedging6
Maximum ...............................................................................................
Minimum ................................................................................................
b) On trading
Maximum ...............................................................................................
Minimum ................................................................................................
` in million
At March 31, 2010
Currency
derivatives1
Interest rate
derivatives 2
23,432.8
1,136,020.6
235,286.1
3,145,275.0
13,891.8
—
115,703.5
58.2
1,380.6
(54.6)
(323.9)
(1,358.8)
(2,121.7)
1,459.8
—
91,886.0
7,288.5
1,646.7
(6,835.8)
(9,071.7)
2,322.6
1,282.0
1.
2.
3.
4.
5.
6.
Options and cross currency interest rate swaps and currency futures are included in currency derivatives.
Foreign currency interest rate swaps, forward rate agreements and swaptions are included in interest rate derivatives.
For trading portfolio including accrued interest. Represents net positions.
Includes accrued interest.
Amounts given are absolute values on a net basis, excluding options.
The swap contracts entered for hedging purpose would have an opposite and offsetting impact with the underlying on-balance sheet items.
F27
schedules
forming part of the Accounts (Contd.)
The Bank has exposure to credit derivative instruments including credit default swaps, credit linked notes, collateralised
debt obligations and principal protected structures. The notional principal amount of these credit derivatives outstanding
at March 31, 2011 was ` 10,599.7 million (March 31, 2010: ` 15,400.7 million) in funded instruments and ` 28,168.2
million (March 31, 2010: ` 32,881.1 million) in non-funded instruments which includes ` 223.0 million (March 31, 2010:
` 224.5 million) of protection bought by the Bank.
The profit and loss impact on the above portfolio on account of mark-to-market and realised gains/losses
during the year ended March 31, 2011 was a net profit of ` 94.6 million (March 31, 2010: ` 3,974.2 million). At
March 31, 2011, the total outstanding mark-to-market position of the above portfolio was a net loss of ` 527.9 million
(March 31, 2010: ` 610.1 million). The credit derivatives are marked to market by the Bank based on counter-party
valuation quotes, or internal models using inputs from market sources such as Bloomberg/Reuters, counter-parties and
FIMMDA.
The Bank offers deposits to customers of its offshore branches with structured returns linked to interest, forex, credit or
equity benchmarks. The Bank covers these exposures in the inter-bank market. At March 31, 2011, the net open position
on this portfolio was Nil (March 31, 2010: ` 32.6 million) with mark-to-market gain of ` 27.8 million (March 31, 2010:
` 3.0 million). The profit and loss impact on account of mark-to-market and realized profit and loss during the year ended
March 31, 2011 was a net profit of ` 57.6 million.
The notional principal amount of forex contracts classified as non-trading at March 31, 2011 amounted to
` 340,828.8 million (March 31, 2010: ` 182,911.8 million). The notional principal amount of forex contracts classified as
trading at March 31, 2011 amounted to ` 2,127,789.6 million (March 31, 2010: ` 1,477,775.4 million). The net overnight
open position at March 31, 2011 was ` 502.1 million (March 31, 2010: ` 293.2 million).
17. Exchange traded interest rate derivatives
The following table sets forth, for the periods indicated, the details of exchange traded interest rate derivatives.
Particulars
i)
Notional principal amount of exchange traded interest rate derivatives
undertaken during the year (instrument-wise)
a) Euro dollar futures ....................................................................................
b) Treasury note futures – 10 years .............................................................
c) Treasury note futures – 5 years ...............................................................
d) Treasury note futures – 2 years ...............................................................
e) NSE – GOI Bond futures ...........................................................................
ii)
Notional principal amount of exchange traded interest rate derivatives
outstanding (instrument-wise)
a) Euro dollar futures ....................................................................................
b) Treasury note futures – 10 years .............................................................
c) Treasury note futures – 5 years ...............................................................
d) Treasury note futures – 2 years ...............................................................
e) NSE – GOI Bond futures ..........................................................................
iii) Notional principal amount of exchange traded interest rate derivatives
outstanding and not “highly effective ” (instrument wise) ..........................
iv) Mark-to-market value of exchange traded interest rate derivatives
outstanding and not “highly effective” (instrument-wise) ...........................
` in million
At
March 31, 2011
At
March 31, 2010
—
—
—
—
—
—
—
—
—
—
N.A.
N.A.
—
—
—
—
0.2
—
—
—
—
—
N.A.
N.A.
Pursuant to RBI circular DBOD.No.BP.BC.51/21.06.101/2010-11 dated October 28, 2010, the Bank has started dealing in
exchange traded currency options. The outstanding notional principal amount of these derivatives at March 31, 2011 was
` 9,418.5 million.
F28
schedules
forming part of the Accounts (Contd.)
18. Forward rate agreement (FRA)/Interest rate swaps (IRS)
The following table sets forth, for the periods indicated, the details of the forward rate agreements/interest rate swaps.
Particulars
` in million
At
March 31, 2011
At
March 31, 2010
i)
ii)
iii)
iv)
v)
1.
2.
3.
The notional principal of rupee swap agreements .............................
2,649,306.3
1,870,819.1
Losses which would be incurred if all counter parties
failed to fulfil their obligations under the agreement1 ........................
Collateral required by the Bank upon entering into swaps .................
Concentration of credit risk arising from the rupee swaps2 ................
The fair value of rupee trading swap book3 ........................................
23,133.4
—
673.4
(1,467.8)
20,533.2
—
500.0
(180.5)
For trading portfolio both mark-to-market and accrued interest have been considered and for hedging portfolio, only accrued
interest has been considered.
Credit risk concentration is measured as the highest net receivable under swap contracts from a particular counter party.
Fair value represents mark-to-market including accrued interest.
19. Advances
The following table sets forth, for the periods indicated, the details of movement of gross non-performing assets (NPAs),
net NPAs and provisions.
Particulars
Net NPAs (funded) to net advances (%) ...................................................
i)
ii) Movement of NPAs (Gross)
a) Opening balance1 ...............................................................................
b) Additions during the year2,3,4 ...............................................................
Reductions during the year2 ...............................................................
c)
d) Closing balance1 ..................................................................................
iii) Movement of Net NPAs
a) Opening balance1 ................................................................................
b) Additions during the year2,3,4 ...............................................................
Reductions during the year2 ...............................................................
c)
d) Closing balance1 ..................................................................................
iv) Movement of provisions for NPAs
(excluding provision on standard assets)
a) Opening balance1 ................................................................................
Provisions made during the year4,5 .....................................................
b)
c) Write-off/(write-back) of excess provisions ......................................
d) Closing balance1 ..................................................................................
Year ended
March 31, 2011
1.11%
` in million
Year ended
March 31, 2010
2.12%
94,806.5
28,656.3
(23,120.2)
100,342.6
38,411.1
4,946.4
(19,283.9)
24,073.6
56,395.4
27,782.6
(7,909.0)
76,269.0
96,493.1
64,168.9
(65,855.5)
94,806.5
45,539.4
36,666.5
(43,794.8)
38,411.1
50,953.7
43,181.4
(37,739.7)
56,395.4
1.
2.
3.
4.
5.
Net of write-off.
Includes cases added to and deleted from NPAs during the year ended March 31, 2011, with such gross loans amounting to ` 5,025.8
million (March 31, 2010: ` 9,970.7 million) and such net loans amounting to ` 3,512.0 million (March 31, 2010: ` 8,716.8 million).
Till year ended March 31, 2010, the difference between the opening and closing balances (other than accounts written off during
the year) of NPAs in retail loans was included in additions during the year. From the year ended March 31, 2011, the bifurcation
between additions and deletions is made except for NPAs in credit cards. For NPAs in credit cards, the difference between the
opening and closing balances (other than accounts written off during the year) is included in additions during the year. The
previous year amounts have been reclassified accordingly.
Includes NPAs acquired on account of amalgamation of Bank of Rajasthan.
Till year ended March 31, 2010, the difference between the opening and closing balances of provisions (adjusted for write-off
and sale of NPAs during period) in retail loans was included in provisions made during the year. From the year ended on
March 31, 2011, the bifurcation between provision made and write back of excess provision is made except for the NPAs in credit
cards. For NPAs in credit cards, the difference between the opening and closing balances (adjusted for write-off and sale of NPAs
during the year) is included in provisions made during the year. The previous year amounts have been reclassified accordingly.
F29
schedules
forming part of the Accounts (Contd.)
20. Provision on standard assets
The Bank makes provision on standard assets as per applicable RBI guidelines.
The Bank has not written back any standard asset provision pursuant to the RBI circular no. DBOD.BP.BC.83/21.01.002/2008-09
dated November 15, 2008. The provision on standard assets held by the Bank at March 31, 2011 (including ` 435.4 million
on account of amalgamation of Bank of Rajasthan) was ` 14,796.0 million (March 31, 2010: ` 14,360.6 million).
21. Provision Coverage Ratio
The provision coverage ratio of the Bank at March 31, 2011 computed as per the RBI circular dated December 1, 2009 is
76.0% (March 31, 2010: 59.5%).
22. Farm loan waiver
The Ministry of Finance, Government of India had issued guidelines for the implementation of the Agriculture debt
waiver and relief scheme for farmers on May 23, 2008. The Bank has implemented the scheme as per guidelines issued
by RBI circular DBOD No.BP.BC. 26/21.04.048/2008-09 dated July 30, 2008 on “Agricultural Debt Waiver and Debt Relief
Scheme, 2008 – Prudential norms on income recognition, asset classification and provisioning and Capital Adequacy”.
Pursuant to the Scheme, an aggregate amount of ` 2,763.3 million (March 31, 2010: ` 2,758.1 million) has been waived which
is recoverable from Government of India. Of the above, an amount of ` 2,757.5 million has been received by March 31, 2011
(March 31, 2010: ` 1,220.8 million) and balance ` 5.8 million (March 31, 2010: ` 1,537.3 million) is receivable in future.
At August 12, 2010, erstwhile Bank of Rajasthan had an aggregate amount of ` 32.0 million which was recoverable from
Government of India. Of the above, an amount of ` 31.4 million has been received by March 31, 2011 and balance ` 0.6
million is receivable in future.
23. Securitisation
The Bank sells loans through securitisation and direct assignment. The following tables set forth, for the periods indicated,
the information on securitisation and direct assignment activity of the Bank as an originator.
Total number of loan assets securitised .............................................................
Total book value of loan assets securitised ........................................................
Sale consideration received for the securitised assets .....................................
Net gain/(loss) on account of securitisation1 ......................................................
` in million, except number of loans securitised
Year ended
March 31, 2010
33
81,309.4
81,493.7
(5,093.8)
Year ended
March 31, 2011
—
—
—
(5,492.7)
1.
Includes loss booked upfront on sales during the year, gain/(loss) on deal closures, gain amortised during the year and expenses
relating to utilisation of credit enhancement.
Outstanding credit enhancement (funded) ........................................................
Outstanding liquidity facility ...............................................................................
Net outstanding servicing asset/(liability) ..........................................................
Outstanding subordinate contributions .............................................................
At
March 31, 2011
5,266.2
1,246.6
(17.4)
6,017.0
` in million
At
March 31, 2010
9,987.3
3,196.9
225.7
7,424.3
The outstanding credit enhancement in the form of guarantees amounted to ` 16,006.0 million at March 31, 2011
(March 31, 2010: ` 19,920.0 million).
Outstanding credit enhancement in the form of guarantees for third party originated securitisation transactions amounted
to ` 8,639.0 million at March 31, 2011 (March 31, 2010: ` 6,442.0 million) and outstanding liquidity facility for third party
originated securitisation transactions amounted to Nil at March 31, 2011 (March 31, 2010: ` 0.2 million).
The following table sets forth, for the periods indicated, the details of provision for securitisation and direct assignment
transactions.
Particulars
Opening balance .....................................................................................................................
Add: Additions during the year ..........................................................................
Less: Deductions during the year .......................................................................
Closing balance ...................................................................................................
Year ended March
31, 2011
2,253.8
2,277.1
(2,167.1)
2,363.8
F30
` in million
Year ended March
31, 2010
5,567.2
1,038.4
(4,351.8)
2,253.8
schedules
forming part of the Accounts (Contd.)
24. Financial assets transferred during the year to securitisation company (SC)/reconstruction company (RC)
The Bank has transferred certain assets to Asset Reconstruction Companies (ARCs) in terms of the guidelines issued by
RBI governing such transfer. For the purpose of the valuation of the underlying security receipts issued by the underlying
trusts managed by ARCs, the security receipts are valued at their respective NAVs as advised by the ARCs.
The following table sets forth, for the periods indicated, the details of the assets transferred.
Number of accounts1............................................................................................
Aggregate value (net of provisions) of accounts sold to SC/RC ........................
Aggregate consideration ......................................................................................
Additional consideration realised in respect of accounts transferred in earlier years2
Aggregate gain/(loss) over net book value .........................................................
` in million, except number of accounts
Year ended
March 31, 2010
55,160
7,617.9
7,866.7
—
248.8
Year ended
March 31, 2011
—
—
—
—
—
1.
2.
Excludes accounts previously written-off.
During the year ended March 31, 2011, asset reconstruction companies have fully redeemed security receipts of two trusts. The
Bank realised ` 67.6 million over the gross book value in respect of these trusts (March 31, 2010: ` 89.8 million).
25. Information in respect of restructured assets
The following table sets forth, for the periods indicated, details of loan assets subjected to restructuring.
Year ended March 31, 2011
Year ended March 31, 2010
SME Debt
Restructuring
CDR
Mechanism
Others
CDR
Mechanism
SME Debt
Restructuring
Others
` in million
Standard advances
restructured3
Sub- standard
advances
restructured
Doubtful advances
restructured
Total
Number of
borrowers
Amount outstanding
Amount restructured
Sacrifice (diminution
in the fair value)
Number of
borrowers
Amount outstanding
Amount restructured
Sacrifice (diminution
in the fair value)
Number of
borrowers
Amount outstanding
Amount restructured
Sacrifice (diminution
in the fair value)
Number of borrowers
Amount outstanding
Amount restructured
Sacrifice (diminution
in the fair value)
4
993.7
964.6
132.5
—
—
—
—
—
—
—
—
4
993.7
964.6
132.5
2
60
99.4 11,627.7
89.7 11,024.6
11
14,186.6
12,444.3
11
3,806
397.6 40,918.8
251.4 39,248.4
—
645.2
1,006.0
4.8
1,406.5
5
—
— 1,215.2
— 1,216.6
3
640.2
624.3
1
77.8
77.8
98
288.2
244.9
—
—
—
—
—
651.1
80.7
5.9
8.7
2
321.7
360.4
—
—
—
—
—
—
—
—
—
3
207.2
187.8
17.5
2
67
99.4 13,164.6
89.7 12,601.6
14
14,826.8
13,068.6
12
3,907
475.4 41,414.2
329.2 39,681.1
— 1,296.3
1,086.7
10.7
1,432.7
1.
2.
3.
4.
The aforesaid disclosure for the year ended March 31, 2011, includes the reversal of interest income of ` 176.7 million
(March 31, 2010: ` 704.3 million) on account of conversion of overdue interest into Funded Interest Term Loan (FITL).
The aforesaid disclosure excludes the reversal of derivative income of ` 18.5 million for the year ended March 31, 2011 (March 31, 2010:
` 303.1 million) on account of conversion of derivative receivables into term loan/preference shares.
Includes eight borrowal accounts restructured for a second time with asset classification benefit upto June 30, 2009, amounting
to ` 24,280.8 million against which sacrifice (diminution in fair value) was ` 1,498.1 million.
Amount outstanding represents the borrower level balances (including facilities not restructured) at the end of the quarter in
which the restructuring scheme is implemented.
F31
schedules
forming part of the Accounts (Contd.)
26. Details of non-performing assets purchased/sold, excluding those sold to SC/RC
The Bank has not purchased any non-performing assets in terms of the guidelines issued by the RBI circular no.
DBOD.No.BP.BC.16/21.04.048/2005-06 dated July 13, 2005. The Bank has sold certain non-performing assets in terms of
these RBI guidelines.
The following table sets forth, for the periods indicated, details of non-performing assets sold, excluding those sold to SC/RC.
Particulars
No. of accounts1 ...........................................................................................................
Aggregate value (net of provisions) of accounts sold,
excluding those sold to SC/RC ....................................................................................
Aggregate consideration .............................................................................................
Aggregate gain/(loss) over net book value ................................................................
1.
Excludes accounts previously written-off.
27. Floating provision
` in million, except no. of accounts
Year ended
March 31, 2010
Year ended
March 31, 2011
—
—
—
—
7,428
479.0
463.6
(15.4)
The Bank holds floating provision of ` 1.9 million at March 31, 2011 which was taken over from erstwhile Bank of
Rajasthan on amalgamation.
28. Concentration of Deposits, Advances, Exposures and NPAs
(I) Concentration of deposits, advances, exposures and NPAs
Concentration of deposits
` in million
At
March 31, 2011
At
March 31, 2010
Total deposits of twenty largest depositors ...............................................
219,063.0
304,189.2
Deposits of twenty largest depositors as a percentage
of total deposits of the Bank .......................................................................
Concentration of advances1
9.71%
15.06%
At
March 31, 2011
` in million
At
March 31, 2010
Total advances to twenty largest borrowers (including banks) ................
968,797.3
912,696.2
Advances to twenty largest borrowers as a
percentage of total advances of the Bank .................................................
16.93%
18.74%
1. Represents credit exposure as per RBI guidelines on exposure norms. Total advances do not include the exposure to
consolidated entities which are deducted from capital funds of the Bank and exposure to NABARD.
Concentration of exposures1
At
March 31, 2011
` in million
At
March 31, 2010
Total exposure to twenty largest borrowers (including banks) .................
1,007,127.8
942,409.4
Exposures to twenty largest borrowers as a
percentage of total exposure of the Bank .................................................
18.23%
1. Represents credit and investment exposures as per RBI guidelines on exposure norms. Total exposure does not include the
exposure to consolidated entities which are deducted from capital funds of the Bank, SLR investments and exposure to NABARD.
16.29%
Concentration of NPAs
Total exposure1 to top four NPA accounts .................................................
1. Represents gross exposure (funded and non-funded)
At
March 31, 2011
6,508.1
` in million
At
March 31, 2010
7,200.3
F32
schedules
forming part of the Accounts (Contd.)
(II) Sector-wise NPAs
Sr.
no. Sector
1. Agriculture and allied activities1 ...........................................
2.
Industry (Micro & small, medium and large) ........................
3. Services .................................................................................
Personal loans2 ......................................................................
4.
Total .......................................................................................
Percentage of NPAs to total
advances in that sector
At
March 31, 2011
Net
3.00%
0.77%
0.51%
1.83%
1.11%
Gross
5.62%
2.37%
2.60%
9.02%
5.06%
At
March 31, 2010
Net
3.05%
1.19%
1.16%
3.34%
2.12%
Gross
7.61%
2.10%
1.76%
9.84%
4.47%
1. Represents loans towards agriculture and allied activities that qualify for priority sector lending.
2.
Excludes retail loans towards agriculture and allied activities that qualify for priority sector lending. Excludes commercial
business loans, developer financing and dealer funding.
(III) Movement of NPAs
Particulars
Opening balance of gross NPAs1 ..............................................................
Additions: fresh NPAs during the year2,3 ...................................................
Sub-total (A) ...............................................................................................
Less: ...........................................................................................................
i) Upgradations .......................................................................................
ii) Recoveries (excluding recoveries made from upgraded accounts) .
iii) Write-offs .............................................................................................
Sub-total (B) ..............................................................................................
Closing balance of gross NPAs1 (A-B) .....................................................
1. Net of write-off.
2.
Year ended
March 31, 2011
94,806.5
28,656.3
123,462.8
(7,581.6)
(13,670.1)
(1,868.5)
(23,120.2)
100,342.6
` in million
Year ended
March 31, 2010
96,493.1
64,168.9
160,662.0
(6,655.9)
(24,183.1)
(35,016.5)
(65,855.5)
94,806.5
3.
Includes cases added to and deleted from NPAs during the year ended March 31, 2011, with such gross loans amounting to
` 5,025.8 million (March 31, 2010: ` 9,970.7 million).
Till year ended March 31, 2010, the difference between the opening and closing balances (other than accounts written off
during the year) of NPAs in retail loans was included in additions during the year. From the year ended March 31, 2011, the
bifurcation between additions and deletions is made except for NPAs in credit cards. For NPAs in credit cards, the difference
between the opening and closing balances (other than accounts written off during the year) is included in additions during
the year. The previous year amounts have been reclassified accordingly.
(IV) Overseas assets, NPAs and revenue
Particulars
Total assets1 ...............................................................................................
Total NPAs (net)2 ........................................................................................
Total revenue1 ............................................................................................
At
March 31, 2011
697,435.3
981.1
39,309.8
` in million
At
March 31, 2010
611,827.7
1,593.3
44,598.1
1. Represents the total assets and total revenue of foreign operations as reported in Schedule 18 of the financial statements.
2. As per RBI guidelines.
(V) Off-balance sheet special purpose vehicles (SPVs) sponsored (which are required to be consolidated as per
accounting norms)
(a) The following table sets forth, the names of SPVs/trusts sponsored by the Bank/subsidiaries which are consolidated:
Sr.
No.
A.
Name of the SPV sponsored1
Domestic
1.
2.
3.
4.
5.
ICICI Eco-net Internet and Technology Fund
ICICI Equity Fund
ICICI Emerging Sectors Fund
ICICI Strategic Investments Fund
ICICI Venture Value Fund
B. Overseas
None
1.
The nature of business of the above entities is given in significant accounting policies (Schedule 17) in the consolidated
notes to accounts to consolidated financial statements.
F33
schedules
forming part of the Accounts (Contd.)
(b) The following table sets forth, the names of SPVs/trusts which are not sponsored by the Bank/subsidiaries and
are consolidated:
Name of the SPV1
Sr.
No.
A. Domestic
1. Rainbow Fund
B. Overseas
None
1. The nature of business of the above entities is given in significant accounting policies (Schedule 17) in the notes to accounts
to consolidated financial statements.
29. Lending to sensitive sectors
The Bank has lending to sectors, which are sensitive to asset price fluctuations. The sensitive sectors include capital
markets and real estate.
The following table sets forth, for the periods indicated, the position of lending to capital market sector.
Capital market sector
i)
ii)
Direct investment in equity shares, convertible debentures and units
of equity-oriented mutual funds, the corpus of which is not exclusively
invested in corporate debt
Advances against shares/bonds/ debentures or other securities or
on clean basis to individuals for investment in shares (including IPOs/
ESOPs), convertible bonds, convertible debentures, and units of equity-
oriented mutual funds
iii) Advances for any other purposes where shares or convertible bonds or
convertible debentures or units of equity oriented mutual funds are taken
as primary security
iv) Advances for any other purposes to the extent secured by the collateral
security of shares or convertible bonds or convertible debentures or units
of equity oriented mutual funds
v)
vi)
Secured and unsecured advances to stockbrokers and guarantees issued
on behalf of stockbrokers and market makers
Loans sanctioned to corporate against the security of shares/bonds/
debentures or other securities or on clean basis for meeting promoter’s
contribution to the equity of new companies in anticipation of raising
resources
vii) Bridge loans to companies against expected equity flows/issues
viii) Underwriting commitments taken up by the Bank in respect of primary
issue of shares or convertible bonds or convertible debentures or units of
equity oriented mutual funds
ix)
x)
Financing to stockbrokers for margin trading
All exposures to Venture Capital Funds (both registered and unregistered)
xi) Others
Total Exposure to Capital Market
` in million
At
March 31, 2011
At
March 31, 2010
19,481.6
22,082.3
12,659.3
34,463.6
5,513.6
5,315.6
—
330.6
31,845.2
22,771.3
—
—
—
—
—
—
—
—
10,338.6
26,014.9
105,853.2
12,214.3
14,091.8
111,269.5
Note:The above excludes the exposure under non disposable undertaking (NDU) and power of attorney (PoA) structure and acquisition
financing which are backed only by contractual comfort of shares.
F34
schedules
forming part of the Accounts (Contd.)
The following table sets forth, for the periods indicated, the summary of lending to real estate sector.
Real estate sector
I
Direct exposure ......................................................................................
i) Residential mortgages ......................................................................
of which: individual housing loans eligible for priority sector advances
ii) Commercial real estate1 ...................................................................
iii) Investments in mortgage backed securities (MBS) and other
securitised exposure ........................................................................
a. Residential..................................................................................
b. Commercial real estate..............................................................
II
Indirect exposure ...................................................................................
i) Fund based and non-fund based exposures on National Housing
Bank (NHB) and Housing Finance Companies (HFCs) ....................
ii) Others ...............................................................................................
Total Exposure to Real Estate Sector2..................................................
At
` in million
At
March 31, 2011
March 31, 2010
712,446.1
453,165.2
190,163.0
250,948.9
8,332.0
8,332.0
—
64,893.7
64,893.7
—
777,339.8
579,950.5
434,865.1
205,019.4
135,198.6
9,886.8
9,886.8
—
58,756.8
58,104.1
652.7
638,707.3
1.
2.
Commercial real estate exposure include loans to individuals against non-residential premises, loans given to land and building
developers for construction, corporate loans for development of special economic zone, loans to borrowers where servicing of
loans is from a real estate activity and exposures to mutual funds/venture capital funds/private equity funds investing primarily in
the real estate companies.
Excludes non-banking assets acquired in satisfaction of claims.
30. Risk category-wise country exposure
As per the extant RBI guidelines, the country exposure of the Bank is categorised into various risk categories listed in the
following table. The funded country exposure (net) of the Bank as a percentage of total funded assets for United Kingdom
was 1.32% (March 31, 2010: 1.44%) and Canada was 0.99% (March 31, 2010: 1.11%). As the net funded exposure to
United Kingdom exceeds 1.0% of total funded assets, the Bank has made a provision of ` 140.0 million on country
exposure at March 31, 2011 (March 31, 2010: ` 235.0 million) based on RBI guidelines.
The following table sets forth, for the periods indicated, the details of exposure (net) and provision held by the bank.
Risk category
Insignificant ................................................
Low .............................................................
Moderate....................................................
High ............................................................
Very High ...................................................
Restricted ...................................................
Off-Credit ...................................................
Total ...........................................................
- Of which: funded ....................................
Exposure (net) at
March 31, 2011
Provision held at
March 31, 2011
Exposure (net) at
March 31, 2010
Provision held at
March 31, 2010
` in million
452,917.5
129,968.6
23,727.2
485.7
—
—
—
140.0
—
—
—
—
—
—
392,684.7
131,940.9
25,024.4
696.4
—
—
—
607,099.0
295,610.7
140.0
—
550,346.4
245,144.8
235.0
—
—
—
—
—
—
235.0
—
31. Details of Single Borrower Limit and Borrower Group Limit exceeded by the Bank
During the year ended March 31, 2011, the Bank has complied with the Reserve Bank of India guidelines on single
borrower and borrower group limit. As per the exposure limits permitted under the extant RBI regulation, the Bank
F35
schedules
forming part of the Accounts (Contd.)
with the approval of the Board of Directors can enhance exposure to a single borrower or borrower group by a further
5 percent of capital funds. During the year ended March 31, 2011, with the prior approval of the Board of Directors, the
Bank exceeded the single borrower limit of 15% of capital funds to Reliance Industries Limited. At March 31, 2011, the
exposure to Reliance Industries Limited as a percentage of capital funds was 12.4%.
32. Unsecured advances against intangible assets
The Bank has made advances against intangible collaterals of the borrowers which are classified as ‘unsecured’ in its
financial statements. At March 31, 2011, the amount of such advances was Nil (March 31, 2010: Nil) and the estimated
value of the intangible collaterals was Nil (March 31, 2010: Nil).
33. Fixed Assets
The following table sets forth, for the periods indicated, the movement in software acquired by the Bank, as included in fixed assets.
` in million
At
March 31, 2010
At
March 31, 2011
Particulars
At cost at March 31st of preceding year ..............................................................
Additions during the year1 ....................................................................................
Deductions during the year ..................................................................................
5,852.6
737.6
(0.6)
Depreciation to date ..............................................................................................
Net block ................................................................................................................
(4,830.8)
1,758.8
5,267.4
824.9
(239.7)
(4,043.3)
1,809.3
1.
Includes impact of acquisition of erstwhile Bank of Rajasthan.
34. Assets given on lease
Assets under finance lease
The following table sets forth, for the periods indicated, the details of finance leases.
Particulars
Future minimum lease receipts
Present value of lease receipts .............................................................................
Unmatured finance charges ..................................................................................
Total .......................................................................................................................
Maturity profile of future minimum lease receipts
- Not later than one year .......................................................................................
- Later than one year and not later than five years ..............................................
- Later than five years ............................................................................................
Total .......................................................................................................................
Maturity profile of present value of lease rentals
At
March 31, 2011
` in million
At
March 31, 2010
6.8
0.6
7.4
2.7
4.7
—
7.4
17.4
0.2
17.6
17.6
—
—
17.6
The following table sets forth, for the periods indicated, the details of maturity profile of present value of finance lease
receipts.
Particulars
Not later than one year ........................................................................................
Later than one year and not later than five years ...............................................
Later than five years .............................................................................................
Total ......................................................................................................................
` in million
At
March 31, 2011
At
March 31, 2010
2.4
4.4
—
6.8
17.4
—
—
17.4
F36
schedules
forming part of the Accounts (Contd.)
35. Description of contingent liabilities
The following table describes the nature of contingent liabilities of the Bank.
Sr.
no.
1.
2.
3.
4
5
6
Contingent liability
Brief Description
Claims against
the Bank, not
acknowledged as
debts
This item represents demands made in certain tax and legal matters against the Bank
in the normal course of business. In accordance with the Bank’s accounting policy
and Accounting Standard 29, the Bank has reviewed the demands and classified such
disputed tax issues as possible obligation based on legal opinion/judicial precedents.
No provision in excess of provisions already made in the financial statements is
considered necessary.
Liability for partly paid
investments
This item represents amounts remaining unpaid towards purchase of investments.
These payment obligations of the Bank do not have any profit/loss impact.
Liability on account of
outstanding forward
exchange contracts
The Bank enters into foreign exchange contracts in its normal course of business,
to exchange currencies at a pre-fixed price at a future date. This item represents the
notional principal amount of such contracts, which are derivative instruments. With
respect to the transactions entered into with its customers, the Bank generally enters
into off-setting transactions in the inter-bank market. This results in generation of a
higher number of outstanding transactions, and hence a large value of gross notional
principal of the portfolio, while the net market risk is lower.
Guarantees given on
behalf of constituents,
acceptances,
endorsements and
other obligations
This item represents the guarantees and documentary credits issued by the Bank in
favour of third parties on behalf of its customers, as part of its trade finance banking
activities, with a view to augment the customers’ credit standing. Through these
instruments, the Bank undertakes to make payments for its customers’ obligations,
either directly or in case of failure of the customers to fulfil their financial or performance
obligations.
Currency swaps,
interest rate swaps,
currency options and
interest rate futures
Other items for
which the Bank is
contingently liable
This item represents the notional principal amounts of various derivative instruments
which the Bank undertakes in its normal course of business. The Bank offers these
products to its customers to enable them to transfer, modify or reduce their foreign
exchange and interest rate risks. The Bank also undertakes these contracts to manage
its own interest rate and foreign exchange positions. With respect to the transactions
entered into with its customers, the Bank generally enters into off-setting transactions
in the inter-bank market. This results in generation of a higher number of outstanding
transactions, and hence a large value of gross notional principal of the portfolio, while
the net market risk is lower.
Other items for which the Bank is contingently liable include primarily the securitisation
and notional principal amounts of credit derivatives. The Bank is also obligated under
a number of capital contracts. Capital contracts are job orders of a capital nature which
have been committed. This item also includes the amount of Government securities
bought/sold and remaining to be settled on the date of the financials statements.
36. Bancassurance
The following table sets forth, for the periods indicated, the break-up of income derived from bancassurance business.
Nature of income
` in million
Year ended
March 31, 2011
Income from selling life insurance policies ..................................................................................
Income from selling non life insurance policies ..........................................................................
Income from selling mutual fund/collective investment scheme products ...............................
1,885.4
325.6
597.4
Sr.
No.
1.
2.
3.
During the year ended March 31, 2010, the Bank earned income of ` 2,955.9 million from selling life and non-life
insurance policies.
F37
schedules
forming part of the Accounts (Contd.)
37. Transfer of merchant acquiring operations
During the year ended March 31, 2010, the Bank and First Data, a global company engaged in electronic commerce and
payment services, formed a merchant acquiring alliance and a new entity, 81.0% owned by First Data, was formed, which
has acquired ICICI Bank’s merchant acquiring operations through transfer of assets, primarily comprising fixed assets
and receivables, and assumption of liabilities, for a total consideration of ` 3,744.0 million. This transfer of assets and
liabilities to the new entity would be considered a ‘slump sale’ for tax purposes. The Bank realised a profit of ` 2,029.0
million from this transaction, which is included in Schedule 14 - “Other income” for the year ended March 31, 2010.
38. Staff retirement benefits
Pension
The following tables set forth, for the periods indicated, reconciliation of opening and closing balance of the present
value of the defined benefit obligation for pension benefits.
Particulars
Opening obligations ............................................................................................
Service cost ..........................................................................................................
Interest cost ..........................................................................................................
Actuarial (gain)/loss ..............................................................................................
Liabilities extinguished on settlement .................................................................
Addition due to amalgamation ............................................................................
Benefits paid .........................................................................................................
Obligations at the end of year ............................................................................
Opening plan assets, at fair value ......................................................................
Expected return on plan assets ...........................................................................
Actuarial gain/(loss) ..............................................................................................
Assets distributed on settlement .........................................................................
Contributions ........................................................................................................
Addition due to amalgamation ............................................................................
Benefits paid .........................................................................................................
Closing plan assets, at fair value ........................................................................
Fair value of plan assets at the end of the year ..................................................
Present value of the defined benefit obligations at the end of the year ............
Amount not recognised as an asset (limit in Para 59(b)) ....................................
Asset/(liability).....................................................................................................
Cost for the year
Service cost ..........................................................................................................
Interest cost ..........................................................................................................
Expected return on plan assets ...........................................................................
Actuarial (gain)/loss ..............................................................................................
Curtailments & settlements (gain)/loss ................................................................
Effect of the limit in para 59(b) .............................................................................
Net cost ................................................................................................................
Investment details of plan assets
Majority of the plan assets are invested in Government securities and corporate bonds
Assumptions
Interest rate ...........................................................................................................
Salary escalation rate: ..........................................................................................
On Basic Pay .........................................................................................................
On Dearness Relief ...............................................................................................
Estimated rate of return on plan assets ..............................................................
Year ended
March 31, 2011
1,748.7
170.8
457.8
607.0
(460.0)
6,479.0
(160.4)
8,842.9
` in million
Year ended
March 31, 2010
1,932.2
51.8
134.5
(32.1)
(287.7)
—
(50.0)
1,748.7
1,839.9
156.5
69.1
(511.1)
6,094.6
978.8
(160.4)
8,467.4
8,467.4
8,842.9
—
(375.5)
170.8
457.8
(156.5)
537.9
51.1
(7.7)
1,053.4
8.10%
1.50%
7.00%
8.00%
2,145.3
169.9
(130.7)
(322.6)
28.0
—
(50.0)
1,839.9
1,839.9
1,748.7
7.7
83.5
51.8
134.5
(169.9)
98.6
34.9
(43.5)
106.4
7.75%
7.00%
7.00%
8.00%
F38
schedules
forming part of the Accounts (Contd.)
Experience adjustment
Particulars
Plan assets ..............................................................
Defined benefit obligations ....................................
Amount not recognised as an asset
(limit in para 59(b)) .................................................
Surplus/(deficit) ......................................................
Experience adjustment on plan assets ..................
Experience adjustment on plan liabilities ..............
Year ended
March 31,
2011
8,467.4
8,842.9
Year ended
March 31,
2010
1,839.9
1,748.7
Year ended
March 31,
2009
2,145.3
1,932.2
Year ended
March 31,
2008
1,490.1
1,678.1
` in million
Year ended
March 31,
2007
988.5
1,029.4
—
(375.5)
69.1
689.7
7.7
83.5
(130.7)
196.9
51.2
161.9
144.8
6.6
—
(188.0)
(117.9)
(121.9)
—
(40.9)
(110.1)
32.8
Gratuity
The following tables set forth, for the periods indicated, reconciliation of opening and closing balance of the present
value of the defined benefit obligation for gratuity benefits.
Particulars
Opening obligations ..........................................................................................
Add: Adjustment for exchange fluctuation on opening obligations ...............
Adjusted opening obligations ..........................................................................
Service cost ........................................................................................................
Interest cost ........................................................................................................
Actuarial (gain)/loss ............................................................................................
Past service cost .................................................................................................
Addition due to amalgamation ..........................................................................
Liability assumed on acquisition/(settled on divestiture) .................................
Benefits paid .......................................................................................................
Obligations at the end of the year ...................................................................
Opening plan assets, at fair value ....................................................................
Expected return on plan assets .........................................................................
Actuarial gain/(loss) ............................................................................................
Addition due to amalgamation ..........................................................................
Contributions ......................................................................................................
Assets acquired on acquisition/(distributed on divestiture) .............................
Benefits paid .......................................................................................................
Closing plan assets, at fair value ......................................................................
Fair value of plan assets at the end of the year ................................................
Present value of the defined benefit obligations at the end of the year ..........
Amount not recognised as an asset (limit in Para 59(b)) ..................................
Asset/(liability) ...................................................................................................
Cost for the year
Service cost ........................................................................................................
Interest cost ........................................................................................................
Expected return on plan assets .........................................................................
Actuarial (gain)/loss ............................................................................................
Past service cost .................................................................................................
Exchange fluctuation loss/(gain) ........................................................................
Losses/(Gains) on “Acquisition/Divestiture” ......................................................
Effect of the limit in para 59(b) ...........................................................................
Net cost ..............................................................................................................
Investment details of plan assets
Majority of the plan assets are invested in Government securities and corporate bonds
Assumptions ......................................................................................................
Interest rate .........................................................................................................
Salary escalation rate .........................................................................................
Estimated rate of return on plan assets ............................................................
Year ended
March 31, 2011
2,310.5
0.2
2,310.7
297.1
326.3
(324.9)
9.9
2,773.1
35.3
(344.8)
5,082.7
` in million
Year ended
March 31, 2010
2,195.7
(4.8)
2,190.9
276.9
161.5
(144.9)
—
—
(8.4)
(165.5)
2,310.5
2,507.5
233.5
(63.2)
803.0
2,006.9
39.5
(344.8)
5,182.4
5,182.4
5,082.7
—
99.7
297.1
326.3
(233.5)
(261.7)
9.9
0.2
(4.2)
(47.9)
86.2
8.10%
7.00%
8.00%
2,272.1
186.9
168.8
—
45.2
—
(165.5)
2,507.5
2,507.5
2,310.5
47.9
149.1
276.9
161.5
(186.9)
(313.7)
—
(4.8)
—
40.0
(27.0)
7.75%
7.00%
8.00%
F39
schedules
forming part of the Accounts (Contd.)
Experience adjustment
Particulars
Plan assets ..............................................................
Defined benefit obligations ....................................
Amount not recognised as an asset
(limit in para 59(b)) .................................................
Surplus/(deficit) ......................................................
Experience adjustment on plan assets ..................
Experience adjustment on plan liabilities ..............
` in million
Year ended
March 31,
2011
Year ended
March 31,
2010
Year ended
March 31,
2009
Year ended
March 31,
2008
Year ended
March 31,
2007
5,182.4
5,082.7
2,507.5
2,310.5
2,272.1
1,506.7
891.7
2,195.7
1,840.4
1,142.1
—
99.7
(63.2)
79.0
47.9
149.1
168.8
(0.8)
7.9
68.5
(118.0)
(4.1)
—
—
(333.7)
(250.4)
(24.8)
14.0
(18.0)
38.1
The estimates of future salary increases, considered in actuarial valuation, take into consideration inflation, seniority,
promotion and other relevant factors.
The guidance on implementing Accounting Standard 15 - Employee Benefits (revised 2005) issued by the Accounting
Standards Board (ASB) provides that exempt provident funds which require employers to meet the interest shortfall
are in effect defined benefit plans. The Bank’s actuary has informed that it is not practicable to actuarially determine the
interest shortfall obligation.
39. Movement in provision for credit card/debit card reward points
The following table sets forth, for the periods indicated, movement in provision for credit card/debit card reward points.
Opening provision for reward points .................................................................
Provision for reward points made during the year ............................................
Utilisation/write-back of provision for reward points ........................................
Closing provision for reward points1 .................................................................
Year ended
March 31, 2011
269.7
555.4
(362.6)
462.5
` in million
Year ended
March 31, 2010
232.0
476.0
(438.3)
269.7
1.
The closing provision is based on the actuarial valuation of accumulated credit/debit card reward points. This amount will be
utilised towards redemption of the credit/debit card reward points.
40. Provisions and contingencies
The following table sets forth, for the periods indicated, the break-up of provisions and contingencies included in profit
and loss account.
Provisions for depreciation of investments .......................................................
Provision towards non-performing and other assets ........................................
Provision towards standard assets .....................................................................
Provision towards income tax1 ...........................................................................
Provision towards wealth tax ..............................................................................
Other provisions and contingencies...................................................................
Total provisions and contingencies ...................................................................
Year ended
March 31, 2011
2,038.2
19,769.1
—
16,063.3
30.0
1,061.1
38,961.7
` in million
Year ended
March 31, 2010
(26.5)
43,621.6
—
13,173.4
30.0
273.5
57,072.0
1.
Net of creation of net deferred tax asset amounting to ` 5,317.8 million for the year ended March 31, 2011 (March 31, 2010:
` 2,804.4 million).
41. Provision for income tax
The provision for income tax (including deferred tax) for the year ended March 31, 2011 amounted to ` 16,063.3 million
(March 31, 2010: ` 13,173.4 million).
The Bank has a comprehensive system of maintenance of information and documents required by transfer pricing
legislation under section 92-92F of the Income Tax Act, 1961. The Bank is of the opinion that all international transactions
are at arm’s length so that the above legislation will not have material impact on the financial statements.
F40
schedules
forming part of the Accounts (Contd.)
42. Deferred tax
At March 31, 2011, the Bank has recorded net deferred tax asset of ` 26,900.3 million (March 31, 2010: ` 20,756.7 million),
which has been included in other assets.
The following table sets forth, for the periods indicated, the break-up of deferred tax assets and liabilities into major items.
Deferred tax asset
Provision for bad and doubtful debts ..................................................................
Others ...................................................................................................................
Total deferred tax assets1 ....................................................................................
Deferred tax liability
Depreciation on fixed assets ................................................................................
Total deferred tax liability ...................................................................................
Deferred tax asset/(liability) pertaining to foreign branches ..............................
Total net deferred tax asset/(liability) ................................................................
At
March 31, 2011
` in million
At
March 31, 2010
28,944.3
2,398.8
31,343.1
4,444.1
4,444.1
1.3
26,900.3
23,597.6
1,827.4
25,425.0
4,671.1
4,671.1
2.8
20,756.7
1.
Pursuant to the amalgamation of erstwhile Bank of Rajasthan with the Bank from the close of the business at August 12, 2010, the
Bank has recognised deferred tax assets of ` 827.3 million on eligible amount of timing difference on the date of amalgamation.
43. Dividend distribution tax
For the purpose of computation of dividend distribution tax on the proposed dividend, the Bank has reduced the dividend
received from its Indian subsidiaries, which are not the subsidiaries of any other company, on which dividend distribution
tax has been paid by the subsidiaries as per the provisions of Section 115-O of the Income Tax Act, 1961.
44. Related party transactions
The Bank has transactions with its related parties comprising subsidiaries, associates/joint ventures/other related entities,
key management personnel and relatives of key management personnel.
Subsidiaries
ICICI Bank UK PLC, ICICI Bank Canada, ICICI Bank Eurasia Limited Liability Company, ICICI Prudential Life Insurance
Company Limited1, ICICI Lombard General Insurance Company Limited1, ICICI Prudential Asset Management Company
Limited1, ICICI Securities Limited, ICICI Securities Primary Dealership Limited, ICICI Home Finance Company Limited,
ICICI Venture Funds Management Company Limited, ICICI International Limited, ICICI Trusteeship Services Limited, ICICI
Investment Management Company Limited, ICICI Securities Holdings Inc., ICICI Securities Inc., ICICI Prudential Trust
Limited1, ICICI Wealth Management Inc. (upto December 31, 2009) and ICICI Prudential Pension Funds Management
Company Limited.
1.
Jointly controlled entities.
Associates/joint ventures/other related entities
ICICI Equity Fund1, ICICI Eco-net Internet and Technology Fund1, ICICI Emerging Sectors Fund1, ICICI Strategic Investments
Fund1, ICICI Kinfra Limited1, ICICI West Bengal Infrastructure Development Corporation Limited1 (upto December 31, 2010),
Financial Inclusion Network & Operations Limited (earlier known as Financial Information Network & Operations Limited), TCW/
ICICI Investment Partners Limited (earlier known as TCW/ICICI Investment Partners LLC), I-Process Services (India) Private
Limited, I-Solutions Providers (India) Private Limited, NIIT Institute of Finance, Banking and Insurance Training Limited, ICICI
Venture Value Fund1, Comm Trade Services Limited, Loyalty Solutions & Research Limited1 (upto March 31, 2010), Transafe
Services Limited1 (upto September 30, 2009), Prize Petroleum Company Limited, ICICI Foundation for Inclusive Growth,
Firstsource Solutions Limited (upto December 31, 2009), I-Ven Biotech Limited1, Rainbow Fund, ICICI Merchant Services
Private Limited and Mewar Aanchalik Gramin Bank2.
Entities consolidated as per Accounting Standard (AS) 21 on ‘consolidated financial statements’.
1.
2. With respect to an entity, which has been identified as a related party during the year ended March 31, 2011, previous year’s
comparative figures have not been reported.
Key management personnel
Mr. K. V. Kamath1, Ms. Chanda Kochhar, Mr. Sandeep Bakhshi2, Mr. N. S. Kannan3, Mr. K. Ramkumar, Mr. Rajiv Sabharwal4,
Mr. Sonjoy Chatterjee5, Mr. V. Vaidyanathan1.
F41
schedules
forming part of the Accounts (Contd.)
Relatives of key management personnel
Ms. Rajalakshmi Kamath1, Mr. Ajay Kamath1, Ms. Ajnya Pai1, Mr. Mohan Kamath1, Mr. Deepak Kochhar, Mr. Arjun
Kochhar, Ms. Aarti Kochhar, Mr. Mahesh Advani, Ms. Varuna Karna, Ms. Sunita R. Advani, Ms. Mona Bakhshi2,
Mr. Sameer Bakhshi2, Ms. Rangarajan Kumudalakshmi3, Ms. Aditi Kannan3, Mr. Narayanan Raghunathan3,
Mr. Narayanan Rangarajan3, Mr. Narayanan Krishnamachari3, Ms. Narayanan Sudha3, Mr. R. Shyam, Ms. R. Suchithra,
Mr. K. Jayakumar, Ms. J. Krishnaswamy, Ms. Sangeeta Sabharwal4, Mr. Somnath Chatterjee5, Mr. Tarak Nath Chatterjee5,
Ms. Sunaina Chatterjee5, Ms. Nandini Chatterjee5, Ms. Jeyashree V.1, Mr. V. Satyamurthy1, Mr. V. Krishnamurthy1, Mr. K. Vembu1.
1.
2.
3.
4.
5.
Transactions reported upto April 30, 2009.
Transactions reported with effect from May 1, 2009 upto July 31, 2010.
Transactions reported with effect from May 1, 2009.
Transactions reported with effect from June 24, 2010.
Transactions reported upto April 30, 2010.
The following were the significant transactions between the Bank and its related parties for the year ended
March 31, 2011. A specific related party transaction is disclosed as a material related party transaction wherever it
exceeds 10% of all related party transactions in that category.
Insurance services
During the year ended March 31, 2011, the Bank paid insurance premium to insurance subsidiaries amounting to
` 1,529.7 million (March 31, 2010: ` 1,162.5 million). The material transaction for the year ended March 31, 2011 was
payment of insurance premium to ICICI Lombard General Insurance Company Limited amounting to ` 1,380.8 million
(March 31, 2010: ` 1,057.3 million).
During the year ended March 31, 2011, the Bank’s insurance claims from the insurance subsidiaries amounted to ` 945.5
million (March 31, 2010: ` 876.1 million). The material transaction for the year ended March 31, 2011 was with ICICI
Lombard General Insurance Company Limited amounting to ` 906.5 million (March 31, 2010: ` 823.0 million).
Fees and commission income
During the year ended March 31, 2011, the Bank received fees from its subsidiaries amounting to ` 2,809.5 million
(March 31, 2010: ` 3,793.9 million), from its associates/joint ventures/other related entities amounting to ` 0.8 million
(March 31, 2010: ` 5.3 million), from key management personnel amounting to Nil (March 31, 2010: ` 0.2 million) and
from relatives of key management personnel amounting to Nil (March 31, 2010: ` 0.1 million). The material transactions
for the year ended March 31, 2011 were with ICICI Prudential Life Insurance Company Limited amounting to ` 1,969.0
million (March 31, 2010: ` 2,708.9 million), ICICI Lombard General Insurance Company Limited amounting to ` 380.0 million
(March 31, 2010: ` 403.5 million) and with ICICI Securities Limited amounting to ` 358.7 million (March 31, 2010: ` 437.4 million).
During the year ended March 31, 2011, the Bank received commission on bank guarantees from its subsidiaries amounting
to ` 10.3 million (March 31, 2010: ` 8.1 million) and from its associates/joint ventures/other related entities amounting
to Nil (March 31, 2010: ` 15.4 million). The material transactions for the year ended March 31, 2011 were with ICICI Bank
UK PLC amounting to ` 8.6 million (March 31, 2010: ` 0.7 million), ICICI Securities Limited amounting to ` 1.5 million
(March 31, 2010: ` 1.2 million), ICICI Home Finance Company Limited amounting to Nil (March 31, 2010: ` 5.7 million)
and with Firstsource Solutions Limited amounting to Nil (March 31, 2010: ` 15.3 million).
Lease of premises and facilities
During the year ended March 31, 2011, the Bank recovered from its subsidiaries an amount of ` 1,080.2 million
(March 31, 2010: ` 1,324.6 million) and from its associates/joint ventures/other related entities an amount of ` 87.5 million
(March 31, 2010: ` 34.5 million) for lease of premises, facilities and other administrative costs. The material transactions
for the year ended March 31, 2011 were with ICICI Home Finance Company Limited amounting to ` 241.1 million
(March 31, 2010: ` 484.0 million), ICICI Securities Limited amounting to ` 234.5 million (March 31, 2010: ` 231.9 million),
ICICI Prudential Life Insurance Company Limited amounting to ` 208.0 million (March 31, 2010: ` 203.1 million) and with
ICICI Lombard General Insurance Company Limited amounting to ` 178.1 million (March 31, 2010: ` 175.0 million).
Secondment of employees
During the year ended March 31, 2011, the Bank received compensation from its subsidiaries amounting to ` 29.1 million
(March 31, 2010: ` 24.8 million) and from its associates/joint ventures/other related entities amounting to ` 40.0 million
(March 31, 2010: ` 36.8 million) for secondment of employees. The material transactions for the year ended
March 31, 2011 were with ICICI Merchant Services Private Limited amounting to ` 24.4 million (March 31, 2010: ` 22.5 million),
ICICI Investment Management Company Limited amounting to ` 19.5 million (March 31, 2010: ` 11.9 million), ICICI Securities
Limited amounting to ` 12.1 million (March 31, 2010: ` 13.0 million) and with ICICI West Bengal Infrastructure Development
Corporation Limited amounting to ` 7.3 million (March 31, 2010: ` 9.8 million).
F42
schedules
forming part of the Accounts (Contd.)
Purchase of investments
During the year ended March 31, 2011, the Bank purchased certain investments from its subsidiaries amounting to
` 4,200.0 million (March 31, 2010: ` 6,355.0 million). The material transactions for the year ended March 31, 2011 were
with ICICI Securities Primary Dealership Limited amounting to ` 2,109.6 million (March 31, 2010: ` 5,414.1 million) and
with ICICI Prudential Life Insurance Company Limited amounting to ` 1,991.4 million (March 31, 2010: ` 704.7 million).
During the year ended March 31, 2011, the Bank invested in the equity shares, preference shares and bonds of its
subsidiaries amounting to ` 2,516.0 million (March 31, 2010: ` 32.1 million) and in its associates/joint ventures/other
related entities amounting to Nil (March 31, 2010: ` 765.3 million). The material transactions for the year ended
March 31, 2011 were with ICICI Lombard General Insurance Company Limited amounting to ` 2,516.0 million
(March 31, 2010: Nil) and with ICICI Merchant Services Private Limited amounting to Nil (March 31, 2010: ` 755.8 million).
At March 31, 2010, ICICI Bank had applied for equity shares in ICICI Securities Limited, which were allotted during the
year ended March 31, 2011. The amount of application money was ` 1,000.0 million.
Sale of investments
During the year ended March 31, 2011, the Bank sold certain investments to its subsidiaries amounting to ` 12,013.8
million (March 31, 2010: ` 3,646.0 million). The material transactions for the year ended March 31, 2011 were with ICICI
Securities Primary Dealership Limited amounting to ` 8,528.8 million (March 31, 2010: ` 2,408.8 million) and with ICICI
Prudential Life Insurance Company Limited amounting to ` 3,074.9 million (March 31, 2010: ` 1,237.2 million).
Investment in bonds and Certificate of Deposits (CDs) issued by ICICI Bank
During the year ended March 31, 2011, subsidiaries have invested in bonds issued by the Bank amounting to Nil
(March 31, 2010: ` 650.0 million). The material transactions for the year ended March 31, 2011 were with ICICI Securities
Primary Dealership Limited amounting to Nil (March 31, 2010: ` 150.0 million) and with ICICI Prudential Life Insurance
Company Limited amounting to Nil (March 31, 2010: ` 500.0 million).
During the year ended March 31, 2011, subsidiaries have invested in CDs issued by the Bank amounting to ` 4,820.9
million (March 31, 2010: ` 11,173.9 million). The material transactions for the year ended March 31, 2011 were with ICICI
Prudential Life Insurance Company Limited amounting to ` 4,365.4 million (March 31, 2010: ` 8,131.2 million) and with
ICICI Securities Primary Dealership Limited amounting to Nil (March 31, 2010: ` 2,338.6 million).
Redemption/buyback and conversion of investments
During the year ended March 31, 2011, the Bank received a consideration from its associates/joint ventures/other related
entities amounting to ` 1,929.3 million (March 31, 2010: ` 1,379.9 million) on account of redemption/buyback/ distribution
of loss on units/equity shares by associates/joint ventures/other related entities. The material transactions for the year ended
March 31, 2011 were with ICICI Emerging Sectors Fund amounting to ` 389.2 million (March 31, 2010: ` 846.4 million), ICICI
Equity Fund amounting to ` 1,336.9 million (March 31, 2010: Nil) and with ICICI Eco-net Internet and Technology Fund
amounting to ` 203.2 million (March 31, 2010: ` 533.5 million).
Reimbursement of expenses to subsidiaries
During the year ended March 31, 2011, the Bank reimbursed expenses to its subsidiaries amounting to ` 31.7 million
(March 31, 2010: ` 51.9 million). The material transactions for the year ended March 31, 2011 were with ICICI Bank UK
PLC amounting to ` 31.4 million (March 31, 2010: ` 40.2 million) and with ICICI Bank Canada amounting to ` 0.3 million
(March 31, 2010: ` 11.7 million).
Reimbursement of expenses to the Bank
During the year ended March 31, 2011, subsidiaries reimbursed expenses to the Bank amounting to ` 45.5 million
(March 31, 2010: ` 169.3 million). The material transactions for the year ended March 31, 2011 were with ICICI Bank UK
PLC amounting to ` 40.3 million (March 31, 2010: ` 160.1 million) and with ICICI Bank Canada amounting to ` 5.2 million
(March 31, 2010: ` 9.2 million).
Brokerage and fee expenses
During the year ended March 31, 2011, the Bank paid brokerage/fees to its subsidiaries amounting to ` 658.7 million
(March 31, 2010: ` 825.3 million) and to its associates/joint ventures/other related entities amounting to ` 1,405.4 million
(March 31, 2010: ` 1,346.2 million). The material transactions for the year ended March 31, 2011 were with ICICI Home
Finance Company Limited amounting to ` 408.3 million (March 31, 2010: ` 608.2 million), ICICI Merchant Services Private
Limited amounting to ` 664.4 million (March 31, 2010: ` 169.6 million), I-Process Services (India) Private Limited amounting to
` 392.9 million (March 31, 2010: ` 686.1 million), Financial Inclusion Network & Operations Limited amounting to ` 340.3
million (March 31, 2010: ` 20.4 million), ICICI Securities Limited amounting to ` 207.3 million (March 31, 2010: ` 60.0
million) and with Loyalty Solutions & Research Limited amounting to Nil (March 31, 2010: ` 407.0 million).
F43
schedules
forming part of the Accounts (Contd.)
Income on custodial services
During the year ended March 31, 2011, the Bank recovered custodial charges from its subsidiaries amounting to ` 1.6
million (March 31, 2010: ` 1.6 million) and from its associates/joint ventures/other related entities amounting to ` 2.6 million
(March 31, 2010: ` 3.3 million). The material transactions for the year ended March 31, 2011 were with ICICI Securities
Primary Dealership Limited amounting to ` 1.6 million (March 31, 2010: ` 1.5 million), ICICI Strategic Investments Fund
amounting to ` 0.9 million (March 31, 2010: ` 1.1 million), ICICI Equity Fund amounting to ` 0.5 million (March 31, 2010:
` 0.8 million) and with ICICI Emerging Sectors Fund amounting to ` 0.9 million (March 31, 2010: ` 1.3 million).
Interest expenses
During the year ended March 31, 2011, the Bank paid interest to its subsidiaries amounting to ` 560.7 million
(March 31, 2010: ` 902.2 million), to its associates/joint ventures/other related entities amounting to ` 79.7 million
(March 31, 2010: ` 3.3 million), to its key management personnel amounting to ` 1.5 million (March 31, 2010: ` 2.5
million) and to relatives of key management personnel amounting to ` 0.7 million (March 31, 2010: ` 1.2 million).
The material transactions for the year ended March 31, 2011 were with ICICI Prudential Life Insurance Company
Limited amounting to ` 272.5 million (March 31, 2010: ` 420.4 million), ICICI Securities Limited amounting to ` 157.2
million (March 31, 2010: ` 159.3 million), ICICI Bank Eurasia Limited Liability Company amounting to ` 11.3 million
(March 31, 2010: ` 146.8 million) and to Mewar Aanchalik Gramin Bank amounting to ` 69.7 million.
Interest income
During the year ended March 31, 2011, the Bank received interest from its subsidiaries amounting to ` 1,579.1 million
(March 31, 2010: ` 1,588.0 million), from its associates/joint ventures/other related entities amounting to ` 4.8 million
(March 31, 2010: ` 2.9 million), from its key management personnel amounting to ` 0.4 million (March 31, 2010: ` 0.5
million) and from relatives of key management personnel amounting to ` 0.7 million (March 31, 2010: ` 1.0 million). The
material transactions for the year ended March 31, 2011 were with ICICI Home Finance Company Limited amounting to
` 1,127.7 million (March 31, 2010: ` 913.7 million) and with ICICI Bank Eurasia Limited Liability Company amounting to
` 166.4 million (March 31, 2010: ` 351.0 million).
Other income
The Bank undertakes derivative transactions with its subsidiaries, associates, joint ventures and other related entities.
The Bank manages its foreign exchange and interest rate risks arising from these transactions by covering them in the
market. During the year ended March 31, 2011, the net loss of the Bank on forex and derivative transactions entered
into with subsidiaries was ` 121.9 million (March 31, 2010: loss of ` 17,346.2 million) and the net gain/loss was Nil
(March 31, 2010: loss of ` 220.9 million) with its associates/joint ventures/other related entities. The material transactions
for the year ended March 31, 2011 were loss of ` 13.9 million (March 31, 2010: loss of ` 17,913.1 million) with ICICI
Bank Canada, loss of ` 167.5 million (March 31, 2010: gain of ` 495.2 million) with ICICI Bank UK PLC, loss of ` 64.1
million (March 31, 2010: gain of ` 215.8 million) with ICICI Home Finance Company Limited, gain of ` 371.7 million
(March 31, 2010: loss of ` 50.7 million) with ICICI Securities Primary Dealership Limited and loss of ` 248.1 million
(March 31, 2010: loss of ` 93.4 million) with ICICI Bank Eurasia Limited Liability Company. While the Bank within its
overall position limits covers these transactions in the market, the above amounts represent only the transactions with
its subsidiaries, associates, joint ventures and other related entities and not the offsetting/covering transactions.
Dividend income
During the year ended March 31, 2011, the Bank received dividend from its subsidiaries amounting to ` 4,113.5 million
(March 31, 2010: ` 3,692.7 million). The material transactions for the year ended March 31, 2011 were with ICICI Home
Finance Company Limited amounting to ` 1,499.8 million (March 31, 2010: ` 934.0 million), ICICI Securities Limited
amounting to ` 810.0 million (March 31, 2010: ` 920.0 million), ICICI Securities Primary Dealership Limited amounting
to ` 250.1 million (March 31, 2010: ` 422.1 million), ICICI Lombard General Insurance Company Limited amounting to
` 416.6 million (March 31, 2010: ` 476.1 million), ICICI Venture Funds Management Company Limited amounting to
` 450.0 million (March 31, 2010: ` 260.0 million) and with ICICI Prudential Asset Management Company Limited amounting
to ` 229.6 million (March 31, 2010: ` 409.6 million).
Dividend paid
During the year ended March 31, 2011, the Bank paid dividend to its key management personnel amounting to
` 4.2 million (March 31, 2010: ` 4.5 million). The dividend paid during the year ended March 31, 2011 to Ms. Chanda
Kochhar was ` 3.2 million (March 31, 2010: ` 3.0 million), to Mr. Sandeep Bakhshi was ` 0.04 million (March 31, 2010:
` 0.03 million), to Mr. N. S. Kannan was ` 1.0 million (March 31, 2010: ` 0.9 million), to Mr. K. Ramkumar was Nil
(March 31, 2010: ` 0.2 million) and to Mr. Sonjoy Chatterjee was Nil (March 31, 2010: ` 0.3 million).
Remuneration to whole-time directors
Remuneration paid to the whole-time directors of the Bank during the year ended March 31, 2011 was ` 79.6 million
(March 31, 2010: ` 119.4 million). The remuneration paid for the year ended March 31, 2010 to Mr. K. V. Kamath was
F44
schedules
forming part of the Accounts (Contd.)
` 4.1 million. The remuneration paid for the year ended March 31, 2011 to Ms. Chanda Kochhar was ` 25.2 million
(March 31, 2010: ` 17.3 million), to Mr. Sandeep Bakhshi was ` 7.7 million (March 31, 2010: ` 12.6 million), to Mr. N. S. Kannan
was ` 15.8 million (March 31, 2010: ` 10.2 million), to Mr. K. Ramkumar was ` 17.6 million [March 31, 2010: ` 53.7 million
(includes perquisite value of ` 40.6 million on employee stock options (ESOPs) exercised)], to Mr. Rajiv Sabharwal was ` 9.0
million and to Mr. Sonjoy Chatterjee was ` 4.3 million [March 31, 2010: ` 19.6 million (includes perquisite value of ` 7.9 million
on ESOPs exercised)]. The remuneration paid for the year ended March 31, 2010 to Mr. V. Vaidyanathan was ` 1.9 million.
Sale of fixed assets
During the year ended March 31, 2011, the Bank sold fixed assets to its subsidiaries amounting to ` 0.9 million
(March 31, 2010: ` 574.2 million) and to its associates/joint ventures/other related entities amounting to ` 2.8 million
(March 31, 2010: Nil). The material transactions for the year ended March 31, 2011 were with ICICI Merchant Services Private
Limited amounting to ` 2.8 million (March 31, 2010: Nil), ICICI Securities Limited amounting to ` 0.8 million (March 31, 2010:
` 2.8 million) and with ICICI Home Finance Company Limited amounting to Nil (March 31, 2010: ` 570.0 million).
Purchase of fixed assets
During the year ended March 31, 2011, the Bank purchased fixed assets from its subsidiaries amounting to ` 10.9 million
(March 31, 2010: ` 21.3 million). The material transactions for the year ended March 31, 2011 were with ICICI Home
Finance Company Limited amounting to ` 9.9 million (March 31, 2010: Nil) and with ICICI Securities Limited amounting
to ` 0.2 million (March 31, 2010: ` 19.2 million).
Sale of gold coins
During the year ended March 31, 2011, the Bank sold gold coins to ICICI Prudential Life Insurance Company Limited
amounting to ` 0.9 million (March 31, 2010: ` 50.7 million).
Donation
During the year ended March 31, 2011, the Bank has given donation to ICICI Foundation for Inclusive Growth amounting
to ` 61.0 million (March 31, 2010: ` 153.0 million).
Purchase of loan
During the year ended March 31, 2011, the Bank has purchased a loan from ICICI Bank UK PLC amounting to ` 688.7 million
(March 31, 2010: Nil).
Transfer of merchant acquiring operations
During the year ended March 31, 2010, the Bank and First Data, a company engaged in electronic commerce and
payment services, formed a merchant acquiring alliance and a new entity, 81% owned by First Data, was formed, which
has acquired ICICI Bank’s merchant acquiring operations through transfer of assets, primarily comprising fixed assets
and receivables, and assumption of liabilities, for a total consideration of ` 3,744.0 million. This transfer of assets and
liabilities to the new entity would be considered a ‘slump sale’ for tax purposes. The Bank realised a profit of ` 2,029.0
million from this transaction, which was included in Schedule 14 – “Other income” for the year ended March 31, 2010.
Letters of Comfort
The Bank has issued letters of comfort on behalf of its banking subsidiaries, ICICI Bank UK PLC and ICICI Bank Canada.
The details of the letters are given below.
On behalf of
ICICI Bank UK PLC
ICICI Bank Canada
To
Purpose
Financial Services
Authority, UK (FSA)
Financially support ICICI Bank UK PLC to ensure that it
meets all of its obligations as they fall due.
Canada Deposit
Insurance
Corporation (CDIC)
To comply with the Bank Act and the CDIC regulations
or by-laws thereunder and to indemnify CDIC against
all losses, damages, reasonable costs and expenses
arising from failure of ICICI Bank Canada in performing
the same.
The Bank has issued an undertaking on behalf of ICICI Securities Inc. for Singapore dollar 10.0 million (` 353.9 million)
to the Monetary Authority of Singapore (MAS) and has executed indemnity agreement on behalf of ICICI Bank Canada
to its independent directors for a sum not exceeding Canadian Dollar 2.5 million (currently equivalent to ` 115.0 million)
each, aggregating to Canadian Dollar 10 million (currently equivalent to ` 460.0 million). The aggregate amount of ` 813.9
million is included in the contingent liabilities.
F45
schedules
forming part of the Accounts (Contd.)
As per the assessment done, there is no likely financial impact of the above letters issued to overseas regulators or of
the indemnity agreements at March 31, 2011.
In addition to the above, the Bank has also issued letters of comfort in the nature of letters of awareness on behalf
of banking and non-banking subsidiaries in respect of their borrowings made or proposed to be made and for other
incidental business purposes. As they are in the nature of factual statements or confirmation of facts, they do not create
any financial impact on the Bank.
The letters of comfort that are outstanding at March 31, 2011 pertain to facilities aggregating equivalent to ` 40,240.9
million (March 31, 2010: ` 76,408.0 million) as availed of by such subsidiaries. The repayments of facilities pertaining
to which such letters were issued, aggregate to ` 30,022.6 million and letters that were expired during the year ended
March 31, 2011 pertained to facilities aggregating to ` 8,356.0 million. A letter pertaining to facilities aggregating to
` 2,229.8 million was re-issued during the year ended March 31, 2011.
As advised by RBI, the Bank has provided additional capital of ` 1,700.5 million (March 31, 2010: ` 3,312.4 million) on
the letters of comfort that are in the nature of letters of awareness issued on behalf of its subsidiaries for their borrowing
programmes.
Related party balances
The following table sets forth, the balance payable to/receivable from subsidiaries/joint ventures/associates/other related
entities/key management personnel and relatives of key management personnel at March 31, 2011.
Items/Related party
Subsidiaries
Deposits with ICICI Bank ........
Deposits of ICICI Bank ...........
Call/term money lent ..............
Call/term money borrowed ....
9,028.7
117.8
—
—
Advances ................................
18,162.2
Investments of ICICI Bank ......
135,409.7
Investments of related parties
in ICICI Bank ............................
Receivables1 ............................
Payables1 .................................
387.2
516.8
69.0
Guarantees/ letter of credit ....
5,975.9
Swaps/forward contracts
(notional amount) ...................
Employee stock options
outstanding (Numbers) ..........
Employee stock options
exercised2 ..............................
271,676.7
—
—
Associates/ joint
ventures/other
related entities
Key
Management
Personnel
Relatives of Key
Management
Personnel
` in million
Total
1,572.2
35.8
12.1
10,648.8
—
—
—
44.3
7,518.6
15.0
188.2
117.8
0.1
—
—
—
—
—
—
10.6
—
3.5
—
—
—
—
2,263,000
—
—
—
—
7.7
—
—
—
—
—
—
—
—
117.8
—
—
18,224.8
142,928.3
405.7
705.0
186.8
5,976.0
271,676.7
2,263,000
—
1.
2.
Excludes mark-to-market on outstanding derivative transactions.
During the year ended March 31, 2011, no employee stock options were exercised.
F46
schedules
forming part of the Accounts (Contd.)
The following table sets forth, the maximum balance payable to/receivable from subsidiaries/joint ventures/associates/
other related entities/key management personnel and relatives of key management personnel during the year ended
March 31, 2011.
Items/ Related party
Subsidiaries
Associates/ joint
ventures/other
related entities
Key
Management
Personnel
Relatives of Key
Management
Personnel
` in million
Total
Deposits with ICICI Bank ..........
13,241.6
2,285.9
Deposits of ICICI Bank ..............
Call/term money lent ................
Call/term money borrowed ......
Advances ..................................
Investments of ICICI Bank ........
Investments of related parties
in ICICI Bank ..............................
Receivables ...............................
Payables ....................................
Guarantees/ letter of credit ......
Swaps/forward contracts
(notional amount) .....................
164.7
6,235.3
2,990.0
22,118.6
138,972.5
564.6
4,223.4
662.8
5,976.8
305,497.6
—
—
—
78.8
10,358.1
15.0
261.3
117.9
0.1
—
37.0
—
—
—
11.1
—
3.5
—
—
—
—
21.2
15,585.7
—
—
—
9.1
—
—
—
—
—
—
164.7
6,235.3
2,990.0
22,217.6
149,330.6
583.1
4,484.7
780.7
5,976.9
305,497.6
1. Maximum balances are determined based on comparison of the total outstanding balances at each quarter end during the
financial year.
The following table sets forth, the balance payable to/receivable from subsidiaries/joint ventures/associates/other related
entities/key management personnel and relatives of key management personnel at March 31, 2010.
Items/ Related party
Subsidiaries
Associates/joint
ventures/other
related entities
Key
Management
Personnel
Relatives of Key
Management
Personnel
` in million
Total
Deposits with ICICI Bank ..........
15,564.7
357.2
32.9
15.8
15,970.6
Deposits of ICICI Bank .............
Call/term money lent ................
Call/term money borrowed ......
Advances ..................................
Investments of ICICI Bank ........
Investments of related parties
in ICICI Bank ..............................
Receivables1 ..............................
Payables1 ...................................
Guarantees/ letter of credit ......
Swaps/forward contracts
(notional amount) .....................
Employee stock options
outstanding (Number) ..............
Employee stock options
exercised2 ................................
17.6
4,041.0
2,245.0
13,724.0
132,687.9
1,121.0
1,784.7
859.7
1,029.0
261,038.4
—
—
—
—
—
42.5
10,358.1
—
286.2
341.1
0.1
—
—
—
—
—
—
6.7
—
3.6
—
—
—
—
1,254,250
46.3
1.
2.
Excludes mark-to-market on outstanding derivative transactions.
During the year ended March 31, 2010, 121,875 employee stock options were exercised.
—
—
—
8.1
—
—
—
—
—
—
—
—
17.6
4,041.0
2,245.0
13,781.3
143,046.0
1,124.6
2,070.9
1,200.8
1,029.1
261,038.4
1,254,250
46.3
F47
schedules
forming part of the Accounts (Contd.)
The following table sets forth, the maximum balance payable to/receivable from subsidiaries/joint ventures/associates/
other related entities/key management personnel and relatives of key management personnel during the year ended
March 31, 2010.
Items/Related party
Subsidiaries
Deposits with ICICI Bank ........
Deposits of ICICI Bank ...........
Call/term money lent ..............
Call/term money borrowed ....
Advances ...............................
16,899.9
1,589.9
11,291.6
7,079.7
19,494.4
Investments of ICICI Bank ......
132,687.9
Investments of related parties
in ICICI Bank ............................
Receivables .............................
Payables ..................................
Guarantees/ letter of credit ...
Swaps/forward contracts
(notional amount) ...................
2,043.01
4,737.0
1,850.81
4,226.5
647,121.7
Associates/ joint
ventures/other
related entities
Key
Management
Personnel
Relatives of Key
Management
Personnel
734.2
—
—
—
208.3
12,159.2
—
464.01
341.11
2,390.0
3,878.9
60.2
—
—
—
26.1
—
9.1
—
—
—
—
23.2
—
—
—
12.2
—
0.3
—
—
—
—
` in million
Total
17,717.5
1,589.9
11,291.6
7,079.7
19,741.0
144,847.1
2,052.4
5,201.0
2,191.9
6,616.5
651,000.6
1. Maximum balances are determined based on comparison of the total outstanding balances at each quarter end during the financial year.
45. Small and micro enterprises
Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006, certain
disclosures are required to be made relating to enterprises covered under the Act. During the year ended March 31, 2011, the
amount paid after the due date to vendors registered under the MSMED Act, 2006 was ` 17.9 million (March 31, 2010: ` 65.2
million). An amount of ` 0.7 million (March 31, 2010: ` 1.7 million) has been charged to profit & loss account towards accrual of
interest on these delayed payments.
46. Penalties/fines imposed by RBI and other banking regulatory bodies
The penalty imposed by RBI and other banking regulatory bodies during the year ended March 31, 2011 was ` 510,000 (March
31, 2010: Nil).
During the year ended March 31, 2011, RBI vide letter dated June 22, 2010 had issued an order under section 11(3) of FEMA, 1999
directing the Bank to pay a penalty of ` 10,000 for violation of FEMA regulations. The Bank has paid the penalty to RBI on July 2, 2010.
During the year ended March 31, 2011, RBI has levied a penalty of ` 500,000 on the Bank for having opened an account only on
the basis of driving licence as an identity proof while relying on the introduction from existing customer as an address proof.
The Bank has paid the penalty of ` 500,000 on August 5, 2010.
In April, 2011, RBI has imposed a penalty of ` 1.5 million on the Bank towards non-compliance of certain instructions issued by
RBI in respect of derivative business.
47. Disclosure of complaints
The following table sets forth, for the periods indicated, the movement of the outstanding number of complaints.
Particulars
a) No. of complaints pending at the beginning of the year ..............................
b) No. of complaints relating to erstwhile Bank of Rajasthan at August 12, 2010
c) No. of complaints received during the year ..................................................
d) No. of complaints redressed during the year ...............................................
e) No. of complaints pending at the end of the year ........................................
Year ended
March 31, 2011
Year ended
March 31, 2010
2,102
57
155,4751
154,610
3,024
886
—
112,051
110,835
2,102
1.
2.
3.
Includes complaints received relating to erstwhile Bank of Rajasthan from August 13, 2010.
Does not include complaints redressed within 1 working day.
The number of complaints for the year ended March 31, 2011 have increased, as the Bank has started considering all critical
requests as complaints from October 2009.
F48
schedules
forming part of the Accounts (Contd.)
The following table sets forth, for the periods indicated, the details of awards during the year.
Particulars
a) No. of unimplemented awards at the beginning of the year .......................
b) No. of unimplemented awards relating to erstwhile Bank of Rajasthan at
August 12, 2010 ..............................................................................................
c) No. of awards passed by the Banking Ombudsmen during the year ..........
d) No. of awards implemented during the year ................................................
e) No. of unimplemented awards at the end of the year ..................................
Year ended
March 31, 2011
Year ended
March 31, 2010
—
21
—
—
—
—
—
—
—
—
1.
These unimplemented awards had become null and void as the appeal preferred before Appellate Authority for the same has
been upheld.
48. Comparative figures
Figures of the previous year have been re-grouped to conform to the current year presentation.
Signatures to Schedules 1 to 18
FOR S.R. BATLIBOI & Co.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAN JALAN
Partner
Membership no.: 102102
For and on behalf of the Board of Directors
K. V. KAMATH
Chairman
SRIDAR IyENGAR
CHANDA KOCHHAR
Director Managing Director & CEO
N. S. KANNAN
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
Place : Mumbai
Date : April 28, 2011
SANDEEP BATRA
Group Compliance Officer &
RAKESH JHA
Deputy Chief
Company Secretary
Financial Officer
F49
section 212
Statement pursuant to Section 212 of the Companies Act, 1956, relating to subsidiary companies
Sr.
No.
1
2
3
4
5
6
7
8
9
10
11
Name of the subsidiary company
Financial year of the
subsidiary ended on
No. of equity shares held by ICICI Bank and/or its nominees in
the subsidiary at March 31, 2011
ICICI Securities Primary Dealership Limited
March 31, 2011
15,634 equity shares of ` 100,000 each fully paid up
ICICI Securities Limited
March 31, 2011
805,353,500 equity shares of ` 2 each fully paid up
ICICI Securities Holdings Inc.3
March 31, 2011
16,640,000 common stock of USD 1 each fully paid up held by
ICICI Securities Limited
ICICI Securities Inc.3
March 31, 2011
11,950,000 common stock of USD 1 each fully paid up held by
ICICI Securities Holdings Inc.
ICICI Venture Funds Management Company Limited
March 31, 2011
1,000,000 equity shares of ` 10 each fully paid up
ICICI International Limited4
March 31, 2011
90,000 ordinary shares of USD 10 each fully paid up
ICICI Home Finance Company Limited
March 31, 2011
1,098,750,000 equity shares of ` 10 each fully paid up
ICICI Trusteeship Services Limited
March 31, 2011
50,000 equity shares of ` 10 each fully paid up
ICICI Investment Management Company Limited
March 31, 2011
10,000,700 equity shares of ` 10 each fully paid up
ICICI Prudential Life Insurance Company Limited
March 31, 2011
1,055,310,900 equity shares of ` 10 each fully paid up
ICICI Lombard General Insurance Company Limited
March 31, 2011
297,552,950 equity shares of ` 10 each fully paid up
(excludes 23,082,568 equity shares of ` 10 each fully paid up
pending allotment)
Net aggregate amount of profits/
(losses) of the subsidiary so far as
it concerns the members of ICICI
Bank and is not dealt with in the
accounts of ICICI Bank 1
Net aggregate amount of profits/
(losses) of the subsidiary so far as
it concerns the members of ICICI
Bank dealt with or provided for in
the accounts of ICICI Bank 2
` in '000s
` in '000s
For the
financial
year ended
March 31,
2011
For the
previous
financial
years of the
subsidiary since
it became a
subsidiary
For the
financial
year ended
March 31,
2011
For the previous
financial years
of the subsidiary
since it became a
subsidiary
277,666
6,474,167
250,144
7,150,149
321,955
1,191,986
810,000
2,836,540
(6,511)
(137,450)
(22,851)
(501,461)
Nil
Nil
Nil
15,635
289,070
1,707,189
450,000
3,710,979
6,282
35,067
Nil
15,782
833,075
2,191,219
1,499,794
2,853,464
342
11,865
2,419
14,438
5,966,717
(25,417,973)
Nil
Nil
Nil
Nil
Nil
Nil
(1,007,133)
1,712,896
416,212
1,700,996
Extent of
interest of
ICICI Bank
in capital of
subsidiary
100.0%
100.0%
-
-
100.0%
100.0%
100.0%
100.0%
100.0%
73.9%
73.6%
12
ICICI Bank UK PLC4
March 31, 2011
545,000,000 ordinary shares of USD 1 each and 50,002 ordinary
shares of 1 GBP each
100.0%
1,477,914
5,519,250
187,971
535,172
13
14
15
16
17
ICICI Bank Canada5, 8
December 31, 2010 839,500,000 common shares of Canadian Dollar (CAD) 1 each
ICICI Bank Eurasia Limited Liability Company#,6,8
December 31, 2010 Not Applicable #
ICICI Prudential Asset Management Company Limited March 31, 2011
9,002,573 equity shares of ` 10 each fully paid up
ICICI Prudential Trust Limited
March 31, 2011
51,157 equity shares of ` 10 each fully paid up
ICICI Prudential Pension Funds Management Company
Limited7
March 31, 2011
11,000,000 equity shares of ` 10 each, fully paid up held by
ICICI Prudential Life Insurance Company Limited
100.0%
100.0%
51.0%
50.8%
-
1,191,524
1,079,409
268,189
307,188
284,815
136,773
705
(2)
153,741
Nil
Nil
540,083
229,565
909,881
1,437
(137)
767
Nil
1,432
Nil
#
1.
2.
3.
4.
5.
6.
7.
8.
The shares in the authorised capital of ICICI Bank Eurasia Limited Liability Company are registered without issue of equity shares due to the legal form of the subsidiary.
The above companies (other than ICICI Bank UK PLC, ICICI Bank Canada, ICICI Bank Eurasia Limited Liability Company, ICICI Prudential Asset Management Company Limited, ICICI Prudential Trust Limited and ICICI Prudential Pension Funds
Management Company Limited) which were subsidiaries of erstwhile ICICI Limited have become subsidiaries of the Bank consequent to the merger of erstwhile ICICI Limited with ICICI Bank.
The amount received by erstwhile ICICI Limited upto March 29, 2002 as dividend has also been included in the reserves of ICICI Bank.
ICICI Securities Holdings Inc. is a wholly owned subsidiary of ICICI Securities Limited. ICICI Securities Inc. is a wholly owned subsidiary of ICICI Securities Holdings Inc.
The profits of ICICI Bank UK PLC and ICICI International Limited for the year ended March 31, 2011 have been translated into Indian Rupees at the rate of 1 USD = ` 45.5688.
The profits of ICICI Bank Canada for the year ended December 31, 2010 have been translated into Indian Rupees at the rate of 1 CAD = ` 44.4831.
The profits of ICICI Bank Eurasia Limited Liability Company for the year ended December 31, 2010 have been translated into Indian Rupees at the rate of 1 RUB = ` 1.50696.
ICICI Prudential Pension Funds Management Company Limited, a wholly owned subsidiary of ICICI Prudential Life Insurance Company Limited, was incorporated on April 22, 2009.
The information furnished for ICICI Bank Canada and ICICI Bank Eurasia Limited Liability Company is for the period January 1, 2010 to December 31, 2010, being their financial year.
The key financial parameters of the following companies at March 31, 2011 and their movement from December 31, 2010 are given below.
` in ‘000s
Particulars
Fixed assets
Investments
Advances
Borrowingsa
ICICI Bank Canada b
ICICI Bank Eurasia Limited Liability Company c
At March 31, 2011
At December 31, 2010
Movement
At March 31, 2011
At December 31, 2010
111,848
47,962,097
152,340,541
3,449,250
110,338
48,572,150
153,332,631
3,358,500
1,510
(610,053)
(992,090)
90,750
54,982
265,548
9,499,948
9,350,236
58,768
275,885
8,069,670
10,942,049
Movement
(3,786)
(10,337)
1,430,278
(1,591,813)
a. Since it is not possible to identify the amount borrowed to meet the current liabilities, the amount shown above represents the total borrowings. The borrowings include subordinate debts and exclude preferred shares.
b. The financial parameters of ICICI Bank Canada have been translated into Indian Rupees at 1 CAD = ` 45.9900 at March 31, 2011 and 1 CAD = ` 44.7800 at December 31, 2010.
c. The financial parameters of ICICI Bank Eurasia Limited Liability Company have been translated into Indian Rupees at 1 RUB = ` 1.59026 at March 31, 2011 and 1 RUB = ` 1.48405 at December 31, 2010.
K. V. Kamath
Chairman
n. S. Kannan
Executive Director & CFO
SanDeeP Batra
Group Compliance Officer &
Company Secretary
SriDar iyengar
Director
K. ramKumar
Executive Director
raKeSh jha
Deputy Chief
Financial Officer
For and on behalf of the Board of Directors
ChanDa KoChhar
Managing Director & CEO
rajiV SaBharwal
Executive Director
Place: mumbai
Date : april 28, 2011
F50
Consolidated financial statements of
ICICI Bank Limited and
its subsidiaries
auditors’ report
To the Board of Directors of ICICI Bank Limited on the Consolidated Financial
Statements of ICICI Bank Limited and its Subsidiaries, Associates and Joint Ventures.
1. We have audited the attached consolidated balance sheet of ICICI Bank Limited (the ‘Bank’) and its subsidiaries,
associates and joint ventures (the ‘ICICI Group’), as at March 31, 2011, and also the consolidated profit and loss account
and the consolidated cash flow statement for the year ended on that date annexed thereto. These financial statements
are the responsibility of the ICICI Bank Limited’s management and have been prepared by the management on the basis
of separate financial statements and other financial information regarding components. Our responsibility is to express
an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
3. We did not audit the financial statements of certain subsidiaries, whose financial statements reflect total assets of
` 1,292,190.2 million as at March 31, 2011, total revenue of ` 277,710.8 million and cash flows amounting to
` (39,042.3) million for the year then ended. These financial statements and other financial information have been
audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of
other auditors.
4. We did not audit the financial statements of Singapore, Bahrain and Hong Kong branches, whose financial statements
reflect total assets of ` 850,507.9 million as at March 31, 2011, the total revenue of ` 42,480.8 million for the year ended
March 31, 2011 and net cash flows amounting to ` 39,302.7 million for the year ended March 31, 2011. These financial
statements have been audited by other auditors, duly qualified to acts as auditors in the country of incorporation of the
said branches, whose reports have been furnished to us, and our opinion is based solely on the report of other auditors.
5. We have also relied on the un-audited financial statements of certain subsidiaries, associates and joint ventures, whose
financial statements reflect total assets of ` 11,857.3 million as at March 31, 2011, total revenues of ` 3,141.8 million and
net cash flows amounting to ` (178.0) million for the year then ended.
6. We report that the consolidated financial statements have been prepared by the ICICI Bank Limited’s management in
accordance with the requirements of Accounting Standards (AS) 21, Consolidated financial statements, Accounting
Standards (AS) 23, Accounting for Investments in Associates in Consolidated Financial Statements and Accounting
Standard (AS) 27, Financial Reporting of Interests in Joint Ventures notified pursuant to the Companies (Accounting
Standards) Rules, 2006, (as amended).
7.
The actuarial valuation of liabilities for life policies in force is the responsibility of the ICICI Group’s life insurance
subsidiary’s appointed actuary (the Appointed Actuary). The actuarial valuation of these liabilities as at March 31, 2011
has been duly certified by the Appointed Actuary and in his opinion; the assumption for such valuation are in accordance
with the guidelines and norms issued by the Insurance Regulatory and Development Authority (‘IRDA’) and the Actuarial
Society in concurrence with the IRDA. The statutory auditors of ICICI Prudential Life Insurance Company Limited have
relied upon the Appointed Actuary’s certificate in this regard.
8.
The actuarial valuation of liability in respect of claims incurred but not reported (‘IBNR’) and those incurred but not
enough reported (‘IBNER’) (the Appointed Actuary). The actuarial valuation of these liabilities as at March 31, 2011 has
been duly certified by the Appointed Actuary and in his opinion; the assumption for such valuation are in accordance
F52
auditors’ report
auditors’ report
with the guidelines and norms issued by the IRDA and the Actuarial Society in concurrence with the IRDA. The statutory
auditors of ICICI Lombard General Insurance Company Limited have relied upon the Appointed Actuary’s certificate in
this regard.
9.
Based on our audit and on consideration of reports of other auditors on separate financial statements, on consideration
of reports of branches auditors on separate financial statements, on the consideration of the un-audited financial
statements and on the other financial information of the components, and to the best of our information and according
to the explanations given to us, we are of the opinion that the attached consolidated financial statements give a true and
fair view in conformity with the accounting principles generally accepted in India:
(a)
(b)
(c)
in the case of the consolidated balance sheet, of the state of affairs of the ICICI Group as at March 31, 2011;
in the case of the consolidated profit and loss account, of the profit for the year ended on that date; and
in the case of the consolidated cash flow statement, of the cash flows for the year ended on that date.
For S.R. Batliboi & Co.
Firm registration number: 301003E
Chartered Accountants
per Shrawan Jalan
Partner
Membership No.: 102102
Mumbai
April 28, 2011
F53
consolidated balance sheet
at March 31, 2011
(` in ‘000s)
Schedule
At
31.03.2011
At
31.03.2010
CAPITAL AND LIABILITIES
Capital ..............................................................................................
Employees stock options outstanding ...........................................
Reserves and surplus .....................................................................
1
2
11,518,200
11,148,892
2,929
—
541,503,823
501,816,108
Minority interest ..............................................................................
2A
13,582,218
12,704,046
Deposits
..........................................................................................
Borrowings ......................................................................................
Liabilities on policies in force .........................................................
Other liabilities and provisions .......................................................
TOTAL CAPITAL AND LIABILITIES ................................................
ASSETS
Cash and balances with Reserve Bank of India .............................
Balances with banks and money at call and short notice .............
Investments .....................................................................................
Advances .........................................................................................
Fixed assets .....................................................................................
Other assets ....................................................................................
3
4
5
6
7
8
9
10
11
2,591,060,049
2,415,722,960
1,258,388,602
1,156,983,219
644,820,556
539,654,286
276,802,280
255,443,442
5,337,678,657
4,893,472,953
212,340,063
278,502,787
181,512,556
192,938,426
2,096,527,791
1,863,197,840
2,560,193,137
2,257,781,280
54,895,477
38,622,924
232,209,633
262,429,696
TOTAL ASSETS ...............................................................................
5,337,678,657
4,893,472,953
Contingent liabilities .......................................................................
12
10,225,996,643
8,205,199,348
Bills for collection ............................................................................
85,304,043
67,188,608
Significant accounting policies and notes to accounts .................
17 & 18
The schedules referred to above form an integral part of the Balance Sheet.
As per our Report of even date.
For S.R. BATLIBOI & CO.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAN JALAN
Partner
Membership no.: 102102
Place : Mumbai
Date : April 28, 2011
F54
For and on behalf of the Board of Directors
K. V. KAMATH
Chairman
SRIDAR IyENGAR
CHANDA KOCHHAR
Director Managing Director & CEO
N. S. KANNAN
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
SANDEEP BATRA
Group Compliance Officer &
Company Secretary
RAKESH JHA
Deputy Chief
Financial Officer
consolidated balance sheet
consolidated profit and loss account
Schedule
13
14
15
16
for the year ended March 31, 2011
I.
II.
III.
IV.
INCOME
Interest earned .......................................................................
Other income .........................................................................
TOTAL INCOME .....................................................................
EXPENDITURE
Interest expended ..................................................................
Operating expenses ...............................................................
Provisions and contingencies ...............................................
TOTAL EXPENDITURE ...........................................................
PROFIT/LOSS
Net profit for the year ............................................................
Less: Minority interest ...........................................................
Net profit/(loss) after minority interest ...............................
Profit/(loss) brought forward .................................................
TOTAL PROFIT/(LOSS) ..........................................................
APPROPRIATIONS/TRANSFERS
Transfer to Statutory Reserve ................................................
Transfer to Reserve Fund .......................................................
Transfer to Capital Reserve ...................................................
Transfer to/(from) Investment Reserve Account ..................
Transfer to Special Reserve ...................................................
Transfer to Revenue and other reserves ...............................
Dividend (including corporate dividend tax) for the
previous year paid during the year .......................................
Proposed equity share dividend ...........................................
Proposed preference share dividend ....................................
Corporate dividend tax ..........................................................
Balance carried over to balance sheet ..................................
TOTAL .....................................................................................
Year ended
31.03.2011
300,814,041
315,133,003
615,947,044
193,425,685
313,024,545
46,314,873
552,765,103
63,181,941
2,249,269
60,932,672
16,886,406
77,819,078
12,880,000
360
832,500
(1,160,000)
5,720,000
679,371
21,658
16,125,811
35
2,641,730
40,077,613
77,819,078
(` in ‘000s)
Year ended
31.03.2010
301,537,078
294,460,648
595,997,726
207,291,861
277,332,381
62,939,335
547,563,577
48,434,149
1,731,204
46,702,945
5,371,720
52,074,665
10,070,000
2,170
4,440,000
1,160,000
3,330,000
521,833
929
13,378,604
35
2,284,688
16,886,406
52,074,665
Significant accounting policies and notes to accounts ................
Earnings per share (refer note 18.2)
Basic (`) ..................................................................................
Diluted (`) ...............................................................................
Face value per share (`) ...................................................................
17 & 18
53.54
53.25
10.00
41.93
41.72
10.00
The schedules referred to above form an integral part of the Profit and Loss Account
As per our Report of even date.
For S.R. BATLIBOI & CO.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAN JALAN
Partner
Membership no.: 102102
Place : Mumbai
Date : April 28, 2011
For and on behalf of the Board of Directors
K. V. KAMATH
Chairman
SRIDAR IyENGAR
CHANDA KOCHHAR
Director Managing Director & CEO
N. S. KANNAN
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
SANDEEP BATRA
Group Compliance Officer &
Company Secretary
RAKESH JHA
Deputy Chief
Financial Officer
F55
consolidated cash flow statement
for the year ended March 31, 2011
(` in ‘000s)
Particulars
Cash flow from operating activities
Net profit before taxes ..................................................................................
Adjustments for :
Depreciation and amortisation .....................................................................
Net (appreciation)/depreciation on investments ..........................................
Provision in respect of non-performing assets (including prudential
provision on standard assets) .......................................................................
Provision for contingencies & others ...........................................................
(Profit)/loss on sale of fixed assets ...............................................................
Adjustments for :
(Increase)/decrease in investments ..............................................................
(Increase)/decrease in advances ..................................................................
Increase/(decrease) in borrowings ...............................................................
Increase/(decrease) in deposits ...................................................................
(Increase)/decrease in other assets .............................................................
Increase/(decrease) in other liabilities and provisions ................................
(Payment)/refund of taxes (net) ...................................................................
Net cash flow from operating activities .................................................... (A)
Cash flow from investing activities
Purchase of fixed assets ...............................................................................
Proceeds from sale of fixed assets ..............................................................
(Purchase)/sale of held to maturity securities .............................................
Net cash generated from investing activities ........................................... (B)
Cash flow from financing activities
Proceeds from issue of share capital (including ESOPs) net of issue
expense .........................................................................................................
Net proceeds/(repayment) of bonds (including subordinated debt) .........
Dividend and dividend tax paid ...................................................................
Net cash generated from financing activities ............................................ (C)
Effect of exchange fluctuation on translation reserve ..............................
(D)
Net cash and cash equivalents taken over from
The Bank of Rajasthan Limited on amalgamation ....................................
Net increase/(decrease) in cash and cash equivalents .....(A)+(B)+(C)+(D)+(E)
Cash and cash equivalents at April 1 .........................................................
Cash and cash equivalents at March 31 ....................................................
(E)
Significant accounting policies and notes to accounts (refer schedule 17 & 18).
The schedules referred to above form an integral part of the Balance Sheet.
Year ended
31.03.2011
Year ended
31.03.2010
81,647,759
64,055,237
8,576,451
14,541,573
20,555,297
1,881,817
(299,958)
126,902,939
(79,202,742)
(261,585,581)
75,360,723
40,049,589
25,485,114
58,660,309
(141,232,588)
(22,046,919)
(36,376,568)
(8,940,934)
707,207
(52,576,194)
(60,809,921)
1,426,887
20,712,924
(15,567,579)
6,572,232
1,253,363
11,772,300
(77,588,594)
471,441,213
393,852,619
9,085,111
4,526,200
44,745,424
513,461
(821,610)
122,103,823
(216,921,819)
358,364,395
(3,820,938)
(202,834,572)
28,724,367
229,307,649
192,819,082
(19,414,369)
295,508,536
(6,654,131)
3,374,730
(152,852,224)
(156,131,625)
1,175,994
(1,247,434)
(14,348,954)
(14,420,394)
(4,129,160)
—
120,827,357
350,613,856
471,441,213
As per our Report of even date.
For S.R. BATLIBOI & CO.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAN JALAN
Partner
Membership no.: 102102
Place : Mumbai
Date : April 28, 2011
F56
For and on behalf of the Board of Directors
K. V. KAMATH
Chairman
SRIDAR IyENGAR
CHANDA KOCHHAR
Director Managing Director & CEO
N. S. KANNAN
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
SANDEEP BATRA
Group Compliance Officer &
Company Secretary
RAKESH JHA
Deputy Chief
Financial Officer
consolidated cash flow statement
schedules
forming part of the Consolidated Balance Sheet
SCHEDULE 1 - CAPITAL
Authorised capital
At
31.03.2011
(` in ‘000s)
At
31.03.2010
1,275,000,000 equity shares of ` 10 each
(March 31, 2010: 1,275,000,000 equity shares of ` 10 each) ............................
12,750,000
12,750,000
15,000,000 shares of ` 100 each
(March 31, 2010: 15,000,000 shares of ` 100 each)1 .........................................
1,500,000
1,500,000
350 preference shares of ` 10 million each
(March 31, 2010: 350 preference shares of ` 10 million each)2 ........................
3,500,000
3,500,000
Equity share capital
Issued, subscribed and paid-up capital
1,114,845,314 equity shares of ` 10 each
(March 31, 2010: 1,113,250,642 equity shares of ` 10 each) ...........................
11,148,453
11,132,506
Add: 34,184,121 equity shares of ` 10 each fully paid up issued to
shareholders of erstwhile The Bank of Rajasthan Limited ................................
Less: 200 equity shares of the Bank, earlier held by erstwhile The Bank of
Rajasthan Limited, extinguished on amalgamation ...........................................
Add: 2,743,137 equity shares of ` 10 each fully paid up (March 31, 2010:
1,594,672 equity shares) issued pursuant to exercise of employee stock options
Less: Calls unpaid ...............................................................................................
Add: 111,603 equity shares forfeited (March 31, 2010: 111,603 equity shares)
341,841
(2)
—
—
27,431
15,947
11,517,723
11,148,453
(293)
770
(331)
770
TOTAL CAPITAL ..................................................................................................
11,518,200
11,148,892
1. These shares will be of such class and with such rights, privileges, conditions or restrictions as may be determined by
the Bank in accordance with the Articles of Association of the Bank and subject to the legislative provisions in force for
the time being in that behalf.
2. Pursuant to RBI circular no. DBOD.BP.BC No.81/ 21.01.002/2009-10, the issued and paid-up preference shares are
grouped under Schedule 4 - ”Borrowings”.
F57
schedules
forming part of the Consolidated Balance Sheet (Contd.)
(` in ‘000s)
At
31.03.2011
At
31.03.2010
58,863,807
48,793,807
14,882,712
—
73,746,519
10,070,000
—
58,863,807
1,160,000
—
1,160,000
—
—
1,160,000
—
1,160,000
27,831,700
5,720,000
—
33,551,700
24,501,700
3,330,000
—
27,831,700
313,801,906
1,617,958
2,097,973
313,321,891
313,165,969
635,937
—
313,801,906
SCHEDULE 2 - RESERVES AND SURPLUS
I. Statutory reserve
Opening balance ...........................................................................................
Additions during the year
[includes ` 2,002.7 million (March 31, 2010: Nil) on amalgamation] ..........
Deductions during the year ..........................................................................
Closing balance .............................................................................................
II. Special reserve
Opening balance ...........................................................................................
Additions during the year .............................................................................
Deductions during the year ..........................................................................
Closing balance .............................................................................................
III. Securities premium
Opening balance ...........................................................................................
Additions during the year1 ............................................................................
Deductions during the year2 .........................................................................
Closing balance .............................................................................................
IV. Investment reserve account
Opening balance ...........................................................................................
Additions during the year .............................................................................
Deductions during the year3 .........................................................................
Closing balance .............................................................................................
V. Unrealised investment reserve4
Opening balance ...........................................................................................
Additions during the year .............................................................................
Deductions during the year ..........................................................................
Closing balance .............................................................................................
VI. Capital reserve
Opening balance ..........................................................................................
Additions during the year5 ............................................................................
Deductions during the year ..........................................................................
Closing balance6 ............................................................................................
VII. Foreign currency translation reserve
Opening balance ...........................................................................................
Additions during the year .............................................................................
Deductions during the year ..........................................................................
Closing balance .............................................................................................
VIII. Reserve fund
Opening balance ...........................................................................................
Additions during the year7 ............................................................................
Deductions during the year ..........................................................................
Closing balance .............................................................................................
IX. Revenue and other reserves
Opening balance - joint ventures..................................................................
Opening balance - others .............................................................................
Additions during the year - joint ventures ...................................................
Additions during the year - others ................................................................
Deductions during the year - joint ventures ................................................
Deductions during the year - others ............................................................
Closing balance8,9 ..........................................................................................
X. Balance in profit and loss account - others ..................................................
XI. Balance in profit and loss account - joint ventures ......................................
TOTAL RESERVES AND SURPLUS .....................................................................
1. Includes ` 1,391.3 million (March 31, 2010: ` 568.3 million) on exercise of employee stock options.
2. Represents excess of paid up value of equity shares issued over the fair value of the net assets acquired and amalgamation expenses.
3. Represents the amount utilised for provision made during the year towards depreciation in investments in AFS and HFT categories.
4. Represents unrealised profit/(loss) pertaining to the investments of venture capital funds.
5. Includes profit on sale of investments in HTM category, net of taxes and transfer to Statutory Reserve. Also includes profit on sale of land and buildings,
(2,687)
42,590,034
—
15,227,151
—
—
57,814,498
16,889,517
(3,111)
501,816,108
(2,687)
57,817,185
—
1,766,237
—
5,301,941
54,278,794
40,081,420
(3,807)
541,503,823
20,875,357
832,500
—
21,707,857
(521,469)
97,939
1,114,187
(1,537,717)
(3,498,090)
3,082,983
106,362
(521,469)
16,456,602
4,588,195
169,440
20,875,357
9,254,640
3,438,235
7,599,891
5,092,984
5,092,984
1,961,480
708,577
6,345,887
8,749
2,170
—
10,919
10,919
360
—
11,279
net of taxes and transfer to Statutory Reserve, for the year ended March 31, 2011.
6. Includes capital reserve on consolidation amounting to ` 82.2 million (March 31, 2010: ` 82.2 million).
7. Represents appropriation of 5% of net profit by the Bank’s Sri Lanka branch to meet the requirements of Section 20 of Sri Lankan Banking Act No 30 of 1988.
8. Includes unrealised profit/(loss), net of tax, of ` (3,258.6) million [March 31, 2010: ` (4,313.8) million] pertaining to the investments in the available for
sale category of ICICI Bank UK PLC.
9. Includes restricted reserve of ` 6,222.3 million (March 31, 2010: ` 11,333.6 million) primarily relating to lapsed contracts of the life insurance subsidiary.
F58
schedules
forming part of the Consolidated Balance Sheet (Contd.)
SCHEDULE 2A - MINORITY INTEREST
Opening minority interest ....................................................................................
Subsequent increase/(decrease) .........................................................................
CLOSING MINORITY INTEREST .........................................................................
SCHEDULE 3 - DEPOSITS
I. Demand deposits
A.
From banks .....................................................................................
i)
ii) From others .....................................................................................
II. Savings bank deposits ...........................................................................
III. Term deposits
From banks ......................................................................................
i)
ii) From others ....................................................................................
TOTAL DEPOSITS .................................................................................................
I. Deposits of branches in India ...............................................................
B.
II. Deposits of branches/subsidiaries outside India .................................
TOTAL DEPOSITS .................................................................................................
SCHEDULE 4 - BORROWINGS
I. Borrowings in India
i)
Reserve Bank of India ...........................................................................
ii) Other banks ...........................................................................................
iii) Other institutions and agencies
a) Government of India ...................................................................
Financial institutions/others .........................................................
b)
iv) Borrowings in the form of
a) Deposits .......................................................................................
Commercial paper .......................................................................
b)
Bonds and debentures (excluding subordinated debt)1 ............
c)
v) Application money-bonds2 ...................................................................
vi) Capital instruments
–
–
–
–
Innovative Perpetual Debt Instruments (IPDI)
(qualifying as Tier I capital) .........................................................
Hybrid debt capital instruments issued as bonds/debentures
(qualifying as upper Tier II capital) .............................................
Redeemable Non-Cumulative Preference Shares (RNCPS)
(Redeemable Non-Cumulative Preference Shares of ` 10
million each issued to preference share holders of erstwhile
ICICI Limited on amalgamation redeemable at par on April 20,
2018) ............................................................................................
Unsecured redeemable debentures/bonds
(subordinated debt included in Tier II capital) ...........................
TOTAL BORROWINGS IN INDIA
II. Borrowings outside India
Capital instruments
–
i)
–
Innovative Perpetual Debt Instruments (IPDI)
(qualifying as Tier I capital) .........................................................
Hybrid debt capital instruments issued as bonds/debentures
(qualifying as upper Tier II capital) .............................................
Unsecured redeemable debentures/bonds
(subordinated debt included in Tier II capital) ...........................
ii)
Bonds and notes ...................................................................................
iii) Other borrowings3 ................................................................................
TOTAL BORROWINGS OUTSIDE INDIA .............................................................
TOTAL BORROWINGS .........................................................................................
–
At
31.03.2011
12,704,046
878,172
13,582,218
20,176,015
334,537,779
732,637,812
153,559,266
1,350,149,177
2,591,060,049
2,132,983,708
458,076,341
2,591,060,049
5,000,000
63,186,638
299,581
89,874,799
18,959,593
7,019,749
21,331,106
—
13,010,000
98,188,633
(` in ‘000s)
At
31.03.2010
9,105,054
3,598,992
12,704,046
14,856,747
300,667,768
622,221,663
88,149,385
1,389,827,397
2,415,722,960
1,911,271,065
504,451,895
2,415,722,960
—
60,072,566
687,491
73,843,875
35,459,265
16,976,284
41,656,724
25,000,000
13,010,000
97,502,000
3,500,000
3,500,000
201,316,236
521,686,335
145,090,481
512,798,686
15,106,107
43,926,075
14,553,006
294,843,311
368,273,768
736,702,267
1,258,388,602
15,199,979
40,410,000
11,817,445
285,560,180
291,196,929
644,184,533
1,156,983,219
Includes borrowings guaranteed by Government of India of ` 4,367.5 million (March 31, 2010: ` 8,355.0 million).
1.
2. Application money received towards subordinated debt.
3. Includes borrowings guaranteed by Government of India for the equivalent of ` 16,515.0 million (March 31, 2010: ` 17,252.7 million).
4. Secured borrowings in I and II above are ` 15,403.1 million (March 31, 2010: ` 17,811.2 million) excluding borrowings under Collateralised Borrowing
and Lending Obligation and/or repurchase transactions with banks and financial institutions.
F59
schedules
forming part of the Consolidated Balance Sheet (Contd.)
(` in ‘000s)
At
31.03.2011
At
31.03.2010
SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS
I. Bills payable ..................................................................................................
35,615,550
27,687,572
II.
Inter-office adjustments (net credit) ............................................................
—
244,147
III.
Interest accrued ............................................................................................
32,569,903
31,306,292
IV.
Sundry creditors ...........................................................................................
89,239,928
87,895,240
V.
Provision for standard assets........................................................................
16,909,115
16,415,504
VI. Others1 ...........................................................................................................
102,467,784
91,894,687
TOTAL OTHER LIABILITIES AND PROVISIONS ....................................................
276,802,280
255,443,442
1. Includes:
a) Proposed dividend amounting to ` 16,125.8 million (March 31, 2010: ` 13,378.6 million).
b) Corporate dividend tax payable of ` 2,254.2 million (March 31, 2010: ` 1,757.0 million).
SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA
I.
II.
Cash in hand (including foreign currency notes) .......................................
41,109,739
36,425,017
Balances with Reserve Bank of India in current accounts ..........................
171,230,324
242,077,770
TOTAL CASH AND BALANCES WITH RESERVE BANK OF INDIA ....................
212,340,063
278,502,787
SCHEDULE 7 - BALANCES WITH BANKS AND MONEY AT CALL AND
SHORT NOTICE
I.
In India
i) Balances with banks
a)
b)
in current accounts ........................................................................
in other deposit accounts ............................................................
ii) Money at call and short notice
a) with banks ......................................................................................
b) with other institutions ...................................................................
TOTAL ....................................................................................................................
II. Outside India
i)
ii)
in current accounts .................................................................................
in other deposit accounts .....................................................................
iii) Money at call and short notice ..............................................................
TOTAL ....................................................................................................................
TOTAL BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE
5,864,648
55,013,756
9,600,000
3,180,818
73,659,222
25,140,674
11,408,038
71,304,622
107,853,334
181,512,556
9,778,514
40,075,977
70,000
--
49,924,491
21,985,978
40,391,512
80,636,445
143,013,935
192,938,426
F60
schedules
forming part of the Consolidated Balance Sheet (Contd.)
SCHEDULE 8 - INVESTMENTS
I.
Investments in India (net of provisions)
Government securities ..........................................................................
i)
ii) Other approved securities ....................................................................
iii) Shares (includes equity and preference shares)1 .................................
iv) Debentures and bonds ..........................................................................
v) Assets held to cover linked liabilities of life insurance business ........
vi) Others (commercial paper, mutual fund units, pass through
certificates, security receipts, certificate of deposits, Rural
Infrastructure Development Fund deposits and other related
investments etc.) ...................................................................................
TOTAL INVESTMENTS IN INDIA ........................................................................
II.
Investments outside India (net of provisions)
i)
Government securities .........................................................................
ii) Others ...................................................................................................
TOTAL INVESTMENTS OUTSIDE INDIA ............................................................
TOTAL INVESTMENTS ........................................................................................
III.
Investments in India
Gross value of investments2 .........................................................................
Less: Aggregate of provision/depreciation/(appreciation) .........................
Net investments ............................................................................................
IV.
Investments outside India
Gross value of investments .........................................................................
Less: Aggregate of provision/depreciation/(appreciation) .........................
Net investments ............................................................................................
TOTAL INVESTMENTS ........................................................................................
At
31.03.2011
732,979,973
356,398
41,536,041
206,459,725
588,265,347
(` in ‘000s)
At
31.03.2010
732,093,813
45,009
42,426,779
75,752,082
514,692,566
388,530,238
1,958,127,722
337,886,043
1,702,896,292
54,619,909
83,780,160
138,400,069
2,096,527,791
1,984,587,186
26,459,464
1,958,127,722
141,810,619
3,410,550
138,400,069
2,096,527,791
38,707,855
121,593,693
160,301,548
1,863,197,840
1,718,296,361
15,400,069
1,702,896,292
164,916,920
4,615,372
160,301,548
1,863,197,840
1. Includes acquisition cost of investment in associates of ` 578.7 million (March 31, 2010: ` 524.5 million).
2. Includes appreciation of ` 72,320.7 million (March 31, 2010: ` 93,112.5 million) on investments held to cover linked liabilities of life insurance business.
SCHEDULE 9 - ADVANCES (net of provisions)
A. i)
Bills purchased and discounted .............................................................
ii) Cash credits, overdrafts and loans repayable on demand ...................
iii) Term loans ..............................................................................................
iv) Securitisation, finance lease and hire purchase receivables ................
TOTAL ADVANCES ..............................................................................................
i)
Secured by tangible assets [includes advances against book debts] ..
B.
ii) Covered by bank/government guarantees ............................................
iii) Unsecured................................................................................................
TOTAL ADVANCES ..............................................................................................
C.
Advances in India
Priority sector ..................................................................................
i)
ii)
Public sector ....................................................................................
iii) Banks ................................................................................................
iv) Others ..............................................................................................
TOTAL ADVANCES IN INDIA ...............................................................................
I.
II. Advances outside India
i) Loans to banks .................................................................................
ii) Due from others
a) Bills purchased and discounted ................................................
b) Syndicated and term loans .......................................................
c) Others .........................................................................................
TOTAL ADVANCES OUTSIDE INDIA ..................................................................
TOTAL ADVANCES ...............................................................................................
70,301,265
307,352,546
2,057,775,362
124,763,964
2,560,193,137
1,922,059,342
27,057,409
611,076,386
2,560,193,137
534,015,609
13,788,639
1,810,607
1,132,200,854
1,681,815,709
47,219,427
260,401,668
1,809,026,622
141,133,563
2,257,781,280
1,612,468,494
21,202,426
624,110,360
2,257,781,280
539,773,871
3,201,088
41,790
916,388,589
1,459,405,338
43,708,080
13,683,352
11,610,861
752,209,407
70,849,080
878,377,428
2,560,193,137
17,714,187
693,892,525
73,085,878
798,375,942
2,257,781,280
F61
schedules
forming part of the Consolidated Balance Sheet (Contd.)
(` in ‘000s)
At
31.03.2011
At
31.03.2010
SCHEDULE 10 - FIXED ASSETS
I.
Premises
At cost at March 31 of preceding year .........................................................
Additions during the year1 .............................................................................
Deductions during the year ..........................................................................
Depreciation to date ......................................................................................
Net block2 .......................................................................................................
II. Other fixed assets (including furniture and fixtures)
At cost at March 31 of preceding year .........................................................
Additions during the year1 .............................................................................
Deductions during the year ..........................................................................
Depreciation to date ......................................................................................
Net block ........................................................................................................
III. Assets given on Lease
At cost at March 31 of preceding year .........................................................
Additions during the year .............................................................................
Deductions during the year ..........................................................................
Depreciation to date, accumulated lease adjustment and provisions ........
Net block ........................................................................................................
TOTAL FIXED ASSETS ..........................................................................................
28,681,193
18,438,137
(1,216,539)
(8,156,035)
37,746,756
36,232,085
6,665,154
(1,456,215)
(26,862,655)
14,578,369
17,760,500
—
(250,413)
(14,939,735)
2,570,352
54,895,477
1. Includes assets acquired from erstwhile The Bank of Rajasthan Limited for the year ended March 31, 2011.
2. Includes assets amounting to Nil (March 31, 2010: ` 446.1 million) which are in the process of being sold.
SCHEDULE 11 - OTHER ASSETS
I.
Inter-office adjustments (net debit) .............................................................
Interest accrued ............................................................................................
II.
III. Tax paid in advance/tax deducted at source (net) ......................................
IV. Stationery and stamps .................................................................................
V. Non-banking assets acquired in satisfaction of claims1 ..............................
VI. Advance for capital assets ...........................................................................
VII. Deposits ........................................................................................................
VIII. Deferred tax asset (net) ................................................................................
IX. Others2 ...........................................................................................................
TOTAL OTHER ASSETS .......................................................................................
207,829
49,240,460
37,124,889
109,751
887,459
1,418,588
13,776,546
29,936,668
99,507,443
232,209,633
29,563,202
1,369,012
(2,251,021)
(6,472,554)
22,208,639
38,138,907
2,297,683
(4,204,505)
(23,351,752)
12,880,333
17,961,174
—
(200,674)
(14,226,548)
3,533,952
38,622,924
—
41,402,059
39,651,493
641
743,464
11,907,171
19,863,374
24,842,072
124,019,422
262,429,696
1. Includes certain non-banking assets acquired in satisfaction of claims which are in the process of being transferred in the Bank’s name.
2. Includes goodwill on consolidation amounting to ` 1,464.8 million (March 31, 2010: ` 1,514.4 million) and goodwill on purchase of assets by way of
merger amounting to Nil (March 31, 2010: ` 41.5 million).
SCHEDULE 12 - CONTINGENT LIABILITIES
I.
II.
III.
IV. Guarantees given on behalf of constituents
Claims against the Group not acknowledged as debts ..............................
Liability for partly paid investments ............................................................
Liability on account of outstanding forward exchange contracts1 .............
a)
In India ...................................................................................................
b) Outside India ..........................................................................................
V.
Acceptances, endorsements and other obligations ...................................
VI. Currency swaps1 ...........................................................................................
Interest rate swaps, currency options and interest rate futures1 ................
VII.
VIII. Other items for which the Group is contingently liable2 .............................
TOTAL CONTINGENT LIABILITIES .....................................................................
21,093,514
128,050
2,550,667,789
647,524,739
182,021,705
393,972,235
567,720,233
5,800,967,594
61,900,784
10,225,996,643
35,364,093
128,126
1,753,368,882
489,303,787
129,981,831
321,795,858
506,938,754
4,846,442,184
121,875,833
8,205,199,348
1. Represents notional amount.
2. Includes an amount of ` 1,653.8 million pertaining to government securities settled after the Balance Sheet date, which are accounted as per settlement
date method pursuant to RBI guidelines issued during the year ended March 31, 2011.
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forming part of the Consolidated Profit and Loss Account
SCHEDULE 13 - INTEREST EARNED
I.
Interest/discount on advances/bills ..............................................................
II.
Income on investments .................................................................................
III.
Interest on balances with Reserve Bank of India and other inter-bank funds ....
IV. Others1,2 ..........................................................................................................
Year ended
31.03.2011
(` in ‘000s)
Year ended
31.03.2010
190,975,431
203,626,416
91,806,801
4,693,218
13,338,591
78,164,417
7,111,651
12,634,594
TOTAL INTEREST EARNED .................................................................................
300,814,041
301,537,078
1. Includes interest amounting to ` 1,694.7 million (March 31, 2010: ` 1,241.8 million) on income tax refunds.
2. Includes interest and amortisation of premium on non-trading interest rate swaps and foreign currency swaps.
SCHEDULE 14 - OTHER INCOME
I.
Commission, exchange and brokerage .......................................................
II.
Profit/(loss) on sale of investments (net) .....................................................
III. Profit/(loss) on revaluation of investments (net) .........................................
IV. Profit/(loss) on sale of land, buildings and other assets (net)1 ....................
V.
Profit/(loss) on exchange transactions (net) ................................................
VI. Premium and other operating income from insurance business ...............
VII. Miscellaneous income (including lease income)2 .......................................
TOTAL OTHER INCOME ......................................................................................
1. Includes profit/(loss) on sale of assets given on lease.
2. Includes share of profit/(loss) from associates.
SCHEDULE 15 - INTEREST EXPENDED
I.
Interest on deposits .......................................................................................
II.
Interest on Reserve Bank of India/inter-bank borrowings ...........................
III. Others (including interest on borrowings of erstwhile ICICI Limited) .........
65,977,918
6,215,295
(4,528,802)
299,958
10,121,840
236,030,257
1,016,537
315,133,003
113,151,705
16,826,306
63,447,674
TOTAL INTEREST EXPENDED ..............................................................................
193,425,685
SCHEDULE 16 - OPERATING EXPENSES
I.
Payments to and provisions for employees .................................................
II.
Rent, taxes and lighting .................................................................................
III.
Printing and stationery ..................................................................................
IV.
Advertisement and publicity .........................................................................
Depreciation ..................................................................................................
V.
VI. Depreciation (including lease equalisation) on leased assets .....................
VII. Directors' fees, allowances and expenses ....................................................
VIII. Auditors' fees and expenses .........................................................................
Law charges ...................................................................................................
IX.
X.
Postages, telegrams, telephones, etc. ..........................................................
XI. Repairs and maintenance .............................................................................
XII.
Insurance .......................................................................................................
XIII. Direct marketing agency expenses ..............................................................
XIV. Claims and benefits paid pertaining to insurance business ........................
XV. Other expenses pertaining to insurance business .......................................
XVI. Other expenditure .........................................................................................
TOTAL OPERATING EXPENSES ............................................................................
43,925,959
9,723,158
1,491,506
3,874,585
6,607,680
789,135
33,590
160,924
810,340
3,007,539
6,677,282
1,994,829
2,578,556
28,158,043
180,870,784
22,320,635
313,024,545
60,039,038
10,359,185
3,923,447
821,610
11,911,507
204,757,832
2,648,029
294,460,648
135,093,359
18,644,064
53,554,438
207,291,861
36,784,297
10,168,540
1,609,042
4,421,935
6,212,233
1,416,505
27,868
148,042
1,396,354
3,575,692
6,685,665
1,885,845
2,413,170
20,643,054
158,516,684
21,427,455
277,332,381
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schedules
forming part of the Consolidated Accounts (Contd.)
SCHEDULE 17
Significant accounting policies
OVERVIEW
ICICI Bank Limited (the Bank) together with its subsidiaries, joint ventures and associates (collectively, the Group) is a diversified
financial services group providing a wide range of banking and financial services including commercial banking, retail banking,
project and corporate finance, working capital finance, insurance, venture capital and private equity, investment banking, broking
and treasury products and services.
The Bank was incorporated in Vadodara, India and is a banking company governed by the Banking Regulation Act, 1949.
Principles of consolidation
The consolidated financial statements include the financials of ICICI Bank, its subsidiaries, associates and joint ventures.
Entities, in which the Bank holds, directly or indirectly, more than 50.00% of the voting rights or where it exercises control, are fully
consolidated on a line-by-line basis in accordance with the provisions of AS 21. Entities where the Bank, directly or indirectly, holds
20.00% to 50.00% of the voting rights and/or has the ability to exercise significant influence are accounted for under the equity
method of accounting and the pro-rata share of their profit/(loss) is included in the consolidated profit and loss account. Assets,
liabilities, income and expenditure of jointly controlled entities are consolidated using the proportionate consolidation method.
Under this method, the Bank’s share of each of the assets, liabilities, income and expenses of the jointly controlled entity is reported
in separate line items in the consolidated financial statements. The Bank does not consolidate entities where control is intended to
be temporary. All significant inter-company accounts and transactions are eliminated on consolidation.
Basis of preparation
The accounting and reporting policies of the Group used in the preparation of the consolidated financial statements conform to
Generally Accepted Accounting Principles in India (Indian GAAP), the guidelines issued by the Reserve Bank of India (RBI), Securities
and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), National Housing Bank (NHB), the
Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI) and notified by the Companies (Accounting
Standards) Rules, 2006 from time to time, as applicable to relevant companies and practices generally prevalent within the banking
industry in India. In the case of the foreign subsidiaries, Generally Accepted Accounting Principles as applicable to the foreign
subsidiaries are followed.
The Group follows the accrual method of accounting except where otherwise stated, and the historical cost convention. In case the
accounting policies followed by a subsidiary or joint venture are different from those followed by the Bank, the same have been
disclosed separately.
The preparation of consolidated financial statements requires management to make estimates and assumptions which are considered
in the reported amounts of assets and liabilities (including contingent liabilities) as of the date of the consolidated financial statements
and the reported income and expenses during the reporting period. Management believes that the estimates used in the preparation
of the consolidated financial statements are prudent and reasonable. Future results could differ from these estimates.
The consolidated financial statements include the results of the following entities in addition to the Bank.
Name of the entity4,5,6,7,8
Country of
incorporation
United Kingdom Subsidiary
ICICI Bank UK PLC
Subsidiary
ICICI Bank Canada
Canada
Subsidiary
ICICI Bank Eurasia Limited Liability Company Russia
Subsidiary
ICICI Securities Limited
Nature of
relationship
India
ICICI Securities Holdings Inc.
ICICI Securities Inc.
ICICI Securities Primary Dealership Limited
ICICI Venture Funds Management
Company Limited
ICICI Home Finance Company Limited
ICICI Trusteeship Services Limited
ICICI Investment Management
Company Limited
ICICI International Limited
ICICI Prudential Pension Funds Management
Company Limited9
USA
USA
India
India
India
India
India
Mauritius
India
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Subsidiary
Nature of business
Banking
Banking
Banking
Securities broking and
merchant banking
Holding company
Securities broking
Securities investment, trading
and underwriting
Private equity/venture capital
fund management
Housing finance
Trusteeship services
Asset management
Asset management
Pension fund management
Ownership
interest
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
100.00%
Sr.
no.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
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forming part of the Consolidated Accounts (Contd.)
Name of the entity4,5,6,7,8
Sr.
no.
Country of
incorporation
Nature of
relationship
Nature of business
14.
ICICI Eco-net Internet and Technology Fund
India
Venture capital fund
Ownership
interest
92.12%
Consolidated as
per AS 21
Consolidated as
per AS 21
Consolidated as
per AS 21
Consolidated as
per AS 21
Unregistered venture capital fund 100.00%
Venture capital fund
99.31%
Unregistered venture capital fund 100.00%
Consolidated as
per AS 21
Infrastructure development
consultancy
76.00%
Consolidated as
per AS 21
Unregistered venture capital fund 54.35%
Consolidated as
per AS 21
Investment in research and
development of biotechnology
100.00%
Jointly
controlled entity
Jointly
controlled entity
Life insurance
General insurance
Jointly
controlled entity
Asset management company for
ICICI Prudential Mutual Fund
Jointly
controlled entity
Trustee company for ICICI
Prudential Mutual Fund
73.88%
73.55%
51.00%
50.80%
50.00%
India
India
India
India
India
India
India
India
India
India
15.
ICICI Equity Fund
16.
ICICI Emerging Sectors Fund
17.
ICICI Strategic Investments Fund
18.
ICICI Kinfra Limited
19.
ICICI Venture Value Fund
20.
I-Ven Biotech Limited
21.
22.
23.
ICICI Prudential Life Insurance Company
Limited1
ICICI Lombard General Insurance Company
Limited1
ICICI Prudential Asset Management Company
Limited1
24.
ICICI Prudential Trust Limited1
25. TCW/ICICI Investment Partners Limited2
(formerly known as TCW/ICICI Investment
Partners LLC)
26. Rainbow Fund3
27. Financial Inclusion Network & Operations
Limited3
Mauritius
Jointly
controlled entity
Asset management
India
India
Associate
Associate
28.
I-Process Services (India) Private Limited3
India
Associate
29.
I-Solutions Providers (India) Private Limited3
India
Associate
30. NIIT Institute of Finance Banking and
Insurance Training Limited3
31. Prize Petroleum Company Limited3
32.
ICICI Merchant Services Private Limited3
33. Mewar Aanchalik Gramin Bank3
India
India
India
India
Associate
Associate
Associate
Associate
Unregistered venture capital fund 23.91%
Support services for financial
inclusion
Services related to back end
operations
Services related to sales and
promotion activities
27.65%
19.00%
19.00%
Education and training in banking
and finance
18.94%
Oil exploration and production
Merchant servicing
Banking
35.00%
19.00%
35.00%
1.
2.
3.
4.
5.
6.
7.
8.
9.
The financial statements of these jointly controlled entities have been consolidated as per AS 21 on ‘consolidated financial statements’
consequent to the limited revision to AS 27 on ‘financial reporting of interests in joint ventures’.
The entity has been consolidated as per the proportionate consolidation method as prescribed by AS 27 on ‘financial reporting of
interests in joint ventures’.
These entities have been accounted as per the equity method as prescribed by AS 23 on ‘accounting for investments in associates in
consolidated financial statements’.
During the quarter ended June 30, 2009, Crossdomain Solutions Private Limited and Contests2win.com India Private Limited ceased to
be associates and accordingly, these entities have not been accounted as per the equity method as prescribed by AS 23.
During the quarter ended September 30, 2009, Transafe Services Limited ceased to be a consolidating entity and accordingly, has not
been consolidated.
ICICI Wealth Management Inc. has been dissolved with effect from December 31, 2009 and therefore, it has not been consolidated from
the quarter ended December 31, 2009.
During the quarter ended June 30, 2010, Loyalty Solutions & Research Limited ceased to be a consolidating entity and accordingly, has
not been consolidated.
During the quarter ended March 31, 2011, ICICI West Bengal Infrastructure Development Corporation Limited ceased to be a
consolidating entity and accordingly, has not been consolidated.
ICICI Prudential Pension Funds Management Company Limited is a wholly owned subsidiary of ICICI Prudential Life Insurance
Company Limited.
The financial statements of Comm Trade Services Limited and 3i infotech Limited have not been consolidated under
AS 21/AS 23, since the investments in these companies are temporary in nature.
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forming part of the Consolidated Accounts (Contd.)
SIGNIFICANT ACCOUNTING POLICIES
1.
Transactions involving foreign exchange
The consolidated financial statements of the Group are reported in Indian rupees (`), the national currency of India. Foreign
currency income and expenditure items are translated as follows:
•
For domestic operations, at the exchange rates prevailing on the date of the transaction with the resultant gain or loss
accounted for in the profit and loss account.
For integral foreign operations, at weekly average closing rates with the resultant gain or loss accounted for in the profit and
loss account. An integral foreign operation is a subsidiary, associate, joint venture or branch of the reporting enterprise,
the activities of which are based or conducted in a country other than the country of the reporting enterprise but are an
integral part of the reporting enterprise.
For non-integral foreign operations, at the quarterly average closing rates with the resultant gains or losses accounted for
as foreign currency translation reserve.
•
•
Monetary foreign currency assets and liabilities of domestic and integral foreign operations are translated at closing exchange
rates notified by Foreign Exchange Dealers’ Association of India (FEDAI) at the balance sheet date and the resulting profits/
losses are included in the profit and loss account.
Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated at
closing exchange rates notified by FEDAI at the balance sheet date and the resulting profits/losses from exchange differences
are accumulated in the foreign currency translation reserve until the disposal of the net investment in the non-integral foreign
operations.
The premium or discount arising on inception of forward exchange contracts in domestic operations that are entered to
establish the amount of reporting currency required or available at the settlement date of a transaction is amortised over the
life of the contract. All other outstanding forward exchange contracts are revalued at the exchange rates notified by FEDAI
for specified maturities and at interpolated rates for contracts of interim maturities. The contracts of longer maturities where
exchange rates are not notified by FEDAI, are revalued at the forward exchange rates implied by the swap curves for respective
currencies. The resultant gains or losses are recognised in the profit and loss account.
Contingent liabilities on account of guarantees, endorsements and other obligations denominated in foreign currency are
disclosed at the closing exchange rates notified by FEDAI at the balance sheet date.
Revenue recognition
•
Interest income is recognised in the profit and loss account as it accrues except in the case of non-performing assets
(NPAs) where it is recognised upon realisation, as per the income recognition and asset classification norms of RBI/NHB.
Income from hire purchase operations is accrued by applying the implicit interest rate on outstanding balances.
Income from leases is calculated by applying the interest rate implicit in the lease to the net investment outstanding on the
lease over the primary lease period. Leases entered into till March 31, 2001 have been accounted for as operating leases.
Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.
Dividend income is accounted on an accrual basis when the right to receive the dividend is established.
Loan processing fee is accounted for upfront when it becomes due except in the case of foreign banking subsidiaries,
where it is amortised over the period of the loan.
Project appraisal/structuring fee is accounted for on the completion of the agreed service.
Arranger fee is accounted for as income when a significant portion of the arrangement/syndication is completed.
Commission received on guarantees issued is amortised on a straight-line basis over the period of the guarantee.
All other fees are accounted for as and when they become due.
Net income arising from sell-down/securitisation of loan assets prior to February 1, 2006 has been recognised upfront
as interest income. With effect from February 1, 2006 net income arising from securitisation of loan assets are amortised
over the life of securities issued or to be issued by the special purpose vehicle/special purpose entity to which assets
are sold. Net income arising from sale of loan assets through direct assignment with recourse obligation is amortised
over the life of underlying assets sold and net income from sale of loan assets through direct assignment, without any
recourse obligation, is recognised at the time of sale. Net loss arising on account of the sell-down/securitisation and direct
assignment of loan assets are recognised at the time of sale.
The Bank deals in bullion business on a consignment basis. The difference between price recovered from customers and
cost of bullion is accounted for at the time of sale to the customers.
The Bank also deals in bullion on a borrowing and lending basis and the interest paid/received is accounted on
accrual basis.
Income from brokerage activities is recognised as income on the trade date of the transaction. Brokerage income in
relation to public or other issuances of securities is recognised based on mobilisation and terms of agreement with
the client.
Life insurance premium is recognised as income when due. Premium on lapsed policies is recognised as income when
such policies are reinstated. Top-up premiums are considered as single premium. For linked business, premium is
recognised when the associated units are created. Income from linked funds, which includes fund management charges,
policy administration charges, mortality charges etc. are recovered from the linked fund in accordance with the terms and
conditions of the policy and are recognised when due.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
2.
F66
schedules
forming part of the Consolidated Accounts (Contd.)
•
•
•
In the case of general insurance business, premium is recorded for the policy period at the commencement of risk and
for installment cases, it is recorded on installment due dates. Premium earned is recognised as income over the period
of risk or the contract period based on 1/365 method, whichever is appropriate, on a gross basis, net of service tax.
Any subsequent revision to premium is recognised over the remaining period of risk or contract period. Adjustments
to premium income arising on cancellation of policies are recognised in the period in which the policies are cancelled.
Commission on reinsurance ceded is recognised as income in the period of ceding the risk. Profit commission under
reinsurance treaties, wherever applicable, is recognised as income in the period of final determination of profits and
combined with commission on reinsurance ceded.
In the case of general insurance business, insurance premium on ceding of the risk is recognised in the period in which
the risk commences. Any subsequent revision to premium ceded is recognised in the period of such revision. Adjustment
to re-insurance premium arising on cancellation of policies is recognised in the period in which it is cancelled. In case
of life insurance business, cost of reinsurance ceded is accounted for at the time of recognition of premium income in
accordance with the treaty or in-principle arrangement with the reinsurer. Profit commission on reinsurance ceded is
netted off against premium ceded on reinsurance.
In the case of general insurance business, premium deficiency is recognised when the sum of expected claim costs and
related expenses exceed the reserve for unexpired risks and is computed at a business segment level.
3.
ICICI Bank Limited
ICICI Prudential Life Insurance Company Limited
ICICI Lombard General Insurance Company Limited
ICICI Venture Funds Management Company Limited
Stock based compensation
The following entities within the group have granted stock options to their employees:
•
•
•
•
The Employees Stock Option Scheme (the Scheme) provides for grant of equity shares of the Bank to wholetime directors and
employees of the Bank and its subsidiaries. The Scheme provides that employees are granted options to subscribe to equity
shares of the Bank that vest in a graded manner. The options may be exercised within a specified period. ICICI Prudential Life
Insurance Company and ICICI Lombard General Insurance Company have also formulated similar stock option schemes for
their employees for grant of equity shares of their respective companies.
The Group follows the intrinsic value method to account for its stock-based employee compensation plans. Compensation
cost is measured as the excess, if any, of the fair market price of the underlying stock over the exercise price on the grant date.
The fair market price is the latest closing price, immediately prior to the grant date, which is generally the date of the Board of
Directors meeting in which the options are granted, on the stock exchange on which the shares of the Bank are listed. If the
shares are listed on more than one stock exchange, then the stock exchange where there is highest trading volume on the said
date is considered. The banking subsidiaries namely, ICICI Bank UK and ICICI Bank Canada account for the cost of the options
granted to employees by ICICI Bank using the fair value method based on Black Scholes model. In the case of ICICI Prudential
Life Insurance Company and ICICI Lombard General Insurance Company, the fair value of the shares is determined based on an
external valuation report.
The Group’s venture capital subsidiary i.e. ICICI Venture Funds Management Company has settled carried interest trusts for the
benefit of its employees. These trusts have investment in a separate class of units of certain fully consolidated funds. These
carried interest entitlements are treated as employee compensation and are accounted for at the time of distribution of such
carried interest to the trusts.
4.
Income taxes
Income tax expense is the aggregate amount of current tax and deferred tax expense incurred by the Group. The current tax
expense and deferred tax expense is determined in accordance with the provisions of the Income Tax Act, 1961 and as per AS
22 on ‘accounting for taxes on income’ issued by ICAI, respectively. Deferred tax adjustments comprise changes in the deferred
tax assets or liabilities during the year.
Deferred tax assets and liabilities are recognised on a prudent basis for the future tax consequences of timing differences
arising between the carrying value of assets and liabilities and their respective tax basis and carry forward losses. Deferred tax
assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted at the balance
sheet date. The impact of changes in the deferred tax assets and liabilities is recognised in the profit and loss account.
Deferred tax assets are recognised and re-assessed at each reporting date, based on the management’s judgement as to
whether their realisation is considered as reasonably certain.
In the consolidated financial statements, deferred tax assets and liabilities are computed at an individual entity level and
aggregated for consolidated reporting.
5.
Claims and benefits paid
In the case of general insurance business, claims incurred comprise claims paid, estimated liability for outstanding claims made
following a loss occurrence reported and estimated liability for claims incurred but not reported (IBNR) and claims incurred but
not enough reported (IBNER). Further, claims incurred also include specific claim settlement costs such as survey/legal fees
and other directly attributable costs. Claims (net of amounts receivable from re-insurers/co-insurers) are recognised on the
date of intimation of the loss based on estimates from surveyors/insured in the respective revenue account. Estimated liability
for outstanding claims at the balance sheet date is recorded net of claims recoverable from/payable to co-insurers/re-insurers
and salvage to the extent there is certainty of realisation. Estimated liability for outstanding claim is determined by the entity on
the basis of ultimate amounts likely to be paid on each claim based on the past experience. These estimates are progressively
F67
schedules
forming part of the Consolidated Accounts (Contd.)
6.
7.
8.
revalidated on availability of further information. Claims IBNR represent that amount of claims that may have been incurred
during the accounting period but have not been reported or claimed. The claims IBNR provision also includes provision, if
any, required for claims IBNER. Estimated liability for claims IBNR/claims IBNER is based on an actuarial estimate duly certified
by the appointed actuary of the entity. IBNR/IBNER has been created on re-insurance accepted from Indian Motor Third Party
Insurance Pool based on actuarial estimates received from them.
In the case of life insurance business, claims other than maturity claims are accounted for on receipt of intimation. Survival
benefit and maturity claims are accounted when due. Withdrawals and surrenders under linked policies are accounted in the
respective schemes when the associated units are cancelled/redeemed. Re-insurance recoveries on claims are accounted for,
in the same period as the related claims.
Liability for life policies in force
In the case of life insurance business, liability for life policies in force and also policies in respect of which premium has been
discontinued but a liability exists, is determined by the appointed actuary as per the gross premium method in accordance with
accepted actuarial practice, requirements of the IRDA and the Actuarial Society of India.
Reserve for unexpired risk
Reserve for unexpired risk is recognised net of re-insurance ceded and represents premium written that is attributable and to
be allocated to succeeding accounting periods for risks to be borne by the entity under contractual obligations on contract
period basis or risk period basis, whichever is appropriate. It is calculated on a daily pro-rata basis subject to a minimum of
50.00% of the aggregated premium, written on policies during the twelve months preceding the balance sheet date for fire,
marine, cargo and miscellaneous business and 100.00% for marine hull business, on all unexpired policies at balance sheet
date, in accordance with the provisions of the Insurance Act, 1938.
Actuarial method and valuation
In the case of life insurance business, the actuarial liability on both participating and non-participating policies is calculated using
the gross premium method, using assumptions for interest, mortality, expense and inflation, and in the case of participating
policies, future bonuses together with allowance for taxation and allocation of profits to shareholders. These assumptions are
determined as prudent estimates at the date of valuation with allowances for adverse deviations. No allowance is made for
expected lapses.
The greater of liability calculated using discounted cash flows and unearned premium reserves are held for the unexpired
portion of the risk for the general fund liabilities of linked business and attached riders. An unearned premium reserve is held
for one year renewable group term insurance.
The unit liability in respect of linked business has been taken as the value of the units standing to the credit of
policyholders, using the Net Asset Value (NAV) prevailing at the valuation date. The adequacy of charges under unit linked
policies to meet future expenses has been tested and provision made as appropriate. Provision has also been made for
the cost of guarantee under unit linked products that carry a guarantee. The units held in respect of lapsed policies are
divided into a revival reserve, which contributes to liabilities, and a fund for future appropriation, which contributes to
regulatory capital.
The interest rates used for valuing the liabilities are in the range of 6.16% to 6.86% per annum (previous year – 5.10% to 6.78%
per annum).
Mortality rates used are based on the published IALM (94 – 96) Ultimate Mortality Table for assurances and LIC 96-98 table for
annuities, adjusted to reflect expected experience while morbidity rates used are based on CIBT 93 table, adjusted for expected
experience, or on risk rates supplied by reinsurers.
Expenses are provided for at current levels, in respect of renewal expenses, with no allowance for future improvements. Per
policy renewal expenses for regular premium policies are assumed to inflate at 5.90% (previous year – 4.30%).
9.
Acquisition costs for insurance business
Acquisition costs are those costs that vary with and are primarily related to the acquisition of insurance contracts and are
expensed in the period in which they are incurred.
10. Staff retirement benefits
Gratuity
The Group pays gratuity to employees who retire or resign after a minimum prescribed period of continuous service and in the
case of employees at the overseas locations as per the rules in force in the respective countries. ICICI Bank makes contributions
to five separate gratuity funds, for employees inducted from erstwhile ICICI Limited (erstwhile ICICI), employees inducted from
erstwhile Bank of Madura Limited (erstwhile Bank of Madura), employees inducted from erstwhile The Sangli Bank Limited
(erstwhile Sangli Bank), employees inducted from erstwhile The Bank of Rajasthan Limited (erstwhile Bank of Rajasthan) and
employees of ICICI Bank other than those inducted from erstwhile ICICI, erstwhile Bank of Madura, erstwhile Sangli Bank and
erstwhile Bank of Rajasthan.
Separate gratuity funds for employees inducted from erstwhile ICICI, erstwhile Bank of Madura, erstwhile Sangli Bank and
erstwhile Bank of Rajasthan are managed by ICICI Prudential Life Insurance Company Limited.
The gratuity fund for employees of ICICI Bank, other than employees inducted from erstwhile ICICI, erstwhile Bank of Madura,
erstwhile Sangli Bank and erstwhile Bank of Rajasthan is administered by Life Insurance Corporation of India (LIC) and ICICI
Prudential Life Insurance Company Limited.
Actuarial valuation of the gratuity liability for all the above funds is determined by an appointed actuary. Actuarial valuation of
gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition
as per the projected unit credit method.
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forming part of the Consolidated Accounts (Contd.)
Superannuation fund
ICICI Bank contributes 15.00% of the total annual basic salary of certain employees to a superannuation fund for ICICI Bank
employees. The employee gets an option on retirement or resignation to commute one-third of the total credit balance in his/
her account and receive a monthly pension based on the remaining balance. In the event of death of an employee, his or her
beneficiary receives the remaining accumulated balance. ICICI Bank also gives cash option to its employees, allowing them to
receive the amount contributed by ICICI Bank in their monthly salary during their employment. In that event, the employee does
not receive any superannuation benefit on retirement/resignation from services of the Bank.
Upto March 31, 2005, the superannuation fund was administered solely by Life Insurance Corporation of India. Subsequent to
March 31, 2005, both Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited are administering
separate funds. Employees have the option to decide on an annual basis, the insurance company for management of that
year’s contribution towards superannuation fund.
ICICI Prudential Life Insurance Company, ICICI Prudential Asset Management Company and ICICI Venture Funds Management
Company have accrued for superannuation liability based on a percentage of basic salary payable to eligible employees for the
period of service.
Pension
The Bank provides for pension, a deferred retirement plan covering certain employees of erstwhile Bank of Madura, erstwhile
Sangli Bank and erstwhile Bank of Rajasthan. The plan provides for a pension payment on a monthly basis to these employees
on their retirement based on the respective employee’s years of service with the Bank and applicable salary. For erstwhile Bank
of Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan employees in service, separate pension funds are managed
in-house and the liability is funded as per actuarial valuation. The pension payments to retired employees of erstwhile Bank
of Madura and erstwhile Sangli Bank are being administered by ICICI Prudential Life Insurance Company Limited and pension
payments to retired employees of erstwhile Bank of Rajasthan are being administered by LIC and ICICI Prudential Life Insurance
Company Limited for whom the Bank has purchased master annuity policies. Employees covered by the pension plan are not
eligible for benefits under the provident fund plan.
Provident fund
The Group is statutorily required to maintain a provident fund as a part of retirement benefits to its employees. There are
separate provident funds for employees inducted from erstwhile Bank of Madura, erstwhile Sangli Bank, erstwhile Bank of
Rajasthan and for other employees of ICICI Bank. In-house trustees manage these funds. Each employee contributes a specified
portion of the basic salary and the Group contributes an equal amount. The funds are invested according to the rules prescribed
by the Government of India.
Leave encashment
The Group provides for leave encashment benefit, which is a defined benefit scheme, based on actuarial valuation conducted
by an independent actuary.
11. Provisions, contingent liabilities and contingent assets
The Group estimates the probability of any loss that might be incurred on outcome of contingencies on the basis of information
available upto the date on which the consolidated financial statements are prepared. A provision is recognised when an
enterprise has a present obligation as a result of a past event and it is probable that an outflow of resources will be required
to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based on management
estimate required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions.
These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. In cases where
the available information indicates that the loss on the contingency is reasonably possible but the amount of loss cannot be
reasonably estimated, a disclosure to this effect is made in the consolidated financial statements. In case of remote possibility,
neither provision nor disclosure is made in the consolidated financial statements. The Group does not account for or disclose
contingent assets, if any.
12. Cash and cash equivalents
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short notice.
13.
Investments
i)
Investments of the Bank are accounted for in accordance with the extant RBI guidelines on investment classification and
valuation as given below.
a) All investments are classified into ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’. Reclassifications, if
b)
c)
any, in any category are accounted for as per the RBI guidelines.
Under each classification, the investments are further classified as (a) government securities, (b) other approved
securities, (c) shares, (d) bonds and debentures and (e) others.
‘Held to Maturity’ securities are carried at their acquisition cost or at amortised cost, if acquired at a premium over
the face value. Any premium over the face value of fixed rate and floating rate securities acquired is amortised over
the remaining period to maturity on a constant yield basis and straight line basis respectively.
‘Available
for Trading’ securities are valued periodically as per RBI guidelines.
Any premium over the face value of fixed rate and floating rate investments in government securities,
classified as ‘Available for Sale’, is amortised over the remaining period to maturity on constant yield basis
and straight line basis respectively. Quoted investments are valued based on the trades/quotes on the recognised
list of RBI or prices declared
stock exchanges, subsidiary general
ledger account transactions, price
for Sale’ and
‘Held
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forming part of the Consolidated Accounts (Contd.)
by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives Association
(FIMMDA), periodically.
The market/fair value of unquoted government securities which are in the nature of Statutory Liquidity Ratio (SLR)
securities included in the ‘Available for Sale’ and ‘Held for Trading’ categories is as per the rates published by
FIMMDA. The valuation of other unquoted fixed income securities wherever linked to the Yield-to-Maturity (YTM)
rates, is computed with a mark-up (reflecting associated credit risk) over the YTM rates for government securities
published by FIMMDA.
Unquoted equity shares are valued at the break-up value, if the latest balance sheet is available or at ` 1 as per RBI
guidelines.
Securities are valued scrip-wise and depreciation/appreciation is aggregated for each category. Net appreciation in
each category, if any, being unrealised, is ignored, while net depreciation is provided for.
d) Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged to
e)
the profit and loss account.
Profit on sale of investments in the ‘Held to Maturity’ category is credited to the profit and loss account and is
thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit on sale of
investments in ‘Available for sale’ and ‘Held for Trading’ categories is credited to profit and loss account.
f) Market repurchase and reverse repurchase transactions are accounted for as borrowing and lending transactions
in accordance with the extant RBI guidelines. Transactions with RBI under Liquidity Adjustment Facility (LAF) are
accounted for as sale and purchase transactions by the Bank.
Broken period interest (the amount of interest from the previous interest payment date till the date of purchase/sale
of instruments) on debt instruments is treated as a revenue item.
g)
h) At the end of each reporting period, security receipts issued by asset reconstruction companies are valued in
accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly,
in cases where the cash flows from security receipts issued by asset reconstruction companies are limited to the
actual realisation of the financial assets assigned to the instruments in the concerned scheme, the Bank reckons the
NAV, obtained from the asset reconstruction company from time to time, for valuation of such investments at each
reporting period end.
The Bank follows trade date method of accounting for purchase and sale of investments, except government securities
where settlement date method of accounting is followed from January 1, 2011 in accordance with RBI guidelines.
i)
ii) The Bank’s consolidating venture capital funds carry investments at fair values, with unrealised gains and temporary
losses on investments recognised as components of investors’ equity and accounted for in the unrealised investment
reserve account. The realised gains and losses on investments and units in mutual funds and unrealised gains or losses
on revaluation of units in mutual funds are accounted for in the profit and loss account. Provisions are made in respect
of accrued income considered doubtful. Such provisions as well as any subsequent recoveries are recorded through
the profit and loss account. Subscription to/purchase of investments are accounted at the cost of acquisition inclusive
of brokerage, commission and stamp duty. Bonus shares and right entitlements are recorded when such benefits are
known. Quoted investments are valued on the valuation date at the closing market price. Quoted investments that are
not traded on the valuation date but are traded during the two months prior to the valuation date are valued at the latest
known closing price. An appropriate discount is applied where the asset management company considers it necessary
to reflect restrictions on disposal. Quoted investments not traded during the two months prior to the valuation date are
treated as unquoted. Unquoted investments are valued at their estimated fair values by applying appropriate valuation
methods. Where there is a decline, other than temporary in the carrying amounts of investments, the resultant reduction
in the carrying amount is charged to the profit and loss account during the period in which such decline is identified.
iii) The Bank’s primary dealership and securities broking subsidiaries classify their investments as short-term and trading
or as long-term investments. The securities held with the intention of holding for short-term and trading are classified
as stock-in-trade and are valued at lower of cost arrived at on weighted average basis or market value. The securities
acquired with the intention of holding till maturity or for a longer period are classified as long-term investments and are
carried at cost arrived at on weighted average basis. Appropriate provision is made for other than temporary diminution
in the value of investments. Commission earned in respect of securities acquired upon devolvement is reduced from the
cost of acquisition.
iv) The Bank’s housing finance subsidiary classifies its investments as current investments and long-term investments.
Investments that are readily realisable and intended to be held for not more than a year are classified as current
investments, which are carried at the lower of cost and net realisable value. All other investments are classified as long-
term investments, which are carried at cost. However, a provision for diminution in value is made to recognise any other
than temporary decline in the value of such long-term investments. Costs such as brokerage, commission etc. paid at the
time of acquisition of investments are included in the investment cost.
v) The Bank’s United Kingdom and Canadian banking subsidiaries account for unrealised gain/loss, net of tax, on investment
in ‘Available for Sale’ category directly in their reserves. Further, in the case of the Bank’s United Kingdom and Canadian
banking subsidiaries, unrealised gain/loss on investment in ‘Held for Trading’ category is accounted directly in the profit
and loss account.
In the case of life and general insurance businesses, investments are made in accordance with the Insurance Act, 1938,
the IRDA (Investment) Regulations, 2000, and various other circulars/notifications issued by the IRDA in this context from
time to time.
vi)
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forming part of the Consolidated Accounts (Contd.)
In the case of life insurance business, valuation of investments (other than linked business) is done on the following basis:
a. All debt securities and redeemable preference shares are considered as ‘Held to Maturity’ and accordingly stated
at historical cost, subject to amoritsation of premium or accretion of discount in the profit or loss account over the
period of maturity/holding on a straight line basis.
Listed equity shares are stated at fair value being the last quoted closing price on the National Stock Exchange (NSE)
[in case of securities not listed on NSE, the last quoted closing price on the Bombay Stock Exchange (BSE) is used].
Equity shares awaiting listing are stated at historical cost subject to provision for diminution, if any, in the value of
such investment determined separately for each individual investment.
b.
c. Mutual fund units at the balance sheet date are valued at the latest available net asset values of the
respective fund.
Unrealised gains/losses arising due to changes in the fair value of listed equity shares and mutual fund units are taken to
’Revenue and other reserves’ in the balance sheet for life insurance business.
In the case of general insurance business, valuation of investments is done on the following basis:
a. All debt securities including government securities and non-convertible preference shares are considered as ‘Held to
Maturity’ and accordingly stated at amortised cost determined after amortisation of premium or accretion of discount
on a straight line basis over the holding/maturity period.
Listed equities and convertible preference shares at the balance sheet date are stated at fair value, being the lowest
of last quoted closing price on NSE or BSE.
b.
c. Mutual fund investments (other than venture capital fund) are stated at fair value, being the closing net asset value at
balance sheet date.
Investments other than mentioned above are valued at cost.
d.
Unrealised gains/losses arising due to changes in the fair value of listed equity shares and mutual fund units are taken to
’Revenue and other reserves’ in the balance sheet for general insurance business.
The general insurance subsidiary assesses at each balance sheet date whether there is any indication that any investment
in equity or units of mutual fund may be impaired. If any such indication exists, the carrying value of such investment is
reduced to its recoverable amount and the impairment loss is recognised in the revenue(s)/profit and loss account. If at
the balance sheet date there is any indication that a previously assessed impairment loss no longer exists, then such loss
is reversed and the investment is restated to that extent.
The total proportion of investments for which subsidiaries have applied accounting policies different from the Bank as
mentioned above, approximate 14.50% of the total investments at March 31, 2011.
14. Provisions/write-offs on loans and other credit facilities
a) All credit exposures, including overdues arising from crystallised derivative contracts, are classified as per RBI guidelines,
into performing and NPAs. Further, NPAs are classified into sub-standard, doubtful and loss assets based on the criteria
stipulated by RBI.
In the case of corporate loans, provisions are made for sub-standard and doubtful assets at the rates prescribed by RBI.
Loss assets and the unsecured portion of doubtful assets are provided for/written off as per the extant RBI guidelines.
Provisions on homogeneous retail loans, subject to minimum provisioning requirements of RBI, are assessed at a portfolio
level on the basis of days past due.
The Bank holds specific provisions against non-performing loans and general provision against performing loans and
floating provisions taken over from erstwhile Bank of Rajasthan upon amalgamation. The assessment of incremental
specific provisions is made after taking into consideration the existing specific provision held. The specific provisions on
retail loans held by the Bank are higher than the minimum regulatory requirements.
b) Provision on assets restructured/rescheduled is made in accordance with the applicable RBI guidelines on restructuring of
advances by Banks.
In respect of non-performing loan accounts subjected to restructuring, the account is upgraded to standard only after the
specified period i.e. a period of one year after the date when first payment of interest or of principal, whichever is earlier,
falls due, subject to satisfactory performance of the account during the period.
c) Amounts recovered against debts written off in earlier years and provisions no longer considered necessary in the context
d)
e)
f)
of the current status of the borrower are recognised in the profit and loss account.
In addition to the specific provision on NPAs, the Bank/the Bank’s housing finance subsidiary maintains a general provision
on performing loans. The general provision covers the requirements of the RBI/NHB guidelines.
In addition to the provisions required to be held according to the asset classification status, provisions are held for
individual country exposures (other than for home country exposure). The countries are categorised into seven risk
categories namely insignificant, low, moderate, high, very high, restricted and off-credit and provisioning is made on
exposures exceeding 180 days on a graded scale ranging from 0.25% to 100.00%. For exposures with contractual maturity
of less than 180 days, provision is required to be held at 25.00% of the rates applicable to exposures exceeding 180 days.
If the country exposure (net) of the Bank in respect of each country does not exceed 1.00% of the total funded assets, no
provision is required on such country exposure.
In the case of the Bank’s housing finance subsidiary, loans and other credit facilities are classified as per the NHB guidelines
into performing and non-performing assets. Further, NPAs are classified into sub-standard, doubtful and loss assets based
on criteria stipulated by NHB. Additional provisions are made against specific non-performing assets over and above what
is stated above, if in the opinion of the management, increased provisions are necessary.
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forming part of the Consolidated Accounts (Contd.)
forming part of the Consolidated Accounts (Contd.)
g)
h)
In the case of the Bank’s primary dealership subsidiary, the policy of provisioning against NPAs is as per the prudential
norms prescribed by RBI for non-banking financial companies. As per the policy adopted, the provisions against sub-
standard assets are determined, taking into account management’s perception of the higher risk associated with the
business of the borrowers. Certain NPAs are considered as loss assets and full provision is made against such assets.
In the case of the Bank’s overseas banking subsidiaries, loans are stated net of allowance for credit losses. Loans are
classified as impaired when there is no longer reasonable assurance of the timely collection of the full amount of principal
or interest. An allowance for credit losses is maintained at a level that management considers adequate to absorb identified
credit related losses as well as losses that have been incurred but are not yet identifiable.
The total proportion of loans for which subsidiaries have applied accounting policies different from the Bank as mentioned
above, approximate 13.00% of the total loans at March 31, 2011.
15. Transfer and servicing of assets
The Bank transfers commercial and consumer loans through securitisation transactions. The transferred loans are de-recognised
and gains/losses are accounted for only if the Bank surrenders the rights to benefits specified in the underlying securitised loan
contract. Recourse and servicing obligations are accounted for net of provisions.
In accordance with the RBI guidelines for securitisation of standard assets, with effect from February 1, 2006, the Bank accounts
for any loss arising from securitisation immediately at the time of sale and the profit/premium arising from securitisation is
amortised over the life of the securities issued or to be issued by the special purpose vehicle to which the assets are sold. In the
case of loans sold to an asset reconstruction company, the excess provision is not reversed but is utilised to meet the shortfall/
loss on account of sale of other financial assets to securitisation company (SC)/reconstruction company (RC).
16. Fixed assets and depreciation
Premises and other fixed assets are carried at cost less accumulated depreciation. Cost includes freight, duties, taxes and
incidental expenses related to the acquisition and installation of the asset. Depreciation is charged over the estimated useful
life of a fixed asset on a straight-line basis, the rates of depreciation for fixed assets are not lower than the rates prescribed in
Schedule XIV of the Companies Act, 1956.
Depreciation on leased assets and leasehold improvements is recognised on a straight-line basis using rates determined with
reference to the primary period of lease or rates specified in Schedule XIV of the Companies Act, 1956, whichever is higher.
Assets purchased/sold during the period are depreciated on a pro-rata basis for the actual number of days the asset has been
put to use.
In case of the Bank, items costing up to ` 5,000 are depreciated fully over a period of 12 months from the date of purchase.
In case of revalued/impaired assets, depreciation is provided over the remaining useful life of the assets with reference to
revised values of the assets.
17. Accounting for derivative contracts
The Group enters into derivative contracts such as foreign currency options, interest rate and currency swaps, credit default
swaps and cross currency interest rate swaps.
The swap contracts entered into to hedge on-balance sheet assets and liabilities are structured such that they bear an opposite
and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments is correlated with
the movement of underlying assets and accounted pursuant to the principles of hedge accounting. Hedge swaps are accounted
for on an accrual basis except in the case of the Bank’s United Kingdom and Canadian banking subsidiaries, where the hedging
transactions and the hedged items (for the risks being hedged) are measured at fair value with changes recognised in the profit
and loss account.
Foreign currency and rupee derivative contracts entered into for trading purposes are marked to market and the resulting gain/
loss, (net of provisions, if any) is accounted for in the profit and loss account. Pursuant to RBI guidelines, any receivables under
derivative contracts which remain overdue for more than 90 days and mark-to-market gains on other derivative contracts with
the same counter-parties are reversed through the profit and loss account.
18.
Impairment of assets
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying
amount of an asset with future net discounted cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment is recognised by debiting the profit and loss account and is measured as the amount by which
the carrying amount of the assets exceeds the fair value of the assets.
19. Lease transactions
Lease payments for assets taken on operating lease are recognised as an expense in the profit and loss account over the lease term.
20. Earnings per share (EPS)
Basic and diluted earnings per share are computed in accordance with AS 20 on ‘earnings per share’ issued by ICAI.
Basic EPS is calculated by dividing the net profit or loss after tax for the year attributable to equity shareholders by the weighted
average number of equity shares outstanding during the year.
Diluted earnings per share reflect the potential dilution that could occur if contracts to issue equity shares were exercised or
converted during the year. Diluted earnings per equity share is computed using the weighted average number of equity shares
and dilutive potential equity shares issued by the group outstanding during the year, except where the results are anti-dilutive.
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forming part of the Consolidated Accounts (Contd.)
SCHEDULE 18
NOTES FORMING PART OF THE ACCOUNTS
The following additional disclosures have been made taking into account the requirements of Accounting Standards
(ASs) and Reserve Bank of India (RBI) guidelines in this regard.
1.
Amalgamation of The Bank of Rajasthan Limited
The Bank of Rajasthan Limited (Bank of Rajasthan), a banking company incorporated under the Companies Act, 1956
and licensed by RBI under the Banking Regulation Act, 1949 was amalgamated with the Bank with effect from close of
business of August 12, 2010 in terms of the Scheme of Amalgamation (the Scheme) approved by the RBI vide its order
DBOD No. PSBD 2603/16.01.128/2010-11 dated August 12, 2010 under sub section (4) of section 44A of the Banking
Regulation Act, 1949. The consideration for the amalgamation was 25 equity shares of ICICI Bank of the face value of
` 10 each fully paid-up for every 118 equity shares of ` 10 each of Bank of Rajasthan. Accordingly, ICICI Bank allotted
31,323,951 equity shares to the shareholders of Bank of Rajasthan on August 26, 2010 and 2,860,170 equity shares which
were earlier kept in abeyance pending civil appeal, on November 25, 2010.
ICICI Bank is also a banking company incorporated under the Companies Act, 1956 and licensed by RBI under the
Banking Regulation Act, 1949.
As per the Scheme, the undertaking of Bank of Rajasthan including all its assets and liabilities stood transferred/
deemed to be transferred to and vested in ICICI Bank as a going concern.
The amalgamation has been accounted for as per the Scheme. Accordingly, the assets and liabilities of Bank of Rajasthan
have been accounted at the values at which they were appearing in the books of Bank of Rajasthan at August 12, 2010 and
provisions were made for the difference between the book values appearing in the books of Bank of Rajasthan and the fair
value as determined by ICICI Bank. In the books of ICICI Bank, an amalgamation expenses provision account was credited
by an amount determined for the expenses and costs of the Scheme arising as a direct consequence on account of any
changes in the business or operations of Bank of Rajasthan proposed or considered necessary by the Board of Directors
of ICICI Bank (including but not limited to rationalisation, upgradation and enhancement of human resources and expenses
relating to modifying signage, modifying stationery, branding, changing systems and network, communication including
media costs, impairment of technology and fixed assets, conducting general meetings, payment of listing fees and other
statutory and regulatory charges, travel in relation to the consolidation contemplated in the Scheme, valuation, due diligence,
investment banking expenses and charges relating to preparation of the Scheme, consultations in relation to the consolidation
contemplated in the Scheme and training), and other extraordinary expenses on integration and consolidation under the
Scheme, to be incurred by ICICI Bank and the balance in such account has been debited to the securities premium account.
Accordingly, the excess of the paid up value of shares issued over the fair value of the net asset acquired (including Statutory
Reserves) of ` 1,440.1 million and amalgamation expenses of ` 657.8 million have been debited to the securities premium
account. The computation of this amount is detailed in the table below separately.
Particulars
34,184,121 equity shares of face value of ` 10 each issued to the
shareholders of Bank of Rajasthan .....................................................................
Less:
Net assets of Bank of Rajasthan at August 12, 20101 .........................................
Fair value adjustments ........................................................................................
Reserves taken over on amalgamation ..............................................................
Total fair value of the net assets acquired (including Statutory Reserves) of
Bank of Rajasthan at August 12, 2010 ................................................................
Excess of paid-up value of equity shares issued over the fair value of the net
assets acquired ....................................................................................................
Amalgamation expenses2 ....................................................................................
Amount
` in million
Amount
341.8
3,608.0
(2,703.6)
(2,002.7)
(1,098.3)
1,440.1
657.8
Includes ` 50.8 million received subsequent to August 12, 2010 against shares kept in abeyance pending civil appeal.
1.
2. Net of provision for amalgamation expenses amounting to ` 32.2 million no longer required.
As per the accounting done for amalgamation in terms of the Scheme, the identity of reserves of Bank of Rajasthan is not required
to be preserved in the books of ICICI Bank. However, the balance in Statutory Reserve Account of Bank of Rajasthan at August 12,
2010 has been added to the Statutory Reserves of ICICI Bank. As a result, the balance in Statutory Reserves is higher to the extent of
` 2,002.7 million. The excess of the paid up value of shares issued over the fair value of the net asset acquired (including Statutory
Reserves) and amalgamation expenses has been debited to the securities premium account of ICICI Bank. As a result, the balance
in the securities premium account is lower to the extent of ` 2,097.9 million.
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forming part of the Consolidated Accounts (Contd.)
2.
Earnings per share (EPS)
Basic and diluted earnings per equity share are computed in accordance with AS 20 on ‘earnings per share’. Basic
earnings per share is computed by dividing net profit after tax by the weighted average number of equity shares
outstanding during the year. The diluted earnings per equity share is computed using the weighted average number of
equity shares and dilutive potential equity shares outstanding during the year.
The following table sets forth, for the periods indicated, the computation of earnings per share.
Basic
Weighted average no. of equity shares outstanding .........................................
Net profit ..............................................................................................................
Basic earnings per share (`) ................................................................................
Diluted .................................................................................................................
Weighted average no. of equity shares outstanding .........................................
Net profit ..............................................................................................................
Diluted earnings per share (`) .............................................................................
Nominal value per share (`) ................................................................................
The dilutive impact is mainly due to options granted to employees by the Group.
` in million, except per share data
Year ended
March 31, 2010
Year ended
March 31, 2011
1,137,988,639
60,932.7
53.54
1,113,737,557
46,702.9
41.93
1,143,267,823
1,118,224,665
60,876.5
53.25
10.00
46,649.4
41.72
10.00
3.
Related party transactions
The Group has transactions with its related parties comprising associates/other related entities and key management personnel
and their relatives.
Associates/other related entities
Financial Inclusion Network & Operations Limited (earlier known as Financial Information Network & Operations Limited),
I-Process Services (India) Private Limited, I-Solutions Providers (India) Private Limited, NIIT Institute of Finance Banking and
Insurance Training Limited, Comm Trade Services Limited, Prize Petroleum Company Limited, ICICI Foundation for Inclusive
Growth, Rainbow Fund, Firstsource Solutions Limited (up to December 31, 2009), ICICI Merchant Services Private Limited and
Mewar Aanchalik Gramin Bank1.
1. With respect to a entity, which has been identified as a related party during the year ended March 31, 2011, previous year’s comparative
figures have not been reported.
Key management personnel
Mr. K. V. Kamath1, Ms. Chanda Kochhar, Mr. Sandeep Bakhshi2, Mr. N. S. Kannan3, Mr. K. Ramkumar, Mr. Rajiv Sabharwal4,
Mr. Sonjoy Chatterjee5, Mr. V. Vaidyanathan1.
Relatives of key management personnel
Ms. Rajalakshmi Kamath1, Mr. Ajay Kamath1, Ms. Ajnya Pai1, Mr. Mohan Kamath1, Mr. Deepak Kochhar, Mr. Arjun Kochhar,
Ms. Aarti Kochhar, Mr. Mahesh Advani, Ms. Varuna Karna, Ms. Sunita R. Advani, Ms. Mona Bakhshi2, Mr. Sameer
Bakhshi2, Ms. Rangarajan Kumudalakshmi3, Ms. Aditi Kannan3, Mr. Narayanan Raghunathan3, Mr. Narayanan Rangarajan3,
Mr. Narayanan Krishnamachari3, Ms. Narayanan Sudha3, Mr. R. Shyam, Ms. R. Suchithra, Mr. K. Jayakumar, Ms. J. Krishnaswamy,
Ms. Sangeeta Sabharwal4, Mr. Somnath Chatterjee5, Mr. Tarak Nath Chatterjee5, Ms. Sunaina Chatterjee5, Ms. Nandini Chatterjee5,
Ms. Jeyashree V.1, Mr. V. Satyamurthy1, Mr. V. Krishnamurthy1, Mr. K. Vembu1.
1. Transactions reported upto April 30, 2009.
2. Transactions reported with effect from May 1, 2009 upto July 31, 2010.
3. Transactions reported with effect from May 1, 2009.
4. Transactions reported with effect from June 24, 2010.
5. Transactions reported upto April 30, 2010.
The following were the significant transactions between the Group and its related parties for the year ended March 31,
2011. A specific related party transaction is disclosed as a material related party transaction wherever it exceeds 10% of
all related party transactions in that category.
F74
schedules
forming part of the Consolidated Accounts (Contd.)
Insurance services
During the year ended March 31, 2011, the Group received insurance premium from associates/other related entities amounting
to ` 9.5 million (March 31, 2010: ` 52.5 million), from key management personnel amounting to ` 0.2 million (March 31, 2010:
` 0.1 million) and from relatives of key management personnel amounting to ` 0.1 million (March 31, 2010: ` 0.3 million).
The material transactions for the year ended March 31, 2011 were with Financial Inclusion Network & Operations Limited
amounting to ` 7.7 million (March 31, 2010: ` 3.7 million) and with Firstsource Solutions Limited amounting to Nil (March 31,
2010: ` 46.7 million).
During the year ended March 31, 2011, the Group paid insurance claims to its associates/other related entities amounting to
` 0.7 million (March 31, 2010: ` 10.5 million), to the key management personnel of the Bank amounting to Nil (March 31, 2010:
` 0.3 million) and to relatives of key management personnel amounting to Nil (March 31, 2010: ` 0.1 million). The material
transactions for the year ended March 31, 2011 were with Financial Inclusion Network & Operations Limited amounting to
` 0.6 million (March 31, 2010: ` 1.3 million), with I-Process Services (India) Private Limited amounting to ` 0.1 million (March 31,
2010: ` 1.0 million) and with Firstsource Solutions Limited amounting to Nil (March 31, 2010: ` 8.2 million).
Fees and commission income
During the year ended March 31, 2011, the Group received fees from its associates/other related entities amounting to ` 0.9
million (March 31, 2010: ` 3.0 million), from key management personnel amounting to Nil (March 31, 2010: ` 0.2 million) and
from relatives of key management personnel amounting to Nil (March 31, 2010: ` 0.1 million). The material transactions for
the year ended March 31, 2011 were with NIIT Institute of Finance Banking and Insurance Training Limited amounting to ` 0.8
million (March 31, 2010: ` 0.4 million), with Firstsource Solutions Limited amounting to Nil (March 31, 2010: ` 2.2 million) and
with Rainbow Fund amounting to ` 0.1 million (March 31, 2010: ` 0.4 million).
During the year ended March 31, 2011, the Group received commission on bank guarantee from its associates/other related
entities amounting to Nil (March 31, 2010: ` 15.4 million). The material transaction for the year ended March 31, 2011 was with
Firstsource Solutions Limited amounting to Nil (March 31, 2010: ` 15.3 million).
Lease of premises and facilities
During the year ended March 31, 2011, the Group recovered from its associates/other related entities amounting to ` 86.6
million (March 31, 2010: ` 52.8 million) for lease of premises, facilities and other administrative costs. The material transactions
for the year ended March 31, 2011 were with ICICI Merchant Services Private Limited amounting to ` 86.6 million (March 31,
2010: ` 32.0 million) and with Firstsource Solutions Limited amounting to Nil (March 31, 2010: ` 19.7 million).
Secondment of employees
During the year ended March 31, 2011, the Group received compensation from its associates/other related entities amounting
to ` 32.7 million (March 31, 2010: ` 27.0 million) for secondment of employees. The material transactions for the year ended
March 31, 2011 were with ICICI Merchant Services Private Limited amounting to ` 24.4 million (March 31, 2010: ` 22.5 million)
and with I-Process Services (India) Private Limited amounting to ` 3.8 million (March 31, 2010: ` 3.0 million).
Brokerage and fee expenses
During the year ended March 31, 2011, the Group paid fees to its associates/other related entities amounting to ` 1,987.2 million
(March 31, 2010: ` 1,414.4 million). The material transactions for the year ended March 31, 2011 were with Financial Inclusion
Network & Operations Limited amounting to ` 922.1 million (March 31, 2010: ` 345.5 million), ICICI Merchant Services Private
Limited amounting to ` 664.4 million (March 31, 2010: ` 169.6 million), I-Process Services (India) Private Limited amounting
to ` 392.9 million (March 31, 2010: ` 686.1 million), and with Firstsource Solutions Limited amounting to Nil (March 31, 2010:
` 215.1 million).
Purchase of investments
During the year ended March 31, 2011, the Group invested in equity capital and in bonds of its associates/other related entities
amounting to Nil (March 31, 2010: ` 765.3 million). The material transaction for the year ended March 31, 2011 was investment
in ICICI Merchant Services Private Limited amounting to Nil (March 31, 2010: ` 755.8 million).
Interest expenses
During the year ended March 31, 2011, the Group paid interest to its associates/other related entities amounting to ` 79.5
million (March 31, 2010: ` 0.3 million), to its key management personnel amounting to ` 1.5 million (March 31, 2010:
` 2.5 million) and to relatives of key management personnel amounting to ` 0.7 million (March 31, 2010: ` 1.2 million).
The material transactions for the year ended March 31, 2011 were with Mewar Aanchalik Gramin Bank amounting to
` 69.7 million (March 31, 2010: Nil), with Mr. K. Ramkumar amounting to ` 0.9 million (March 31, 2010: ` 1.7 million), with
Firstsource Solutions Limited amounting to Nil (March 31, 2010: ` 0.1 million) and with Comm Trade Services Limited
amounting to ` 0.5 million (March 31, 2010: ` 0.2 million).
F75
schedules
forming part of the Consolidated Accounts (Contd.)
Interest income
During the year ended March 31, 2011, the Group received interest from its associates/other related entities amounting
to ` 7.0 million (March 31, 2010: ` 93.3 million), from its key management personnel amounting to ` 0.4 million
(March 31, 2010: ` 0.5 million) and from relatives of key management personnel amounting to ` 0.7 million (March 31,
2010: ` 1.0 million). The material transactions for the year ended March 31, 2011 were with Financial Inclusion Network
& Operations Limited amounting to ` 7.0 million (March 31, 2010: ` 2.9 million) and with Firstsource Solutions Limited
amounting to Nil (March 31, 2010: ` 90.4 million).
Other income
During the year ended March 31, 2011, the net loss on derivative transactions entered with Firstsource Solutions Limited
was Nil (March 31, 2010: loss of ` 220.9 million).
Dividend paid
During the year ended March 31, 2011, the Bank paid dividend to its key management personnel amounting to
` 4.2 million (March 31, 2010: ` 4.5 million). The dividend paid during the year ended March 31, 2011 to Ms. Chanda
Kochhar was ` 3.2 million (March 31, 2010: ` 3.0 million), to Mr. Sandeep Bakhshi was ` 0.04 million (March 31, 2010:
` 0.03 million), to Mr. N. S. Kannan was ` 1.0 million (March 31, 2010: ` 0.9 million), to Mr. K. Ramkumar was Nil
(March 31, 2010: ` 0.2 million) and to Mr. Sonjoy Chatterjee was Nil (March 31, 2010: ` 0.3 million).
Remuneration to whole-time directors
Remuneration paid to the whole-time directors of the Bank during the year ended March 31, 2011 was ` 79.6 million
(March 31, 2010: ` 119.4 million). The remuneration paid for the year ended March 31, 2010 to Mr. K. V. Kamath was
` 4.1 million. The remuneration paid for the year ended March 31, 2011 to Ms. Chanda Kochhar was ` 25.2 million
(March 31, 2010: ` 17.3 million), to Mr. Sandeep Bakhshi was ` 7.7 million (March 31, 2010: ` 12.6 million), to
Mr. N. S. Kannan was ` 15.8 million (March 31, 2010: ` 10.2 million), to Mr. K. Ramkumar was ` 17.6 million
[March 31, 2010: ` 53.7 million (includes perquisite value of ` 40.6 million on employee stock options (ESOPs) exercised)], to
Mr. Rajiv Sabharwal was ` 9.0 million and to Mr. Sonjoy Chatterjee was ` 4.3 million [March 31, 2010: ` 19.6 million
(includes perquisite value of ` 7.9 million on ESOPs exercised)]. The remuneration paid for the year ended March 31,
2010 to Mr. V. Vaidyanathan was ` 1.9 million.
Sale of fixed assets
During the year ended March 31, 2011, the Group sold fixed assets to its associates/other related entities amounting to
` 2.8 million (March 31, 2010: Nil). The material transaction for the year ended March 31, 2011 was with ICICI Merchant
Services Private Limited amounting to ` 2.8 million (March 31, 2010: Nil).
Donation
During the year ended March 31, 2011, the Group has given donation to ICICI Foundation for Inclusive Growth amounting
to ` 97.0 million (March 31, 2010: ` 236.2 million).
Related party balances
The following table sets forth, for the periods indicated, the balance payable to/receivable from its associates/other
related entities.
Items
` in million
At
March 31, 2011
At
March 31, 2010
Deposits with the Group ......................................................................................
1,561.7
Advances ..............................................................................................................
Investments of the Group in related parties .......................................................
Investments of related parties in ICICI Bank .......................................................
Receivables ...........................................................................................................
Payables ................................................................................................................
Guarantees issued by the Group .........................................................................
44.3
965.2
15.0
187.9
139.0
0.1
300.7
42.5
955.7
–
282.2
214.8
0.1
F76
schedules
forming part of the Consolidated Accounts (Contd.)
The following table sets forth, for the periods indicated, the balance payable to/receivable from key management personnel.
Items
Deposits ................................................................................................................
Advances ..............................................................................................................
Investments ..........................................................................................................
Employee Stock Options Outstanding1 (Nos.) ....................................................
Employee Stock Options Exercised1 ...................................................................
` in million, except number of shares
At
March 31, 2010
At
March 31, 2011
35.8
10.6
3.5
2,263,000
–
38.5
6.7
3.6
1,254,250
46.3
1. During the year ended March 31, 2011, no employee stock options were exercised by the key management personnel of the Bank
(March 31, 2010: 121,875).
The following table sets forth, for the periods indicated, the balance payable to/receivable from relatives of key
management personnel.
` in million
Items
Deposits ...............................................................................................................
Advances .............................................................................................................
At
March 31, 2011
13.3
7.7
At
March 31, 2010
16.9
8.1
The following table sets forth, for the periods indicated, the maximum balance payable to/receivable from key
management personnel.
` in million
Items
Deposits ...............................................................................................................
Advances ............................................................................................................
Investments .........................................................................................................
Year ended
March 31, 2011
45.4
11.1
3.5
Year ended
March 31, 2010
66.1
26.1
9.1
The following table sets forth, for the periods indicated, the maximum balance payable to/receivable from relatives of
key management personnel.
` in million
Items
Deposits ...............................................................................................................
Advances .............................................................................................................
Investments .........................................................................................................
4.
Employee stock option scheme (ESOS)
ICICI Bank:
Year ended
March 31, 2011
22.3
9.1
–
Year ended
March 31, 2010
23.2
12.2
0.3
In terms of the ESOS, as amended, the maximum number of options granted to any eligible employee in a financial year
shall not exceed 0.05% of the issued equity shares of the Bank at the time of grant of the options and aggregate of all
such options granted to the eligible employees shall not exceed 5.00% of the aggregate number of the issued equity
shares of the Bank on the date(s) of the grant of options. Under the stock option scheme, eligible employees are entitled
to apply for equity shares. Options granted for fiscal 2003 and earlier years vest in a graded manner over a three-year
period, with 20.00%, 30.00% and 50.00% of the grants vesting in each year commencing from the end of 12 months
from the date of grant. Options granted for fiscal 2004 to 2008 vest in a graded manner over a four-year period, with
20.00%, 20.00%, 30.00% and 30.00% of the grants vesting in each year commencing from the end of 12 months from
the date of grant. Options granted in April 2009 vest in a graded manner over a five year period with 20.00%, 20.00%,
30.00% and 30.00% of grant vesting each year, commencing from the end of 24 months from the date of grant. Options
granted in March 2010 onwards would vest in a graded manner over a four year period with 20.00%, 20.00%, 30.00%
and 30.00% of grant vesting each year, commencing from the end of 12 months from the date of grant. The options can
be exercised within 10 years from the date of grant or five years from the date of vesting, whichever is later. As per the
scheme, the exercise price of the Bank’s options is the last closing price on the stock exchange, which recorded highest
trading volume preceding the date of grant of options. Hence, there was no compensation cost based on intrinsic value
of options.
F77
schedules
forming part of the Consolidated Accounts (Contd.)
In February 2011, the Bank granted 3,035,000 options to eligible employees and whole-time Directors of the Bank and
certain of its subsidiaries at an exercise price of ` 967.00. Of these options granted 50.00% would vest on April 30, 2014
and the balance 50.00% would vest on April 30, 2015. Based on intrinsic value of options, compensation cost of ` 2.9
million was recognised during the year ended March 31, 2011.
If ICICI Bank had used the fair value of options based on binomial tree model, compensation cost in year ended
March 31, 2011 would have been higher by ` 905.8 million and proforma profit after tax would have been ` 50.60 billion. On
a proforma basis, ICICI Bank’s basic and diluted earnings per share would have been ` 44.47 and ` 44.27 respectively. The
key assumptions used to estimate the fair value of options granted during the year ended March 31, 2011 are given below.
Risk-free interest rate ....................................................................................................................
Expected life ..................................................................................................................................
Expected volatility .........................................................................................................................
Expected dividend yield ................................................................................................................
5.26% to 8.42%
6.35 to 6.87 years
48.38% to 49.82%
1.10% to 1.33%
The weighted average fair value of options granted during the year ended March 31, 2011 is ` 535.87 (March 31, 2010: ` 199.91).
A summary of the status of the Bank’s stock option plan is given below.
`, except number of options
Stock options outstanding
Particulars
Outstanding at the beginning of the year ...............
Add: Granted during the year ..................................
Less: Lapsed during the year, net of re-issuance ....
Less: Exercised during the year ...............................
Outstanding at the end of the year ..........................
Options exercisable ..................................................
Year ended March 31, 2011
Year ended March 31, 2010
Number of
options
18,763,460
5,514,600
1,005,536
2,743,137
20,529,387
10,197,137
Weighted
average
exercise price
689.50
972.00
871.95
517.21
779.72
682.72
Number of
options
18,992,504
1,731,000
365,372
1,594,672
18,763,460
10,104,780
Weighted
average
exercise price
685.05
434.78
661.78
366.38
689.50
609.18
In terms of the Scheme, 20,529,387 options (March 31, 2010: 18,763,460 options) granted to eligible employees were
outstanding at March 31, 2011.
A summary of stock options outstanding at March 31, 2011 is given below.
Range of exercise price
(` per share)
105-299
300-599
600-999
1,000-1,399
Number of shares
arising out of
options
Weighted average
exercise price
(` per share)
Weighted average
remaining contractual
life (Number of years)
95,086
6,906,951
13,426,350
101,000
137.13
466.85
942.54
1,084.59
1.07
5.30
7.78
7.94
A summary of stock options outstanding at March 31, 2010 is given below.
Range of exercise price
(` per share)
105-299
300-599
600-999
1,000-1,399
Number of shares
arising out of
options
Weighted average
exercise price
(` per share)
Weighted average
remaining contractual
life (Number of years)
117,601
9,339,639
9,238,220
68,000
146.21
462.04
923.24
1,114.57
2.03
6.08
7.61
7.65
The options were exercised regularly throughout the period and the weighted average share price as per (NSE) price
volume data during the year ended March 31, 2011 was ` 1,014.96 (March 31, 2010: ` 853.80).
F78
schedules
forming part of the Consolidated Accounts (Contd.)
ICICI Life:
ICICI Prudential Life Insurance Company has formulated various ESOS schemes, namely Founder I, Founder II, 2004-05,
2005-06, 2006-07 and 2007-08.
For ICICI Prudential Life Insurance Company there is no compensation cost for the year ended March 31, 2011 based on the
intrinsic value of options. If the entity had used the fair value of options based on the binomial tree model, compensation
cost for the year ended March 31, 2011 would have been higher by ` 90.4 million (March 31, 2010: ` 175.1 million).
The following table sets forth, the key assumptions used to estimate the fair value of options granted during the year ended
March 31, 2011.
Risk-free interest rate ..............................................................................................................
6.87%-8.00% p.a.
Expected life ............................................................................................................................
Expected volatility ...................................................................................................................
Expected dividend yield ..........................................................................................................
3-5 years
28.65% p.a.
1.50% p.a.
The following table sets forth, for the periods indicated, a summary of the status of the stock option plan of ICICI
Prudential Life Insurance Company.
`, except number of options
Particulars
Outstanding at the beginning of the year ........
Add: Granted during the year ...........................
Less: Forfeited/lapsed during the year .............
Less: Exercised during the year .......................
Outstanding at the end of the year ...................
Options exercisable ...........................................
Stock options outstanding
Year ended March 31, 2011
Year ended March 31, 2010
Number of
shares
14,827,086
–
943,666
318,266
13,565,154
8,768,885
Weighted
average
exercise
price
210.73
–
257.84
65.18
210.87
161.34
Number of
shares
16,609,012
–
896,336
885,590
14,827,086
5,614,986
Weighted
average
exercise
price
199.72
–
147.79
67.95
210.73
136.69
The following table sets forth, summary of stock options outstanding of ICICI Prudential Life Insurance Company at
March 31, 2011.
Range of exercise price (` per share)
Number of shares
arising out of
options (Number
of shares)
Weighted average
exercise price
(` per share)
Weighted average
remaining contractual
life (Number of years)
30-400
13,565,154
210.87
6.11
ICICI General:
ICICI Lombard General Insurance Company has formulated various ESOS schemes to their employees. There is no
compensation cost for the year ended March 31, 2011 based on the intrinsic value of options. If the entity had used the
fair value of options based on the binomial tree model, compensation cost for the year ended March 31, 2011 would
have been higher by ` 67.5 million (March 31, 2010: ` 37.6 million).
The following table sets forth, the key assumptions used to estimate the fair value of options granted during the year
ended March 31, 2011.
Risk-free interest rate ..............................................................................................................
5.79%-8.17% p.a.
Expected life ............................................................................................................................
3-7 years
Expected volatility ...................................................................................................................
17.00%-84.89% p.a.
Expected dividend yield ..........................................................................................................
0.80%-2.85% p.a.
F79
schedules
forming part of the Consolidated Accounts (Contd.)
The following table sets forth, for the periods indicated, a summary of the status of the stock option plan of ICICI
Lombard General Insurance Company.
`, except number of options
Particulars
Outstanding at the beginning of the year ........
Add: Granted during the year ...........................
Less: Forfeited/ lapsed during the year ............
Less: Exercised during the year .......................
Outstanding at the end of the year ...................
Options exercisable ...........................................
Stock options outstanding
Year ended March 31, 2011
Year ended March 31, 2010
Number of
options
13,346,000
2,312,000
1,132,000
881,000
13,645,000
7,577,000
Weighted
average
exercise
price
94.55
114.00
126.62
43.17
98.72
75.09
Number of
shares
Weighted
average
exercise price
14,399,000
1,249,000
1,705,000
597,000
13,346,000
6,737,000
94.19
91.00
107.33
41.86
94.56
63.26
The following table sets forth, summary of stock options outstanding of ICICI Lombard General Insurance Company at
March 31, 2011.
Range of exercise price (` per share)
Number of shares
arising out of
options (Number
of shares)
Weighted average
exercise price
(` per share)
Weighted average
remaining contractual
life (Number of years)
35–200
13,645,000
98.72
7.12
If the Group had used the fair value of options based on the binomial tree model, the compensation cost for the year
ended March 31, 2011 would have been higher by ` 1,022.6 million (March 31, 2010: ` 1,058.3 million) and the proforma
consolidated profit after tax would have been ` 59.91 billion (March 31, 2010: ` 45.64 billion). On a proforma basis, the
Group’s basic earnings per share would have been ` 52.65 (March 31, 2010: ` 40.98) and diluted earnings per share
would have been ` 52.35 (March 31, 2010: ` 40.77).
5.
Fixed assets
The following table sets forth, for the periods indicated, the movement in software acquired by the Group, as included
in fixed assets.
` in million
Particulars
At
March 31, 2011
At
March 31, 2010
At cost at March 31 of preceding year ...............................................................
Additions during the year1 ...................................................................................
Deductions during the year ................................................................................
Depreciation to date ............................................................................................
Net block ..............................................................................................................
8,014.6
1,185.5
(205.2)
(6,245.3)
2,749.6
6,906.7
1,369.5
(261.6)
(5,250.7)
2,763.9
1.
Includes impact of acquisition of erstwhile Bank of Rajasthan.
6.
Assets on lease
6.1 Assets taken under operating lease
The following table sets forth, for the periods indicated, the details of future rentals payable on operating leases.
Particulars
At
March 31, 2011
` in million
At
March 31, 2010
Not later than one year .......................................................................................
Later than one year and not later than five years ..............................................
Later than five years ............................................................................................
Total .....................................................................................................................
1,437.1
3,733.4
1,265.2
6,435.7
1,651.9
4,211.4
1,500.6
7,363.9
F80
schedules
forming part of the Consolidated Accounts (Contd.)
6.2 Assets under finance lease
The following table sets forth, for the periods indicated, the details of finance leases.
Particulars
Future minimum lease receipts .........................................................................
Present value of lease receipts ..........................................................................
Unmatured finance charges ...............................................................................
Total ..................................................................................................................
Maturity profile of future minimum lease receipts
- Not later than one year ..................................................................................
- Later than one year and not later than five years .........................................
- Later than five years .......................................................................................
Total ..................................................................................................................
` in million
At
March 31, 2011
At
March 31, 2010
1,437.1
6.8
0.6
7.4
2.7
4.7
–
7.4
1,651.9
17.4
0.2
17.6
17.6
–
–
17.6
6.3 Maturity profile of present value of lease rentals
The following table sets forth, for the periods indicated, the details of maturity profile of present value of finance lease receipts.
` in million
Particulars
At
At
March 31, 2011
March 31, 2010
Not later than one year ...............................................................................................
Later than one year and not later than five years ......................................................
Later than five years ....................................................................................................
Total .............................................................................................................................
2.4
4.4
–
6.8
17.4
–
–
17.4
7.
Preference shares
Certain government securities amounting to ` 2,563.8 million at March 31, 2011 (March 31, 2010: ` 2,405.2 million) have
been earmarked against redemption of preference share issued by the Bank, which fall due for redemption on April 20,
2018, as per the original issue terms.
8.
Provisions and contingencies
The following table sets forth, for the periods indicated, the break-up of provisions and contingencies included in profit
and loss account.
Particulars
` in million
Year ended
March 31, 2011
Year ended
March 31, 2010
Provision for depreciation of investments .................................................................
Provision towards non-performing and other assets ................................................
Provision towards income tax1 ...................................................................................
Provision towards wealth tax ......................................................................................
Other provision and contingencies ............................................................................
Total provisions and contingencies ...........................................................................
3,162.7
20,555.3
20,684.9
30.2
1,881.8
46,314.9
328.2
44,745.4
17,321.8
30.5
513.4
62,939.3
1. Net of creation of net deferred tax asset amounting to ` 4,441.6 million for the year ended March 31, 2011 (March 31, 2010: ` 2,349.8 million).
F81
schedules
forming part of the Consolidated Accounts (Contd.)
9.
Staff retirement benefits
Pension
The following tables set forth, for the periods indicated, reconciliation of opening and closing balance of the present
value of the defined benefit obligation for pension benefits.
` in million
Particulars
oPening obligations ...............................................................................................
Service coSt ...........................................................................................................
intereSt coSt ..........................................................................................................
ActuAriAl (gAin)/loSS ..............................................................................................
liAbilitieS extinguiShed on Settlement ......................................................................
Addition due to AmAlgAmAtion ................................................................................
benefitS pAid ..........................................................................................................
obligations at the end of the Year .........................................................................
oPening Plan assets, at fair value ..........................................................................
expected return on plAn ASSetS ..............................................................................
ActuAriAl gAin/(loSS) ..............................................................................................
ASSetS diStributed on Settlement ............................................................................
contributionS ........................................................................................................
Addition due to AmAlgAmAtion ................................................................................
benefitS pAid ..........................................................................................................
closing Plan assets, at fair value ...........................................................................
fAir vAlue of plAn ASSetS At the end of the yeAr ......................................................
preSent vAlue of the defined benefit obligAtionS At the end of the yeAr ....................
Amount not recognised as an asset
(limit in para 59(b) of AS 15 on ‘employee benefits’) ...................................................
asset/(liabilitY) .....................................................................................................
cost for the Year
Service coSt ...........................................................................................................
intereSt coSt ..........................................................................................................
expected return on plAn ASSetS ..............................................................................
ActuAriAl (gAin)/loSS ..............................................................................................
curtAilmentS & SettlementS (gAin)/loSS .................................................................
effect of the limit in pArA 59(b) of AS 15 on ‘employee benefitS’ .............................
net cost ................................................................................................................
investMent details of Plan assets
mAjority of the plAn ASSetS Are inveSted in government SecuritieS And corporAte bondS.
assuMPtions
intereSt rAte ..........................................................................................................
SAlAry eScAlAtion rAte
on bASic pAy .........................................................................................................
on deArneSS relief ................................................................................................
eStimAted rAte of return on plAn ASSetS .................................................................
Pension
Year ended
March 31, 2011
1,748.7
170.8
457.8
607.0
(460.0)
6,749.0
(160.4)
8,842.9
1,839.9
156.5
69.1
(511.1)
6,094.6
978.8
(160.4)
8,467.4
8,467.4
8,842.9
Year ended
March 31, 2010
1,932.2
51.8
134.5
(32.1)
(287.7)
–
(50.0)
1,748.7
2,145.3
169.9
(130.7)
(322.6)
28.0
–
(50.0)
1,839.9
1,839.9
1,748.7
–
(375.5)
170.8
457.8
(156.5)
537.9
51.1
(7.7)
1,053.4
8.10%
1.50%
7.00%
8.00%
7.7
83.5
51.8
134.5
(169.9)
98.6
34.9
(43.5)
106.4
7.75%
7.00%
7.00%
8.00%
Experience adjustment
Particulars
Plan assets ....................................................................
Defined benefit obligations ..........................................
Amount not recognised as an asset
(limit in para 59(b) of AS 15 on ‘employee benefits’) ..
Surplus/(deficit) ............................................................
Experience adjustment on plan assets ........................
Experience adjustment on plan liabilities ....................
Year ended
March 31,
2011
Year ended
March 31,
2010
Year ended
March 31,
2009
Year ended
March 31,
2008
` in million
Year ended
March 31,
2007
8,467.4
1,839.9
2,145.3
1,490.1
988.5
8,842.9
1,748.7
1,932.2
1,678.1
1,029.4
–
7.7
(375.5)
69.1
689.7
83.5
(130.7)
196.9
51.2
161.9
144.8
6.6
–
–
(188.0)
(117.9)
(121.9)
(40.9)
(110.1)
32.8
F82
schedules
forming part of the Consolidated Accounts (Contd.)
Gratuity
The following tables set forth, for the periods indicated, reconciliation of opening and closing balance of the present
value of the defined benefit obligation for gratuity benefits of the Group.
Particulars
Defined benefit obligation liability
Opening obligations ...............................................................................................
Add: Adjustment for exchange fluctuation on opening obligation .......................
Adjusted opening obligations .................................................................................
Service cost .............................................................................................................
Interest cost .............................................................................................................
Actuarial (gain)/loss .................................................................................................
Past service cost ......................................................................................................
Addition due to amalgamation ................................................................................
Liability assumed on acquisition/(settled on divestiture) .......................................
Benefits paid ............................................................................................................
Obligations at the end of year ...............................................................................
Opening plan assets, at fair value .........................................................................
Expected return on plan assets ...............................................................................
Actuarial gain/(loss) .................................................................................................
Addition due to amalgamation ................................................................................
Contributions ..........................................................................................................
Asset acquired on acquisition/(distributed on divestiture) ....................................
Benefits paid ............................................................................................................
Closing plan assets, at fair value ...........................................................................
Fair value of plan assets at the end of the year ......................................................
Present value of the defined benefit obligations at the end of the year ................
Unrecognised past service cost ..............................................................................
Amount not recognised as an asset
(limit in para 59(b) of AS 15 on ‘employee benefits’) .............................................
Asset/(liability) ........................................................................................................
Cost for the year
Service cost .............................................................................................................
Interest cost .............................................................................................................
Expected return on plan assets ...............................................................................
Actuarial (gain)/loss .................................................................................................
Past service cost ......................................................................................................
Losses/(gains) on “Acquisition/Divestiture” .............................................................
Exchange fluctuation loss/(gain) ..............................................................................
Effect of the limit in para 59(b) of AS 15 on ‘employee benefits’ ...........................
Net cost ....................................................................................................................
Investment details of plan assets
Majority of the plan assets are invested in Government securities and corporate bonds.
Assumptions
Interest rate ................................................................................................................
Salary escalation rate ................................................................................................
Estimated rate of return on plan assets ....................................................................
` in million
Gratuity
Year ended
March 31, 2011
Year ended
March 31, 2010
3,089.6
0.2
3,089.8
460.1
391.9
(375.7)
10.2
2,773.1
3.7
(409.7)
5,943.4
3,073.1
278.9
(90.5)
803.0
2,190.5
10.5
(409.7)
5,855.8
5,855.8
5,943.4
25.5
4.9
(67.1)
460.1
391.9
(278.9)
(285.2)
25.2
(7.7)
0.2
(43.0)
262.7
2,813.8
(4.8)
2,809.0
440.8
212.5
(230.6)
98.6
–
11.0
(251.7)
3,089.6
2,521.7
209.7
194.8
–
378.0
20.7
(251.7)
3,073.2
3,073.2
3,089.6
40.5
47.9
(23.8)
440.8
212.5
(209.7)
(425.4)
73.3
(2.2)
(4.8)
40.0
124.5
7.59%-8.30%
6.10%-8.35%
7.00%-10.00% 6.00%-20.00%
7.50%-8.00%
7.50%-8.00%
F83
schedules
forming part of the Consolidated Accounts (Contd.)
Experience adjustment
Particulars
Year ended
March 31,
2011
Year ended
March 31,
2010
Year ended
March 31,
2009
Year ended
March 31,
2008
Year ended
March 31,
2007
` in million
Plan assets ..........................................................
Defined benefit obligations ................................
5,855.8
5,943.4
3,073.2
3,089.6
Amount not recognised as an asset (limit in para
59(b) of AS 15 on ‘employee benefits’) .............
Surplus/(deficit) ..................................................
Experience adjustment on plan assets ...............
Experience adjustment on plan liabilities ...........
–
(87.7)
(90.5)
(72.8)
47.9
(64.3)
194.8
(21.2)
2,521.7
2,813.8
7.9
(300.0)
(149.3)
(22.3)
1,712.6
2,287.2
1,011.3
1,352.2
–
–
(574.6)
(340.9)
(4.0)
(29.2)
(13.6)
69.5
The estimates of future salary increases, considered in actuarial valuation, take into consideration inflation, seniority, promotion
and other relevant factors.
The guidance on implementing AS 15 on ‘employee benefits’ (revised 2005) issued by the Accounting Standards Board (ASB)
provides that exempt provident funds which require employers to meet the interest shortfall are in effect defined benefit
plans. The Group’s actuary has informed that it is not practical to actuarially determine the interest shortfall obligation.
10. Provision for income tax
The provision for income tax (including deferred tax) for the year ended March 31, 2011 amounted to ` 20,684.9 million
(March 31, 2010: ` 17,321.8 million).
The Group has a comprehensive system of maintenance of information and documents required by transfer pricing legislation
under sections 92-92F of the Income Tax Act, 1961. The management is of the opinion that all international transactions are
at arm’s length so that the above legislation will not have material impact on the financial statements.
11. Deferred tax
At March 31, 2011 the Group has recorded net deferred tax asset of ` 29,936.7 million (March 31, 2010: ` 24,842.1 million),
which has been included in other assets.
The following table sets forth, for the periods indicated, the break-up of deferred tax assets and liabilities into major items.
` in million
Particulars
Deferred tax asset
Provision for bad and doubtful debts ..................................................................
Others ...................................................................................................................
Total deferred tax asset1 ......................................................................................
Deferred tax liability
Depreciation on fixed assets ................................................................................
Others ...................................................................................................................
Total deferred tax liability ...................................................................................
Add: Net deferred tax asset/(liability) pertaining to
foreign branches/foreign subsidiaries ................................................................
Total net deferred tax asset/(liability) .................................................................
At
At
March 31, 2011
March 31, 2010
29,506.7
4,972.1
34,478.8
4,496.2
63.6
4,559.8
17.7
29,936.7
24,052.8
5,503.0
29,555.8
4,712.6
86.5
4,799.1
85.4
24,842.1
1. Pursuant to the amalgamation of erstwhile Bank of Rajasthan with the Bank from the close of business at August 12, 2010, the Bank
has recognised deferred tax asset of ` 827.3 million on eligible amount of timing difference on the date of amalgamation.
F84
schedules
forming part of the Consolidated Accounts (Contd.)
At March 31, 2011, ICICI Prudential Life Insurance Company has created deferred tax asset on carry forward unabsorbed
losses amounting to ` 1,330.8 million (March 31, 2010: ` 2,041.5 million) which can be set off against future taxable
income and on timing differences arising from funds for future appropriation under linked line of business. ICICI Lombard
General Insurance Company has created deferred tax asset on carry forward unabsorbed losses amounting to ` 305.8
million (March 31, 2010: Nil).
12.
Information about business and geographical segments
A. Business segments for the year ended March 31, 2011
The primary segment for the Group has been presented as follows:
1. Retail banking includes exposures of the Bank which satisfy the four criteria of orientation, product, granularity and low
value of individual exposures for retail exposures laid down in the Basel Committee on Banking Supervision document
‘International Convergence of Capital Measurement and Capital Standards’, as per the RBI guidelines for the Bank.
2. Wholesale banking includes all advances to trusts, partnership firms, companies and statutory bodies, by the Bank
which are not included under Retail Banking segment, as per the RBI guidelines for the Bank.
3. Treasury includes the entire investment portfolio of the Bank, ICICI Eco-net Internet and Technology Fund, ICICI Equity
Fund, ICICI Emerging Sectors Fund, ICICI Strategic Investments Fund and ICICI Venture Value Fund.
4. Other banking business includes hire purchase and leasing operations and other items not attributable to any particular
business segment of the Bank. Further, it includes the Bank’s banking subsidiaries i.e. ICICI Bank UK PLC, ICICI Bank
Canada and its subsidiary, namely, ICICI Wealth Management Inc. (upto December 31, 2009) and ICICI Bank Eurasia LLC.
5. Life insurance represents results of ICICI Prudential Life Insurance Company Limited.
6. General insurance represents results of ICICI Lombard General Insurance Company Limited.
7. Venture fund management represents results of ICICI Venture Funds Management Company Limited.
8. Others includes ICICI Home Finance Company Limited, ICICI International Limited, ICICI Securities Primary Dealership
Limited, ICICI Securities Limited, ICICI Securities Holdings Inc., ICICI Securities Inc., ICICI Prudential Asset Management
Company Limited, ICICI Prudential Trust Limited, ICICI Investment Management Company Limited, ICICI Trusteeship
Services Limited, TCW/ICICI Investment Partners Limited, ICICI Kinfra Limited, ICICI West Bengal Infrastructure
Development Corporation Limited (upto December 31, 2010), I-Ven Biotech Limited and ICICI Prudential Pension Funds
Management Company Limited, Loyalty Solutions & Research Limited (upto March 31, 2010).
Income, expenses, assets and liabilities are either specifically identified with individual segments or are allocated to
segments on a systematic basis.
All liabilities are transfer priced to a central treasury unit, which pools all funds and lends to the business units at appropriate
rates based on the relevant maturity of assets being funded after adjusting for regulatory reserve requirements.
The results of reported segments for the year ended March 31, 2011 are not comparable with that of reported segments
for the year ended March 31, 2010 to the extent entities have been discontinued from consolidation.
F85
schedules
forming part of the Consolidated Accounts (Contd.)
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schedules
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F87
schedules
forming part of the Consolidated Accounts (Contd.)
B. Geographical segments
The Group has reported its operations under the following geographical segments.
• Domestic operations comprise branches and subsidiaries/joint ventures in India.
• Foreign operations comprise branches and subsidiaries/joint ventures outside India and offshore banking unit in India.
The Group conducts transactions with its customers on a global basis in accordance with their business requirements,
which may span across various geographies.
The following tables set forth, for the periods indicated, the geographical segment results.
Revenue
For the year ended
March 31, 2011
For the year ended
March 31, 2010
` in million
Domestic operations ......................................................................................
553,305.3
532,972.3
Foreign operations .........................................................................................
Total ................................................................................................................
Assets
62,641.7
615,947.0
At
63,025.4
595,997.7
` in million
At
March 31, 2011
March 31, 2010
Domestic operations ......................................................................................
4,128,281.6
3,694,052.1
Foreign operations .........................................................................................
1,142,335.5
1,134,927.3
Total ................................................................................................................
5,270,617.1
4,828,979.4
Note: Segment assets do not include tax paid in advance/tax deducted at source (net) and deferred tax asset (net).
` in million
Capital expenditure incurred
during the year ended
Depreciation provided on
capital expenditure during the
year ended
March 31,
2011
March 31,
2010
March 31,
2011
March 31,
2010
Domestic operations ...........................................
25,008.7
3,545.3
7,188.6
Foreign operations ..............................................
94.6
121.4
208.2
Total .....................................................................
25,103.3
3,666.7
7,396.8
7,390.1
238.6
7,628.7
13. Penalties/fines imposed by RBI and other banking regulatory bodies
The penalty imposed by RBI and other banking regulatory bodies during the year ended March 31, 2011 was ` 510,000
(March 31, 2010: Nil).
During the year ended March 31, 2011, RBI vide letter dated June 22, 2010 had issued an order under section 11(3) of
FEMA, 1999 directing the Bank to pay a penalty of ` 10,000 for violation of FEMA regulations. The Bank has paid the
penalty to RBI on July 2, 2010.
During the year ended March 31, 2011, RBI has levied a penalty of ` 500,000 on the Bank for having opened an account
only on the basis of driving licence as an identity proof while relying on the introduction from existing customer as an
address proof. The Bank has paid the penalty of ` 500,000 on August 5, 2010.
In April 2011, RBI has imposed a penalty of ` 1.5 million on the Bank towards non-compliance of certain instructions
issued by RBI in respect of derivative business.
F88
schedules
forming part of the Consolidated Accounts (Contd.)
14. Small and Micro Industries
Under the Micro, Small and Medium Enterprises Development Act, 2006 which came into force from October 2, 2006,
certain disclosures are required to be made relating to enterprises covered under the Act. During the year ended
March 31, 2011, the amount paid after the due date to vendors registered under the MSMED Act, 2006 was ` 17.9
million (March 31, 2010: ` 65.2 million). An amount of ` 0.7 million (March 31, 2010: ` 1.7 million) has been charged to
profit and loss account towards accrual of interest on these delayed payments.
15. Transfer of merchant acquiring operations
During the year ended March 31, 2010, the Bank and First Data, a company engaged in electronic commerce and
payment services, formed a merchant acquiring alliance and a new entity, 81.00% owned by First Data, was formed,
which acquired ICICI Bank’s merchant acquiring operations through transfer of assets, primarily comprising fixed assets
and receivables, and assumption of liabilities, for a total consideration of ` 3,744.0 million. This transfer of assets and
liabilities to the new entity would be considered a ‘slump sale’ for tax purposes. The Bank realised a profit of ` 2,029.0
million from this transaction, which was included in Schedule 14 – “Other income” for the year ended March 31, 2010.
16. Repurchase transactions
Upto March 31, 2010, the Bank used to account for market repurchase and reverse repurchase transactions in
government securities and corporate debt securities, if any, as “sale and repurchase” transactions. However, as per RBI
circular no. RBI/2009-2010/356 IDMD/ 4135/11.08.43/2009-10 dated March 23, 2010, the Bank has started accounting for
such transactions as “borrowing and lending” transactions, effective April 1, 2010.
If the Bank had continued to account the repurchase and reverse repurchase transactions as “sale and repurchase” at
March 31, 2011, the investments would have been higher by ` 122.8 million and the ‘Balances with Banks and Money
at call and short notice’ and ‘Borrowings’ would have been lower by ` 124.0 million and ` 1.2 million respectively.
Pursuant to above guidelines, ICICI Securities Primary Dealership Limited has also started accounting for such
transactions as “borrowing and lending” transactions, effective April 1, 2010. If ICICI Securities Primary Dealership
Limited had continued to account the repurchase and reverse repurchase transactions as “sale and repurchase” at
March 31, 2011, the borrowing would have been higher by ` 21,895.9 million, the investment would have been higher
by ` 21,831.0 million and interest accrued on investment would have been higher by ` 64.9 million.
17. Settlement date accounting for government securities
Pursuant to RBI circular DBOD.No.BP.BC.58/21.04.141/2010-11 dated November 4, 2010, the Bank has changed the
accounting for purchase and sale of government securities from trade date basis to settlement date basis with effect
from January 1, 2011. Under settlement date accounting, the purchase and sale of securities are recognised in the
books on the date of settlement. The changes in fair value of investments between trade date and settlement date are
recognised in case of purchased securities while such changes are ignored in case of securities sold. In case the Bank
had continued to follow the trade date accounting, investments portfolio at March 31, 2011 would have been lower by
` 655.2 million (net), the other assets would have been higher by ` 1,153.6 million, other liabilities would have been
higher by ` 500.2 million and the impact on the profit and loss account would have been Nil.
18. Contribution to Motor Third Party Insurance Pool by ICICI Lombard General Insurance Company Limited
(ICICI General)
In accordance with IRDA guidelines, ICICI General, together with all other general insurance companies participates in
the Indian Motor Third Party Insurance Pool (‘the Pool’), administered by the General Insurance Corporation of India
(‘GIC’) from April 1, 2007. The Pool covers reinsurance of third party risks of commercial vehicles.
ICICI General has ceded 100.00% of the third party premium collected to the Pool and has recorded its share of results
in the Pool based on unaudited statements received from the Pool for the period from March 2010 upto February 2011.
Based on the statements received from the Pool, liability for IBNR claim for the Pool was provided in the past. During
the current year, IRDA carried out independent assessment of the provision required and vide its order IRDA/NL/ORD/
MPL/046/03/2011 dated March 12, 2011 directed all general insurance companies to make a provision of not less than
153.00% for each of the four years from the inception of the Pool (i.e. from 2007-08). Due to this, an additional provision
of ` 2,720.0 million has been created during the current year by ICICI General.
Accordingly, the Bank’s consolidated net profit before tax for FY2011 includes impact of additional losses on account of
the pool of ` 2,000.6 million. IRDA has also indicated that there will be a peer review of the provisions requirement by
independent actuary and further provisions, if any will be made once the review is completed. The impact of the same
in the consolidated financial statements is presently not determinable.
In view of above developments, IRDA has allowed increase in the rate of premium applicable to Motor Third Party
Liability insurance business by 68.50% with effect from April 25, 2011.
F89
schedules
forming part of the Consolidated Accounts (Contd.)
19. Additional disclosure
Additional statutory information disclosed in the separate financial statements of the Bank and subsidiaries having no
material bearing on the true and fair view of the consolidated financial statements and the information pertaining to the
items which are not material have not been disclosed in the consolidated financial statements.
20. Comparative figures
Figures of the previous year have been re-grouped to conform to the current year presentation.
SIGNATURES TO SCHEDULES 1 TO 18
For S.R. BATLIBOI & CO.
Firm’s Registration no.: 301003E
Chartered Accountants
SHRAWAN JALAN
Partner
Membership no.: 102102
For and on behalf of the Board of Directors
K. V. KAMATH
Chairman
SRIDAR IYENGAR
Director
CHANDA KOCHHAR
Managing Director & CEO
N. S. KANNAN
Executive Director & CFO
K. RAMKUMAR
Executive Director
RAJIV SABHARWAL
Executive Director
Place : Mumbai
Date : April 28, 2011
SANDEEP BATRA
Group Compliance Officer &
Company Secretary
RAKESH JHA
Deputy Chief
Financial Officer
F90
schedules
Financial information of subsidiary companies for the year ended March 31, 2011
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F91
bAsel ii – pillAr 3 disClosures (ConsolidAted)
at March 31, 2011
ICICI Bank is subject to the Basel II framework with effect from March 31, 2008 as stipulated by the Reserve Bank of India (RBI).
The Basel II framework consists of three-mutually reinforcing pillars:
(i) Pillar 1: Minimum capital requirements for credit risk, market risk and operational risk
(ii) Pillar 2: Supervisory review of capital adequacy
(iii) Pillar 3: Market discipline
Market discipline (Pillar 3) comprises set of disclosures on the capital adequacy and risk management framework of the Bank.
These disclosures have been set out in the following sections.
1. SCOPE OF APPLICATION
Pillar 3 disclosures apply to ICICI Bank Limited and its consolidated entities, wherein ICICI Bank Limited is the controlling
entity in the group.
Basis of consolidation for capital adequacy
Consolidation for capital adequacy is based on consolidated financial statements of ICICI Bank and its subsidiaries in line
with the guidelines for consolidated accounting and other quantitative methods issued by RBI.
The entities considered for consolidation for capital adequacy include subsidiaries, associates and joint ventures of the
Bank, which carry on activities of banking or financial nature as stated in the scope for preparing consolidated prudential
reports as prescribed by RBI. Entities engaged in insurance business and businesses not pertaining to financial services
are excluded from consolidation for capital adequacy. Investment above 30% in paid-up equity capital of financial entities
which are not consolidated for capital adequacy (including insurance entities) and investments in other instruments
eligible for regulatory capital status in those entities are deducted to the extent of 50% from Tier-1 and 50% from Tier-2
capital.
The following table lists ICICI Bank’s financial and non-financial subsidiaries, associates, joint ventures and other entities
consolidated for preparation of consolidated financial statements and their treatment in consolidated capital adequacy
computations.
Name of the entity
Sr.
No.
Nature of business & consolidation status
ICICI Bank UK PLC
ICICI Bank Canada
Banking – fully consolidated
Banking – fully consolidated
ICICI Bank Eurasia Limited Liability Company
Banking – fully consolidated
ICICI Securities Limited
ICICI Securities Inc.
ICICI Securities Holdings Inc.
ICICI Securities Primary Dealership Limited
ICICI Venture Funds Management Company Limited
Securities broking and merchant banking – fully
consolidated
Securities broking – fully consolidated
Holding company of ICICI Securities Inc. – fully
consolidated
Securities investment, trading and underwriting – fully
consolidated
Private equity/venture capital fund management – fully
consolidated
ICICI Home Finance Company Limited
Housing finance – fully consolidated
ICICI Trusteeship Services Limited
Trusteeship services – fully consolidated
ICICI Investment Management Company Limited
Asset management – fully consolidated
ICICI International Limited
Asset management – fully consolidated
ICICI Prudential Pension Funds Management Company
Limited
Pension fund management – fully consolidated
ICICI Eco-net Internet and Technology Fund1
Venture capital fund – fully consolidated
ICICI Equity Fund1
ICICI Emerging Sectors Fund1
Unregistered venture capital fund – fully consolidated
Venture capital fund – fully consolidated
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
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Name of the entity
Nature of business & consolidation status
ICICI Strategic Investments Fund1
Unregistered venture capital fund – fully consolidated
Sr.
No.
17
18
19
20
ICICI Kinfra Limited1
ICICI Venture Value Fund1
I-Ven Biotech Limited1
21
ICICI Prudential Life Insurance Company Limited
22
ICICI Lombard General Insurance Company Limited
23
ICICI Prudential Asset Management Company Limited
24
ICICI Prudential Trust Limited
25
TCW/ICICI Investment Partners Limited (formerly known
as TCW/ICICI Investment Partners LLC)
26
Rainbow Fund
27
Financial Inclusion Network & Operations Limited
28
I-Process Services (India) Private Limited
29
I-Solutions Providers (India) Private Limited
30 NIIT Institute of Finance, Banking and Insurance Training
Limited
31
Prize Petroleum Company Limited
32
ICICI Merchant Services Private Limited
33 Mewar Aanchalik Gramin Bank
1.
Consolidating entities under Accounting Standard 21.
a. Capital deficiencies
Infrastructure development consultancy – consolidated
for financial reporting but not for capital adequacy
Unregistered venture capital fund – fully consolidated
Investment in research and development of
biotechnology – fully consolidated
Life insurance – consolidated for financial reporting but
not for capital adequacy and deducted from capital for
capital adequacy
General Insurance – consolidated for financial reporting
but not for capital adequacy and deducted from capital
for capital adequacy
Asset management company for ICICI Prudential
Mutual Fund – fully consolidated
Trustee company for ICICI Prudential Mutual Fund –
fully consolidated
Asset management – proportionately consolidated
Unregistered venture capital fund – consolidated
by equity method for financial reporting but not
consolidated for capital adequacy
Support services for financial inclusion – consolidated
by equity method for financial reporting but not
consolidated for capital adequacy
Services related to back end operations – consolidated
by equity method for financial reporting but not
consolidated for capital adequacy
Services related to sales and promotion activities –
consolidated by equity method for financial reporting
but not consolidated for capital adequacy
Education and training in banking and finance –
consolidated by equity method for financial reporting
but not consolidated for capital adequacy
Oil exploration and production -– consolidated
by equity method for financial reporting but not
consolidated for capital adequacy
Merchant servicing – consolidated by equity method
for financial reporting but not consolidated for capital
adequacy
Banking - consolidated by equity method for financial
reporting and deducted from capital for capital adequacy
Majority owned financial entities that are not consolidated for capital adequacy purposes and for which the
investment in equity and other instruments eligible for regulatory capital status are deducted from capital, meet their
respective regulatory capital requirements at all times. There is no deficiency in capital in any of the subsidiaries of
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the Bank at March 31, 2011. ICICI Bank maintains an active oversight on its subsidiaries through its representation
on their respective Boards. On a periodic basis the capital adequacy/solvency position of subsidiaries (banking,
non-banking and insurance subsidiaries), as per the applicable regulations, is reported to their respective Boards
as well as to the Board of the Bank.
b. Bank’s interest in insurance entities
The book value of the Bank’s total interest in its insurance subsidiaries at March 31, 2011, which is deducted from
capital for capital adequacy under Basel II is detailed in the following table.
Name of the entity
Country of
incorporation
Ownership
interest
Book value of
investment
` in billion
ICICI Prudential Life Insurance Company Limited
ICICI Lombard General Insurance Company Limited
India
India
73.88%
73.55%
35.94
13.481
1.
Includes ` 2.52 billion held as share application money pending allotment of the shares.
The quantitative impact on regulatory capital of using risk weighted investments method versus using the
deduction method at March 31, 2011 is set out in the following table.
Method
Deduction method
Capital at 9% based on risk weighted assets
` in billion
Quantitative impact1
49.42
4.45
1.
Includes ` 2.52 billion held as share application money pending allotment of the shares in ICICI Lombard General Insurance
Company.
c. Amalgamation of The Bank of Rajasthan Limited
The Bank of Rajasthan Limited, a banking company incorporated under the Companies Act, 1956 and licensed by
RBI under the Banking Regulations Act, 1949 was amalgamated with the Bank with effect from close of business of
August 12, 2010 in terms of the Scheme of Amalgamation approved by the RBI. The capital adequacy position of
the Bank at March 31, 2011 includes the impact of the risk exposures of erstwhile Bank of Rajasthan at that date.
2. CAPITAL STRUCTURE
a. Summary information on main terms and conditions/features of capital instruments
As per the RBI capital adequacy norms, ICICI Bank’s regulatory capital is classified into Tier-1 capital and Tier-2
capital.
Tier-1 capital includes paid-up equity capital, statutory reserves, other disclosed free reserves, capital reserves
and innovative perpetual debt instruments (Tier-1 bonds) eligible for inclusion in Tier-1 capital that comply with
requirement specified by RBI.
Tier-2 capital includes revaluation reserves (if any), general provision and loss reserve, investment reserve, upper
Tier-2 instruments (upper Tier-2 bonds) and subordinate debt instruments (lower Tier-2 bonds) eligible for inclusion
in Tier-2 capital.
ICICI Bank and its subsidiaries have issued debt instruments that form a part of Tier-1 and Tier-2 capital. The terms
and conditions that are applicable for these instruments comply with the stipulated regulatory requirements and
where required an independent legal opinion has been obtained for inclusion of these instruments in capital.
Tier-1 bonds are non-cumulative and perpetual in nature with a call option after 10 years. Interest on Tier-1 bonds
is payable either annually or semi-annually. These Tier-1 bonds have a step-up clause on interest payment ranging
up to 100 basis points.
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The upper Tier-2 bonds are cumulative and have an original maturity of 15 years with call option after 10 years.
The interest on upper Tier-2 bonds is payable either annually or semi-annually. Some of the upper Tier-2 debt
instruments have a step-up clause on interest payment ranging up to 100 basis points.
The lower Tier-2 bonds (subordinated debt) are cumulative and have an original maturity between 5 to 15 years.
The interest on lower Tier-2 capital instruments is payable quarterly, semi-annually or annually.
RBI vide its circular dated January 20, 2011 stipulated that henceforth capital instruments issued with step-up
option will not be eligible for inclusion in the capital funds. Capital issuances with step-up option prior to the
release of the above-mentioned circular would continue to remain eligible for inclusion in regulatory capital. The
Bank is in compliance with this stipulation and the existing Tier-1 and Tier-2 capital instruments with step-up option
have all been issued prior to January 20, 2011.
b. Amount of Tier-1 capital (March 31, 2011)
Tier-1 capital elements
Paid-up share capital1
Reserves2
Innovative Tier-1 capital instruments
Minority interest
Gross Tier-1 capital
Deductions:
Investments in instruments eligible for regulatory capital of financial
subsidiaries/associates
Securitisation exposures including credit enhancements
Deferred tax assets
Others3
Minority interest not eligible for inclusion in Tier-1 capital
Net Tier-1 capital
` in billion
Amount
12.74
540.94
28.12
0.66
582.46
24.73
23.59
27.68
2.02
0.18
504.25
1.
2.
Includes preference shares permitted by RBI for inclusion in Tier-1 capital.
Includes statutory reserves, disclosed free reserves, capital reserves and special reserves (net of tax payable).
3.
Includes goodwill and adjustments for less liquid positions.
c. Amount of Tier-2 capital (March 31, 2011)
Tier-2 capital elements
General provisions
Upper Tier-2 capital instruments
Lower Tier-2 capital instruments
Gross Tier-2 capital
Deductions:
Investments in instruments eligible for regulatory capital of financial
subsidiaries/associates
Securitisation exposures including credit enhancements
Net Tier-2 capital
` in billion
Amount
17.87
142.04
173.79
333.70
24.73
23.59
285.38
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d. Debt capital instruments eligible for inclusion in Tier-1 and Tier-2 capital
Total amount outstanding at March 31, 2011
Of which, amounts raised during the year
Amount eligible to be reckoned as capital funds at
March 31, 2011
e. Total eligible capital (March 31, 2011)
Tier-1 capital
Tier-2 capital
Total eligible capital
3. CAPITAL ADEQUACY
a. Capital management
Objective
` in billion
Lower Tier-1
Upper Tier-2
Lower Tier-2
28.12
—
28.12
142.04
—
142.04
211.87
66.48
173.79
` in billion
Amount
504.25
285.38
789.63
The Bank actively manages its capital to meet regulatory norms and current and future business needs considering
the risks in its businesses, expectation of rating agencies, shareholders and investors, and the available options of
raising capital.
Organisational set-up
The capital management framework of the Bank is administered by the Finance Group and the Risk Management
Group (RMG) under the supervision of the Board and the Risk Committee.
Regulatory capital
The Bank is subject to the capital adequacy norms stipulated by the RBI guidelines on Basel II. The RBI guidelines
on Basel II require the Bank to maintain a minimum ratio of total capital to risk weighted assets of 9.0%, with a
minimum Tier-1 capital adequacy ratio of 6.0%. The total capital adequacy ratio of the Bank at a standalone level at
March 31, 2011 as per the RBI guidelines on Basel II is 19.54% with a Tier-1 capital adequacy ratio of 13.17%. The
total capital adequacy ratio of the ICICI Group (consolidated) at March 31, 2011 as per the RBI guidelines on Basel
II is 19.92% with a Tier-1 capital adequacy ratio of 12.72%.
Under Pillar 1 of the RBI guidelines on Basel II, the Bank follows the standardised approach for credit and market
risk and basic indicator approach for operational risk.
Internal assessment of capital
The Bank’s capital management framework includes a comprehensive internal capital adequacy assessment
process (ICAAP) conducted annually and which determines the adequate level of capitalisation for the Bank to meet
regulatory norms and current and future business needs, including under stress scenarios. The ICAAP is formulated
at both standalone bank level and the consolidated group level. The ICAAP encompasses capital planning for a four
year time horizon, identification and measurement of material risks and the relationship between risk and capital.
The Bank’s capital management framework is complemented by its risk management framework (detailed in the
following sections), which includes a comprehensive assessment of material risks.
Stress testing which is a key aspect of the ICAAP and the risk management framework provides an insight on
the impact of extreme but plausible scenarios on the Bank’s risk profile and capital position. Based on the Board-
approved stress testing framework, the Bank conducts stress tests on its various portfolios and assesses the impact
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on its capital ratios and the adequacy of capital buffers for current and future periods. The Bank periodically
assesses and refines its stress tests in an effort to ensure that the stress scenarios capture material risks as well as
reflect possible extreme market moves that could arise as a result of market conditions.
The business and capital plans and the stress testing results of the group entities are integrated into the ICAAP.
Based on the ICAAP, the Bank determines its capital needs and the optimum level of capital by considering the
following in an integrated manner:
regulatory capital requirements as per the RBI guidelines;
assessment of material risks and impact of stress testing;
Bank’s strategic focus, business plan and growth objectives;
•
•
•
•
•
• evaluation of options to raise capital from domestic and overseas markets, as permitted by RBI from time to time.
future strategy with regard to investments or divestments in subsidiaries; and
perception of credit rating agencies, shareholders and investors;
The Bank formulates its internal capital level targets based on the ICAAP and endeavours to maintain its capital
adequacy level in accordance with the targeted levels at all times.
Monitoring and reporting
The Board of Directors of ICICI Bank maintains an active oversight over the Bank’s capital adequacy levels. On a
quarterly basis an analysis of the capital adequacy position and the risk weighted assets and an assessment of the
various aspects of Basel II on capital and risk management as stipulated by RBI, are reported to the Board. Further,
the capital adequacy position of the banking subsidiaries and the significant non-banking subsidiaries based on
the respective host regulatory requirements is also reported to the Board. In line with the RBI requirements for
consolidated prudential report, the capital adequacy position of the ICICI Group (consolidated) is reported to the
Board on a half-yearly basis.
Further, the ICAAP which is an annual process also serves as a mechanism for the Board to assess and monitor the
Bank’s and the Group’s capital adequacy position over a four year time horizon.
Capital adequacy of the subsidiaries
Each subsidiary in the Group assesses the adequate level of capitalisation required to meet its respective host
regulatory requirements and business needs. The Board of each subsidiary maintains oversight over the capital
adequacy framework for the subsidiary either directly or through separately constituted committees.
Basel III
In order to strengthen the resilience of the banking sector to potential future shocks, together with ensuring adequate
liquidity in the banking system, the Basel Committee on Banking Supervision (BCBS) issued the Basel III proposals
on December 17, 2009. Following a consultation phase on these proposals, the final set of Basel III rules were issued
on December 16, 2010. The Basel III rules on capital consist of measures on improving the quality, consistency
and transparency of capital, enhancing risk coverage, introducing a supplementary leverage ratio, reducing
procyclicality and promoting countercyclical buffers, and addressing systemic risk and interconnectedness. The
Basel III rules on liquidity consist of a measure of short-term liquidity coverage ratio aimed at building liquidity
buffers to meet stress situations and a measure of long-term net stable funding ratio aimed at promoting longer
term structural funding. BCBS has stipulated a phased implementation of the Basel III framework between January
1, 2013 and January 1, 2019.
Guidelines on Basel III framework for the Indian banking system are awaited from RBI. The Bank continues to monitor
developments on the Basel III framework and believes that its current robust capital adequacy position, adequate
headroom currently available to raise hybrid/debt capital, demonstrated track record of access to domestic and
overseas markets for capital raising and adequate flexibility in its balance sheet structure and business model will
enable it to adapt to the Basel III framework, as and when it is implemented.
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b. Capital requirements for various risk areas (March 31, 2011)
As required by RBI guidelines on Basel II, the Bank’s capital requirements have been computed using the
Standardised approach for credit risk, Standardised Duration method for market risk and Basic Indicator approach
for operational risk. The minimum capital required to be held at 9.00% for credit, market and operational risks is
given below:
I. Capital required for credit risk
- for portfolio subject to standardised approach
- for securitisation exposure
II. Capital required for market risk
- for interest rate risk2
- for foreign exchange (including gold) risk
- for equity position risk
III. Capital required for operational risk
Total capital requirement (I+II+III)
Total capital funds of the Bank
Total risk weighted assets
Capital adequacy ratio
` in billion
Amount1
296.56
294.82
1.74
34.02
27.65
0.92
5.45
26.25
356.83
789.63
3,964.78
19.92%
1.
2.
Includes all entities considered for Basel II capital adequacy computation.
Includes capital required of ` 0.65 billion for securitisation exposure.
The capital ratios of the Bank and its banking subsidiaries at March 31, 2011 are as follows:
Capital ratios
Tier-1 capital ratio
Total capital ratio
ICICI Bank Ltd
(consolidated)1
ICICI Bank Ltd
(standalone)1
ICICI Bank UK
PLC1
ICICI Bank
Canada1
ICICI Bank
Eurasia LLC1,2
12.72%
19.92%
13.17%
19.54%
14.11%
23.07%
24.83%
26.32%
n.a.
34.64%
1.
2.
Computed as per capital adequacy guidelines issued by regulators of respective jurisdictions.
Tier-1 capital ratio is not required to be reported in line with regulatory norms stipulated by the Central Bank of Russia.
4. RISK MANAGEMENT FRAMEWORK
As a financial intermediary, the Bank is exposed to various types of risks including credit, market, liquidity, operational,
legal, compliance and reputation risks. The objective of the risk management framework at the Bank is to ensure that
various risks are understood, measured and monitored and that the policies and procedures established to address
these risks are strictly adhered to.
The key principles underlying the risk management framework at the Bank are as follows:
1. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees of the Board have
been constituted to facilitate focused oversight of various risks. The Risk Committee reviews the risk management
policies in relation to various risks and the Bank’s compliance with risk management guidelines stipulated by the
RBI and of the status of implementation of the advanced approaches under the Basel framework. It reviews key risk
indicators covering areas such as credit risk, interest rate risk, liquidity risk, foreign exchange risk, operational and
outsourcing risks and the limits framework, including stress test limits for various risks. The Risk Committee also
reviews the risk profile of the overseas banking subsidiaries annually. Credit Committee reviews developments in
key industrial sectors and the Bank’s exposure to these sectors and various portfolios on a periodic basis. Audit
Committee provides direction to and also monitors the quality of the internal audit function.
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2. Policies approved from time to time by the Board of Directors/Committees of the Board form the governing
framework for each type of risk. The business activities are undertaken within this policy framework.
3.
Independent groups and sub-groups have been constituted across the Bank to facilitate independent evaluation,
monitoring and reporting of various risks. These control groups function independently of the business groups/
sub-groups.
The risk management framework forms the basis of developing consistent risk principles across the Bank, overseas
branches and overseas banking subsidiaries.
Material risks are identified, measured, monitored and reported to the Board of Directors and Board level committees
through the following:
a. Key risk indicators
Key risk indicators are presented to the Risk Committee on a periodic basis. The presentation covers an
overview of the key developments in the global and domestic economy as well as trends observed in the major
industries where the Bank has an exposure. Additionally, risk indicators with respect to credit risk, liquidity risk
and market risk are also presented and discussed.
b. ICAAP/stress testing
As part of ICAAP, the Bank conducts stress testing under various historical and hypothetical scenarios to
assess the impact of stress on current and projected capital positions. The methodology for the stress testing
is approved by the Board of Directors. The results of stress testing are reported to the Board of Directors
and submitted to RBI annually as part of the ICAAP. As detailed in the ICAAP, stress test results are reported
periodically for various risks to the Asset Liability Management Committee (ALCO).
c. Stress tolerance limits
In line with various risk limits applicable for the Bank’s portfolios, stress tolerance limits have been formulated
for various risks. The actual position/utilisation against the limits is periodically reported to Board level
committees/ALCO.
d. Risk profile templates
Bank-wide risk dashboard covering various risks of the Bank is presented to the Risk Committee and to the
Board on a quarterly basis. The risk dashboard provides the level and the direction of risk at Bank level with
a comparison to the previous quarter. The level and direction of risk are arrived at based on pre-determined
parameters.
e. Other Reviews by Credit Committee
Apart from sanctioning proposals, the Credit Committee carries out reviews of the credit quality of the portfolio at
regular intervals. The Committee also reviews specific cases that need special attention, details of credit sanctions,
irregularity reports and movement in non-performing loans. Further, the Committee reviews developments in
industrial sectors and specific strategies of the Bank with respect to the exposure to those industries.
f. Reporting against prudential exposure norms
Status of actual position against prudential exposure limits set by the Board or stipulated by RBI is reported
periodically to respective committees.
Measurement of risks for capital adequacy purposes
Under Pillar 1 of the extant RBI guidelines on Basel II, the Bank currently follows the standardised approach for credit
and market risk and basic indicator approach for operational risk.
5. CREDIT RISK
The Bank is exposed to credit risk in its lending operations. Credit risk is the risk of loss that may occur from the failure
of any counterparty to abide by the terms and conditions of any financial contract with the Bank, principally the failure
to make required payments as per the terms and conditions of the contracts.
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Policies and processes
All credit risk related aspects are governed by Credit and Recovery Policy (Credit Policy). Credit Policy outlines the type
of products that can be offered, customer categories, target customer profile, credit approval process and limits. The
Credit Policy is approved by the Board of Directors.
The delegation structure for approval of credit limits is approved by the Board of Directors. All credit proposals other
than retail products, program lending and certain other specified products are rated internally by the Risk Management
Group (RMG) prior to approval by the appropriate forum.
Credit facilities with respect to retail products are provided as per approved product policies. All retail products and
policies require the approval of the Committee of Executive Directors.
• Within the retail operations, there is segregation of the sourcing, verification, approval and disbursement of retail
credit exposures to achieve independence.
• Program lending involves a cluster based approach wherein a lending program is implemented for a homogeneous
group of individuals/business entities which comply with certain laid down parameterised norms. The approving
authority as per the Board approved authorisation lays down these parameters.
• For certain products including dealer funding, builder finance and facilities fully collateralised by cash and cash
equivalents, the delegation structure approved by the Board of Directors may permit exemption from the stipulation
pertaining to internal rating, up to a certain loan amount. Credit approval limits with respect to such products are
laid out in the delegation structure approved by the Board of Directors.
A risk based asset review framework has been put in place wherein the frequency of asset review would be higher for
cases with higher outstanding and/or lower credit rating.
Structure and organisation
RMG is responsible for rating of the credit portfolio, tracking trends in various industries and periodic reporting of
portfolio-level changes. RMG is segregated into sub-groups for corporate, small enterprises, rural and agri-linked
banking group and retail businesses.
The overseas banking subsidiaries of the Bank have also established similar structures to ensure adequate risk
management, factoring in the risks particular to the respective businesses and the regulatory and statutory guidelines.
The risk heads of all overseas banking subsidiaries have a reporting relationship to the Head - RMG, in addition to
reporting to the Chief Executive Officer of the respective subsidiaries.
Credit risk assessment process
There is a structured and standardised credit approval process including a comprehensive credit risk assessment
process, which encompasses analysis of relevant quantitative and qualitative information to ascertain credit rating of
the borrower.
The credit rating process involves assessment of risk emanating from various sources such as industry risk, business
risk, financial risk, management risk, project risk and structure risk.
In respect of retail advances, the Bank’s credit officers evaluate credit proposals on the basis of the operating notes
approved by the Committee of Executive Directors and the risk assessment criteria defined by RMG.
Credit approval authorisation structure
The Board of Directors has delegated the authority to the Credit Committee consisting of a majority of independent
Directors, the Committee of Executive Directors consisting of whole time Directors, the Committee of Senior
Management consisting of whole time directors and Group Executives, the Committee of Executives, the Regional
Committee, Small and Medium Enterprise and corporate Agriculture Forums and Retail Credit Forums, all consisting of
designated executives, and to individual executives in the case of program/policy based products, to approve financial
assistance within certain individual and group exposure limits set by the Board of Directors. The authorisation is based
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on the level of risk and the quantum of exposure, to ensure that the transactions with higher exposure and level of risk
are put up to correspondingly higher forum/committee for approval.
In respect of retail loans, all product-level policies require the approval of the Committee of Executive Directors. The
criteria incorporated in these policies vary across product segments but typically include factors such as the borrower’s
income, the loan-to-value ratio and demographic parameters. The individual credit proposals are evaluated and
approved by executives on the basis of the product policies.
Credit risk monitoring process
For effective monitoring of credit facilities, a post-approval authorisation structure has been laid down. For corporate,
small enterprises and rural and agriculture linked banking business, Credit Middle Office Group verifies adherence to
the terms of the approval prior to commitment and disbursement of credit facilities.
Within retail, the Bank has established centralised operations to manage operational risk in the various back office
processes of the Bank’s retail loan business except for a few operations, which are decentralised to improve turnaround
time for customers. A fraud prevention and control group has been set up to manage fraud-related risks through fraud
prevention and through recovery of fraud losses. The fraud control group evaluates various external agencies involved
in the retail finance operations, including direct marketing associates, external verification associates and collection
agencies.
The Bank has a collections unit structured along various product lines and geographical locations, to manage delinquency
levels. The collections unit operates under the guidelines of a standardised recovery process.
The segregation of responsibilities and oversight by groups external to the business groups ensure adequate checks
and balances.
Reporting and measurement
Credit exposure for the Bank is measured and monitored using a centralised exposure management system. The
analysis of the composition of the portfolio is presented to the Risk Committee on a quarterly basis.
The Bank complies with the norms on exposure stipulated by RBI for both single borrower as well as borrower group at
the consolidated level. Limits have been set as a percentage of the Bank’s consolidated capital funds and are regularly
monitored. The utilisation against specified limits is reported to the Committee of Executive Directors and Credit
Committee on a periodic basis.
Credit concentration risk
Credit concentration risk arises mainly on account of concentration of exposures under various categories including
industry, products, geography, sensitive sectors, underlying collateral nature and single/group borrower exposures.
Limits have been stipulated on single borrower, borrower group, industry and longer tenure exposure to a borrower
group. Exposure to top 10 borrowers and borrower groups, exposure to capital market segment and unsecured
exposures for the ICICI Group (consolidated) is reported to the Board level committees on a quarterly basis. Limits on
countries and bank counterparties have also been stipulated.
Definition and classification of non-performing assets (NPAs)
The Bank classifies its advances (loans and debentures in the nature of an advance) into performing and non-performing
loans in accordance with the extant RBI guidelines.
A NPA is defined as a loan or an advance where:
i)
interest and/or installment of principal remain overdue for more than 90 days in respect of a term loan. Any amount
due to the bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the Bank;
ii)
if the interest due and charged during a quarter is not serviced fully within 90 days from the end of the quarter;
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iii)
the account remains ‘out of order’ in respect of an overdraft/cash credit facility continuously for 90 days. An
account is treated as ‘out of order’ if:
a. the outstanding balance remains continuously in excess of the sanctioned limit/drawing power; or
b. where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing
power, but there are no credits continuously for 90 days as on the date of the balance sheet; or
c. credits in the account are not enough to cover the interest debited during the accounting period; or
d. drawings have been permitted in the account for a continuous period of 90 days based on drawing power
computed on the basis of stock statements that are more than three months old even though the unit may be
working or the borrower’s financial position is satisfactory; or
e. the regular/ad hoc credit limits have not been reviewed/renewed within 180 days from the due date/date of ad
hoc sanction.
iv) a bill purchased/discounted by the Bank remains overdue for a period of more than 90 days;
v)
interest and/or installment of principal in respect of an agricultural loan remains overdue for two crop seasons for
short duration crops and one crop season for long duration crops;
vi)
In respect of a securitisation transaction undertaken in terms of the RBI guidelines on securitisation, the amount of
liquidity facility remains outstanding for more than 90 days;
vii) In respect of derivative transactions, if the overdue receivables representing positive mark-to-market value of a
derivative contract, remain unpaid for a period of 90 days from the specified due date for payment.
Further, NPAs are classified into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. A sub-
standard asset is one, which has remained a NPA for a period less than or equal to 12 months. An asset is classified as
doubtful if it has remained in the sub-standard category for more than 12 months. A loss asset is one where loss has
been identified by the Bank or internal or external auditors or during RBI inspection but the amount has not been written
off fully.
Restructured assets
As per RBI guidelines, a fully secured standard loan can be restructured by rescheduling principal repayments and/
or the interest element, but must be separately disclosed as a restructured loan in the year of restructuring. Similar
guidelines apply to restructuring of substandard and doubtful loans.
A sub-standard asset, which has been restructured, will be upgraded to the standard category only after a satisfactory
performance of the borrower over a period of time. The RBI has specified the period to be one year from date when the
instalment/ interest falls due as per the rescheduled scheme.
a. Credit risk exposures (March 31, 2011)
Credit risk exposures (excluding specific risk on available-for-sale and held-for-trading portfolio) include all credit
exposures as per RBI guidelines on exposure norms and investments in the held-to-maturity category. Domestic
sovereign exposures that are risk-weighted at zero percent and exposures to regulatory capital instruments of
subsidiaries that are deducted from the capital funds have been excluded.
Category
Fund-based facilities
Non-fund based facilities
Total1
1.
Includes all entities considered for Basel II capital adequacy computation.
` in billion
Credit exposure
3,786.24
2,522.22
6,308.46
F102
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at March 31, 2011
b. Geographic distribution of exposures (March 31, 2011)
Category
Domestic
Overseas
Total1
` in billion
Fund-based facilities Non-fund based facilities
2,776.43
2,175.56
1,009.81
3,786.24
346.66
2,522.22
1.
Includes all entities considered for Basel II capital adequacy computation.
c.
Industry-wise distribution of exposures (March 31, 2011)
Industry
Retail finance1
Bank2
Electronics and engineering
Services – finance
Services - non finance
Crude petroleum/refining and petrochemicals
Road, port, telecom, urban development and
other infrastructure
Power
Iron/steel and products
Construction
Metal and products (excluding iron and steel)
Food and beverages
Mutual funds
Wholesale/retail trade
Chemical and fertilizers
Cement
Mining
Automobiles
Shipping
Drugs and pharmaceuticals
Gems and jewellery
Manufacturing products excluding metal
Textiles
FMCG
Venture capital funds
Other industries
Grand Total3
Fund-based facilities Non-fund based facilities
` in billion
1,112.93
214.31
83.04
365.85
259.54
177.29
193.96
187.65
139.23
67.39
60.66
111.65
143.34
67.66
49.79
62.90
69.01
41.53
34.58
41.67
29.99
27.19
30.92
10.42
1.90
201.84
3,786.24
25.24
337.53
418.43
112.70
129.96
204.47
180.24
184.68
172.37
179.49
133.46
39.05
2.41
68.55
65.69
33.81
25.84
36.76
39.52
31.05
15.00
15.96
7.72
4.17
—
58.12
2,522.22
1.
2.
3.
Includes home loans, automobile loans, commercial business loans, two wheeler loans, personal loans, and credit cards.
Also includes dealer funding exposures and developer financing exposures.
Includes balances with banks.
Includes all entities considered for Basel II capital adequacy computation.
F103
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at March 31, 2011
d. Maturity pattern of assets (March 31, 2011)1
The maturity pattern of assets at March 31, 2011 is detailed in the table below.
Maturity buckets
Day 1
2 to 7 days
8 to 14 days
15 to 28 days
29 days to 3 months
3 to 6 months
6 months to 1 year
1 to 3 years
3 to 5 years
Above 5 years
Total
Investments
Loans &
advances
Fixed
assets
Other
assets
` in billion
Total
Cash &
balances
with RBI
Balances
with banks
& money
at call and
short notice
57.54
—
—
14.03
19.76
11.03
19.97
65.45
3.18
18.64
64.21
41.45
28.86
5.51
12.45
9.14
5.80
1.22
0.00
0.05
126.57
57.06
29.55
105.17
100.26
76.81
123.78
11.32
25.51
17.67
32.10
178.04
226.90
292.44
365.09
1,017.36
113.05
330.06
426.58
332.13
209.60
168.69
1,427.40
2,560.05
—
(0.00)
—
—
0.05
0.05
0.04
0.06
2.44
25.33
11.62
6.10
11.26
10.08
3.38
4.06
10.91
4.96
45.75
48.39
108.95
196.65
284.97
135.64
82.18
168.07
320.64
327.31
446.09
1,460.09
550.21
835.58
4,610.78
1.
Consolidated figures for the Bank and its banking subsidiaries, ICICI Home Finance Company, ICICI Securities Primary
Dealership Limited and ICICI Securities Limited and its subsidiaries. The maturity pattern of assets for the Bank is based on
methodology used for reporting positions to the RBI on asset-liability management. The maturity pattern of assets for the
subsidiaries is based on similar principles.
e. Amount of non-performing loans (NPLs) (March 31, 2011)
NPL Classification
Gross NPLs
Sub-standard
Doubtful
- Doubtful 11
- Doubtful 21
- Doubtful 31
Loss
Total2, 3
NPL ratio4
20.58
77.19
29.29
25.12
22.78
9.45
107.22
4.06%
` in billion
Net NPLs
14.41
14.50
9.41
5.09
—
—
28.91
1.13%
1.
Loans classified as NPLs for 456 to 820 days are classified as Doubtful 1, 821 to 1,550 days as Doubtful 2 and above 1,550
days as Doubtful 3.
2.
3.
Includes advances portfolio of the Bank and its banking subsidiaries and ICICI Home Finance Company.
Identification of loans as non-performing is as per the guidelines issued by RBI.
4. Gross NPL ratio is computed as a ratio of gross NPLs to gross advances. Net NPL ratio is computed as a ratio of net NPLs
to net advances.
F104
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at March 31, 2011
f. Movement of NPLs
Opening balance at April 1, 2010
Additions during the year1
Reductions/write-offs during the year1
Closing balance at March 31, 20112
Gross NPL
100.75
32.00
(25.53)
107.22
` in billion
Net NPL
42.84
7.52
(21.45)
28.91
1.
The difference between the opening and closing balances (other than accounts written off during the year) of NPLs in
credit cards is included in additions during the year.
2.
Includes advances portfolio of the Bank and its banking subsidiaries and ICICI Home Finance Company.
g. Movement of provisions for NPLs
Opening balance at April 1, 2010
Provisions made during the year1
Write-offs during the year
Write-back of excess provisions during the year
Closing balance at March 31, 20112
` in billion
Amount
57.90
28.59
(1.36)
(6.82)
78.31
1
The difference between the opening and closing balances (other than accounts written off during the year) of provisions
on credit cards is included in provisions made during the year.
2
Includes advances portfolio of the Bank and its banking subsidiaries and ICICI Home Finance Company.
h. Amount of non-performing investments (NPIs) in securities, other than government and other approved securities
` in billion
Gross NPIs at March 31, 2011
Total provisions held on NPIs
Net NPIs at March 31, 2011
1.
Includes NPIs of the Bank and its banking subsidiaries.
i. Movement of provisions for depreciation on investments1
Opening balance at April 1, 2010
Provision/depreciation (net) made during the year
(Write-off)/(write back) of excess provision during the year
Closing balance at March 31, 20112
1. After considering movement in appreciation on investments.
2.
Includes all entities considered for Basel II capital adequacy computation.
Amount1
5.61
(4.37)
1.24
` in billion
Amount
18.72
11.78
(2.28)
28.22
F105
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at March 31, 2011
6. CREDIT RISK: PORTFOLIOS SUBJECT TO THE STANDARDISED APPROACH
a. External ratings
The Bank uses the standardised approach to measure the capital requirements for credit risk. As per the standardised
approach, regulatory capital requirements for credit risk on corporate exposures is measured based on external
credit ratings assigned by External Credit Assessment Institutions (ECAI) specified by RBI in its guidelines on Basel
II. As stipulated by RBI, the risk weights for resident corporate exposures are assessed based on the external ratings
assigned by domestic ECAI and the risk weights for non-resident corporate exposures are assessed based on the
external ratings assigned by international ECAI. For this purpose, the domestic ECAI specified by RBI are CRISIL
Limited, Credit Analysis & Research Limited, ICRA Limited and Fitch India and the international ECAI specified by
RBI are Standard & Poor’s, Moody’s and Fitch. Further, the RBI’s Basel II framework stipulates guidelines on the
scope and eligibility of application of external ratings. The Bank reckons the external rating on the exposure for risk
weighting purposes, if the external rating assessment complies with the guidelines stipulated by RBI.
The key aspects of the Bank’s external ratings application framework are as follows:
• The Bank uses only those ratings that have been solicited by the counterparty.
• Foreign sovereign and foreign bank exposures are risk-weighted based on issuer ratings assigned to them.
• The risk-weighting of corporate exposures based on the external credit ratings includes the following:
i. The Bank reckons external ratings of corporates either at the credit facility level or at the borrower (issuer)
level. The Bank considers the facility rating where both the facility and the borrower rating are available
given the more specific nature of the facility credit assessment.
ii. The Bank ensures that the external rating of the facility/borrower has been reviewed at least once by the
ECAI during the previous 15 months and is in force on the date of its application.
iii. When a borrower is assigned a rating that maps to a risk weight of 150%, then this rating is applied on all
the unrated facilities of the borrower and risk weighted at 150%.
iv. Unrated short-term claim on counterparty is assigned a risk weight of at least one level higher than the risk
weight applicable to the rated short term claim on that counterparty.
• The RBI guidelines outline specific conditions for facilities that have multiple ratings. In this context, the lower
rating, where there are two ratings and the second-lowest rating where there are three or more ratings are used
for a given facility.
b. Credit exposures by risk weights
At March 31, 2011, the credit exposures subject to the Standardised approach after adjusting for credit risk
mitigation by risk weights were as follows:
Exposure Category
Less than 100% risk weight
100% risk weight
More than 100% risk weight
Deducted from capital
Total2
` in billion
Amount outstanding1
2,089.30
3,756.44
326.95
37.06
6,209.75
1.
Credit risk exposures include all exposures, as per RBI guidelines on exposure norms, subject to credit risk and
investments in held-to-maturity category. Claims on domestic sovereign which are risk-weighted at 0% and regulatory
capital instruments of subsidiaries which are deducted from the capital funds have been excluded. The credit exposures
have been adjusted for credit risk mitigation.
2.
Includes all entities considered for Basel II capital adequacy computation.
F106
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at March 31, 2011
7. CREDIT RISK MITIGATION
a. Collateral management and credit risk mitigation
The Bank has a Board approved policy framework for collateral management and credit risk mitigation techniques,
which include among other aspects guidelines on acceptable types of collateral, ongoing monitoring of collateral
including the frequency and basis of valuation and application of credit risk mitigation techniques.
Collateral management
Overview
The Bank defines collateral as the assets or rights provided to the Bank by the borrower or a third party in order to
secure a credit facility. The Bank would have the rights of secured creditor in respect of the assets/contracts offered
as security for the obligations of the borrower/obligor. The Bank ensures that the underlying documentation for the
collateral provides the bank appropriate rights over the collateral or other forms of credit enhancement including
the right to liquidate, retain or take legal possession of it in a timely manner in the event of default by the counter
party. The Bank also endeavours to keep the assets provided as security to the Bank under adequate insurance
during the tenor of the Bank’s exposure. The collateral value is monitored periodically.
Collateral valuation
As stipulated by the RBI guidelines, the Bank uses the comprehensive approach for collateral valuation. Under this
approach, the Bank reduces its credit exposure to counterparty when calculating its capital requirements to the
extent of risk mitigation provided by the eligible collateral as specified in the Basel II guidelines.
The Bank adjusts the value of any collateral received to adjust for possible future fluctuations in the value of the
collateral in line with the requirements specified by RBI guidelines. These adjustments, also referred to as ‘haircuts’,
to produce volatility-adjusted amounts for collateral, are reduced from the exposure to compute the capital charge
based on the applicable risk weights.
Types of collateral taken by the Bank
The Bank determines the appropriate collateral for each facility based on the type of product and risk profile of
the counterparty. In case of corporate and small and medium enterprises financing, fixed assets are generally
taken as security for long tenor loans and current assets for working capital finance. For project finance, security
of the assets of the borrower and assignment of the underlying project contracts is generally taken. In addition, in
some cases, additional security such as pledge of shares, cash collateral, charge on receivables with an escrow
arrangement and guarantees is also taken.
For retail products, the security to be taken is defined in the product policy for the respective products. Housing
loans and automobile loans are secured by the security of the property/automobile being financed. The valuation
of the properties is carried out by an empanelled valuer at the time of sanctioning the loan.
The Bank also offers products which are primarily based on collateral such as shares, specified securities,
warehoused commodities and gold jewellery. These products are offered in line with the approved product policies
which include types of collateral, valuation and margining.
The Bank extends unsecured facilities to clients for certain products such as derivatives, credit cards and personal
loans. The limits with respect to unsecured facilities have been approved by the Board of Directors.
The decision on the type and quantum of collateral for each transaction is taken by the credit approving authority
as per the credit approval authorisation approved by the Board of Directors. For facilities provided as per approved
product policies (retail products, loan against shares etc.), collateral is taken in line with the policy.
F107
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Credit risk mitigation techniques
The RBI guidelines on Basel II allow the following credit risk mitigants to be recognised for regulatory capital
purposes:
• Eligible financial collateral which include cash (deposited with the Bank), gold (including bullion and jewellery,
subject to collateralised jewellery being benchmarked to 99.99% purity), securities issued by Central and State
Governments, Kisan Vikas Patra, National Savings Certificates, life insurance policies with a declared surrender
value issued by an insurance company which is regulated by the insurance sector regulator, certain debt
securities, mutual fund units where daily net asset value is available in public domain and the mutual fund is
limited to investing in the instruments listed above.
• On-balance sheet netting, which is confined to loans/advances and deposits, where banks have legally
enforceable netting arrangements, involving specific lien with proof of documentation.
• Guarantees, where these are direct, explicit, irrevocable and unconditional. Further, the eligible guarantors
would comprise:
- Sovereigns, sovereign entities stipulated in the RBI guidelines on Basel II, bank and primary dealers with a
lower risk weight than the counterparty; and
- Other entities, which are rated AA(-) or better.
The Bank reckons the permitted credit risk mitigants for obtaining capital relief only when the credit risk mitigant
fulfills the conditions stipulated for eligibility and legal certainty by RBI in its guidelines on Basel II.
Concentrations within credit risk mitigation
The RBI guidelines, among its conditions for eligible credit risk mitigants, require that there should not be a material
positive correlation between the credit quality of the counterparty and the value of the collateral being considered.
RMG conducts the assessment of the aspect of material positive correlation on cases referred to it and accordingly
evaluates the eligibility of the credit risk mitigant for obtaining capital relief. Currently, the Bank does not have any
concentration risk within credit risk mitigation.
b. Portfolio covered by eligible financial collateral (March 31, 2011)
Exposures fully covered by eligible financial collateral, after application of haircut
Exposures fully covered by eligible corporate guarantees
1.
Includes all entities considered for Basel II capital adequacy computation.
` in billion
Amount1
77.62
15.25
The processes for capital computation and credit risk mitigation based on Basel II guidelines are consistent across
subsidiaries of the Bank.
8. SECURITISATION
a. Securitisation objectives, roles played by the Bank and the risks
Objectives
The Bank’s primary objective of securitisation activities is to increase the efficiency of capital and enhance the
return on capital employed by diversifying sources of funding.
Roles played by the Bank
In securitisation transactions backed by assets either originated by the Bank or third parties, the Bank plays the
following major roles:
• Underwriter: allowing un-subscribed portions of securitised debt issuances, if any to devolve on the Bank,
with the intent of selling at a later stage.
F108
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•
Investor/trader/market-maker: acquiring investment grade securitised debt instruments backed by financial
assets originated by third parties for purposes of investment/trading/market-making with the aim of developing
an active secondary market in securitised debt.
• Structurer: structuring appropriately in a form and manner suitably tailored to meet investor requirements
while being compliant with extant regulations.
• Provider of liquidity facilities: addressing temporary mismatches on account of the timing differences
between the receipt of cash flows from the underlying performing assets and the fulfillment of obligations to
the beneficiaries.
• Provider of credit enhancement facilities: addressing delinquencies associated with the underlying assets,
i.e. bridging the gaps arising out of credit considerations between cash flows received/collected from the
underlying assets and the fulfillment of repayment obligations to the beneficiaries.
• Provider of collection and processing services: collecting and/or managing receivables from underlying
obligors, contribution from the investors to securitisation transactions, making payments to counterparties/
appropriate beneficiaries, reporting the collection efficiency and other performance parameters and providing
other services relating to collections and payments as may be required for the purpose of the transactions.
Risks in securitisation
The major risks inherent in the securitised transactions are:
•
Credit risk: Risk arising on account of payment delinquencies from underlying obligors/borrowers in the
assigned pool.
• Market risk:
i) Liquidity risk: Risk arising on account of lack of secondary market to provide ready exit options to the
investors/participants.
ii)
Interest rate/currency risk: Mark to market risks arising on account of interest rate/currency fluctuations.
• Operational risk:
i) Co-mingling risk: Risk arising on account of comingling of funds belonging to investor(s) with that of
the originator and/or collection and processing servicer when there exist a time lag between collecting
amounts due from the obligors and payment made to the investors.
ii) Performance risk: Risk arising on account of the inability of a Collection and Processing Agent to collect
monies from the underlying obligors as well as operational difficulties in processing the payments.
iii) Regulatory and legal risk: Risk arising on account of
– non-compliance of the transaction structures with the extant applicable laws which may result in the
transaction(s) being rendered invalid;
–
conflict between the provisions of the transaction documents with those of the underlying financial
facility agreements; and
– non-enforceability of security/claims due to imperfection in execution of the underlying facility
agreements with the borrower(s).
•
Reputation risk: Risk arising on account of
i)
rating downgrade of a securitised instrument due to unsatisfactory performance of the underlying asset
pool; and
ii)
inappropriate practices followed by the collection and processing agent.
In addition to the above, securitised assets are exposed to prepayment and pipeline and warehousing risks.
Prepayment risk arises on account of prepayment of dues by obligors/borrowers in the assigned pool either in
part or full. Pipeline and warehousing risks refer to the event where originating banks are unable to off-load assets,
which were originated with an intention of selling thus potentially exposing them to losses arising on declining
values of these assets. The Bank does not follow the “originate to distribute” model and hence is not exposed to
the pipeline and warehousing risks.
F109
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at March 31, 2011
Processes in place to monitor change in risks of securitisation exposures
The Bank has established appropriate risk management processes to monitor the risks on securitisation exposures,
which include:
• Monitoring credit risk
The Bank in the capacity of collection and processing agent prepares monthly performance reports which are
circulated to investors/assignees/rating agencies. The securitised pools are continuously monitored and those
requiring attention are subjected to specific interventions (e.g. focused collection efforts in affected geographies
etc.) to improve their performance.
The risk assessment of the pools is done continuously by the rating agencies based on amortisation level,
collection efficiency, credit enhancement utilisation levels and credit cover available for balance deal tenor.
•
Monitoring market risk
The Bank ascertains market value of the securitisation exposures based on extant norms which is compared
with their book value to assess the marked to market impact of these exposures monthly.
Bank’s policy governing the use of credit risk mitigation to mitigate the risks retained through securitisation
exposures
The Bank has not used credit risk mitigants to mitigate retained risks.
b. Summary of the Bank’s accounting policies for securitisation activities
Whether the transactions are treated as sales or financings
The Bank transfers commercial and consumer loans through securitisation transactions. The transferred loans are
de-recognised and gains/losses are accounted for only if the Bank surrenders the rights to benefits specified in the
underlying securitised loan contract. Recourse and servicing obligations are accounted for net of provisions.
In accordance with the RBI guidelines for securitisation of standard assets, with effect from February 1, 2006, the
Bank accounts for any loss arising from securitisation immediately at the time of sale and the profit/premium arising
from securitisation is amortised over the life of the securities issued or to be issued by the special purpose vehicle
to which the assets are sold.
Methods and key assumptions (including inputs) applied in valuing positions retained or purchased
The valuation of the retained interests in the form of pass-through certificates (PTCs) is based on the projected
cash flows as received from the issuer, which are present valued using the Yield-to-Maturity (YTM) rates, which
are computed with a mark-up (reflecting associated credit risk) over the YTM rates for government securities as
published by Fixed Income Money Market and Derivatives Association (FIMMDA).
The retained/purchased interests in the form of subordinate contributions are carried at book value.
There is no change in the methods and key assumptions applied in valuing retained/purchased interests from
previous year.
Policies for recognising liabilities on the balance sheet for arrangements that could require the bank to provide
financial support for securitised assets
The Bank provides credit enhancements in the form of cash deposits or guarantees in its securitisation transactions.
The Bank makes appropriate provisions for any delinquency losses assessed at the time of sale as well as over the
life of the securitisation transactions in accordance with the RBI guidelines.
c. Rating of securitisation exposures
Ratings obtained from ECAIs stipulated by RBI (as stated above) are used for computing capital requirements for
securisation exposures. Where the external ratings of the Bank’s investment in securitised debt instruments/PTCs
are at least partly based on unfunded support provided by the Bank, such investments are treated as unrated and
deducted from the capital funds.
F110
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at March 31, 2011
d. Details of securitisation exposures in the banking book
I. Total outstanding exposures securitised and the related unrecognised gains/(losses) (March 31, 2011)
Exposure type
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
Outstanding1
` in billion
Unrecognised
gains/(losses)
0.62
0.01
12.56
—
3.39
—
16.57
—
—
—
—
0.01
1. The amounts represent the total outstanding principal at March 31, 2011 for securitisation deals and include direct
assignments in the nature of sell-downs. Credit enhancements and liquidity facilities are not included in the above
amounts. During the year ended March 31, 2011, the Bank had not securitised any assets as an originator.
ii. Break-up of securitisation gains/(losses) (net)
Exposure type
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
` in billion
Year ended
March 31, 20111
(4.35)
0.09
(1.25)
0.05
(0.03)
(5.49)
1. The amounts include gain amortised during the year and expenses relating to utilisation of credit enhancements.
iii. Assets to be securitised within a year at March 31, 2011
Amount of assets intended to be securitised within a year
Of which:
Amount of assets originated within a year before securitisation
iv. Securitisation exposures retained or purchased (March 31, 2011)
Exposure type1
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
On-balance sheet Off-balance sheet
4.89
18.25
8.16
3.92
6.95
42.17
9.32
0.17
5.52
8.72
10.23
33.96
` in billion
Amount
—
n.a.
` in billion
Total
14.21
18.42
13.68
12.64
17.18
76.13
1. Securitisation exposures include but are not restricted to liquidity facilities, other commitments and credit enhancements
such as interest only strips, cash collateral accounts and other subordinated assets as well as direct assignments in the
nature of sell-downs. The amounts are net of provisions. Credit enhancements have been stated at gross levels and not
been adjusted for their utilisation. Utilised portion of unfunded credit enhancements have been disclosed under off-
balance sheet exposures at March 2011.
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v. Risk weight bands break-up of securitisation exposures retained or purchased (March 31, 2011)
Exposure type1
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
Total capital charge
<100% risk
weight
3.61
7.78
3.74
8.88
8.15
32.16
1.05
100% risk
weight
1.84
3.25
—
1.33
0.17
6.59
0.59
>100% risk
weight
—
—
—
0.32
—
0.32
0.10
1.
Includes direct assignments in the nature of sell-downs.
vi. Securitisation exposures deducted from capital (March 31, 2011)
Exposure type1
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
Exposures deducted
entirely from
Tier-1 capital
Credit enhancing
interest-only strips
deducted from
total capital2
—
—
—
—
—
—
0.66
1.16
1.53
—
0.98
4.33
` in billion
Total
5.45
11.03
3.74
10.53
8.32
39.07
1.74
` in billion
Other exposures
deducted from
total capital3
8.10
6.23
8.42
2.12
7.88
32.73
1.
Includes direct assignments in the nature of sell-downs.
2.
3.
Includes subordinate contribution amount deducted from capital.
Includes credit enhancements (excluding interest only strips). Credit enhancements have been stated at gross levels and
not been adjusted for their utilisation. The amounts are net of provisions.
e. Details of securitisation exposures in the trading book
I. Aggregate amount of exposures securitised for which the Bank has retained some exposures subject to
market risk (March 31, 2011)
Exposure type
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
1. The amounts represent the outstanding principal at March 31, 2011 for securitisation deals.
` in billion
Total1
2.81
3.13
0.21
—
4.90
11.05
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ii. Securitisation exposures retained or purchased (March 31, 2011)
Exposure type1
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
On-balance sheet Off-balance sheet
—
—
—
—
—
—
2.88
13.04
0.22
0.38
7.81
24.33
` in billion
Total
2.88
13.04
0.22
0.38
7.81
24.33
1. Securitisation exposures include PTCs originated by the Bank as well as PTCs purchased in case of third party originated
securitisation transactions.
iii. Risk weight bands break-up of securitisation exposures retained or purchased and the related capital charge
(March 31, 2011)
<100% risk weight
100% risk weight
>100% risk weight
Total
Exposure
14.19
—
—
14.19
` in billion
Capital charge1
0.65
—
—
0.65
1. Represents capital required to be maintained at 9.00% as per RBI guidelines.
vi. Securitisation exposures deducted from capital (March 31, 2011)
Exposure type
Vehicle/equipment loans
Home and home equity loans
Personal loans
Corporate loans
Mixed asset pool
Total
Exposures deducted
entirely from
Tier-1 capital
Credit enhancing
interest-only strips
deducted from
total capital
` in billion
Credit enhancing
interest-only strips
deducted from
total capital1
—
—
—
—
—
—
—
—
—
—
—
—
2.87
—
0.22
—
7.03
10.12
1. PTCs originated by the Bank whose external credit ratings are at least partly based on unfunded support provided by the
Bank have been treated as unrated and deducted from the capital funds at their book values.
9. MARKET RISK IN TRADING BOOK
a. Market risk management policy
Risk management policies
Market risk is the possibility of loss arising from changes in the value of a financial instrument as a result of changes
in market variables such as interest rates, exchange rates, credit spreads and other asset prices. The market risk
for the Bank is managed in accordance with the Investment Policy and Derivatives Policy, which are approved by
the Board. The policies ensure that operations in securities, foreign exchange and derivatives are conducted in
accordance with sound and acceptable business practices and are as per the extant regulatory guidelines, laws
governing transactions in financial securities and the financial environment. The policies contain the limit structure
that governs transactions in financial instruments. The policies are reviewed periodically to incorporate therein,
changed business requirements, economic environment and revised policy guidelines.
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Risk management objectives
The Bank manages its market risk with the broad objectives of:
1. Management of market risk such as interest rate risk, currency risk, equity risk and credit spread risk arising
from the investments and derivatives portfolio.
2. Proper classification, valuation and accounting of investments and derivatives portfolio.
3. Adequate and proper reporting of investments and derivative products.
4. Compliance with regulatory requirements.
5. Effective control over the operation and execution of market related transactions.
Structure and organisation of the market risk management function
The Market Risk Management Group (MRMG), which is an independent function, reports to the Head - RMG. MRMG
exercises independent control over the process of market risk management and recommends changes in policies
and methodologies for measuring market risk.
To comply with the home and host country regulatory guidelines and to have independent control groups there is
clear functional separation of:
• Trading i.e. front office;
• Monitoring, control, settlements and accounting i.e. Treasury Middle Office Group.
Strategies and processes
Internal control system
Treasury operations warrant elaborate control procedures. Keeping this in view, the following guidelines are
followed for effective control of the treasury operations:
1. Delegation
Appropriate delegation of administrative powers has been put in place for treasury operations. Keeping in view
the size of the investment portfolio and the variety of securities that the Bank has been dealing in, authority for
investment decisions has been delegated to various dealers depending on exigencies of business.
Treasury Middle Office Group (TMOG) is responsible for an independent check of the transactions entered into
by the front office. It also monitors the various limits, which have been laid down in the Investment Policy.
2. System controls
The system used for recording, processing, monitoring and accounting of treasury transactions have adequate
data integrity controls. The process for enabling/disabling role-based access is also documented.
3. Exception handling processes
The Investment Policy sets out deal-size limits for various products. Various coherence checks have been
inserted in the system for ensuring that the appropriate deal size limits are enforced to minimise exceptions.
Additionally, the Investment Policy lists the value-at-risk (VaR) limits and stop loss limits for different groups. It
also defines the approval mechanism in case of breach of these limits.
Scope and nature of risk reporting and/or measurement systems
Reporting
The Bank periodically reports on the various investments and their related risk measures to the senior management
and the committees of the Board. The Bank also periodically reports to its various regulators as per the reporting
requirements of the respective regulators.
Measurement
The Bank has devised various risk metrics for different products and investments. These risk metrics are measured
and reported to the senior management independently by TMOG. Some of the risk metrics adopted by the Bank
for monitoring its risks are VaR, duration of equity (DoE), price value of basis point (PV01) and stop loss amongst
others. Limits are placed on various risk metrics which are monitored on a periodic basis.
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Hedging and mitigation
Limits on positions that can be maintained are laid out in the relevant policies. All business groups are required to
operate within these limits.
Hedge transactions for banking book transactions are periodically assessed for hedge effectiveness.
Frameworks in overseas banking subsidiaries
Frameworks that are broadly similar to the above framework have been established at each of the overseas banking
subsidiaries of the Bank to manage market risk. The frameworks are established considering host country regulatory
requirements as applicable.
b. Capital requirements for market risk
The capital requirements for market risk (general and specific) at March 31, 2011 were:
Capital required
- for interest rate risk1
- for foreign exchange (including gold) risk
- for equity position risk
1.
Includes capital required of ` 0.65 billion for securitisation exposure.
10. OPERATIONAL RISK
a. Operational risk management framework
` in billion
Amount
34.02
27.65
0.92
5.45
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people or systems, or
from external events. Operational risk includes legal risk but excludes strategic and reputation risk. Operational
risk is inherent in the Bank’s business activities in both domestic as well as overseas operations and covers a wide
spectrum of issues.
Objectives
The objective of the Bank’s operational risk management is to manage and control operational risks in a cost
effective manner within targeted levels of operational risk consistent with the Bank’s risk appetite as specified in
the Operational Risk Management Policy (the Policy). The Policy aims to:
• Define Bank level operational risk appetite;
• Establish clear ownership and accountability for management and mitigation of operational risk;
• Help business and operations to improve internal controls, reduce likelihood of occurrence of operational risk
incidents and minimise potential impact of losses;
• Minimise losses and customer dissatisfaction due to failure in processes; and
• Develop comprehensive operational risk loss database for effective mitigation.
Operational risk management governance and framework
In line with the RBI guidelines, an independent Operational Risk Management Group (ORMG) was set up in 2006.
The Bank’s operational risk management governance and framework risk is defined in the Policy. While the Policy
provides a broad framework, detailed standard operating procedures for operational risk management processes
are established. For the purpose of robust quality of operational risk management across the Bank, the operational
risk management processes of the Bank have been certified for ISO 9001:2008 standard.
The Policy specifies the composition, roles and responsibilities of Operational Risk Management Committee (ORMC).
ORMC is responsible for overseeing all material operational risks, responses to risk issues and the adequacy and
effectiveness of controls within a given operational risk control area.
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The key elements in the operational risk management framework include:
Identification and assessment of operational risks and controls;
•
• New products and processes approval framework;
• Measurement through incident and exposure reporting;
• Monitoring through key risk indicators;
• Mitigation through process and controls enhancement and insurance; and
• Reporting of operational risk profiles to the business groups.
Identification and assessment
Operational risks and controls across the Bank are documented and updated regularly. Each business and operations
group in the Bank has business operational risk managers within the group. ORMG along with these managers
facilitates the business and operation groups for carrying out risk and control self-assessments on a periodic
basis as per the plan approved by the ORMC. Risk mitigation plans are monitored to ensure timely mitigation of
risks. Internal controls are tested by Internal Audit Group in the Bank. The testing results are incorporated in the
operational risk assessment. The Bank has a comprehensive Product and Process Approval framework along with
the detailed operating guidelines for effective new product and process risk management. As per the framework,
Bank has a Product and Process Approval Committee (PAC) in place. The role of PAC is to assess the proposed
product offering/process improvement from the business and operational perspective, examine the feasibility of
system requirements for supporting the product/process and ascertain that adequate risk mitigation and legal and
compliance measures are considered.
Measurement, monitoring, mitigation and reporting
Operational risk incidents are reported regularly and transactions results in losses are routed through operational
risk account. Root cause analysis is carried out for the significant operational risk incidents reported and corrective
actions are incorporated back into respective processes.
The Bank has initiated steps to adopt advanced approaches for operational risk capital computation. The Bank is
taking steps to compute capital charge across eight business lines as per the requirements of the standardised
approach for computation of operational risk capital charge. The Bank has been estimating operational VaR for the
purpose of ICAAP. The operational VaR is estimated based on the principles of advanced measurement approach
by using internal loss data, scenario analysis and external loss data. The operational VaR is stress tested on a
periodic basis to ensure adequacy of the capital provided for operational risk and is compared with trends of actual
losses.
Operational risk profiles are presented to the business and operations on a periodic basis. Operational risk exposures
(risk and control self assessment results, operational risk incidents analysis, key risk indicators and open risks) are
monitored by the ORMC on a quarterly basis and are also being reported to the business heads in the form of
dashboards on a quarterly basis. Operational risk management status along with significant incidents analysis is
updated to the Risk Committee and to the Board on a half-yearly basis. The level and direction of operational risk on
the basis of a set of key risk indicators covering six areas namely process, technology, people, event, outsourcing
and reputation, is presented to the Risk Committee and the Board on a quarterly basis.
For facilitating effective operational risk management, the Bank has implemented a comprehensive operational risk
management system in the financial year 2010. The software comprises five modules namely incident management,
risk and control self-assessment, key indicators, scenario analysis and issues and action. The Bank is in the process
of implementing economic capital system for operational risk during the financial year 2012.
Operational risk management in international locations
ORMG is responsible for design, development and continuous enhancement of the operational risk management
framework across the Bank including overseas banking subsidiaries and overseas branches. While the common
framework is adopted, suitable modifications in the processes are carried out depending upon the requirements
of the local regulatory guidelines. ORMG exercises oversight through the process of periodic review of operational
risk management in the international locations.
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b. Capital requirement for operational risk (March 31, 2011)
As per the RBI guidelines on Basel II, the Bank has adopted Basic Indicator approach for computing capital charge
for operational risk. The capital required for operational risk at March 31, 2011 was ` 26.25 billion.
11. INTEREST RATE RISK IN THE BANKING BOOK (IRRBB)
a. Risk Management Framework for IRRBB
Interest rate risk is the risk of potential variability in earnings and capital value resulting from changes in market
interest rates. IRRBB refers to the risk of deterioration in the positions held on the banking book of an institution
due to movement in interest rates over time. The Bank holds assets, liabilities and off balance sheet items across
various markets with different maturity or re-pricing dates and linked to different benchmark rates, thus creating
exposure to unexpected changes in the level of interest rates in such markets.
Organisational set-up
ALCO is responsible for management of the balance sheet of the Bank with a view to manage the market risk
exposure assumed by the Bank within the risk parameters laid down by the Board of Directors/Risk Committee. A
Global Asset Liability Management (GALM) Group at the Bank monitors and manages the risk under the supervision
of ALCO. Further, the Asset Liability Management (ALM) groups in overseas branches manage the risk at the
respective branches, under direction of the Bank’s GALM group.
The ALM Policy of the Bank contains the prudential limits on liquidity and interest rate risk, as prescribed by
the Board of Directors/Risk Committee/ALCO. Any amendments to the ALM Policy can be proposed by business
group(s), in consultation with the market risk and compliance teams and are subject to approval from ALCO/Risk
Committee/Board of Directors, as per the authority defined in the Policy. The amendments so approved by ALCO
are presented to the Board of Directors/Risk Committee for information/approval.
TMOG is an independent group responsible for preparing the various reports to monitor the adherence to the prudential
limits as per the ALM Policy. These limits are monitored on a regular basis at various levels of periodicity. Breaches,
if any, are duly reported to ALCO/Risk Committee/Board of Directors, as may be required under the framework
defined for approvals/ratification. Upon review of the indicators of IRRBB and the impact thereof, ALCO may suggest
necessary corrective actions in order to realign the exposure with the current assessment of the markets.
Risk measurement and reporting framework
The Bank proactively manages impact of IRRBB as a part of its ALM activities. ALM policy defines the different types
of interest rates risks that are to be monitored, measured and controlled. ALCO decides strategies for managing
IRRBB at the desired level. Further, ALCO periodically gives direction for management of interest rate risk on the
basis of its expectations of future interest rates. Based on the guidance, GALM manages the IRRBB with the help of
various tools i.e. gap analysis, earning at risk (EaR), DoE, stress testing for basis risk etc. These tools are as follows:
•
Gap analysis: The interest rate gap or mismatch risk is measured by calculating gaps over different time
intervals at a given date for domestic and overseas operations. Gap analysis measures mismatches between
rate sensitive liabilities (RSL) and rate sensitive assets (RSA) (including off-balance sheet positions). The
report is prepared by grouping rate sensitive liabilities, assets and off-balance sheet positions into time
buckets according to residual maturity or next re-pricing period, whichever is earlier. For non-maturity assets/
liabilities (for instance, working capital facilities on the assets side and current and savings account deposits
on the liabilities side) grouping into time buckets is done based on behavioral studies or by making certain
assumptions. The difference between RSA and RSL for each time bucket signifies the gap in that time bucket.
The direction of the gap indicates whether net interest income is positively or negatively impacted by a change
in the direction of interest rates and the extent of the gap approximates the change in net interest income for
that given interest rate shift. The ALM Policy of the Bank stipulates bucket-wise limits on interest rate gaps for
the domestic operations of the Bank, linked to the networth of the Bank.
• EaR: From an EaR perspective, the gap reports indicate whether the Bank is in a position to benefit from rising
interest rates by having a positive gap (RSA > RSL) or whether it is in a position to benefit from declining
interest rates by a negative gap (RSL > RSA). The Bank monitors the EaR with respect to net interest income
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(NII) based on a 100 basis points adverse change in the level of interest rates. The magnitude of the impact over
a one year period, as a percentage of the NII of the previous four quarters gives a fair measure of the earnings
risk that the Bank is exposed to. The EaR computations include the banking book as well as the trading book.
For some of the products, Bank provides its depositors and borrowers an option to terminate the deposit/
loan pre-maturely. These products may or may not provide for a penalty for premature termination. In case of
pre-mature terminations, the Bank faces a risk of re-pricing of the assets/liabilities at the current rates and the
resultant impact on the NII (adjusted for the penalty), over and above the impact as estimated through EAR.
However, the re-pricing/re-investment risk is partly mitigated on account of the premature termination option
in wholesale term deposits and term loans being captured through the behavioral studies implemented in the
interest rate gap statement as mentioned in the earlier paragraphs.
• DoE: Change in the interest rates also have a long-term impact on the market value of equity of the Bank, as
the economic value of the Bank’s assets, liabilities and off-balance sheet positions is impacted . Duration is
a measure of interest rate sensitivity of assets, liabilities and also equity. It may be defined as the percentage
change in the market value of an asset or liability (or equity) for a given change in interest rates. Thus DoE is
a measure of change in the market value of equity of a firm due to the identified change in the interest rates.
The Bank uses DoE as a part of framework to manage IRRBB for its domestic and overseas operations and
the ALM Policy stipulates a limit on the overall DoE of the Bank in order to monitor and manage IRRBB. The
DoE computations include the banking book as well as the trading book. The utilisation against these limits is
computed for appropriate interest rate movements and monitored periodically.
• Stress test for basis risk: The assets and liabilities on the balance sheet are priced based on multiple benchmarks
and when interest rates fluctuate, all these different yield curves may not necessarily move in tandem exposing
the balance sheet to basis risk. Therefore, over and above the EaR, the Bank measures the impact of differential
movement in interest rates across benchmark curves. For the domestic operations various scenarios of interest
rate movements (across various benchmark yield curves) are identified and the worst-case impact is measured
as a percentage of the aggregate of Tier-1 and Tier-2 capital. These scenarios take into account the magnitude
as well as the timing of various interest rate movements (across curves). Currently, the scenarios provide for
differential movements in each yield curve but the movement in each curve is assumed to be parallel. Further,
for the overseas operations of the Bank, assets and liabilities are primarily linked to LIBOR and the basis risk is
computed for a parallel shift in LIBOR as well as spread over LIBOR for the borrowings of the Bank. The basis
risk for the Bank is summations of the risk on domestic and overseas operations.
Most of the other banking entities in the Group, wherever applicable, also monitor IRRBB through similar tools and
limit framework.
Marked-to-market (MTM) on the trading book
In addition to the above, the price risk of the trading book is monitored through a framework of VaR and cumulative
stop loss limits. The trading book includes all fixed income securities in available for sale and held for trading book
including securities held for statutory liquid ratio maintenance purposes in these books, interest rate swaps, and any
other derivatives, which have to be marked to market. The management of price risk of the trading book is detailed in
the Investment Policy.
Hedging policy
Depending on the underlying asset or liability and prevailing market conditions, the Bank enters into hedge
transactions for identified assets or liabilities. The Bank has a policy for undertaking hedge transactions. These
hedges are periodically assessed for hedge effectiveness as per the applicable financial guidelines. The hedges that
meet the effectiveness requirements are accounted for on a basis similar to the underlying asset/liability.
Frameworks in overseas banking subsidiaries
Frameworks that are broadly similar to the above framework have been established at each of the overseas
banking subsidiaries of the Bank to manage interest rate risk in the banking book. The frameworks are established
considering host country regulatory requirements as applicable.
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b. Level of interest rate risk
The following table sets forth one possible prediction of the impact on the net interest income of changes in interest
rates on interest sensitive positions for the year ending March 31, 2012, assuming a parallel shift in the yield curve:
Currency
INR
USD
JPY
GBP
EURO
CHF
CAD
Others
Total
` in billion
Change in interest rates1
-100 basis points
403.2
(588.1)
(27.4)
(379.1)
(4.0)
(0.2)
(283.4)
(140.9)
(1,019.9)
+100 basis points
(403.2)
588.1
27.4
379.1
4.0
0.2
283.4
140.9
1,019.9
1. Consolidated figures for ICICI Bank and its banking subsidiaries, ICICI Home Finance Company, ICICI Securities Primary
Dealership Limited and ICICI Securities and its subsidiaries.
The following table sets forth one possible prediction of the impact on economic value of equity of changes in
interest rates on interest sensitive positions at March 31, 2011, assuming a parallel shift in the yield curve:
Currency
INR
USD
JPY
GBP
EURO
CHF
CAD
Others
Total
` in billion
Change in interest rates1,2
-100 basis points
29,404.6
1,196.5
2.8
(628.0)
(278.7)
(12.9)
112.7
(133.5)
29,663.5
+100 basis points
(29,404.6)
(1,196.5)
(2.8)
628.0
278.7
12.9
(112.7)
133.5
(29,663.5)
1.
For INR, coupon and yield of Indian government securities and for other currencies, coupon and yield of currency-wise
Libor/swap rates have been assumed across all time buckets that are closest to the mid point of the time buckets.
2. Consolidated figures for ICICI Bank and its banking subsidiaries, ICICI Home Finance Company, ICICI Securities Primary
Dealership Limited, ICICI Securities and its subsidiaries.
12. LIQUIDITY RISK
Liquidity risk is the risk of inability to meet financial commitments as they fall due, through available cash flows or
through sale of assets at fair market value. It is the current and prospective risk to the Bank’s earnings and equity arising
out of inability to meet the obligations as and when they become due. It includes both, the risk of unexpected increases
in the cost of funding an asset portfolio at appropriate maturities as well as the risk of being unable to liquidate a position
in a timely manner at a reasonable price.
The goal of liquidity risk management is to be able, even under adverse conditions, to meet all liability repayments on
time and to fund all investment opportunities by raising sufficient funds either by increasing liabilities or by converting
assets into cash expeditiously and at reasonable cost.
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Organisational set-up
The Bank manages liquidity risk in accordance with its ALM Policy. This policy is framed as per the extant regulatory
guidelines and is approved by the Board of Directors. The ALM Policy is reviewed periodically to incorporate changes
as required by regulatory stipulation or to realign with changes in the economic landscape. The ALCO of the Bank
formulates and reviews strategies and provides guidance for management of liquidity risk within the framework laid out
in the ALM Policy. The Risk Committee of the Board has oversight on the ALCO.
Risk measurement and reporting framework
The Bank proactively manages liquidity risk as a part of its ALM activities. The Bank uses various tools for measurement
of liquidity risk including the statement of structural liquidity (SSL), dynamic liquidity gap statements, liquidity ratios and
stress testing through scenario analysis.
The SSL is used as a standard tool for measuring and managing net funding requirements and assessment of surplus
or shortfall of funds in various maturity buckets in the future. The cash flows pertaining to various assets, liabilities
and off-balance sheet items are placed in different time buckets based on their contractual or behavioural maturity. For
non-maturity assets/liabilities e.g. working capital facilities on the assets side and current account & savings account
deposits on the liabilities side grouping into time buckets is done based on the assumptions. The SSL for INR operations
is prepared on daily basis for the domestic operations of the Bank and SSL for international operations of the Bank is
prepared periodically and the utilisation against gap limits laid down for each bucket are reviewed by ALCO.
The Bank also prepares dynamic liquidity gap statements, which in addition to scheduled cash flows, also considers the
liquidity requirements pertaining to incremental business and the funding thereof. The dynamic liquidity gap statements
are prepared in close coordination with the business groups, and cash flow projections based on the same are presented
to ALCO periodically. As a part of the stock and flow approach, the Bank also monitors various liquidity ratios, and limits
are laid down for these ratios under the ALM Policy.
Further, the Bank has a Board approved liquidity stress testing framework, as per which the Bank gauges its liquidity
position under a range of stress scenarios. These scenarios cover Bank specific and market-wide stress situations and
have been designed for the domestic and the international operations of the Bank. The potential impact on the Bank’s
financial position for meeting the stress outflows under these scenarios is measured and is subject to a stress tolerance
limit specified by the Board. The results of liquidity stress testing are reported to ALCO on a monthly basis.
The Bank has also framed a Liquidity Contingency Plan (LCP) which serves as a framework for early identification and
calibrated action in the event of tight liquidity conditions. The LCP includes various indicators which are monitored
regularly, and lays down the mechanism for escalation, remedial action and crisis management until return to normalcy.
Liquidity management
The Bank has diverse sources of liquidity to allow for flexibility in meeting funding requirements. For the domestic
operations, current accounts and savings deposits payable on demand form a significant part of the Bank’s funding
and the Bank is working with a concerted strategy to sustain and grow this segment of deposits along with retail
term deposits. These deposits are augmented by wholesale deposits, borrowings and through issuance of bonds and
subordinated debt from time to time. Loan maturities and sale of investments also provide liquidity. The Bank holds
unencumbered, high quality liquid assets to protect against stress conditions.
For domestic operations, the Bank also has the option of managing liquidity by borrowing in the inter-bank market on
a short-term basis. The overnight market, which is a significant part of the inter-bank market, is susceptible to volatile
interest rates. To limit the reliance on such volatile funding, the ALM Policy has stipulated limits for borrowing and
lending in the inter-bank market. The Bank also has access to refinancing facilities extended by the RBI.
For the overseas operations too, the Bank has a well-defined borrowing program. The US dollar is the base currency
for the overseas branches of the Bank, apart from the branches where the currency is not freely convertible. In order
to maximise the borrowings at reasonable cost, liquidity in different markets and currencies is targeted. The wholesale
borrowings are in the form of bond issuances, syndicated loans from banks, money market borrowings, inter-bank
bilateral loans and deposits, including structured deposits. The Bank also raises refinance from banks against the buyer’s
credit and other forms of trade assets. The loans that meet the criteria of the Export Credit Agencies are refinanced as
per the agreements entered with these agencies. Apart from the above the Bank is also focused on increasing the share
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of retail deposit liabilities, in accordance with the regulatory framework at the host countries.
Frameworks that are broadly similar to the above framework have been established at each of the overseas banking
subsidiaries of the Bank to manage liquidity risk. The frameworks are established considering host country regulatory
requirements as applicable.
In summary, the Bank has in place robust governance structure, policy framework and review mechanism to ensure
availability of adequate liquidity even under stressed market conditions.
13. RISK MANAGEMENT FRAMEWORK OF ICICI SECURITIES PRIMARY DEALERSHIP LIMITED
The Board of Directors of the Company maintains oversight on the risk management framework of the Company
and approves all major risk management policies and procedures. The Risk Management Committee of the Board is
responsible for analysing and monitoring the risks associated with the different business activities of the Company and
ensuring adherence to the risk and investment limits set by the Board of Directors.
The risk management function in the Company is managed by the Credit Risk Management Group within the broad
framework of risk policies and guidelines established by the Risk Management Committee.
The risk control framework is through an effective management information system, which tracks the investments as
well as the VaR reports for portfolios. Valuation of instruments is carried out by mid-office as per guidelines issued by
RBI/FIMMDA and other applicable regulatory agencies.
14. RISK MANAGEMENT FRAMEWORK OF ICICI HOME FINANCE COMPANY LIMITED
The Board of Directors of the Company is responsible for the oversight and control of the functioning of the Company
and approves all major policies and procedures of the Company. The Board of Directors has oversight of all the risks
assumed by the company. The Board also functions through various board level and executive committees such as:
a) Audit Committee
b) Management Committee
c) Asset Liability Management Committee (ALCO)
d) Committee of Directors (COD)
e) Committee of Executives (COE)
f) Product & Processes Approval Committee (PAC)
g) Banking Operations and Premises Committee
The policies approved by the Board of Directors form the governing framework for overall risk management. The key
policies in this regard are Asset Liability Management Policy, Investment Policy, Risk Management Policy, Outsourcing
Policy and Anti-Money Laundering Policy. Business activities are undertaken within this framework. Independent support
groups such as Compliance, Policy & Risk, Internal Audit and Legal have been constituted to facilitate independent
evaluation, monitoring and reporting of various risks. These support groups function independent of the business
groups and represent themselves at the various committees.
15. RISK MANAGEMENT FRAMEWORK OF ICICI PRUDENTIAL LIFE INSURANCE COMPANY LIMITED
The risk governance structure consists of the Board, Board Risk Committee (BRC), Executive Risk Committee (ERC) and
its sub committees. The BRC comprises non-executive directors. The ERC, chaired by the Chief Actuary, is responsible
for assisting the Board and the BRC in their risk management duties and, in particular, is responsible for the approval of
all new products launched by the Company.
The Investment Risk Committee assists the ERC in identification, measurement, monitoring and control of market,
liquidity and credit risks. This includes asset liability management through regular monitoring of the equity backing
ratios and asset liability duration mismatch.
The Insurance Risk Committee assists the ERC in identification, measurement, monitoring and control of insurance risks
i.e. demographic and expense risks.
The Operational Risk Committee assists the ERC in identification, measurement, monitoring and control of operational
risks i.e. risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events.
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The risk management model of the organisation comprises a four stage continuous cycle, namely identification and
assessment, measurement, monitoring and control of risks. The Company has in place a Risk Management Policy which
details the strategy and procedure adopted to follow the risk management cycle at the enterprise level. A risk report
detailing the key risk exposures faced by the Company and mitigation measures is placed before the BRC on a periodic
basis.
16. RISK MANAGEMENT FRAMEWORK OF ICICI LOMBARD GENERAL INSURANCE COMPANY LIMITED
The risk management framework of the Company is overseen by the Risk Management Committee (Risk Committee) of
the Board. The framework is broadly structured as follows:
• Risk identification, assessment and mitigation process
• Risk management and oversight structure
• Risk monitoring and reporting mechanism
As part of the Enterprises Risk Management exercise, critical risks along with the detailed mitigation plan have been
presented to the Risk Committee. The risk mitigation plans are monitored regularly by the Company to ensure their
timely and appropriate execution. A Risk Register is maintained to capture inventory of risks that the Company is
exposed to along with mitigation and corrective action plans. The Risk Committee is updated on the progress on a
quarterly basis.
The senior management of the Company is responsible for periodic review of the risk management process to ensure
that the process initiatives are aligned to the desired objectives. The Management Reassurance Function is responsible
for review of risk management processes within the Company and for the review of self-assessments of risk management
activities. Further, compliance testing is done on a periodic basis and the Risk Committee is kept appraised of the
outcome of the same.
The Company’s reinsurance program defines the retention limit for various classes of products. Further, the Company
has in place a retention reinsurance philosophy which defines the product-wise retention limits on a per risk basis as
well as a retention limit on a per event basis. The Underwriting Policy defines product-wise approval limits for various
underwriters. The Investment Policy lays down the asset allocation strategy to ensure financial liquidity, security and
diversification. The Capital Adequacy and Liquidity Management Policy covers maintenance of adequate level of capital
at all times to meet diverse risk related to market and operations.
17. RISK MANAGEMENT FRAMEWORK OF ICICI SECURITIES LIMITED
The Board of Directors of ICICI Securities has constituted a Risk Management Committee (RMC) for identifying and
assessing risks, framing risk management policies and methodologies, ensuring compliance of the same, managing
various risks, analysing and monitoring various products/processes/policies from an operational risk perspective and
suggesting risk controls to ensure that the residual risk of various business activities is within tolerable limits. The RMC
meets at least once in a quarter.
The risk management function in the Company is performed by the Internal Controls team within the broad framework
as contained in the Corporate Risk and Investment Policy (CRIP). The CRIP is approved by the RMC. The Corporate Risk
Management Group along with Operations Risk Management Group aims at anticipating risks, proactively planning for
managing such risks and being better equipped for handling/managing any uncertainties.
The finance team works under the broad framework of Asset Liability Management Policy to ensure maintenance of
adequate level of economic capital at all times.
Further, the following board-constituted committees also contribute to the operational efficiency and risk management
of the company:
a. Audit Committee.
b. Product & Processes Approval Committee (PAC)
c. Compliance Committee
d.
Investment Committee
e. Commitment Committee
f.
Information Technology (IT) Risk & Customer Service Committee
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Apart from the above, various policies including Prevention of Money Laundering Policy, Oversight Policy, Whistle
Blower Policy, Prevention of Insider Trading Policy (Code of Conduct) etc. help in mitigating various risks faced by
the Company. Further, activities such as internal audit of various business units and corporate services, risk based
compliance monitoring, risk and controls self assessment, operational risk reviews, SEBI mandated internal audit of
broking operations, etc. ensure the independent evaluation, monitoring and reporting of the risks.
18. RISK MANAGEMENT FRAMEWORK OF ICICI VENTURE FUNDS MANAGEMENT COMPANY LIMITED
The policies approved by the Board of Directors form the governing framework for overall risk management. The key
policies in this regard are Anti-money laundering policy, Insider Trading Policy, Chinese Wall Policy, Conflict Resolution
Policy and Arm’s Length Policy. Business activities are undertaken within this framework. Independent groups such as
Compliance and Operational Risk have been constituted to facilitate independent evaluation, monitoring and reporting
of various risks. These groups function independent of the business groups and represent themselves at the Audit
Committee of the Board of the company and also interface with the corresponding groups at ICICI Bank for a Group level
oversight.
The Operational Risk Management function was created during fiscal 2011 to establish an operational risk management
framework in the company. The framework includes the Operational Risk Management Policy and Board-approved
process manuals. A Risk Register has also been created and maintained as a part of the Risk and Control Self Assessment
exercise involving all the departments in the company. The Register contains an inventory of risks that the company is
exposed to along with existing controls.
19. RISK MANAGEMENT FRAMEWORK OF ICICI PRUDENTIAL ASSET MANAGEMENT COMPANY LIMITED
ICICI Prudential AMC has in place a Risk Management Policy detailing the philosophy and procedure adopted to identify,
measure, monitor and treat /mitigate risk at the enterprise level. As per the policy, the management reviews the risk
levels and action plans at a Risk Management Committee (RMC) meeting which is convened periodically.
The RMC addresses a wide range of issues such as operational risk, investment risk, reputation risk and strategic risk.
Also a key risk report summarising the key risks faced by the enterprise is placed before the Audit & Risk Committee
(which is a board-level committee) and RMC periodically.
Investment Risk oversight forms an integral part of the overall risk management framework. The process of assessment
of investment risk includes portfolio construction/asset allocation, analysis of performance of funds, review of
counterparty/concentration risk, review of trading risk controls etc. To sensitise management regarding any exceptions
in the area of investments, the investment risk oversight reporting forms part of the RMC agenda.
The company has in place various policies to manage operational risk such as the business continuity plan, information
technology security policy, product and process approval guidelines), procedure manuals etc.
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Innovative solutions to
enhance customer experience
At ICICI Bank, we understand that consumers need access
to smart and efficient solutions to manage their financial
needs. By offering a bouquet of services, many of which
are the first of their kind in the industry, we have changed
the paradigm of banking in the country.
As a pioneer in the banking industry, we believe in
leveraging technology to make banking more accessible
and convenient to our customers. Through continuous
innovations across banking touch points such as ATMs,
Internet, Mobile and Call Centre, we have made financial
transactions faster, simpler and more secure.
Our adoption of innovative technology is a manifestation
of our philosophy of ‘Khayaal Aapka’. Offering convenience
through technology-led solutions is a reinforcement of
our commitment towards continuously improving and
deepening our relationship with our customers.
On April 1, 2011, Ms. Chanda Kochhar, Managing Director & CEO was awarded the prestigious Padma Bhushan
by the President of India
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17th Annual Report and Accounts 2010-2011
ICICI BANK LIMITED
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400 051
www.icicibank.com
Innovative
solutions to enhance
customer experience
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