ICICI Bank Limited
Annual Report 2018

Plain-text annual report

Partnering a DYnaMiC inDia AnnuAl RePoRt 2017-2018 Contents Partnering a Dynamic India Financials ICICI Bank at a Glance Financial Highlights Message from the Chairman Message from the MD & Ceo 10 Message from the Coo 11 Messages from the executive Directors Board of Directors Board Committees and Management team 135 Independent Auditors’ Report – Financial Statements 140 Financial Statements of ICICI Bank limited 230 236 291 Independent Auditors’ Report – Consolidated Financial Statements Consolidated Financial Statements of ICICI Bank limited and its Subsidiaries Statement Pursuant to Section 129 of Companies Act, 2013 empowering the Dynamic Indian 293 Basel Pillar 3 Disclosures Propelling a Dynamic India Inc. 294 Glossary of terms Collaborating with a Dynamic Bharat 1 2 4 6 8 12 13 14 16 18 20 nurturing a Dynamic team ICICI 22 Promoting Inclusive Growth for a Dynamic India EnclOsUREs 24 Awards & Recognitions 25 Directors’ Report 92 Auditor’s Certificate on Corporate Governance 93 Business overview 107 Management’s Discussion & Analysis 133 Key Financial Indicators: last 10 Years notice Attendance Slip and Form of Proxy REGISTERED OFFICE - ICICI Bank tower, near Chakli Circle, old Padra Road, Vadodara 390 007 tel : +91-265-6722239 CIn : l65190GJ1994PlC021012 STATUTORY AUDITORS - B S R & Co. llP, 5th Floor, lodha excelus, Apollo Mills Compound, n. M. Joshi Marg, Mahalaxmi, Mumbai 400 011 CORPORATE OFFICE - ICICI Bank towers, Bandra-Kurla Complex, Mumbai 400 051 tel : +91-22-33667777 Fax : +91-22-26531122 REGISTRAR AND TRANSFER AGENTS - 3i Infotech limited, International Infotech Park, tower 5, 3rd Floor, Vashi Railway Station Complex, Vashi, navi Mumbai 400 703 Partnering a DYnaMiC inDia India is on the move. At ICICI Bank, we are on the move too, to support the ambitions and aspirations of Indians and India Inc. Our mission is to help realise the aspirations of a dynamic India in the backdrop of a rapidly changing economic and technological landscape. ICICI Bank is partnering with a dynamic India by constantly innovating its products and services for its individual and business customers across urban and rural India. Driven by our core ethos of putting customers first, we are aligning our internal processes and strengthening the capabilities of our employees to lead the charge in transforming banking. We continue to create the latest trends in financial services by deploying innovative solutions to make banking more personalised, more accessible and more intuitive. At ICICI Bank, our promise to our stakeholders is that we are ready to shape the financial services industry as a dynamic India marches ahead. EmpOwERing thE Dynamic inDian Indians today are challenging the status quo and moving ahead. At ICICI Bank, we are cognisant of the evolving needs and aspirations of Indians, whether they reside in metros or smaller towns and whether they are salaried or self-employed. We are continuously investing in personalising, digitising and innovating our industry-leading products and services to empower our dynamic fellow citizens in fulfilling their ambitions. ICICI Bank, we are committed cOllabORating with a Dynamic bhaRat the future of Bharat resides in her dynamic villages. At to creating and strengthening local ecosystems to make our villages self-sustaining. our initiatives promote sustainable growth and financial inclusion and help Bharat in becoming ready for a digital, cashless and prosperous future. We have created over 600 Digital Villages across 21 states in India over the last two years to help support this ambition. pROpElling a Dynamic inDia inc. India Inc. is moving rapidly to meet the needs of a dynamic India and a transforming global economy. It is producing global leaders across industries. At ICICI Bank, we have always propelled the global and local aspirations of Indian businesses by enabling corporates to grow and to operate with speed and efficiency. our extensive experience and wide gamut of best-in-class innovative and customised banking solutions help large corporates, young entrepreneurs and small and medium enterprises alike in managing their day- to-day transactions and in raising capital. nURtURing a Dynamic tEam icici A dynamic team ICICI is at the core of our partnership with a dynamic India. our leaders and employees drive our pursuit for constant innovation, profitable growth and flawless execution. We are nurturing our teams to become future-ready by reinforcing our commitment to building a DYnAMIC (Digital, Young, nurturing, Agile, Mindful, Inclusive and Connected) work culture. In addition to investing in capability building and development of future leaders, we are consciously creating an environment that promotes continuous learning, unlearning and relearning for a dynamic world. 1 ICICI Bank at a glanCe ICICI Bank is the country’s largest private sector bank by consolidated assets. We pride ourselves in continuing to support India’s growth story with our extensive distribution network, diversified portfolio and leadership in technology. ` 11,242.81 billion Consolidated total Assets ` 189.40 billion Core operating Profit (Profit before provisions and tax, excluding treasury income) 21% Year-on-Year Growth in Retail loans 56.6% Retail loans as a Proportion of total loans 51.7% CASA Ratio 18.42% total Capital Adequacy Ratio All information as on March 31, 2018 4,867 Branches 14,367 AtMs 2 annual report 2017-2018Digital First bank over 95% of financial and non-financial transactions undertaken by savings account customers in fiscal 2018 were done outside branches. ICICI Bank’s mobile and internet channels offer more than 250 banking services. Digital transactions of over ` 7 trillion Digital channels recorded over ` 7 trillion worth of transactions in fiscal 2018. biggest blockchain Deployment over 250 Indian corporates used the Bank’s blockchain platform for undertaking domestic and international trade finance transactions. ipal - First banking chatbot service available on both website and mobile app First bank in the country to offer Artificial Intelligence (AI) based chatbot services on its website and mobile application. ICICI Bank’s iPal handles about 1.3 million queries on a monthly basis. largest mortgage portfolio largest mortgage portfolio among private sector banks of more than ` 1.5 trillion. best Retail bank Declared the ‘Best Retail Bank’ in India for five years in a row at the Asian Banker excellence in Retail Financial Services awards. First bank in the country to Offer a Digital procedure for Opening ppF accounts ICICI Bank offers customers the facility to open a Public Provident Fund (PPF) account instantly and in a completely online and paperless manner. close to 20% of transactions handled by software Robotic systems over 750 software robotic systems perform close to 2 million transactions. skilled over 267,000 indians trained over 267,000 underprivileged individuals since inception through the ICICI Digital Villages Programme, Rural Self employment training Institutes (RSetIs) & ICICI Academy of Skills. best company to work For Awarded ‘Best Company to Work For’ in the Banking, Financial Services and Insurance sector by Business today magazine for the second year in a row. 3 annual report 2017-2018FInanCIal HIgHlIgHts TOTAL DEPOSITS TOTAL ADVANCES 5,609.75 4,900.39 4,214.26 45.6% 3,615.63 3,319.14 39.4% 39.5% 43.7% 40.7% 5,123.95 12.5% 5.0% 25.9% 4,642.32 16.1% 4.8% 27.3% 3,875.22 4,352.64 21.6% 24.3% 4.3% 4.4% 28.8% 27.5% 3,387.03 26.5% 4.4% 30.1% 46.6% 51.8% 56.6% 39.0% 42.5% FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 total Deposits (` in billion) Average CASA ratio Retail Domestic Corporate Small & Medium enterprise overseas total (` in billion) TOTAL ASSETS CAPITAL ADEQUACY RATIO 7,717.91 7,206.95 8,791.89 17.70% 17.02% 16.64% 4.92% 4.24% 3.55% 18.42% 2.50% 17.39% 3.03% 6,461.29 5,946.42 12.78% 12.78% 13.09% 15.92% 14.36% FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 total Assets (` in billion) tier I tier II total 4 annual report 2017-2018NII & NIM FEE INCOME 212.24 217.37 230.26 190.40 164.75 3.33% 3.48% 3.49% 3.25% 3.23% 103.41 27.2% 94.52 30.0% 88.20 35.2% 82.87 39.0% 77.58 43.5% 61.0% 64.8% 56.5% 70.0% 72.8% FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 net Interest Income (nII) (` in billion) net Interest Margin (nIM) Retail Fee Income Corporate Fee Income Fee Income (` in billion) OPERATING ExPENSES CORE OPERATING PROFIT 157.04 147.55 198.03 189.39 180.27 179.10 126.83 114.96 103.09 155.77 FY2014 FY2015 FY2016 FY2017 FY2018 FY2014 FY2015 FY2016 FY2017 FY2018 operating expenses (` in billion) Core operating Profit (` in billion) (Profit before provisions and tax, excluding treasury income) 5 annual report 2017-2018Message FroM tHe CHaIrMan icici bank has continued to focus on improving its portfolio mix, resolving stressed assets and maintaining and enhancing its customer franchise. major economies on trade issues have led to protectionist measures and counter-measures in some countries. the future course of events in this regard and their impact on global trade, growth and capital flows will have to be closely monitored. Geopolitical developments in various regions may also affect the economy and financial markets through their impact on commodity prices, risk appetite and capital flows. In India, the first half of the fiscal year 2018 was marked by the adjustment to the demonetisation of high value currency notes, and to the introduction of the Goods & Services tax. Both of them are welcome from a longer term perspective – the first step has provided an impetus to digitisation, much needed in the financial sector, and the second to elimination of the cascading effect of diverse taxes and greater formalisation of the economy. However, in the short term, these reflected in a moderation in economic growth and banking system credit growth, while banking system deposit growth continued to be high on a year-on- year basis. the second half of the year saw an improvement in economic growth. Banking system credit growth also improved lows, while deposit growth normalised. Government spending has played a significant role in boosting growth and demand. the turnaround in industrial production and the capital goods sector is particularly encouraging as it bodes well for revival in investments going forward. the economic growth outlook is positive, with most agencies forecasting higher GDP growth in fiscal 2019. At the same time, oil prices have risen significantly, which has implications for inflation and external sector parameters. the hardening of interest rates also represents a reversal in the declining interest rate environment of recent years. the post-demonetisation from I am delighted to join ICICI Bank as the Chairman of the Board of Directors. this esteemed organisation has a rich legacy of partnering India in its growth and development. Founded as a development finance bank in 1955, the institution has taken several pioneering strides in catalysing the growth of the financial industry. As a financial conglomerate, the ICICI Group has been on a continuous journey of transformation, diversification and expansion. It is a pleasure to be addressing my first message to the shareholders of ICICI Bank. the year 2017 saw positive trends in global growth, across most developed and emerging economies. this was accompanied by the normalisation of monetary policy in major economies. In recent times, differences between 6 annual report 2017-2018the corporate lending and resolution landscape underwent a radical shift during fiscal 2018. the Reserve Bank of India mandated the referral of large non-performing borrowers for resolution under the Insolvency and Bankruptcy Code. Judicial decisions as well as legislative amendments are refining the framework and process of insolvency and resolution under the Code. the Reserve Bank of India also issued its revised framework for resolution of stressed assets. these are welcome steps aimed at accelerating resolution of existing stressed loans as well as enhancing credit discipline and proactive resolution on a sustained basis going forward. years, from essentially a development finance institution with a small commercial banking business, to a large and diversified financial conglomerate. Along the way, the Bank has taken many pioneering initiatives that have contributed to the development of the financial sector as a whole. the fledgling retail and insurance businesses of 2003 have grown into leading consumer banking, life insurance and non-life insurance franchises; the Bank has kept pace with developments in technology and consumer preferences; and it has navigated through rapidly evolving operating environments, capitalising on opportunities as they emerged and changing course to address challenges. Against this backdrop, ICICI Bank has continued to focus on improving its portfolio mix, resolving stressed assets and enhancing its customer franchise. loan growth was driven by the retail segment, backed by healthy growth in deposits. the Bank’s subsidiaries continued to perform well in their respective sectors, maintaining the ICICI Group’s position as a leading diversified financial services franchise. the financial sector is the backbone of the economy. As India grows and financial penetration increases, the growth opportunities for various businesses of the Bank and its subsidiaries will be significant. I am sure the teams across the Group are focusing on maximising profitable growth, with the requisite focus on risk management and sustainable performance. In recent months, the Bank has seen some esteemed members on the Board retiring as they completed the maximum permissible tenure of eight years for independent Directors of banks under the Banking Regulation Act. Consequently, there have been several appointments to the Board to fill these vacancies. While this transition of independent Directors has been well-handled, the Bank is taking steps to ensure that going forward the retirements and induction of independent Directors are more evenly spaced out. ICICI Bank would like to thank the former Board members for their valuable contribution and support. I also take this opportunity to welcome the new Directors who bring diverse and rich experience with them, and I am sure will provide invaluable guidance to the Bank. ICICI Bank has seen its share of challenges in the recent past due to the elevated levels of nPAs but has been dealing with them in the best interest of all stakeholders. taking a longer term view of the past, it is indeed remarkable to see how the institution has grown and transformed over these In recent months, the Bank has been facing questions with regard to governance. the Board of Directors have instituted an enquiry to examine issues relating to the same. the scope of enquiry will be comprehensive and we hope to conclude the uncertainties relating to this issue at the earliest. It will be my topmost priority to uphold the best governance practices at this esteemed institution. As the new Chairman of the Bank, I am happy to be a part of this organisation and its illustrious journey. I hope that we continue to see many more innovations and transformational initiatives from ICICI Bank in the years to come. With best wishes, Girish Chandra Chaturvedi Chairman 7 annual report 2017-2018Message FroM tHe MD & Ceo the bank has made significant progress in de-risking the balance sheet and continued to enhance the franchise. resolution of stressed assets announced by the Reserve Bank of India is expected to ensure focus on proactive early resolution of stress going forward. ICICI Bank continued to focus on the strategic priorities in its 4x4 Agenda, covering Portfolio Quality and enhancing Franchise. the Bank has achieved significant success in further strengthening its balance sheet and businesses through this strategy. I would like to mention a few highlights in this regard: the Bank continued to strengthen its funding profile, with a healthy growth in its low cost deposit base. At March 31, 2018, the current account and savings account (CASA) deposits were 51.7% of total deposits. the average CASA ratio has improved from 39.5% in fiscal 2015 to 45.6% in fiscal 2018 and the cost of deposits in fiscal 2018 was less than 5.0%, the lowest in the last 10 years. the Bank has continued to improve the portfolio mix towards retail and higher rated corporate loans. the proportion of retail loans in the portfolio increased to 56.6% at March 31, 2018. A high proportion of corporate loans disbursed were to customers rated A- and above. the Bank continued to enhance and strengthen its technology capabilities and was at the forefront in offering technology-led solutions to customers. the Bank continues to invest in areas like mobility, analytics and blockchain and offer superior functionalities across all channels. Since fiscal 2016, the Bank has unlocked more than ` 140.00 billion of capital in its subsidiaries, demonstrating the value created in these business. the aggregate market capitalisation of the three listed subsidiaries is now about ` 1.00 trillion. for the economic developments in fiscal 2018 indicate a positive momentum Indian economy. the economic environment has seen a marked shift to a higher growth trajectory in the latter part of the year. the improvement in growth in the industrial sector is encouraging as it has the potential to spur recovery in capital investments in the private sector. the momentum in reforms has continued with the introduction of the Goods and Services tax. Key macroeconomic parameters including inflation and exchange rates remained stable for most of fiscal 2018. the increase in global commodity and crude oil prices however pose some risk to inflation and the current account deficit. the process of resolution of large stressed corporate assets under the Insolvency and Bankruptcy Code, 2016, has been set in motion during fiscal 2018. the new framework for 8 annual report 2017-2018 the Bank’s capital position continues to be very strong. the tier-1 capital adequacy of 15.92% and the total capital adequacy of 18.42% at March 31, 2018 were well above regulatory requirements. internal processes for increasing efficiency. the insurance, asset management & securities businesses would focus on savings & protection opportunities, working towards market leadership and value creation. the Bank’s social initiatives were focussed on skill development and rural development, with the objective of enabling every individual to participate in nation-building and the growth of the Indian economy. the ICICI Foundation for Inclusive Growth has set up skill training centres across the country and provides industry-relevant skill training to underprivileged youth. the ICICI Academy for Skills, launched in october 2013, has 24 centres operating across key urban areas. Apart from this, the Foundation also runs rural self-employment training institutes for skill training in rural areas. In fiscal 2017, ICICI Bank and ICICI Foundation had launched the ICICI Digital Villages initiative. over 600 villages have now been covered under this initiative, which encompasses digital payment ecosystems, skill training, financial inclusion and facilitating market linkages for the villagers. through the ICICI Academy for Skills, rural self- employment training institutes and the Digital Villages initiative, ICICI Foundation has imparted skill training to over 267,000 individuals till March 31, 2018, of whom 52% were women. In the past four years, the Bank has made significant progress in de-risking the balance sheet and continued to enhance the franchise. the ICICI Group has a strong market position across banking, insurance, asset management and securities. We are a leader in catering to the full spectrum of customer needs - be it savings & investments, payments & transactions, credit, protection from risks or advisory services. We believe that there are healthy growth prospects across our businesses. the retail segment would remain the key driver of growth, with segments like business banking, credit cards and personal loans growing at a higher pace off a lower base, while home loans would continue to be the largest part of the portfolio. the proportion of retail loans in the total loan portfolio is expected to increase, while the proportion of overseas loans is expected to decline. the Bank has adopted a new approach to corporate lending with enhanced focus on concentration risk. the Bank would aim to maintain a robust funding profile. the Bank will continue to invest in technology and preserve its digital leadership by offering best in-class digital products to customers and automating the Bank would like to thank all its stakeholders, including regulators, government, and employees. the Bank looks forward to the continued support of all stakeholders in its journey. customers investors, With best wishes, Chanda Kochhar MD & Ceo 9 annual report 2017-2018Message FroM tHe Coo compared to an increase of ` 1.7 trillion in the previous two and a half years. Since then the banking system accelerated the classification of assets including assets under various RBI schemes as non-performing. Various banks including ICICI Bank have undergone annual regulatory assessments and were required to report divergences in asset classification and provisions assessed by the regulator based on thresholds prescribed in the guidelines. For March 2017, no such reporting was required to be made by ICICI Bank. We continue to focus on improving portfolio quality and further strengthening internal processes. We have improved our portfolio mix with a higher share of retail loans, which has stable asset quality. We have improved the proportion of highly rated corporates in the incremental portfolio, reduced the concentration in our portfolio with incremental lending under a revised concentration risk framework and reduced the proportion of exposure to key sectors under stress. We achieved higher recoveries and played a key role in some of the large asset resolutions. looking ahead, India presents an exciting landscape of opportunities for the financial sector. the growth in savings, the increasing formalisation of the economy, the rapidly growing digitisation across various economic activities and the continuing entrepreneurship and aspirations of the Indian are driving both demand as well as innovation in the market for financial services. technology, in particular, is transforming the way financial services are conceptualised and delivered to the customers. Market infrastructure, be it in payments or credit, is also evolving quickly to keep pace with the needs of customers and financial sector players. the ICICI Group is a unique franchise with a presence across customer segments, products and geographies, excellent technology capabilities and a diverse talent pool. our objective is to bring all our capabilities together to be the trusted partner in serving our customers and become their banker of choice. We will focus on streamlining processes and empowering our teams to deliver this objective, while ensuring that our growth is appropriately risk-calibrated. our asset growth will be backed by our robust funding profile and healthy capital position. I believe that the ICICI Group is very well-positioned to capture the exciting opportunities in the Indian financial services sector. I look forward to working with my senior colleagues, the entire team and the outstanding franchise that is ICICI to create value for all our stakeholders. With best wishes, Sandeep Bakhshi Coo (Designate) I am honoured and excited by this new role in the growth of ICICI and the shaping of its future. In recent times, you would have seen media coverage on ICICI Bank centred around nPAs and recognition of stress in earlier years. I thought I should put this in context. In the period from 2010-2012, the Indian economy saw a strong investment phase, and banks like ICICI Bank which were involved in project finance participated in financing this investment activity. these loans subsequently faced significant stress due to many reasons, including a global slowdown and commodity cycles. the regulatory approach also evolved. In 2015, RBI articulated an objective of early and conservative recognition of stress and conducted an asset quality review of Indian banks. Following this review, the gross nPAs of the Indian banking system increased by an estimated ` 2.5 trillion in a span of six months from october 2015 to March 2016, 10 annual report 2017-2018Messages FroM tHe eXeCUtIVe DIreCtors Fiscal 2018 saw a revival in global economic growth along with pickup in global trade flows and increase in commodity prices. However, domestic growth moderated in fiscal 2018 as compared to the previous year. Credit off-take by corporates remained muted. the Insolvency and Bankruptcy Code and national Company law tribunal provided the platform for resolution of stressed assets and many assets were bid for. We continued our strategy of enhancing the quality of our corporate portfolio as well as the quality of earnings. In line with the same, our disbursements were largely to higher-rated customers. We were successful in resolution of large assets and saw significant progress in many other stressed assets. We continued to strengthen our franchise with both existing and new customers with focus on improving our profitability. technology continued to be a cornerstone of our strategy and we leveraged the same to offer superior and customised solutions to our clients. Fiscal 2018 witnessed broad-based global growth across advanced and emerging economies. While the uS Federal Reserve tightened its policy with three rate hikes during the year, the european and Japanese Central Banks maintained a relatively accommodative stance. Moody’s upgraded India’s sovereign rating during the year and investment inflows remained strong. In this environment, the international business of the Bank continued to operate within its risk appetite framework and pursue opportunities with select Indian, MnC and local corporate clients with a focus to grow commercial banking business across its offshore locations. the Bank scaled up its trade franchise and on-boarded 250 corporate clients on the blockchain platform during the year. the Bank maintained its market leadership in remittances through innovations like WhatsApp linked ‘Social Pay’ and Apple’s voice assistant enabled ‘Siri Pay’. In the SMe business, the Bank embarked on a journey to digitise its approval & monitoring platform and commenced a digital lending proposition for eligible SMes. ICICI Bank has a rich legacy of catalysing the growth of retail banking in India. We are committed to making a wide range of innovative products and services accessible to our customers in accordance with their life cycle needs. We believe that speed to market and convenience are keys to meeting their demands in the backdrop of rising income levels, rapid urbanisation and the mainstreaming of the rural economy. During fiscal 2018, our industry-first product propositions included API based solutions, Instant oD to MSMes for increasing ease of doing business, Developer High Rise platform for real estate developers to manage retail and corporate transactions, uPI solutions for ecosystem players and solutions for government departments. In line with our philosophy of promoting inclusive growth, the Bank is also committed to multiple initiatives that are instrumental in impacting communities and helping people lead better lives. our developmental efforts include creation of ‘ICICI Digital Villages’ and disbursement of ‘Pratham’ home loans for the affordable housing segment. 11 Vishakha mUlyE Vijay chanDOk anUp bagchi annual report 2017-2018BoarD oF DIreCtors chaiRman, mD & cEO anD cOO Girish Chandra Chaturvedi Chairman Chanda Kochhar MD & CEO Sandeep Bakhshi COO (Designate)* nOn-ExEcUtiVE DiREctORs Dileep Choksi V. K. Sharma Neelam Dhawan Uday Chitale Lok Ranjan Radhakrishnan Nair M. D. Mallya ExEcUtiVE DiREctORs Vishakha Mulye Vijay Chandok Anup Bagchi 12 *Subject to RBI approval annual report 2017-2018BoarD CoMMIttees anD ManageMent teaM bOaRD cOmmittEEs Audit Committee uday Chitale, Chairperson Dileep Choksi, Alternate Chairperson Radhakrishnan nair Board Governance, Remuneration & Nomination Committee neelam Dhawan, Chairperson Girish Chandra Chaturvedi Dileep Choksi V. K. Sharma Corporate Social Responsibility Committee Radhakrishnan nair, Chairperson Dileep Choksi Chanda Kochhar Anup Bagchi Credit Committee Chairperson would be an Executive Director as determined at each meeting. M. D. Mallya Radhakrishnan nair Chanda Kochhar Sandeep Bakhshi* Vishakha Mulye Information Technology Strategy Committee neelam Dhawan, Chairperson Dileep Choksi Chanda Kochhar Sandeep Bakhshi* Anup Bagchi Customer Service Committee M.D. Mallya, Chairperson uday Chitale neelam Dhawan Chanda Kochhar Sandeep Bakhshi* Anup Bagchi Risk Committee Dileep Choksi, Chairperson M. D. Mallya V. K. Sharma Chanda Kochhar Sandeep Bakhshi* Fraud Monitoring Committee Dileep Choksi, Chairperson uday Chitale neelam Dhawan Chanda Kochhar Sandeep Bakhshi* Anup Bagchi Stakeholders Relationship Committee M. D. Mallya, Chairperson uday Chitale, Anup Bagchi managEmEnt tEam PRESIDENT Sandeep Batra GROUP ExECUTIVES Rakesh Jha Chief Financial Officer SENIOR GENERAL MANAGERS Sanjay Chougule Head – Group Internal Audit Sudhir Dole Anita Pai G. Srinivas t. K. Srirang Kumar Ashish Anindya Banerjee Anuj Bhargava COMPANY SECRETARY Ranganath Athreya (with effect from July 28, 2018) B. Madhivanan B. Prasanna Partha Dey Sujit Ganguli Ajay Gupta Sriram H. Anirudh Kamani loknath Mishra Pranav Mishra Ravi narayanan Amit Palta Murali Ramakrishnan Avijit Saha Subir Saha P. Sanker Supritha Shetty Group Compliance Officer Saurabh Singh *Will be inducted as a member effective from the date of RBI approval for his appointment. 13 annual report 2017-2018eMpowerIng tHe DynaMIC InDIan At ICICI Bank, our constant endeavour is to work towards fulfilling the banking needs of every Indian. Our products and services empower our customers to achieve their dreams and aspirations in this dynamic and digital world. We are relentlessly pursuing our goal of making banking for every Indian more convenient, personalised, accessible, and intuitive. Our commitment to continuously create new solutions and reimagine existing products and services for our retail customers ensured that we won the award for the ‘Best Retail Bank’ in India at The Asian Banker Awards, 2018 for the fifth year in a row. hOmE lOans Young Indians today dream of owning homes early in life. At ICICI Bank, our extensive suite of home loan products enable Indians at different stages of life to fulfil this dream and has helped us build a mortgage portfolio of over ` 1.5 trillion, the largest among private sector banks. During fiscal 2018, we introduced Step Up Home Loans, a product designed especially for our salaried customers. Step up Home loans offer aspirational home buyers higher loan eligibility of up to 20%, thereby making their dream homes a reality. In a bid to make affordable housing more accessible, we have opened more than 100 new loan processing centres in tier II & III cities and micro-markets near large cities. instant lOans anD cREDit caRDs In order to realise their ambitions, Indians today need their bank to be ubiquitous and to be available instantly on demand. During fiscal 2018, ICICI Bank introduced two products for our existing customers that fulfilled this latent need with the compelling proposition of paperless, hassle free and instant availability of funds. this year, we became the first Bank in the country to launch an Insta Credit Card. this feature allows our ‘pre-qualified’ customers to avail a credit card from the convenience of their mobile or computer. the customers can start using their credit cards online immediately while they receive the physical credit card over the next few days. Insta Personal Loan allows immediate disbursal of personal loans through AtMs, mobile banking and internet banking. the personal loan amount gets credited instantly to the savings account for our ‘pre-qualified’ customers in a single click. 14 annual report 2017-2018REtail saVings accOUnts our savings deposits stood at ` 2,009.67 billion on March 31, 2018. In line with our goal of providing personalised products to our customers, we enhanced our retail savings accounts for two key segments - women and senior citizens. the modern Indian woman is an important force in shaping a dynamic India. At ICICI Bank, we have designed the Advantage Woman Savings Account, an account with power-packed features and embellished with offers from alliance partners to fulfil her special banking needs. the number of accounts opened in this segment more than doubled in fiscal 2018 compared to the previous year and there was a three-fold increase in month-end balances in these accounts during the year. In fiscal 2018, we also launched a special marketing initiative #FundYourOwnWorth, as part of our ongoing initiative to encourage women to invest in themselves and dream big. We profiled and recognised 25 lesser known, yet inspiring, women from across the nation to help create new role models for a young and dynamic India. ICICI Bank is focussed on making banking more convenient for our senior citizens. our ‘Life Plus’ Senior Citizens’ Savings Account was enhanced during the year by adding features like doorstep services and a special facility – ‘Quantum optima’. these features enable our senior citizen customers to bank from the comfort of their homes as well as earn higher returns on their savings. 15 Digital inDia ICICI Bank continues to play a pioneering role in reimagining digital and cashless payments and transactions in India. Public Provident Fund (PPF) is one of the most popular investment options in our country. Working closely with the Ministry of Finance, we became the first bank in the country to introduce a 24x7, fully digital and paperless procedure for opening a PPF account through internet banking as well as mobile banking. In addition, we introduced a service enabling customers to register conveniently for the National Pension System (NPS) through their internet banking accounts without visiting the branch or submitting any physical documents. In fiscal 2018, as part of the smart city programme, we launched our Janmitra Card in the city of Ahmedabad, a solution based on the national Common Mobility Card (nCMC) guidelines. Janmitra Card is a single wallet card which can be used for payments for inter-city transit. At ICICI Bank, we believe that this initiative has the potential to help transform the payments landscape in our cities and take us a step closer towards promoting a cashless India. We also continuously invest in enhancing our processes to be able to service our dynamic customers. our AI-powered chatbot called iPal now handles over 1.3 million queries monthly with more than 90% resolutions instantly. annual report 2017-2018propellIng a DynaMIC InDIa InC. India is one of the fastest growing economies in the world and India Inc. is producing global leaders across various industries. At ICICI Bank, we have always partnered with businesses across the spectrum to enable them to leverage technology and to operate with speed and efficiency in this dynamic global environment. Innovating continuously is at the core of everything we do so that we can support the ambitions of large corporates, young entrepreneurs and small and medium enterprises alike. Eazypay our market leading product EazyPay was launched last year to serve as a one-stop payment solution for merchants. It was significantly enhanced and scaled in fiscal 2018 to multiple channels and to accept all modes of payments. With more than 160,000 merchants on the platform, eazyPay now provides an integrated billing and payments platform to both large and small merchants. blOckchain ICICI Bank has played a pioneering role in promoting the usage of blockchain technology across banking. In fiscal 2018, we launched a blockchain application for trade and remittances that has already been adopted by more than 250 of our corporate clients in the first year of its launch. We believe that blockchain has the potential to revolutionise the paper intensive manner in which trade is currently done in India. We are collaborating with various stakeholders and partners in co-creating a comprehensive trade ecosystem which uses blockchain and other innovative technologies as its backbone. 16 annual report 2017-2018E-xpREssway-pay2cORp At ICICI Bank, we are particularly cognisant of the need to have specialised solutions for various industries to address the unique challenges faced by them. In fiscal 2018, we partnered with - a software service provider specialising in maritime business to extend a customised port solution - e-xpressway-Pay2Corp. this composite solution is aimed at digitising documentation and financial transactions for the port ecosystem and serves as a one-stop solution for addressing the multiple needs of various stakeholders in the maritime industry. e-Xpressway is a web-based electronic platform developed by Maritime Gateway and Pay2Corp is a customised B2B payment option built by ICICI Bank offering multiple modes of payment on a single platform. cOnnEctED banking We believe that integrated banking is the future of banking. ICICI Bank has the best-in-class cash management and working capital solutions, which include customised eRP integrations for collections and payments. We enhanced our product suite in fiscal 2018 by launching ICICI Bank Connected Banking, an innovative digital solution for all businesses. Connected Banking helps businesses to make payments, receive invoice collections and facilitates seamless reconciliations, directly from their business management platforms. they do not need to toggle between these platforms and ICICI Bank’s digital or physical channels thus adding to customer delight. Digital EnablEmEnt OF inDia inc. ICICI Bank has also undertaken an array of initiatives to accelerate the pace of digital ‘business-to-business’ and ‘business-to-consumer’ transactions in the country. ICICI Bank changed the way current accounts are sourced in the banking industry by launching India’s First Digital Current Account opening Process through SmartForm. Within nine months of launch, the process is being used to source 95% of individual and proprietorship accounts and 74% of total current accounts. We have reduced our turnaround time for opening of accounts to less than one-third to the delight of our customers. We became one of the first banks to integrate with GeM (Government eMarketplace) to provide a payments solution tailored to suit the requirements of all participants. GeM is a significant step taken by Government of India towards ensuring transparency in government procurement. We are one of the first banks in the country to launch e-Bank Guarantee. the product enables beneficiaries of Bank Guarantees (BGs) to view and download BG cover notes on a near real-time basis. It also allows them to have a consolidated view and a single point access of their BGs through ICICI Bank’s Corporate Internet Banking (CIB) system. We also introduced e-LC, a unique service which enables the beneficiary of a letter of Credit (lC) to view and download a non-negotiable lC copy on a real-time basis. this service also provides a ready repository of all lCs received by the beneficiary. In fiscal 2018, the implementation of Goods & Services Tax (GST) was a landmark event in India’s journey to simplify the indirect tax structure. We are proud that ICICI Bank was awarded the mandate for collection of GSt payments from customers under the Government Agency business. In addition, we have enabled GSt payments through our internet banking platform and through our wide network of branches across the country. In our quest to help our clients in transacting more efficiently, ICICI Bank has tied up with a GSt Suvidha Provider to provide them with a comprehensive solution – Saral GSt for filing GSt returns on a centralised basis. 17 annual report 2017-2018CollaBoratIng wItH a DynaMIC BHarat Our dynamic villages represent the spirit of a dynamic Bharat. At ICICI Bank, we are committed to collaborating with this dynamic Bharat as it marches ahead to a prosperous and digital future. Our products and services for our rural customers help bridge the technological gap between rural and urban India and reflect the soaring aspirations of our fellow citizens in our villages. With our large network of 2,432 branches in semi-urban and rural areas, we have opened 21 million Basic Savings Bank Deposit Accounts (BSBDA). ICICI Bank is focussed on the twin goals of financial inclusion and sustainable growth as the cornerstones of building a dynamic and vibrant rural economy. A growth of 19% in our rural portfolio in fiscal 2018 is a testimony to our commitment to support the growth of Bharat. sashakta gaOn, samRiDDha bhaRat ICICI Bank is focussed on helping in creating a dynamic Bharat by empowering our villages to create and strengthen local ecosystems to make them self-sustaining. After transforming 100 villages into ‘Digital Villages’ in fiscal 2017, we extended the programme to another 500 villages in 21 states of India in fiscal 2018. In association with the ICICI Foundation for Inclusive Growth, the Bank provided skill training to over 87,000 villagers in fiscal 2018 across more than 100 disciplines in areas like animal husbandry, dairy farming, pump repair and dress designing. We further supported these villagers by providing credit and market linkages so that they can use their learnings to make new beginnings. We also help in creating a digital payments ecosystem in these villages by introducing an array of digital banking services like opening of bank accounts through eKYC, digital payments to merchants through SMS Banking, PoS terminals and Bhim Aadhaar Pay devices. Given that animal husbandry is a key source of income for our villagers, ICICI Bank introduced a customised solution aimed at digitising dairy units and enabling milk societies to transfer payments directly into the milk suppliers’ accounts. 18 annual report 2017-2018Digital bhaRat In fiscal 2018, we also launched a suite of banking products and services aimed at furthering financial inclusion in rural India and making financial services more accessible and easier to use for our customers. ‘Mera last year, we had iMobile’ – a introduced comprehensive, first-of-its-kind mobile app in 11 languages, developed especially for Bharat. this app is now used by over half a million customers and as of end of fiscal 2018, we had processed close to 1.1 million transactions through Mera iMobile. During the year, we enhanced the app by introducing additional services including crop advisory and agriculture news, gold loan renewals and railway ticket bookings. the app was also enhanced with Insta Banking services that allow customers to initiate banking transactions even before they reach the branch to save time. We launched Express Loans, an integrated platform to enhance ease and speed of lending to our rural customers. We have rolled out this platform for tractor loans and have launched a pilot for Kisan Credit Card (KCC). the platform helps the sales officers in taking preliminary decisions on the field itself due to availability of eKYC, online integration with the credit bureau and inbuilt algorithms to rate the creditworthiness of customers. commission agents in agricultural markets. A special current account variant was also launched for them with attractive features like zero charges for basic banking transactions, free neFt/RtGS and CMS facility to encourage transactions through formal channels. our branches have also conducted several Gram Samvaads which have helped them in reaching out to the farmers in the villages near large mandis to promote the government’s eNAM initiative (the electronic national Agricultural Market). We introduced another simple yet powerful product called Mandi OD. It is available through our branches in rural and semi-urban locations. this product is specifically designed to cater to the working capital requirements of traders and ICICI Bank launched a unique product called Gold Overdraft for the self-employed segment. this offering allows our SMe customers to access funds quickly. It is characterised by its flexibility and ‘pay as you use’ features. 19 annual report 2017-2018nUrtUrIng a DynaMIC teaM ICICI ICICI Bank was awarded the ‘Best Company to Work For’ in the Banking, Financial Services and Insurance sector by Business Today magazine, for the second year in a row. Our Bank scored highly on critical parameters that include ‘Work Environment’, ‘Culture of Inclusion’ and ‘Fairness & Objectivity’. We are pleased to report that we were ranked No. 4 across all companies and were the only BFSI company in the top 10 companies. At ICICI Bank, we are committed to creating a world-class organisation. We are constantly investing in human capital and empowering them to serve the needs and aspirations of Indians and India Inc. better. With more than 80,000 employees spread over 15 countries, team ICICI will continue to support and partner with a dynamic India. #icici lEaD thE nEw In line with our ethos of empowering employees, we embarked on a journey of becoming ready for a dynamic future by launching an umbrella initiative - #ICICI Lead the New. In fiscal 2018, we undertook various initiatives under this umbrella to reinforce our DnA, DYNAMIC - Digital, Young, nurturing, Agile, Mindful, Inclusive and Connected. team ICICI is driven by a DYnAMIC performance-focussed and customer-first culture. to foster a spirit of innovation and collaboration among various teams, we launched #Simplify, an initiative in which agile cross-functional teams come together to identify and redesign high impact processes. these teams helped us in achieving significant benefits for our customers in terms of reduced turnaround times, enhanced customer service, higher efficiency, reduced error rates and cost reduction. At ICICI Bank, we are committed to ensuring that we continue to engage with team ICICI through a host of initiatives including harnessing the power of technology. #CEOConnect is a platform for our employees to engage directly with our MD & Ceo and gain perspectives on organisational strategy and philosophy. It also provides employees a platform to share their views and suggestions and provide insights to the leadership team. the senior management team can now connect directly with employees all over the country through our internally developed virtual presence solution - iStudio. We launched the ICICI Centre of New – ICON at our corporate office. ICon is a unique, state-of-the-art, modern space which is positioned as a nucleus of the Bank’s DnA 20 annual report 2017-2018and morphs itself seamlessly between a new-age cafeteria, meeting place, and a #befit centre. It is a space that fosters innovation, collaboration, ideation and helps in reinforcing a sense of community. our employee-centric HR app ‘Universe On The Move’ now includes a unique offering called ‘Zeno’, an AI-based chatbot which instantly answers text-based queries raised by employees. this significantly enhances their overall service experience. In fiscal 2018, we also launched the t360 app which serves as a platform for recording behaviours displayed by employees at the workplace and enables real-time feedback on the basis of the Bank’s DnA anchors. It is used as an input for the Bank’s talent management processes. lEaDERship DEVElOpmEnt anD capability bUilDing At ICICI Bank, we are constantly investing in enabling our employees to deliver customer-centric solutions, nurturing leaders, cultivating deep domain skills, and building a culture of data-enabled decision-making. At ICICI Bank, we have identified three emerging capabilities as key to leveraging the opportunities in the transforming business landscape – Design thinking, Data Analytics and Advisory Skills. By investing in equipping our employees with these capabilities, we are ensuring that ICICI Bank continues to be future-ready. As part of our endeavour to become future-ready, we have institutionalised a robust leadership potential assessment and leadership development process. these processes identify and groom leaders for the future and also enable succession planning for critical positions. We continuously invest in Leadership Development Programmes for our senior management that help them in accessing the best of leadership thought and research across the globe. In addition, we enable our employees to constantly up-skill themselves in the context of a dynamic environment. ICICI Bank launched a new learning and Development approach on ‘Capability Building’ to foster innovation. With this approach, our focus is to create a culture of learning and to build in-house skills which are aligned to customer needs. In fiscal 2018, we launched an array of programmes as part of our Capability Building initiatives. From the Self employed Segment (SeS) Academy which includes initiatives for our employees in Retail Banking to the Mortgage Academy which focusses on our employees in mortgage team; our courses helped in enhancing our capabilities to offer effective solutions and service experiences to customers. We also introduced the Retail and SMe Credit Academies and an Internal Controls workshop among other initiatives under the aegis of Capability Building. 21 annual report 2017-2018proMotIng InClUsIVe growtH For a DynaMIC InDIa The ICICI Group has a rich legacy of promoting inclusive growth. With a view to furthering this legacy, the ICICI Group set up the ICICI Foundation for Inclusive Growth (ICICI Foundation) in the year 2008. The Foundation focusses on sustainable and scalable high-impact initiatives that help in empowering the underprivileged. At ICICI, we believe that skill development will play a pivotal part in building a strong nation. Guided by this philosophy, the ICICI Foundation provides pro bono skill development to underprivileged youth across the country. the structured training programmes with deep market and credit linkages enable our youth to earn sustainable livelihoods. these initiatives empower them with financial literacy and a combination of industry relevant skills as well as soft skills. the income level of villagers by training them in locally relevant skills and making them financially independent. ICICI Foundation reaches out to participants in villages through multiple channels and identifies final candidates. Post selection, ICICI Foundation maps existing skills of the candidates to the skill requirements of the local economy. Based on this, relevant need-based livelihood trainings are offered to the participants. At the end of fiscal 2018, we imparted skills to over 267,000 people across India out of which 52% were women. icici Digital VillagEs pROgRammE the ICICI Digital Villages Programme takes a holistic approach India and to the development of four components – skill development, encompasses establishing credit linkages, facilitating market linkages and digitising transactions. rural this programme was launched in fiscal 2017 and by the end of fiscal 2018, the Bank covered more than 600 villages across 21 states in India, as part of this initiative. one of the key goals of the Digital Villages Programme is to improve on completion of training, the participants are provided opportunities of earning sustainable livelihood through a combination of credit and market linkages. A strong hand-holding process allows us to monitor livelihood growth of all trainees. In parallel, ICICI Bank also works on the financial inclusion of the villagers and provides a platform for digital banking through a host of products and channels. In fiscal 2018, we trained more than 87,000 individuals under this programme, of whom 63% were women. over 75% of the trained individuals have been linked to the market for selling their products and services. It was all but over for sunita limbakai. she lost her husband and her younger son to illness, and was rendered homeless. with her meagre income from working on farms, it was tough for her to make both ends meet and support her son’s education. sunita joined the Dress Designing course at the ICICI academy for skills in her village. this was the turning point in her life. on completion of the training programme, the academy helped her find employment at a garment factory. sunita is now providing for her son’s future and hopes to start her own tailoring shop soon. she has learnt to dream again. 22 annual report 2017-2018lajwanti’s life was a saga of struggles. she could not complete her education and was married at an early age. she had an uneasy relationship with her new family. Determined to take charge of her life, lajwanti joined the Beauty parlour Management course at the ICICI rural self employment training Institute (rsetI) at Jodhpur. the course equipped her not only with technical and practical knowledge but also helped her in gaining confidence to put her know-how to use. after she completed the course, she got a loan from ICICI Bank and opened her own parlour. lajwanti is a successful entrepreneur today and saves for the future. she is educating her children and is filled with hope. RURal skill DEVElOpmEnt - RURal sElF EmplOymEnt tRaining institUtEs (RsEtis) ICICI Foundation operates two RSetIs at udaipur and Jodhpur as part of a national programme initiated by the Ministry of Rural Development to provide vocational training and placement support to citizens from marginalised communities. In March 2018, we inaugurated ICICI Green RSetI, Jodhpur, the first green RSetI in the country. the occupational skill building programmes in 11 disciplines are offered in partnership with industry leaders who are our Knowledge Partners. Focussed on making trainees employable, we collaborate with more than 1,300 industry partners to provide placement to our trainees on completion of their courses. During the year, over 28,000 youth across India benefitted from these courses and 40% of these trainees were women. the RSetIs offers intensive full-time residential, industry relevant training and on-location courses in various trades to participants like lajwanti. During fiscal 2018, we trained over 15,000 youth at our RSetIs. More than 60% of our trainees were women. icici acaDEmy FOR skills the ICICI Academy for Skills launched in october 2013 has trained and helped more than 92,000 urban youth find employment. our 24 centres have a stellar record of providing 100% employment to all our trainees. icici bank’s Financial inclUsiOn initiatiVEs ICICI Bank is working with 17 Business Correspondents who have a network of about 5,920 Customer Service Points covering over 16,100 villages. At the end of fiscal 2018, the Bank had opened over 21 million Basic Savings Bank Deposit Accounts, of which 4.0 million were opened under the Pradhan Mantri Jan- Dhan Yojana. the Bank has enrolled more than 4.4 million customers under the Pradhan Mantri Jan Suraksha Yojana. arjun solanki lost his father at the age of 14 and dropped out of school. His family members worked as daily wage labourers to make a living. they had lost all hopes of leading a better life. on the advice of a friend, arjun visited the ICICI academy for skills at Indore and enrolled in the paint application techniques course. over the next three months, he became a skilled painter and enhanced his communication skills. post completion of the course, the academy helped arjun in getting a job with a painting contractor. arjun is a transformed man today. He works as an independent contractor and has built a pucca house for his mother. He is empowered to fulfil his dreams. 23 annual report 2017-2018AnnuAl RePoRt 2017-2018 awarDs & reCognItIons At ICICI Bank, we are committed to supporting the needs and aspirations of a dynamic India. The many awards and accolades that we won in fiscal 2018 are a testimony to the continued partnership we share with our customers and stakeholders as we together build a better tomorrow. ‘Best Retail Bank’ in India award for the fifth year in a row at the Asian Banker excellence in Retail Financial Services International Awards 2018. We also won the ‘Best Retail operational Risk Initiative Application or Programme’ award. ‘Best Company to Work For’ award by Business today magazine for the second year in a row in the Banking, Financial Services and Insurance sector. We were ranked no. 4 across all companies and were the only BFSI company in the top 10 companies. Most awarded bank at Indian Banks’ Association Banking Technology Awards 2018. ICICI Bank was the winner in four categories and the first runner-up in two categories. the Awarded in the ‘Analytics & Big Data’ category at the IDRBt Banking technology excellence Award for 2016–2017, organised by the Institute for Development & Research in Banking technology (IDRBt), an institute established by the Reserve Bank of India. Recognised as a leader in a report on Indian Mobile Apps published by Forrester, an American research agency. the report also mentions ICICI Bank’s mobile banking app as among the world’s best. Celent Model Bank Award 2018 in the ‘Emerging Innovation’ category for our pioneering initiatives in the application of blockchain in the trade finance and supply chain segments. 24 Judged Best Bank in the ‘Fintech Engagement’ category at the Business today – KPMG Best Bank Awards 2018. Winner in the ‘Most Innovative ATM Project’ category in India at the Asset Digital Awards 2017. Judged Best in India across three categories in the 2018 euromoney Private Banking and Wealth Management Survey. the categories were ‘Commercial Banking Capabilities’, ‘net Worth Specific Services’ and ‘Innovative technology - Client experience’. ‘Best Foreign Exchange Provider’ India award by Global Finance magazine as part of its list of ‘the World’s Best Foreign exchange Providers 2017’. in Recognised as the ‘Derivatives House of the Year’ and ‘Best Structured Products House’ in India, at the Asset triple A Private Banking, Wealth Management, Investment and etF Awards 2017. ‘Best Private Sector Bank - Rural Reach’ award at the Dun & Bradstreet Banking Awards 2017. Recognised for our untiring in the ‘Environment Leadership’ category, in the service sector at the Frost & Sullivan Project evaluation and Recognition Program 2017. initiatives DIRECTORS’ REPORT Your Directors have pleasure in presenting the Twenty-Fourth Annual Report of ICICI Bank Limited along with the audited financial statements for the year ended March 31, 2018. FInanCIal HIgHlIgHTS The financial performance for fiscal 2018 is summarised in the following table: ` in billion, except percentages Net interest income and other income Operating expenses Provisions & contingencies1 Profit before tax Profit after tax 1Excludes provision for taxes. Fiscal 2017 412.42 147.55 152.08 112.79 98.01 Fiscal 2018 404.45 157.04 173.07 74.34 67.77 % change (1.9)% 6.4% 13.8% (34.1)% (30.9)% ` in billion, except percentages Consolidated profit before tax and minority interest Consolidated profit after tax and minority interest Fiscal 2017 138.09 101.88 Fiscal 2018 109.78 77.12 % change (20.5)% (24.3)% aPPROPRIaTIOnS The profit after tax of the Bank for fiscal 2018 is ` 67.77 billion after provisions and contingencies of ` 173.07 billion, provision for taxes of ` 6.57 billion and all expenses. The accumulated profit is ` 249.97 billion, taking into account the balance of ` 187.45 billion brought forward from the previous year and deducting ` 5.25 billion directly from balance in profit and loss account towards provision for frauds on non-retail accounts. Your Bank’s dividend policy is based on the profitability and key financial metrics of the Bank, the Bank’s capital position and requirements and the regulations pertaining to the same. Your Bank has a consistent dividend payment history. Given the financial performance for fiscal 2018 and in line with the Bank’s dividend policy and applicable regulations, your Directors are pleased to recommend a dividend of ` 1.50 per equity share for the year ended March 31, 2018 and have appropriated the disposable profit as follows: ` billion To Statutory Reserve, making in all ` 228.97 billion To Special Reserve created and maintained in terms of Section 36(1)(viii) of the Income Tax Act, 1961, making in all ` 89.79 billion To Capital Reserve, making in all ` 128.26 billion1 To Revenue and other reserves, making in all ` 39.59 billion2 Dividend paid during the year – On equity shares, during fiscal 2018 @ ` 2.50 per share of face value ` 2.00 each3,4 – On preference shares, during fiscal 2018 @ 100.00 per preference shares (`) – Corporate dividend tax4 Leaving balance to be carried forward to the next year Fiscal 2017 24.50 Fiscal 2018 16.94 4.50 52.93 0.01 0.01 .. (0.07) 187.45 6.00 25.66 7.01 14.57 35,000 0.09 179.70 1. 2. 3. 4. Includes transfer of ` 24.90 billion on account of sale of part of a equity investment in the Bank’s insurance subsidiary during fiscal 2018 (` 42.61 billion for fiscal 2017). Includes transfer of ` 10.6 million to Reserve Fund for fiscal 2018 (` 9.8 million for fiscal 2017) in accordance with regulations applicable to the Sri Lanka branch. Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date. The proposed dividend (including dividend distribution tax) is not accounted as a liability in accordance with the revised AS 4 – ‘Contingencies and events occurring after the balance sheet date’ from fiscal 2017. The Bank prepares its financial statements in accordance with the applicable accounting standards, Reserve Bank of India (RBI) guidelines and other applicable laws/regulations. RBI, under its risk-based supervision exercise, carries out the risk assessment of the Bank on an annual basis. This assessment is initiated subsequent to the finalisation, completion 25 of audit and publication of audited financial statements for a financial year and typically occurs a few months after the financial year-end. As a part of this assessment, RBI separately reviews asset classification and provisioning of credit facilities given by the Bank to its borrowers. The divergences, if any, in classification or provisioning arising out of the supervisory process are given effect to in the financial statements in subsequent periods after conclusion of the exercise. In terms of the RBI circular no. DBR.BP.BC.No.63/21.04.018/2016-17 dated April 18, 2017, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever either (a) the additional provisioning requirements assessed by RBI exceed 15% of the published net profits after tax for the reference period or (b) the additional Gross NPAs identified by RBI exceed 15% of the published incremental Gross NPAs for the reference period, or both. Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI's annual supervisory process for fiscal 2017. REDEMPTIOn OF PREFEREnCE SHaRES The Board of Directors at their Meeting held on April 2, 2018 considered and approved the redemption of 350, 0.001% Redeemable Non-Cumulative Preference Shares of ` 1,00,00,000/- each which was due on April 20, 2018. Pursuant to the RBI approval dated April 16, 2018, the above mentioned preference shares were redeemed on April 20, 2018. In line with the provisions of Section 61 and other applicable provisions of the Companies Act, 2013, approval of members is being sought in the Notice of the forthcoming Annual General Meeting (AGM) for re-classification of the authorised share capital of the Bank from ` 25,000,000,000 divided into 10,000,000,000 equity shares of ` 2 each, 15,000,000 shares of ` 100 each and 350 shares of ` 10,000,000 each to ` 25,000,000,000 comprising 12,500,000,000 equity shares of ` 2 each. No objection under Section 49C of the Banking Regulation Act, 1949 for the above alteration in the Memorandum of Association and Articles of Association of the Bank has been received from RBI vide DBR.PSBD No.11582/16.01.128/2017- 18 dated June 25, 2018. DIVIDEnD DISTRIBUTIOn POlICY In accordance with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure F. The Policy is hosted on the website of the Bank and can be viewed (https://www.icicibank.com/ managed-assets/docs/investor/policy-for-determining-material-subsidiaries/dividend-distribution-policy.pdf). PaRTICUlaRS OF lOanS, gUaRanTEES OR InVESTMEnTS Pursuant to Section 186(11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the financial statements as per the applicable provisions of Banking Regulation Act, 1949. SUBSIDIaRY, aSSOCIaTE anD JOInT VEnTURE COMPanIES The Bank, to protect its interests as a lender, converts loans or exercises pledge of shares from time to time and hence acquires holding in unrelated companies, which is required to be reported as associate under the Companies Act, 2013 if the holding exceeds 20.0% of the total share capital. Accordingly, during fiscal 2018, pursuant to conversion of loan, Shree Renuka Sugars Limited became an associate company of the Bank for the purpose of reporting under the Companies Act, 2013. Further, pursuant to the Bank’s investments in National Investment and Infrastructure Fund Limited (NIIFL), NIIFL became an associate company of the Bank during the year ended March 31, 2018. The particulars of subsidiary and associate companies as on March 31, 2018 have been included in Form MGT-9 which is annexed to this report as Annexure D. Escorts Motors Limited, which was considered as an associate under Section 2(6) of the Companies Act, 2013, ceased to be an associate of the Bank during fiscal 2018. HIgHlIgHTS OF PERFORManCE OF SUBSIDIaRIES, aSSOCIaTES anD JOInT VEnTURE COMPanIES anD THEIR COnTRIBUTIOn TO THE OVERall PERFORManCE OF THE COMPanY The performance of subsidiaries and associates and their contribution to the overall performance of the Bank as on March 31, 2018 has been annexed to this report as Annexure A. A summary of key financials of the Bank’s subsidiaries is also included in this Annual Report. 26 DIRECTORS’ REPORT annual report 2017-2018The highlights of the performance of key subsidiaries are given as a part of Management’s Discussion & Analysis under the section “Consolidated financials as per Indian GAAP”. The Bank will make available separate audited financial statements of the subsidiaries to any Member upon request. These documents/details are available on the Bank’s website (www.icicibank.com) and will also be available for inspection by any Member or trustee of the holder of any debentures of the Bank at its Registered Office and Corporate Office. 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. SIgnIFICanT anD MaTERIal ORDERS PaSSED BY THE REgUlaTORS OR COURTS OR TRIBUnalS IMPaCTIng THE gOIng COnCERn STaTUS OF THE COMPanY anD ITS FUTURE OPERaTIOnS There are no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status or future operations of the Bank. DIRECTORS anD OTHER KEY ManagERIal PERSOnnEl The Board of the Bank at March 31, 2018 consisted of 12 Directors, out of which six were independent Directors, one was a Government Nominee Director and five were wholetime Directors. The current composition of the Board consisted of 12 Directors, out of which seven are independent Directors, one is a Government Nominee Director and four are wholetime Directors. Changes in the composition of the Board of Directors and other Key Managerial Personnel The Board of Directors at their Meetings held on January 12, 2018, January 17, 2018, May 2, 2018 and May 29, 2018 approved the appointments of Neelam Dhawan, Uday Chitale, Radhakrishnan Nair and M. D. Mallya, respectively as additional (independent) Directors for a period of five years subject to the approval of the Members. All the above four Directors hold office upto the date of the forthcoming AGM and are eligible for appointment. Their appointments are being proposed in the Notice of the forthcoming AGM. Lok Ranjan, Joint Secretary, Department of Financial Services, Ministry of Finance has been nominated by Government of India as a Director on the Board of the Bank effective April 5, 2018 in place of Amit Agrawal. Pursuant to completion of their maximum permissible tenure of eight years as per the provisions of the Banking Regulation Act, 1949, Homi Khusrokhan and V. Sridar, independent Directors ceased to be Directors on the Board of the Bank effective close of business hours on January 20, 2018 and Tushaar Shah, independent Director, ceased to be a Director on the Board of the Bank effective close of business hours on May 2, 2018. The Board acknowledges the valuable contribution and guidance provided by the above Directors. Further, the Board at its Meeting held on June 18, 2018 recommended to the Board of Directors of ICICI Prudential Life Insurance Company Limited (ICICI Life/Company) to appoint N. S. Kannan as the Managing Director & Chief Executive Officer (CEO) of the Company subject to regulatory and other approvals. The Board of Directors of ICICI Life at its Meeting held on June 18, 2018 appointed N. S. Kannan, as Managing Director & Chief Executive Officer of the Company with effect from June 19, 2018, subject to approval of Insurance Regulatory Development Authority of India (IRDAI) and Members of the Company. Pursuant to the aforesaid movement, N. S. Kannan ceased to be the Executive Director of the Bank effective close of business hours on June 18, 2018. The Board acknowledges the valuable contribution and guidance provided by N. S. Kannan during his tenure as executive Director of the Bank. The Board of Directors at its Meeting held on June 18, 2018 approved the appointment of Sandeep Bakhshi as a wholetime Director and Chief Operating Officer (Designate) for a period of five years effective from June 19, 2018 or the date of receipt of approval from RBI, whichever is later. Application has been made to RBI for seeking necessary approval. The said appointment is subject to the approval of RBI and Members. Approval of the Members is being sought for Sandeep Bakhshi’s appointment for five years in the Notice of the forthcoming Annual General Meeting through item nos.13 and 14. The Appointment of Mr. Bakhshi as a Wholetime Director to be designated as Chief Operating Officer is subject to the approval of RBI and would be effective from the date of RBI approval. 27 Further, the Board at its Meeting held on June 29, 2018 approved the appointment of Girish Chandra Chaturvedi as an Additional (Independent) Director effective July 1, 2018 for a period of three years subject to the approval of Members. The Board also approved the appointment of Girish Chandra Chaturvedi as non-executive part-time Chairman effective from July 1, 2018 or the date of receipt of RBI approval for such appointment whichever is later. RBI vide its letter no DBR. Appt.No.451/08.88.001/ 2018-19 dated July 17, 2018 has approved the appointment of Mr. Girish Chandra Chaturvedi as Non-executive (part time) Chairman of the Bank effective July 17, 2018 till June 30, 2021. Approval of the Members is being sought for Girish Chandra Chaturvedi’s appointment for five years in the Notice of the forthcoming Annual General Meeting through item nos.11 and 12. The Board of Directors at its Meeting held July 27, 2018 appointed Ranganath Athreya as the Company Secretary and Compliance Officer of the Bank effective July 28, 2018. The Board in the same Meeting noted the cessation of Mr. P. Sanker, as the Company Secretary and Compliance Officer of the Bank effective close of business hours on July 27, 2018. The Board acknowledges the valuable contribution provided by P. Sanker during his tenure as the Company Secretary and Compliance Officer of the Bank. Declaration of Independence All independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013 and as amended by the Companies (Amendment) Act, 2017 and Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which have been relied on by the Bank and were placed at the Board Meetings held on April 2, 2018 and May 29, 2018. In the opinion of the Board, the independent Directors fulfil the necessary criteria for independence as stipulated under the statutes. Retirement by rotation In terms of Section 152 of the Companies Act, 2013, Vijay Chandok would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Vijay Chandok has offered himself for re-appointment. aUDITORS Statutory auditors M/s B S R & Co. LLP, Chartered Accountants will retire at the ensuing AGM. B S R & Co. LLP, Chartered Accountants were appointed as auditors by the Members at their Twentieth Annual General Meeting (AGM) held on June 30, 2014 to hold office till conclusion of the Twenty-Fourth AGM. Their appointment was last ratified by the Members at their Twenty Third Annual General Meeting held on June 30, 2017 where they were appointed as auditors to hold office from the conclusion of the Twenty Third AGM until the conclusion of the Twenty-Fourth AGM of the Bank. B S R & Co. LLP have been auditors of the Company for four consecutive years, which is the maximum term for statutory auditors of banking companies as per the guidelines issued by Reserve Bank of India (RBI). Hence they would be retiring at the conclusion of the forthcoming Annual General Meeting. The Audit Committee and the Board of Directors have placed on record their appreciation of the professional services rendered by B S R & Co. LLP during their association with the Company as its auditors. As recommended by the Audit Committee, the Board has proposed the appointment of M/s Walker Chandiok & Co LLP as statutory auditors for the year ending March 31, 2019 (fiscal 2019). Their appointment has been approved by RBI on May 17, 2018. The appointment of the auditors is proposed to the Members in the Notice of the current AGM through item no. 5. You are requested to consider their appointment. There are no qualifications, reservation or adverse remarks made by the statutory auditors in the audit report. Secretarial auditors Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank with the approval of its Board, appointed M/s. Parikh Parekh & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Bank for fiscal 2018. The Secretarial Audit Report is annexed herewith as Annexure B. There are no qualifications, reservation or adverse remark or disclaimer made by the auditor in the report save and except disclaimer made by them in discharge of their professional obligation. The Secretarial auditor has drawn reference to the following observation in the audit report: In reference to show cause notice issued by RBI dated September 6, 2017 and supplementary show cause notice dated November 7, 2017 and as mentioned by RBI in its press release dated March 29, 2018, RBI has through an order dated 28 DIRECTORS’ REPORT annual report 2017-2018March 26, 2018, imposed a monetary penalty of ` 589.0 million on ICICI Bank for non-compliance with directions/ guidelines issued by RBI. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. PERSOnnEl The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Companies Act, 2013, the annual report and the accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank. InTERnal COnTROl anD ITS aDEQUaCY The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information. DISClOSURE UnDER FOREIgn EXCHangE ManagEMEnT aCT, 1999 The Bank has obtained a certificate from its statutory auditors that it is in compliance with the Foreign Exchange Management Act, 1999 provisions with respect to investments made in its consolidated subsidiaries and associates during fiscal 2018. RElaTED PaRTY TRanSaCTIOnS The Bank undertakes various transactions with related parties in the ordinary course of business. The Bank has a Board approved policy on Related Party Transactions, which has been disclosed on the website of the Bank and can be viewed at https://www.icicibank.com/managed-assets/docs/personal/general-links/related-party-transactions-policy.pdf. The Bank also has a Board approved Group Arm’s Length Policy which requires transactions with the group companies to be at arm’s length. The transactions between the Bank and its related parties, during fiscal 2018, were in the ordinary course of business and based on the principles of arm’s length. The details of material related party transactions at an aggregate level for fiscal 2018 are given in Annexure C. EXTRaCT OF annUal RETURn The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure D. BUSInESS RESPOnSIBIlITY REPORTIng The Business Responsibility Report as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been hosted on the website of the Bank (https:// www.icicibank.com/aboutus/annual.html). Any Member interested in obtaining a physical copy of the same may write to the Company Secretary at the Registered Office of the Bank. RISK ManagEMEnT FRaMEWORK The Bank’s risk management framework 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 pertaining to credit, market, liquidity, operational and outsourcing risks and business continuity management. The Committee also reviews the Risk Appetite and Enterprise Risk Management frameworks, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing. The stress testing framework includes a range of Bank-specific, market (systemic) and combined scenarios. The ICAAP exercise covers the domestic and overseas operations of the Bank, banking subsidiaries 29 and non-banking subsidiaries. The Committee reviews migration to the advanced approaches under Basel II and implementation of Basel III, risk return profile of the Bank and the activities of the Asset Liability Management Committee. The Committee reviews the level and direction of major risks pertaining to credit, market, liquidity, operational, technology, compliance, group, management and capital at risk as a part of the risk dashboard. In addition, the Committee has oversight on risks of subsidiaries covered under the Group Risk Management Framework. The Risk Committee also reviews the Liquidity Contingency Plan for the Bank and the various thresholds set out in the Plan. The Credit Committee of the Board, apart from sanctioning credit proposals based on the Bank’s credit approval authorisation framework, reviews developments in key industrial sectors and the Bank’s exposure to these sectors as well as to large borrower accounts and borrower groups. The Credit Committee also reviews major credit portfolios, non-performing loans, accounts under watch, overdues and incremental sanctions. The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with inspection and audit reports of RBI, other regulators and statutory auditors. The Asset Liability Management Committee provides guidance for management of liquidity of the overall Bank and management of interest rate risk in the banking book within the broad parameters laid down by the Board of Directors/ Risk Committee.    Summaries 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, 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. The Risk Management Group is further organised into the Credit Risk Management Group, Market Risk Management Group, Operational Risk Management Group and Information Security Group. The Bank has designated an official in the grade of Senior General Manager as Chief Risk Officer (CRO) who reports to the Risk Committee constituted by the Board which reviews risk management policies of the Bank. The CRO, for administrative purpose reports to an President. The above mentioned groups are independent of all business operations and coordinate with representatives of the business units to implement the Bank’s risk management policies and methodologies. The Internal Audit and Compliance groups are responsible to the Audit Committee of the Board. InFORMaTIOn REQUIRED UnDER SEXUal HaRaSSMEnT OF WOMEn aT WORKPlaCE (PREVEnTIOn, PROHIBITIOn & REDRESSal), aCT, 2013 Please refer Principle 3 under Section E of the Business Responsibility Report. CORPORaTE gOVERnanCE The corporate governance framework at 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 to oversee critical areas. At March 31, 2018, independent Directors constituted a majority on most of the Committees and most of the Committees were chaired by independent Directors. I. Philosophy of Corporate governance ICICI Bank’s corporate governance philosophy encompasses regulatory and legal requirements, which aims at a high level of business ethics, effective supervision and enhancement of value for all stakeholders. Whistle Blower Policy The Bank has formulated a Whistle Blower Policy. The policy comprehensively provides an opportunity for any employee/ Director of the Bank to raise any issue concerning breaches of law, accounting policies or any act resulting in financial or reputation loss and misuse of office or suspected or actual fraud. The policy provides for a mechanism to report 30 DIRECTORS’ REPORT annual report 2017-2018such concerns to the Audit Committee through specified channels. The policy has been periodically communicated to the employees and also posted on the Bank’s intranet. The Whistle Blower Policy complies with the requirements of Vigil mechanism as stipulated under Section 177 of the Companies Act, 2013. The details of establishment of the Whistle Blower Policy/Vigil mechanism have been disclosed on the website of the Bank. Code of Conduct as prescribed under Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 In accordance with the requirements of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, ICICI Bank has instituted a comprehensive code of conduct to regulate, monitor and report trading by its directors, employees and other connected persons. Group Code of Business Conduct and Ethics The Group Code of Business Conduct and Ethics for Directors and employees of the ICICI Group aims at ensuring consistent standards of conduct and ethical business practices across the constituents of the ICICI Group. This Code is reviewed on an annual basis and the latest Code is available on the website of the Bank (www.icicibank.com). Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a confirmation from Chief Operating Officer along with one Executive Director regarding compliance with the Code by all the Directors and senior management forms part of the Annual Report. The above mentioned confirmation is as per the letter filed by the Bank with the stock exchanges on July 23, 2018 and the authorisation for the said confirmation has been granted by the Board at its Meeting held on July 27, 2018. Material Subsidiaries In accordance with the requirements of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Policy for determining Material Subsidiaries and the same has been hosted on the website of the Bank (https://www.icicibank.com/managed-assets/docs/investor/policy-for- determining-material-subsidiaries/policy-for-determining-material-subsidiaries.pdf). Presently no subsidiary of the Bank qualifies as a material unlisted subsidiary as per the criteria stipulated in the regulations. Familiarisation Programme for independent Directors Independent Directors are familiarised with their roles, rights and responsibilities in the Bank as well as with the nature of the industry and the business model of the Bank through induction programmes at the time of their appointment as Directors and through presentations on economy & industry overview, key regulatory developments, strategy and performance which are made to the Directors from time to time. The details of the familiarisation programmes have been hosted on the website of the Bank and can be accessed on the link: (http://www.icicibank.com/managed-assets/docs/ about-us/board-of-directors/familiarisation-programme-for-independent-directors.pdf). CEO/CFO Certification In terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the certification by the Chief Operating Officer along with one Executive Director on the financial statements and internal controls relating to financial reporting has been obtained as per the letter filed by the Bank with the stock exchanges on July 23, 2018 and the authorisation for the said certification has been granted by the Board at its Meeting held on July 27, 2018. Board of Directors ICICI Bank has a broad-based Board of Directors, constituted in compliance with the Banking Regulation Act, 1949, the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 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 various committees, namely, Audit Committee, Board Governance, Remuneration & Nomination Committee, Corporate Social Responsibility Committee, Credit Committee, Customer Service Committee, Fraud Monitoring Committee, Information Technology Strategy Committee, Risk Committee, Stakeholders Relationship Committee and Review Committee for Identification of Wilful Defaulters/Non Co-operative Borrowers. At March 31, 2018, independent Directors constituted a majority most of the Board Committees and all Committees except Review Committee for Identification of Wilful Defaulters/Non Co-operative Borrowers were chaired by independent Directors. 31 There were 13 Meetings of the Board during fiscal 2018 - on April 6-7, May 3, June 5, June 28, July 27, September 12, October 27, November 7 and December 11 in 2017 and January 12, January 17, January 31 and March 28 in 2018. At March 31, 2018, the Board of Directors consisted of 12 Members. There were no inter-se relationships between any of the Directors. The names of the Directors, their attendance at Board Meetings during the year, attendance at the last AGM and the number of other directorships and board committee memberships held by them at March 31, 2018 are set out in the following table: Name of Director Independent Directors M. K. Sharma, Chairman (DIN: 00327684) Uday Chitale (w.e.f. January 17, 2018) (DIN: 00043268) Dileep Choksi (DIN: 00016322) Neelam Dhawan*(w.e.f. January 12, 2018) (DIN: 00871445) Homi Khusrokhan (upto close of business hours on January 20, 2018) (DIN: 00005085) M. S. Ramachandran (upto close of business hours on April 24, 2017) (DIN: 00943629) Tushaar Shah* (DIN: 03055738) V. K. Sharma (DIN : 02449088) V. Sridar (upto close of business hours on January 20, 2018) (DIN: 02241339) government nominee Director Amit Agrawal (DIN:07117013) Wholetime/Executive Directors Chanda Kochhar (DIN: 00043617) N. S. Kannan (DIN: 00066009) Vishakha Mulye (DIN: 00203578) Vijay Chandok (DIN: 01545262) Anup Bagchi (DIN: 00105962) Board Meetings attended during the year attendance at last agM (June 30, 2017) number of other directorships of Indian public limited companies1 of other companies2 number of other committee3 memberships 13/13 Present 2/2 N.A. 13/13 Present 2/3 N.A. 4 6 9 - 4 1 2 1 5(3) 7(1) 7(4) - 11/11 Present N.A. N.A. N.A. 1/1 6/13 4/13 N.A. N.A. N.A. N.A. Present Absent - 6 - 7 - - 10/11 Absent N.A. N.A. N.A. 2/13 Absent 12/13 12/13 13/13 12/13 9/13 Present Present Present Present Present - 4 4 1 1 2 - 2 2 - 2 - - - 3 1 1 1 * Participated in one Meeting through video-conference. 1. Comprises public limited companies incorporated in India. Comprises private limited companies incorporated in India, foreign companies, statutory bodies and insurance corporations but excludes Section 8 companies and not for profit foreign companies. Comprises only Audit Committee and Stakeholders’ Relationship Committee of Indian public limited companies. Figures in parentheses indicate committee chairpersonships. 2. 3. 32 DIRECTORS’ REPORT annual report 2017-2018In terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the number of Committees (audit committee and stakeholders’ relationship committee) of public limited companies in which a Director is a member/chairman were within the limits provided under listing regulations, for all the Directors of the Bank. The number of directorships of each independent Director is also within the limits prescribed under listing regulations. The terms of reference of the Board Committees as mentioned earlier, their composition and attendance of the respective Members at the various Committee Meetings held during fiscal 2018 are set out below: 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 examining the financial statements and auditors’ report and overseeing the financial reporting process to ensure fairness, sufficiency and credibility of financial statements, review of the quarterly and annual financial statements before submission to the Board, recommendation of appointment, terms of appointment, remuneration and removal of central and branch statutory auditors and chief internal auditor, approval of payment to statutory auditors for other permitted services rendered by them, reviewing and monitoring with the management the auditor’s independence and the performance and effectiveness of the audit process, approval of transactions with related parties or any subsequent modifications, review of statement of significant related party transactions, review of functioning of the Whistle Blower Policy, 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 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, examination of reasons for substantial defaults, if any, in payment to stakeholders, valuation of undertakings or assets, evaluation of risk management systems and scrutiny of inter-corporate loans and investments. 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 Chief Financial Officer (i.e., the wholetime 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 At March 31, 2018, the Audit Committee consisted three independent Directors and was chaired by Uday Chitale, an independent Director. There were 13 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 Uday Chitale, Chairman (w.e.f. January 21, 2018) Dileep Choksi, Alternate Chairman Tushaar Shah*(w.e.f. January 21, 2018) Homi Khusrokhan (upto January 20, 2018) M. S. Ramachandran (upto April 24, 2017) V. Sridar (upto January 20, 2018) * Participated in one Meeting through video-conference. number of meetings attended 4/4 12/13 2/4 9/9 1/1 8/9 Upon completion of his tenure as a Director, Tushaar Shah ceased to be a Member of the Committee with effect from May 3, 2018. The Board at its Meeting held on May 2, 2018 reconstituted the Committee pursuant to which Radhakrishnan Nair, an independent Director, was inducted as a Member of the Committee with effect from May 3, 2018. 33 III. Board governance, Remuneration & nomination Committee Terms of Reference The functions of the Committee include recommending appointments of Directors to the Board, identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommending to the Board their appointment and removal, formulate a criteria for the evaluation of the performance of the wholetime/independent Directors and the Board and to extend or continue the term of appointment of independent Directors on the basis of the report of performance evaluation of independent Directors, recommending to the Board a policy relating to the remuneration for the Directors, key managerial personnel and other employees, recommending to the Board the remuneration (including performance bonus and perquisites) to wholetime Directors, commission and fee payable to non-executive Directors subject to applicable regulations, approving the policy for and quantum of bonus payable to the members of the staff including senior management and key managerial personnel, formulating the criteria for determining qualifications, positive attributes and independence of a Director, framing policy on Board diversity, framing guidelines for the Employees Stock Option Scheme (ESOS) and decide on the grant of stock options to employees and wholetime Directors of the Bank and its subsidiary companies. Composition At March 31, 2018, the Board Governance, Remuneration & Nomination Committee consisted three independent Directors and was chaired by Tushaar Shah, 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 Tushaar Shah, Chairman (w.e.f. January 21, 2018) Homi Khusrokhan (upto January 20, 2018) M. S. Ramachandran (upto April 24, 2017) M. K. Sharma V. K. Sharma (w.e.f. April 6, 2017) number of meetings attended N.A. 7/7 1/1 7/7 2/6 Upon completion of his tenure as a Director, Tushaar Shah ceased to be a Member of the Committee with effect from May 3, 2018. The Board at its Meeting held on May 2, 2018 reconstituted the Committee pursuant to which Dileep Choksi, an independent Director, was inducted as a Member as well as appointed as the Chairman of the Committee with effect from May 3, 2018. Upon completion of his tenure as a Director, M. K. Sharma ceased to be a Member of the Committee with effect from July 1, 2018. The Board at its Meeting held on June 27, 2018 reconstituted the Committee pursuant to which Neelam Dhawan, an independent Director, was inducted as a Member as well as appointed as the Chairperson of the Committee with effect from July 1, 2018. The Board at its Meeting held on July 27, 2018 further reconstituted the Committee pursuant to which Girish Chandra Chaturvedi, an independent Director, was inducted as a Member of the Committee with immediate effect. Policy/Criteria for Directors’ appointment The Bank with the approval of its Board Governance, Remuneration & Nomination Committee (Committee) has put in place a policy on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes and independence of a Director as well as a policy on Board diversity. The policy has been framed based on the broad principles as outlined hereinafter. The Committee would evaluate the composition of the Board and vacancies arising in the Board from time to time. The Committee while recommending candidature of a Director would consider the special knowledge or expertise possessed by the candidate as required under Banking Regulation Act, 1949. The Committee would assess the fit and proper credentials of the candidate and the companies/entities with which the candidate is associated either as a director or otherwise and as to whether such association is permissible under RBI guidelines and the internal norms adopted by the Bank. For the above assessment, the Committee would be guided by the guidelines issued by RBI in this regard. The Committee will also evaluate the prospective candidate for the position of a Director from the perspective of the criteria for independence prescribed under Companies Act, 2013 as well as the listing regulations. For a non-executive Director to be classified as independent he/she must satisfy the criteria of independence as prescribed and sign a declaration of independence. The Committee will review the same and determine the independence of a Director. 34 DIRECTORS’ REPORT annual report 2017-2018The Committee based on the above assessments will make suitable recommendations on the appointment of Directors to the Board. Remuneration policy Reserve Bank of India (RBI) vide its circular DBOD No. BC. 72/29.67.001/2011-12 dated January 13, 2012 has issued guidelines on “Compensation of wholetime Directors/Chief executive Officers/Risk takers and Control function staff etc.” for implementation by private sector banks and foreign banks from the financial year 2012-13. The Bank adopted a Compensation Policy in January 2012 which is amended from time to time based on regulatory requirements. The Compensation Policy of the Bank is in line with the RBI circular dated January 13, 2012 and is in compliance with the requirements for the Remuneration Policy as prescribed under the Companies Act, 2013. The Policy is divided into the segments, Part A, Part B and Part C where Part A covers the requirements for wholetime Directors & employees pursuant to RBI guidelines, Part B relates to compensation to non-executive Directors (except part-time non-executive Chairman) and Part C relates to compensation to part-time non-executive Chairman. The Compensation/Remuneration Policy is available on the website of the Bank under the link https://www.icicibank.com/aboutus/other-policies.page. Further details with respect to the Compensation Policy are provided under the section titled “Compensation Policy and Practices”. The remuneration payable to non-executive/independent Directors is governed by the provisions of the Banking Regulation Act, 1949, RBI guidelines issued from time to time and the provisions of the Companies Act, 2013 and related rules to the extent it is not inconsistent with the provisions of the Banking Regulation Act, 1949/RBI guidelines. The remuneration for the non-executive/independent Directors (other than Government nominee) would be sitting fee for attending each Meeting of the Committee/Board as approved by the Board from time to time within the limits as provided under Companies Act, 2013 and related rules. RBI vide its guidelines dated June 1, 2015 regarding Compensation of non- executive Directors (NEDs) (except part-time Chairman) of Private Sector Banks has permitted payment of profit related commission up to ` 1,000,000 per annum for non-executive Directors (other than part-time Chairman). The Members at their Meeting held on July 11, 2016 approved the payment of profit related commission upto ` 1,000,000 per annum to non-executive Directors (other than the non-executive Chairman and the Government Nominee Director), for each year effective from the financial year ended March 31, 2016. For the non-executive Chairman, the remuneration, in addition to sitting fee includes such fixed payments on such periodicity as may be recommended by the Board and approved by the Members and RBI from time to time, 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 duties as Chairman of the Bank and any other modes of remuneration as may be permitted by RBI through any circulars/guidelines as may be issued from time to time. All the non-executive/independent Directors would be entitled to reimbursement of expenses for attending Board/ Committee Meetings, official visits and participation in various forums on behalf of the Bank. Performance evaluation of the Board, Committees and Directors The Bank with the approval of its Board Governance, Remuneration & Nomination Committee has put in place an evaluation framework for evaluation of the Board, Directors, Chairperson and Committees. The evaluations for the Directors, the Board, Chairman of the Board and the Committees is carried out through circulation of four different questionnaires, for the Directors, for the Board, for the Chairperson of the Board and the Committees respectively. The performance of the Board is assessed on select parameters related to roles, responsibilities and obligations of the Board, relevance of Board discussions, attention to strategic issues, performance on key areas, providing feedback to executive management and assessing the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The evaluation criteria for the Directors is based on their participation, contribution and offering guidance to and understanding of the areas which were relevant to them in their capacity as members of the Board. The evaluation criteria for the Chairperson of the Board besides the general criteria adopted for assessment of all Directors, focuses incrementally on leadership abilities, effective management of meetings and preservation of interest of stakeholders. The evaluation of the Committees is based on assessment of the clarity with which the mandate of the Committee is defined, effective discharge of terms and reference of the Committees and assessment of effectiveness of contribution of the Committee’s deliberation/recommendations to the functioning/decisions of the Board. 35 The evaluation process for wholetime Directors is further detailed under the section titled “Compensation Policy and Practices”. Details of Remuneration paid to wholetime Directors 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 following table sets out the details of remuneration (including perquisites and retiral benefits) paid to wholetime Directors in fiscal 2018: Basic Details of Remuneration (`) Chanda Kochhar 30,671,520 n. S. Kannan 20,262,600 Vishakha Mulye 20,262,600 Vijay Chandok 18,319,560 anup Bagchi 18,319,560 Performance bonus paid in fiscal 2018 1 2,068,811 1,386,781 - 1,271,214 - Allowances and perquisites 2 Contribution to provident fund 26,831,413 17,999,637 17,425,454 22,293,290 16,803,746 3,680,579 2,431,512 2,431,512 2,198,349 2,198,349 Contribution to superannuation fund - 3,039,393 3,039,393 - - Contribution to gratuity fund Stock options 1,3 (numbers) Fiscal 2018 Fiscal 2017 Fiscal 2016 4 2,554,938 1,687,875 1,687,875 1,526,019 1,526,019 1,512,500 1,512,500 1,595,000 753,500 753,500 797,500 753,500 753,500 NA 753,500 544,500 462,000 753,500 NA NA 1 2 3 4 Represents amounts paid/ options granted during the year as per RBI approvals. The bonus amounts are the deferred portion of bonus approved in earlier years that was paid during fiscal 2018 and the comparable amounts for fiscal 2017 were ` 4.5 million for Chanda Kochhar, ` 3.0 million for N. S. Kannan, ` 2.6 million for Vijay Chandok. Vishakha Mulye and Anup Bagchi had Nil deferred payouts in fiscal 2017 & fiscal 2018 as they were transferred to the Bank from group companies in FY2016 and FY2017 respectively. The consolidated details of variable pay and share-linked instruments for the year ended March 31, 2018 approved by the Board/Board Governance Remuneration & Nomination Committee which are pending regulatory approvals are disclosed in the footnote under the segment titled Quantitative disclosures under Compensation Policy and Practices. Allowances and perquisites exclude stock options exercised during fiscal 2018 which does not constitute remuneration paid to the wholetime Directors for fiscal 2018. Pursuant to the issuance of bonus shares by the Bank on June 24, 2017, stock options were also adjusted with increase of one option for every 10 outstanding options. Accordingly the numbers for fiscal 2018, 2017 and 2016 have been restated. Excludes special grant of stock options approved by RBI in November 2015. 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. In line with the staff loan policy applicable to specified grades of employees who fulfil prescribed eligibility criteria to avail loans for purchase of residential property, the wholetime Directors are also eligible for housing loans subject to approval of RBI. The Board at its Meeting held on June 18, 2018 approved the appointment of Sandeep Bakhshi as wholetime Director and Chief Operating Officer (Designate) for a period of five years effective June 19, 2018 or the date of RBI approval whichever is later. The Board based on the recommendation of the Board Governance Remuneration & Nomination Committee has approved a basic salary of 2,381,000 p.m. and supplementary allowance of 1,632,500 p.m. Approval for the appointment and terms of remuneration of Mr. Bakhshi is being sought for the Members through item No. 12 and 13 of the Notice. Members are requested to consider the same. Details of Remuneration paid to non-executive Directors As provided under Article 132 of the Articles of Association of the Bank, the fees payable to a non-executive Director (other than to the nominee of Government of India) for attending a Meeting of the Board or Committee thereof are 36 DIRECTORS’ REPORT annual report 2017-2018 decided by the Board of Directors from time to time within the limits prescribed by the Companies Act, 2013 and the rules thereunder. The Board had approved the payment of ` 100,000 as sitting fees for each Meeting of the Board and ` 20,000 as sitting fees for each Meeting of the Committee attended. The Board at its Meeting held on April 2, 2018 approved revision in sitting fee payable to the non-executive Directors (other than the Government nominee) from ` 20,000 to ` 100,000 for attending each Meeting of the Audit Committee and to ` 50,000 for attending each Meeting of Committees other than the Audit Committee, with effect from April 1, 2018. The Board of Directors at its Meeting held on June 9, 2015 and subsequently the Members through a postal ballot resolution dated April 22, 2016 approved a remuneration range of ` 3,000,000 – ` 5,000,000 per annum for M. K. Sharma, Chairman of the Board with the remuneration for each year to be determined by the Board within this range. The remuneration for M. K. Sharma is ` 3,500,000 per annum as approved by the Board and RBI. Information on the total sitting fees paid to each non-executive Director during fiscal 2018 for attending Meetings of the Board and its Committees is set out in the following table: Name of Director M. K. Sharma Uday Chitale (w.e.f. January 17, 2018) Dileep Choksi Neelam Dhawan (w.e.f. January 12, 2018) Homi Khusrokhan (ceased w.e.f. January 21, 2018) M. S. Ramachandran (ceased w.e.f. April 25, 2017) Tushaar Shah V. K. Sharma V. Sridar (ceased w.e.f. January 21, 2018) Amit Agrawal1 Total amount (`) 2,080,000 360,000 1,920,000 240,000 2,200,000 180,000 900,000 440,000 1,600,000 - 9,920,000 1. Being a Government Nominee Director, not entitled to receive sitting fees. The details of shares and convertible instruments of the Bank, held by the non-executive Directors as at March 31, 2018 are set out in the following table: Name of Director M. K. Sharma Uday Chitale Dileep Choksi Neelam Dhawan Tushaar Shah V. K. Sharma Amit Agrawal Instrument no. of shares held 55,000 - 2,750 - - - - Equity - Equity - - - - Remuneration disclosures as required under RBI guidelines The RBI circular DBOD No. BC. 72/29.67.001/2011-12 on “Compensation of wholetime Directors/Chief Executive Officers/ Risk takers and Control function staff etc.” requires the Bank to make following disclosures on remuneration on an annual basis in their Annual Report: COMPEnSaTIOn POlICY anD PRaCTICES (a) Qualitative Disclosures a) Information relating to the bodies that oversee remuneration.  name, composition and mandate of the main body overseeing remuneration The Board Governance, Remuneration & Nomination Committee (BGRNC/ Committee) is the body which oversees the remuneration aspects. The functions of the Committee include recommending appointments of Directors to the Board, identifying persons who are qualified to become Directors and who may be 37 appointed in senior management in accordance with the criteria laid down and recommending to the Board their appointment and removal, formulating a criteria for the evaluation of the performance of the wholetime/independent Directors and the Board and to extend or continue the term of appointment of independent Director on the basis of the report of performance evaluation of independent Directors, recommending to the Board a policy relating to the remuneration for the Directors, Key Managerial Personnel and other employees, recommending to the Board the remuneration (including performance bonus and perquisites) to wholetime Directors (WTDs), commission and fee payable to non- executive Directors subject to applicable regulations, approving the policy for and quantum of bonus payable to members of the staff including senior management and key managerial personnel, formulating the criteria for determining qualifications, positive attributes and independence of a Director, framing policy on Board diversity, framing guidelines for the Employee Stock Option Scheme (ESOS) and decide on the grant of the Bank’s stock options to employees and WTDs of the Bank and its subsidiary companies. External consultants whose advice has been sought, the body by which they were commissioned, and in what areas of the remuneration process The Bank did not take advice from an external consultant on any area of remuneration during fiscal 2018. Scope of the Bank’s remuneration policy (eg. by regions, business lines), including the extent to which it is applicable to foreign subsidiaries and branches The Compensation Policy of the Bank, as last amended during fiscal 2018 and approved by the BGRNC and the Board at their meeting held on May 3, 2017, pursuant to the guidelines issued by RBI, covers all employees of the Bank, including those in overseas branches of the Bank. In addition to the Bank’s Compensation Policy guidelines, the overseas branches also adhere to relevant local regulations. Type of employees covered and number of such employees All employees of the Bank are governed by the Compensation Policy. The total number of permanent employees of the Bank at March 31, 2018 was 81,548.    b) Information relating to the design and structure of remuneration processes.  Key features and objectives of remuneration policy The Bank has under the guidance of the Board and the BGRNC, followed compensation practices intended to drive meritocracy within the framework of prudent risk management. This approach has been incorporated in the Compensation Policy, the key elements of which are given below.  Effective governance of compensation: The BGRNC has oversight over compensation. The Committee defines Key Performance Indicators (KPIs) for WTDs and equivalent positions and the organisational performance norms for bonus based on the financial and strategic plan approved by the Board. The KPIs include both quantitative and qualitative aspects. The BGRNC assesses organisational performance as well as the individual performance for WTDs and equivalent positions. Based on its assessment, it makes recommendations to the Board regarding compensation for WTDs and equivalent positions and bonus for employees, including senior management and key management personnel.  alignment of compensation philosophy with prudent risk taking: The Bank seeks to achieve a prudent mix of fixed and variable pay, with a higher proportion of variable pay at senior levels and no guaranteed bonuses. Compensation is sought to be aligned to both financial and non-financial indicators of performance including aspects like risk management and customer service. In addition, the Bank has an employee stock option scheme aimed at aligning compensation to long term performance through stock option grants that vest over a period of time. Compensation of staff in financial and risk control functions is independent of the business areas they oversee and depends on their performance assessment.  Whether the remuneration committee reviewed the firm’s remuneration policy during the past year, and if so, an overview of any changes that were made During FY2018, the Bank’s Compensation Policy was reviewed by the BGRNC and the Board at their meeting held on May 3, 2017. The disclosures were reviewed pursuant to RBI circular on Disclosures in Financial Statements. 38 DIRECTORS’ REPORT annual report 2017-2018  Discussion of how the Bank ensures that risk and compliance employees are remunerated independently of the businesses they oversee The compensation of staff engaged in control functions like Risk and Compliance depends on their performance, which is based on achievement of the key results of their respective functions. Their goal sheets do not include any business targets. c) Description of the ways in which current and future risks are taken into account in the remuneration processes.  Overview of the key risks that the Bank takes into account when implementing remuneration measures The Board approves the risk framework for the Bank and the business activities of the Bank are undertaken within this framework to achieve the financial plan. The risk framework includes the Bank’s risk appetite, limits framework and policies and procedures governing various types of risk. KPIs of WTDs & equivalent positions, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as the desired funding profile and asset quality. The BGRNC takes into consideration all the above aspects while assessing organisational and individual performance and making compensation- related recommendations to the Board.  Overview of the nature and type of key measures used to take account of these risks, including risk difficult to measure The annual performance targets and performance evaluation incorporate both qualitative and quantitative aspects including asset quality, provisioning, increase in stable funding sources, refinement/improvement of the risk management framework, effective management of stakeholder relationships and mentoring key members of the top and senior management.  Discussion of the ways in which these measures affect remuneration Every year, the financial plan/targets are formulated in conjunction with a risk framework with limit structures for various areas of risk/lines of business, within which the Bank operates to achieve the financial plan. To ensure effective alignment of compensation with prudent risk taking, the BGRNC takes into account adherence to the risk framework in conjunction with which the financial plan/targets have been formulated. KPIs of WTDs and equivalent positions, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as the desired funding profile and asset quality. The BGRNC takes into consideration all the above aspects while assessing organisational and individual performance and making compensation-related recommendations to the Board.  Discussion of how the nature and type of these measures have changed over the past year and reasons for the changes, as well as the impact of changes on remuneration. The nature and type of these measures have not changed over the past year and hence, there is no impact on remuneration. d) Description of the ways in which the Bank seeks to link performance during a performance measurement period with levels of remuneration  Overview of main performance metrics for Bank, top level business lines and individuals The main performance metrics include profits, loan growth, deposit growth, risk metrics (such as quality of assets), compliance with regulatory norms, refinement of risk management processes and customer service. The specific metrics and weightages for various metrics vary with the role and level of the individual.  Discussion of how amounts of individual remuneration are linked to the Bank-wide and individual performance The BGRNC takes into consideration above mentioned aspects while assessing performance and making compensation-related recommendations to the Board regarding the performance assessment of WTDs and equivalent positions. The performance assessment of individual employees is undertaken based on achievements compared to their goal sheets, which incorporate various aspects/metrics described earlier. 39 e) f)  Discussion of the measures the Bank will in general implement to adjust remuneration in the event that performance metrics are weak, including the Bank’s criteria for determining ‘weak’ performance metrics The Bank’s Compensation Policy outlines the measures the Bank will implement in the event of a reasonable evidence of deterioration in financial performance. Should such an event occur in the manner outlined in the policy, the BGRNC may decide to apply malus on none, part or all of the unvested deferred variable compensation. Description of the ways in which the Bank seeks to adjust remuneration to take account of the longer term performance  Discussion of the Bank’s policy on deferral and vesting of variable remuneration and, if the fraction of variable remuneration that is deferred differs across employees or groups of employees, a description of the factors that determine the fraction and their relative importance The quantum of bonus for an employee does not exceed a certain percentage (as stipulated in the compensation policy) of the total fixed pay in a year. Within this percentage, if the quantum of bonus exceeds a predefined threshold percentage of the total fixed pay, a part of the bonus is deferred and paid over a period. These thresholds for deferrals are same across employees.  Discussion of the Bank’s policy and criteria for adjusting deferred remuneration before vesting and (if permitted by national law) after vesting through claw back arrangements The deferred portion of variable pay is subject to malus, under which the Bank would prevent vesting of all or part of the variable pay in the event of an enquiry determining gross negligence, breach of integrity or in the event of a reasonable evidence of deterioration in financial performance. In such cases, variable pay already paid out may also be subjected to clawback arrangements, as applicable. Description of the different forms of variable remuneration that the Bank utilises and the rationale for using these different forms  Overview of the forms of variable remuneration offered. a discussion of the use of different forms of variable remuneration and, if the mix of different forms of variable remuneration differs across employees or group of employees, a description of the factors that determine the mix and their relative importance The Bank pays performance linked retention pay (PLRP) to its front-line staff and junior management and performance bonus to its middle and senior management. PLRP aims to reward front line and junior managers, mainly on the basis of skill maturity attained through experience and continuity in role which is a key differentiator for customer service. The Bank also pays variable pay to sales officers and relationship managers in wealth management roles while ensuring that such pay-outs are in accordance with applicable regulatory requirements. The Bank ensures higher proportion of variable pay at senior levels and lower variable pay for front-line staff and junior management levels. (B) Quantitative disclosures The following table sets forth, for the period indicated, the details of quantitative disclosure for remuneration of wholetime Directors (including MD & CEO) and equivalent positions. Particulars Number of meetings held by the BGRNC Remuneration paid to its members during the financial year (sitting fees) Number of employees who received a variable remuneration award1 Number and total amount of sign-on awards made Number and total amount of guaranteed bonuses awarded Details of severance pay, in addition to accrued benefits Breakdown of amount of remuneration awards for the financial year 40 ` in million, except numbers Year ended March 31, 2017 10 0.5 6 - - - Year ended March 31, 2018 7 0.3 4 - - - DIRECTORS’ REPORT annual report 2017-2018 Particulars Fixed2 Variable3 - Deferred - Non-deferred Share-linked instruments3,4 Total amount of deferred remuneration paid out during the year Total amount of outstanding deferred remuneration Cash Shares (nos.) Shares-linked instruments4 Other forms Total amount of outstanding deferred remuneration and retained remuneration exposed to ex-post explicit and/or implicit adjustments Total amount of reductions during the year due to ex-post explicit adjustments Total amount of reductions during the year due to ex-post implicit adjustments ` in million, except numbers Year ended March 31, 2017 231.5 - - - 5,071,000 16 Year ended March 31, 2018 222.7 - - - 4,526,500 6.1 6.1 - 14,747,150 - na - 14,825,250 - 6.1 - - - - - 1. 2. 3. 4. Includes deferred remuneration paid during the year to retired WTDs. Fixed pay includes basic salary, supplementary allowances, superannuation, contribution to provident fund and gratuity fund by the Bank. For the years ended March 31, 2018 and March 31, 2017, variable pay and share-linked instruments represent amounts paid/ options awarded for the years ended March 31, 2017 and March 31, 2016 respectively, as per RBI approvals. For the year ended March 31, 2018, ` 90.4 million of variable pay (FY2017: ` 75.6 million) and 4,307,500 share-linked instruments (FY2017: 4,526,500 option) are subject to RBI approval. Pursuant to the issuance of bonus shares by the Bank on June 24, 2017, the share-linked instruments have been adjusted with increase of one option for every 10 outstanding options. Disclosures required with respect to Section 197(12) of the Companies act, 2013 The ratio of the remuneration of each Director to the median employee’s remuneration and such other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and as amended from time to time. (i) The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year; Chanda Kochhar, Managing Director & CEO N. S. Kannan Vishakha Mulye Vijay Chandok Anup Bagchi 131:1 88:1 88:1 80:1 80:1 (ii) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year; The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer and Company Secretary ranges between 12% and 15%. (iii) The percentage increase in the median remuneration of employees in the financial year; The percentage increase in the median remuneration of employees in the financial year was around 10%. (iv) The number of permanent employees on the rolls of company; The number of employees, as mentioned in the section on ‘Management’s Discussion & Analysis’ is 82,724. Out of this, the employees on permanent rolls of the company is 81,548, including employees in overseas locations. 41 (v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration; The average percentage increase made in the salaries of total employees other than the Key Managerial Personnel for fiscal 2018 was around 9 % while the average increase in the remuneration of the Key Managerial Personnel was in the range of 12% to 15%. (vi) Affirmation that the remuneration is as per the remuneration policy of the company. Yes IV. Corporate Social Responsibility Committee Terms of Reference The functions of the Committee include review of corporate social responsibility (CSR) initiatives undertaken by the ICICI Group and the ICICI Foundation for Inclusive Growth, formulation and recommendation to the Board of a CSR Policy indicating the activities to be undertaken by the Company and recommendation of the amount of expenditure to be incurred on such activities, reviewing and recommending the annual CSR plan to the Board, making recommendations to the Board with respect to the CSR initiatives, policies and practices of the ICICI Group, monitoring the CSR activities, implementation and compliance with the CSR Policy and reviewing and implementing, if required, any other matter related to CSR initiatives as recommended/suggested by RBI or any other body. Composition At March 31, 2018, the Corporate Social Responsibility Committee consisted four Directors including two independent Directors, the Government Nominee Director and the Managing Director & CEO and was chaired by Tushaar Shah, an independent Director. There were three 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 Tushaar Shah, Chairman (Chairman w.e.f. April 25, 2017) Dileep Choksi (w.e.f. April 6, 2017) M. S. Ramachandran (upto April 24, 2017) Amit Agrawal (w.e.f. April 6, 2017) Chanda Kochhar number of meetings attended 3/3 3/3 1/1 1/3 3/3 Amit Agrawal ceased to be a member of the Committee pursuant to his cessation as the Government Nominee Director with effect from April 5, 2018. Upon completion of his tenure as a Director, Tushaar Shah ceased to be a Member of the Committee with effect from May 3, 2018. The Board at its Meeting held on May 2, 2018 appointed Dileep Choksi as the Chairman of the Committee and inducted Radhakrishnan Nair, an independent Director as a Member of the Committee with effect from May 3, 2018. The Board at its Meeting held on June 27, 2018 further reconstituted the Committee pursuant to which Anup Bagchi, Executive Director was inducted as a Member and Radhakrishnan Nair, an independent Director, was appointed as the Chairperson of the Committee with effect from July 1, 2018. Details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year The CSR policy has been hosted on the website of the Company http://www.icicibank.com/managed-assets/ docs/about-us/ICICI-Bank-CSR-Policy.pdf. The Annual Report on CSR activities is annexed herewith as Annexure E. V. Credit Committee Terms of Reference The functions of the Committee include review of developments in key industrial sectors, major credit portfolios and approval of credit proposals as per the authorisation approved by the Board. 42 DIRECTORS’ REPORT annual report 2017-2018 Composition At March 31, 2018, the Credit Committee consisted three Directors including two independent Directors and the Managing Director & CEO and was chaired by M. K. Sharma, an independent Director. There were 25 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 (w.e.f. April 6, 2017) Homi Khusrokhan (upto January 20, 2018) M. S. Ramachandran (upto April 24, 2017) Tushaar Shah* (w.e.f. January 21, 2018) Chanda Kochhar * Participated in three Meetings through video-conference. number of meetings attended 25/25 19/19 1/2 4/6 24/25 Upon completion of his tenure as a Director, Tushaar Shah ceased to be a Member of the Committee with effect from May 3, 2018. The Board at its Meetings held on May 2, 2018 and May 29, 2018 reconstituted the Committee pursuant to which Radhakrishnan Nair and M. D. Mallya, independent Directors, were inducted as Members of the Committee with effect from May 3, 2018 and May 29, 2018 respectively. Upon completion of his tenure as a Director, M. K. Sharma ceased to be a Member of the Committee with effect from July 1, 2018. The Board at its Meeting held on June 27, 2018 further reconstituted the Committee pursuant to which Vishakha Mulye, Executive Director, was inducted as a Member of the Committee with effect from July 1, 2018. Further, the Board approved that the Chairperson would be an Executive Director as determined at each meeting. 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 At March 31, 2018, the Customer Service Committee consisted four Directors including two independent Directors, the Managing Director & CEO and an Executive Director, and was chaired by Tushaar Shah, an independent Director. 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 Tushaar Shah, Chairman (Member w.e.f. April 6, 2017 and Chairman w.e.f. January 21, 2018) Uday Chitale (w.e.f. January 21, 2018) M. S. Ramachandran, (upto April 24, 2017) V. Sridar (upto January 20, 2018) Chanda Kochhar Anup Bagchi (w.e.f. April 6, 2017) number of meetings attended 5/6 2/2 N.A. 4/4 6/6 6/6 Upon completion of his tenure as a Director, Tushaar Shah ceased to be a Member of the Committee with effect from May 3, 2018. The Board at its Meeting held on May 2, 2018 appointed Uday Chitale as the Chairman of the Committee and inducted Neelam Dhawan as a Member of the Committee with effect from May 3, 2018. The Board at its Meeting held on June 27, 2018 further reconstituted the Committee pursuant to which M. D. Mallya, an independent Director, was inducted as a Member as well as appointed as the Chairman of the Committee with effect from July 1, 2018. 43 VII. Fraud Monitoring Committee Terms of Reference The Committee monitors and reviews all the frauds involving an amount of ` 10.0 million and above with the objective of identifying the systemic lacunae, if any, that facilitated perpetration of the fraud and put in place measures to rectify the same. The functions of this Committee include identifying the reasons for delay in detection, if any, and reporting to top management of the Bank and RBI on the same. The progress of investigation and recovery position is also monitored by the Committee. The Committee also ensures 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. The role of the Committee is also to review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of internal controls and put in place other measures as may be considered relevant to strengthen preventive measures against frauds. Composition At March 31, 2018, the Fraud Monitoring Committee consisted five Directors including three independent Directors, the Managing Director & CEO and an Executive Director and was chaired by Dileep Choksi, an independent Director. 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 number of meetings attended Dileep Choksi, Chairman (Chairman w.e.f. January 21, 2018) Uday Chitale (w.e.f. January 21, 2018) Neelam Dhawan#(w.e.f. January 21, 2018) Homi Khusrokhan (upto January 20, 2018) V. K. Sharma (upto April 5, 2017) V. Sridar (upto January 20, 2018) Chanda Kochhar Anup Bagchi (w.e.f. April 6, 2017) # Participated in one Meeting through video-conference. VIII. Information Technology Strategy Committee Terms of Reference 5/6 1/1 1/1 5/5 N.A. 5/5 6/6 6/6 The functions of the Committee are to approve strategy for Information Technology (IT) and policy documents, ensure that IT strategy is aligned with business strategy, review IT risks, ensure proper balance of IT investments for sustaining the Bank’s growth, oversee the aggregate funding of IT at Bank-level, ascertain if the management has resources to ensure the proper management of IT risks, review contribution of IT to business and oversee the activities of Digital Council. Composition At March 31, 2018, the IT Strategy Committee consisted three Directors including two independent Directors and the Managing Director & CEO and was chaired by Neelam Dhawan, an independent Director. There were four Meetings of the Committee held 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 Neelam Dhawan, Chairperson (w.e.f. January 21, 2018) Dileep Choksi (w.e.f. January 21, 2018) Homi Khusrokhan (upto January 20, 2018) V. Sridar (upto January 20, 2018) Chanda Kochhar number of meetings attended 1/1 1/1 3/3 3/3 4/4 The Board at its Meeting held on June 27, 2018 reconstituted the Committee pursuant to which Anup Bagchi, Executive Director, was inducted as a Member of the Committee with effect from July 1, 2018. 44 DIRECTORS’ REPORT annual report 2017-2018 IX. Risk Committee Terms of Reference The functions of the Committee are to review ICICI Bank’s risk management policies pertaining to credit, market, liquidity, operational, outsourcing, reputation risks, business continuity plan and disaster recovery plan. The functions of the Committee also include review of the Enterprise Risk Management (ERM) framework, Risk Appetite Framework (RAF), stress testing framework, Internal Capital Adequacy Assessment Process (ICAAP) and framework for capital allocation; review of the status of Basel II and Basel III implementation, risk return profile of the Bank, risk dashboard covering various risks, outsourcing activities and the activities of the Asset Liability Management Committee. The Committee also has oversight on risks of subsidiaries covered under the Group Risk Management Framework. Composition At March 31, 2018, the Risk Committee consisted four Directors including three independent Directors and the Managing Director & CEO and was chaired by M. K. Sharma, 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 M. K. Sharma, Chairman Dileep Choksi Homi Khusrokhan (upto January 20, 2018) V. K. Sharma V. Sridar (upto January 20, 2018) Chanda Kochhar number of meetings attended 7/7 6/7 5/5 0/7 5/5 7/7 Upon completion of his tenure as a Director, M. K. Sharma ceased to be a Member of the Committee with effect from July 1, 2018. The Board at its Meeting held on June 27, 2018 further reconstituted the Committee pursuant to which M. D. Mallya, an Independent Director, was inducted as a Member and Dileep Choksi, an independent Director, was appointed as the Chairperson of the Committee with effect from July 1, 2018. X. Stakeholders Relationship 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, review redressal and resolution of grievances of shareholders, debenture holders and other security holders, 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 At March 31, 2018, the Stakeholders Relationship Committee consisted three Directors including two Executive Directors and was chaired by Uday Chitale, an independent Director. 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 Uday Chitale, Chairman (w.e.f. January 21, 2018) Homi Khusrokhan (upto January 20, 2018) V. Sridar (upto January 20, 2018) N. S. Kannan Anup Bagchi (w.e.f. January 21, 2018) number of meetings attended 1/1 4/4 3/4 5/5 1/1 45  Pursuant to his appointment as the Managing Director & CEO of ICICI Prudential Life Insurance Company Limited, N. S. Kannan ceased to be the Executive Director of the Bank. Consequently N. S. Kannan ceased to be a Member of the Stakeholders Relationship Committee effective June 19, 2018. The Board at its Meeting held on June 27, 2018 further reconstituted the Committee pursuant to which M. D. Mallya, an independent Director, was inducted as a Member as well as appointed as the Chairman of the Committee with effect from July 1, 2018. The Company Secretary of the Bank acts as the Compliance Officer in accordance with the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. 196 shareholder complaints received in fiscal 2018 were processed. At March 31, 2018, no complaints were pending. XI. Review Committee for Identification of Wilful Defaulters/non Co-operative Borrowers Terms of Reference The function of the Committee is to review the order of the Committee for identification of wilful defaulters/non co-operative borrowers (a Committee comprising wholetime Directors and senior executives of the Bank to examine the facts and record the fact of the borrower being a wilful defaulter/non co-operative borrower) and confirm the same for the order to be considered final. Composition The Managing Director & CEO is the Chairperson of this Committee and any two independent Directors will comprise the remaining members. There were five Meetings of the Committee during the year and details of the same is set out in the following table: Name of Member Chanda Kochhar, Chairperson Dileep Choksi Homi Khusrokhan V. Sridar Tushaar Shah number of meetings attended 5/5 4/4 3/3 2/2 1/1 XII. Separate Meeting of Independent Directors to review matters as prescribed by statute The Independent Directors met on May 3, 2017 and May 3, 2018 to review the matters as statutorily prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. XIII. Other Committees In addition to the above, the Board has from time to time constituted various committees, namely, Committee of Executive Directors, Executive Investment Committee, Asset Liability Management Committee, Committee for Identification of Wilful Defaulters/non co-operative borrowers, 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, Vigilance Committee, Product Governance Committee and other Committees (all comprising Executives). These committees are responsible for specific operational areas like asset liability management, approval/renewal of credit proposals, approval of products and processes and management of operational risk, under authorisation/supervision of the Board and its Committees. 46 DIRECTORS’ REPORT annual report 2017-2018 XIV.general Body Meetings The details of General Body Meetings held in the last three years are given below: general Body Meeting Day, Date Twenty-Third AGM Friday, June 30, 2017 Venue Time 12:00 noon Professor Chandravadan Mehta Auditorium, General Education Centre, Opposite D. N. Hall Ground, The Maharaja Sayajirao University, Pratapgunj, Vadodara 390 002 Twenty-Second AGM Twenty-First AGM Monday, July 11, 2016 12:00 noon Sir Monday, June 29, 2015 12:00 noon Sayajirao Vadodara Mahanagar Seva Sadan, Near GEB Colony, Old Padra Road, Akota, Vadodara 390 020 Nagargruh, The details of the Special Resolutions passed in the Annual General Meetings held in the previous three years are given below: general Body Meeting Day, Date Annual General Meeting Friday, June 30, 2017 Resolution Private placement of securities under Section 42 of the Companies Act, 2013 Annual General Meeting Monday, July 11, 2016 Private placement of securities under Section 42 of the Companies Act, 2013 Annual General Meeting Monday, June 29, 2015 Private placement of securities under Section 42 of the Companies Act, 2013 Postal Ballot Special Resolution was passed through postal ballot during fiscal 2018 vide Postal Ballot Notice dated May 5, 2017 under Section 110 of the Companies Act, 2013 for the following: (i) Alteration of Articles of Association (ii) Amendment to the Employee Stock Option Scheme The Bank followed the procedure as prescribed under Companies (Management and Administration), Rules, 2014, as amended and the Secretarial Standard 2 issued by the Institute of Company Secretaries of India. The Members were provided the facility to cast their votes through electronic voting (e-voting) or through postal ballot. The Board of Directors of the Company, appointed Mr. Alwyn D’souza of Alwyn D’souza & Co., Company Secretaries, as the Scrutinizer for conducting the postal ballot voting process. The scrutinizer submitted his report to the Chairman after the completion of the scrutiny of the postal ballots (including e-voting). Considering the combined results of the Postal Ballot via postal ballot forms and e-voting facility, the resolution was approved on June 12, 2017. The results were declared on June 13, 2017 and communicated to the stock exchanges and displayed on the Bank’s website www.icicibank.com. The details of the voting pattern is given below: Resolution Total number of votes polled % of votes polled on outstanding shares 67.38 Votes cast in favour of the Resolution Votes cast against the Resolution 3,92,39,26,748 16,36,817 % of Votes in favour on votes polled 99.96 % of votes against on votes polled 0.04 Invalid votes 98,459 3,92,55,63,565 Alteration of Articles of Association Amendment to the Employee Stock Option Scheme 3,92,51,16,014 67.38 3,82,79,14,727 9,72,01,287 97.52 2.48 1,57,285 47 At present, no special resolution is proposed to be passed through postal ballot. XV. Disclosures 1. 2. 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. 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, detailed as hereunder: In reference to Show cause notice issued by RBI dated September 6, 2017 and supplementary show cause notice dated November 07, 2017 and as mentioned by RBI in its press release dated March 29, 2018, RBI has through an order dated March 26, 2018, imposed a monetary penalty of ` 589.0 million on ICICI Bank for non-compliance with directions/guidelines issued by RBI. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. 3. In terms of the Whistle Blower Policy of the Bank, no employee of the Bank has been denied access to the Audit Committee. XVI.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 information on ICICI Bank’s strategy, financial performance, operational performance and the latest press releases. ICICI Bank’s 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 BSE Limited (BSE), New York Stock Exchange (NYSE), Securities Exchange Commission (SEC), Singapore Stock Exchange, Japan Securities Dealers Association and SIX Swiss Exchange Ltd from time to time. The financial and other information and the various compliances as required/prescribed under the Listing Regulations are filed electronically with NSE/BSE through NSE Electronic Application Processing (NEAP) System and through BSE Listing Centre and are also available on their respective websites in addition to the Bank’s website. Additionally, information is also disseminated to BSE/NSE where required by email or fax. ICICI Bank’s quarterly financial results are published either in the Financial Express (Mumbai, Pune, Ahmedabad, New Delhi, Lucknow, Chandigarh, Kolkata, Chennai, Bengaluru, Hyderabad and Kochi editions) or the Business Standard (Ahmedabad, Bengaluru, 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 annual general Meeting Twenty-Fourth AGM Day, Date & Time Venue Wednesday, September 12, 2018, 11.30 a.m. Sir Sayajirao Nagargruh, Vadodara Mahanagar Seva Sadan, Near GEB Colony, Old Padra Road, Akota, Vadodara 390 020 48 DIRECTORS’ REPORT annual report 2017-2018 Financial Year Book Closure Dividend Payment Date : : : April 1, 2017 to March 31, 2018 August 28, 2018 to September 12, 2018 September 13, 2018 listing of equity shares/aDSs/Bonds on Stock Exchanges Stock Exchange BSE Limited (BSE) (Equity) Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 001 National Stock Exchange of India Limited (NSE) (Equity) 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. 2. FII segment of BSE. Each ADS of ICICI Bank represents two underlying equity shares. Code for ICICI Bank 532174 & 6321741 ICICIBANK IBN The bonds issued in domestic market comprised of privately placed bonds as well bonds issued via public issues which are listed on BSE/NSE. ICICI Bank has paid annual listing fees for the relevant periods to BSE and NSE where its equity shares/bonds are listed and NYSE where its ADSs are listed. listing of other securities The bonds issued overseas are issued either in public or private placement format. The listed bonds are traded on Singapore Exchange Securities Trading Limited, 2 Shenton Way, #02-02, SGX Centre 1, Singapore 068804 or SIX Swiss Exchange Ltd, P.O. Box 1758, CH-8021 Zurich, Switzerland or Tokyo Stock Exchange, 2-1 Nihombashi Kabutocho, Chuo-ku Tokyo 103-8220 Japan. Market Price Information The reported high and low closing prices and volume of equity shares of ICICI Bank traded during fiscal 2018 on BSE and NSE are set out in the following table: Month April 2017 May 2017 June 2017 July 2017 August 2017 September 2017 October 2017 November 2017 December 2017 January 2018 February 2018 March 2018 Fiscal 2018 High ` 260.68 296.64 295.23 310.20 302.20 298.20 305.60 325.10 317.50 362.05 345.75 306.35 362.05 BSE low ` 244.27 247.95 286.18 289.45 287.10 275.55 257.85 305.80 299.40 309.25 313.50 275.80 244.27 Volume 28,050,514 56,314,696 18,471,010 35,513,452 22,735,367 13,762,764 26,856,926 22,375,693 32,923,892 41,681,148 34,926,534 27,704,791 361,316,787 High ` 260.64 296.77 295.18 310.35 302.60 298.30 305.70 325.10 318.15 362.30 346.20 306.05 362.30 nSE low ` 244.23 247.95 286.23 289.50 286.95 275.95 257.85 305.50 299.50 309.50 313.25 275.55 244.23 Volume 294,766,486 686,787,972 316,970,253 273,787,529 230,083,569 265,346,113 484,037,908 338,858,264 223,570,224 364,937,744 291,549,305 369,766,992 4,140,462,360 Total Volume on BSE and nSE 322,817,000 743,102,668 335,441,264 309,300,981 252,818,936 279,108,877 510,894,834 361,233,957 256,494,116 406,618,892 326,475,839 397,471,783 4,501,779,147 The Bank issued one bonus share for every 10 equity shares effective June 24, 2017. Share prices and volumes in the table have been adjusted accordingly. 49  The reported high and low closing prices and volume of ADRs of ICICI Bank traded during fiscal 2018 on the NYSE are given below: Month April 2017 May 2017 June 2017 July 2017 August 2017 September 2017 October 2017 November 2017 December 2017 January 2018 February 2018 March 2018 Fiscal 2018 High (USD) 8.00 9.02 9.17 9.72 9.45 9.40 9.15 9.89 9.81 11.22 10.78 9.45 11.22 low (USD) 7.50 7.71 8.78 8.90 8.79 8.46 7.91 9.34 9.33 9.71 9.50 8.55 7.50 number of aDS traded 112,908,164 241,530,664 152,262,176 136,531,827 174,370,358 117,338,640 272,236,040 164,074,945 91,013,566 154,597,739 151,033,704 173,399,464 1,941,297,287 The Bank issued one bonus ADS for every 10 ADS held effective June 24, 2017. ADS prices and volumes in the table have been adjusted accordingly. The performance of ICICI Bank equity shares relative to the S&P BSE Sensitive Index (Sensex), S&P BSE Bank Index (Bankex) and NYSE Financial Index during the period April 1, 2017 to March 31, 2018 is given in the following chart: 150.00 140.00 130.00 120.00 110.00 100.00 90.00 80.00 7 1 / r p A 7 1 / y a M 7 1 / n u J 7 1 / l u J 7 1 / g u A 7 1 / p e S 7 1 / t c O 7 1 / v o N 7 1 / c e D 8 1 / n a J 8 1 / b e F 8 1 / r a M S&P BSE Sensex S&P BSE Bankex NYSE Financial Index ICICI Bank 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 an information technology company and in addition to R&T services, provides a wide range of technology & technology-enabled products and services. 50 DIRECTORS’ REPORT annual report 2017-2018  ICICI Bank’s equity shares are traded mainly in dematerialised form. During the year, 1,589,536 equity shares of face value ` 2/- each involving 7,238 certificates were dematerialised. At March 31, 2018, 99.59% of paid-up equity share capital (including equity shares represented by ADS constituting 24.17% of the paid-up equity share capital) are held in dematerialised form. 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 2016 Shares of face value ` 2 1,114 314,890 Fiscal 2017 Shares of face value ` 2 414 109,155 Fiscal 2018 Shares of face value ` 2 629 157,922 As required under Regulation 40(9) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, 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 filed with BSE and NSE. In terms of SEBI 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 with the depositories and in the physical form with the total issued/paid up equity share capital of ICICI Bank. Certificates issued in this regard are placed before the Stakeholders Relationship Committee and filed with 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 250 shares of face value of ` 2 each) 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 R. C. D’souza 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. : +91-22-7123 8099 E-mail : +91-22-7123 8000 : investor@icicibank.com 51 Queries relating to the operational and financial performance of ICICI Bank may be addressed to: Rakesh Jha/Anindya Banerjee ICICI Bank Limited ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 Tel No. : +91-22-2653 7131 Fax No. : +91-22-2653 1175 ir@icicibank.com E-mail : Debenture Trustees Pursuant to Regulation 53 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names and contact details of the debenture trustees for the public issue bonds and privately placed bonds of the Bank are given below: Bank of Maharashtra Head Office, Legal Dept. Lokmangal, “1501”Shivaji Nagar, Pune - 411 005 Tel. No: +91-020-2553 6256 bomcolaw@mahabank.com Axis Trustee Services Limited Axis House, Ground Floor, Bombay Dyeing Mill Compound, Pandurang Budhkar Marg, Worli, Mumbai - 400 025 Tel No: +91- 22- 2425 5202 debenturetrustee@axistrustee.com IDBI Trusteeship Services Limited Asian Building, Ground Floor, 17, R Kamani Marg, Ballard Estate, Mumbai 400 001 Tel No: +91 -22 - 4080 7001 ajit.guruji@idbitrustee.com The details are available on the website of the Bank at the link http://www.icicibank.com/Personal-Banking/investments/icici-bank-bonds/index.page. Information on Shareholding Shareholding pattern of ICICI Bank at March 31, 2018 Shareholder Category Deutsche Bank Trust Company Americas (Depositary for ADS holders) FIIs, NRIs, Foreign Banks, Foreign Companies, OCBs and Foreign Nationals Insurance Companies Bodies Corporate (including Government Companies) Banks & Financial Institutions Mutual Funds Individuals, HUF and Trusts NBFC Registered with RBI Provident Fund / Pension Fund Alternative Investment Fund IEPF Total Shares % holding 1,553,716,495 2,363,839,329 863,754,047 125,541,844 3,071,804 1,104,462,167 353,357,106 948,746 52,643,783 1,920,162 4,735,293 6,427,990,776 24.17 36.77 13.45 1.95 0.05 17.18 5.50 0.01 0.82 0.03 0.07 100.00 Shareholders of ICICI Bank with more than one percent holding at March 31, 2018 S r. No 1 2 3 4 5 Name of the Shareholder Deutsche Bank Trust Company Americas Life Insurance Corporation of India Dodge & Cox International Stock Fund HDFC Trustee Co Ltd (Various Mutual Fund Accounts)/HDFC Large Cap Fund ICICI Prudential Mutual Fund (Various Mutual Fund Accounts) Type of shares Equity Equity Equity Equity no. of shares % 1,553,716,495 603,252,345 388,897,176 275,843,678 24.17 9.38 6.05 4.29 Equity 163,223,945 2.54 52 DIRECTORS’ REPORT annual report 2017-2018 S r. No 6 7 Name of the Shareholder SBI Mutual Fund/SBI Dual Advantage Fund And Other Various Fund Accounts Reliance Capital Trustee Co Ltd/Reliance ETF/Reliance Emergent India Fund (Various Fund Accounts) Aditya Birla Sun Life Trustee Private Limited Government of Singapore 8 9 10 Norges Bank on account of The Government Pension Fund Global Type of shares Equity Equity Equity Equity Equity no. of shares % 133,169,518 2.07 101,446,335 1.58 99,464,487 101,380,233 59,362,755 1.55 1.58 0.92 Note- Pursuant to SEBI circular dated December 19, 2017, the shareholding under different folios has been consolidated basis common Permanent Account Number Distribution of shareholding of ICICI Bank at March 31, 2018 Range – Shares Upto 1,000 1,001 – 5,000 5,001 – 10,000 10,001 – 50,000 50,001 & above Total no. of Folios 427,985 300,970 95,204 53,571 8,694 886,424 % no. of Shares 14,850,980 71,153,318 62,618,295 97,157,514 6,182,210,669 6,427,990,776 48.28 33.95 10.74 6.05 0.98 100.00 % 0.23 1.11 0.97 1.51 96.18 100.00 Disclosure with respect to shares lying in suspense account The Bank had 99,175 equity shares held by 498 shareholders lying in suspense account at the beginning of the fiscal 2018. The Bank has been transferring the shares lying unclaimed to the eligible shareholders as and when the request for the same has been received after proper verification. During the year, the Bank had allotted 9,662 Bonus shares and had received requests from 18 shareholders holding 9,715 shares for claiming these shares out of which 8,615 shares held by 15 shareholders were transferred from the suspense account. As on March 31, 2018, 100,222 shares held by 483 shareholders remained unclaimed in the suspense account. The voting rights on the shares lying in suspense account are frozen till the rightful owner of such shares claims the shares. Transfer of unclaimed dividend and shares to investor education & protection fund (IEPF) Pursuant to the provisions of Section 124 of the Companies Act, 2013, the amounts of dividend remaining unpaid or unclaimed for a period of seven years from the date of its transfer to the Unpaid Dividend Accounts of the Company are required to be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government. Accordingly, the unclaimed dividend for the financial year ended March 31, 2010 was transferred to the IEPF on August 21, 2017. Further, as per the provisions of Section 124(6) of the Companies Act, 2013 read with the Investor Education & Protection Fund Authority (Accounting, Audit, Transfer & Refund) Rules 2016 (IEPF Rules), the shares in respect of which the dividend has not been claimed for seven consecutive years are required to be transferred by the Company to the designated Demat account of the IEPF Authority. In compliance with the aforesaid provision the Bank on November 30, 2017 has transferred, 4,735,293 equity shares of ` 2 each to the demat account of the IEPF Authority which is maintained with National Securities Depository Limited (NSDL). With respect to the unclaimed dividend for the financial year ended March 31, 2011, reminder letters were sent to the Members in March and April 2018 to claim the outstanding dividend amounts on or before June 27, 2018 failing which the corresponding shares alongwith unclaimed dividend would become due for transfer to the designated demat account as mentioned above. The unclaimed dividend for the financial year ended March 31, 2011 would accordingly be transferred to the IEPF in August 2018. The corresponding shares alongwith the unclaimed dividend would also be transferred to the demat account of the IEPF Authority. 53  Members who have not yet encashed their dividend warrant(s) for the financial years ended March 31, 2012 and/ or subsequent years are requested to submit their claims to the Registrar and Transfer Agent of the Company without any delay. The unclaimed dividend and the unclaimed equity shares can be claimed by making an application directly to IEPF in the prescribed form under the IEPF Rules which is available on the website of IEPF i.e. www.iepf.gov.in. or you may write to 3i Infotech Limited for any assistance in this regard. As stipulated under the said Rules, all subsequent corporate benefits that would accrue in relation to the above shares will also be credited to the said IEPF Account. Securities and Exchange Board of India (SEBI) vide its circular no. SEBI/HO/MIRSD/DOP1/CIR/P/2018/73 dated April 20, 2018 has stipulated various procedural steps for all listed entities and their Registrar & Transfer Agents (RTA) with the objective of streamlining the processes relating to maintenance of records, transfer of securities and seamless payment of dividend amounts to shareholders. The circular also mandated the issuer companies to seek the copy of PAN Card and Bank Account details from the shareholders through their RTA. Further, BSE vide circular No. LIST/COMP/15/2018-19 dated July 5, 2018 regarding amendment to Regulation 40 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR Regulations) with respect to mandatory dematerialisation for transfer of securities had stipulated to ensure that shares must be held in the DEMAT form in case of transfer of securities. Listed Companies and their Registrars and Transfer Agents (RTAs) were advised that with effect from December 5, 2018, it should be ensured that shares which are lodged for transfer shall be in dematerialised form only. In view of the above, the Registrar and Transfer Agent had vide its letter dated July 11, 2018 advised the shareholders whose PAN/Bank account details were not available/updated in the records to provide the same within 21 days of the date of the letter. The RTA had further advised the shareholders to convert the physical shares into dematerialized form. Outstanding GDRs/ADSs/Warrants or any Convertible Debentures, conversion date and likely impact on equity ICICI Bank has 776.86 million ADS (equivalent to 1,553.72 million equity shares) outstanding, which constituted 24.17% of ICICI Bank’s total equity capital at March 31, 2018. Currently, there are no convertible debentures outstanding. Commodity price risk or foreign exchange risk and hedging activities The foreign exchange risk position including bullion is managed within the ` 15.00 billion net overnight open position (NOOP) limit approved by the Board of Directors. The Bank does not take positions in commodities. The Bank primarily has floating rate linked foreign currency assets. Wholesale liability raising takes place in USD or other currencies via bond issuances, bilateral loans and syndicated/club loans as well as refinance from Export Credit Agencies (ECA) which may be at a fixed rate or floating rate linked. In case of fixed rate fund raising in USDs, the interest rate risk is hedged via interest rate swaps wherein the Bank moves to a floating rate index in order to match the asset profile. In case of fund raising in non USD currencies, the foreign exchange risk is hedged via foreign exchange swaps or currency interest rate swaps. Plant Locations – Not applicable Address for Correspondence Ranganath Athreya General Manager & Company Secretary (with effect from July 28, 2018) ICICI Bank Limited ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 Tel No. : +91-22-2653 8900 Fax No. : +91-22-2653 1230 E-mail companysecretary@icicibank.com : 54 DIRECTORS’ REPORT annual report 2017-2018  The Bank is in compliance with requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub- regulation (2) of Regulation 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Bank has also complied with the discretionary requirements such as maintaining a separate office for the Chairman at the Bank’s expense, ensuring financial statements with unmodified audit opinion, separation of posts of Chairman and Chief Executive Officer and reporting of internal auditor directly to the Audit Committee. analYSIS OF CUSTOMER COMPlaInTS a) Customer complaints in fiscal 2018 No. of complaints pending at the beginning of the year No. of complaints received during the year No. of complaints redressed during the year No. of complaints pending at the end of the year Note: The above does not include complaint redressed within 1 working day. b) awards passed by the Banking Ombudsman in fiscal 2018 Number of unimplemented awards at the beginning of the year Number of awards passed by the Banking Ombudsman during the year Number of awards implemented during the year Number of unimplemented awards at the end of the year 4,272 237,343 235,406 6,209 Nil Nil Nil Nil COMPlIanCE CERTIFICaTE OF THE aUDITORS ICICI Bank has annexed to this report, a certificate obtained from the statutory auditors, M/s B S R & Co. LLP, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. EMPlOYEE STOCK OPTIOn SCHEME The Bank has an Employee Stock Option Scheme (ESOS/Scheme) which was instituted in fiscal 2000 to enable the employees and wholetime Directors of ICICI Bank and its subsidiaries to participate in future growth and financial success of the Bank. The ESOS aims at achieving the twin objectives of (i) aligning employee interest to that of the shareholders; and (ii) retention of talent. Through employee stock option grants, the Bank seeks to foster a culture of long-term sustainable value creation. The Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the below disclosures are available at www.icicibank.com/aboutus/annual.page. Pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, options are granted by the Board Governance, Remuneration & Nomination Committee (BGRNC) and noted by the Board. The Scheme was initially approved by the Members at their meeting held on February 21, 2000 and thereafter further amended through resolutions at the General Meeting held on September 20, 2004, June 25, 2012 and vide a postal ballot resolution passed on April 22, 2016. The scheme was further amended through a resolution at the Board Governance, Remuneration & Nomination Committee held on July 11, 2016 and vide a postal ballot resolution passed on June 12, 2017. The Bank has upto March 31, 2018 granted 487.11 million stock options from time to time aggregating to 7.58% of the issued equity capital of the Bank at March 31, 2018. 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 10% of ICICI Bank’s issued equity shares on the date of the grant (equivalent to 642.80 million shares of face value ` 2 each at March 31, 2018). 55  Options granted after April 1, 2014 vest in a graded manner over a three year period, with 30%, 30% and 40% of the grant vesting in each year, commencing from the end of 12 months from the date of the grant, other than the following:    275,000 options granted in April 2014, 50% vested on April 30, 2017 and balance 50% vested on April 30, 2018. Options granted in September 2015, 50% vested on April 30, 2018 and balance 50% would vest on April 30, 2019. The unvested options would lapse upon termination of employment due to retirement (including pursuant to early/voluntary retirement scheme). 300,000 options granted in January 2018, would vest to the extent of 100% at the end of four years from the date of grant. Options granted prior to April 1, 2014 vested 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, other than the following:    Options granted in April 2009 vested in a graded manner over a five-year period with 20%, 20%, 30% and 30% of the grant vesting in each year, commencing from the end of 24 months from the date of the grant. The grant approved by the Board at its Meeting held on October 29, 2010 (for which RBI approval for grant to wholetime Directors was received in January 2011), vested 50% on April 30, 2014 and the balance 50% vested on April 30, 2015. Options granted in September 2011 vested in a graded manner over a five-year period with 15%, 20%, 20% and 45% of the grant vesting in each year, commencing from end of 24 months from the date of grant. The price for options granted (except for grants approved on October 29, 2010 where the grant price was the average closing price of the ICICI Bank stock on the stock exchange during the six months upto October 28, 2010) is equal to the closing price on the stock exchange which recorded the highest trading volume preceding the date of grant of options in line with the SEBI regulations. The BGRNC at its Meeting held on May 3, 2017 approved a grant of approximately 36.3 million options (bonus adjusted) for fiscal 2017 to eligible employees and wholetime Directors of ICICI Bank and its subsidiaries. Each option confers on the employee a right to apply for one equity share of face value of ` 2 of ICICI Bank at ` 250.55 being the grant price proportionately adjusted post issuance of bonus options in June 2017 based on the price of ` 275.60 calculated as per the SEBI Regulations which was closing price on the stock exchange which recorded the highest trading volume in ICICI Bank shares on May 2, 2017. Particulars of options granted by ICICI Bank upto March 31, 2018 are given below: Options granted till March 31, 2018 (excluding options forfeited/lapsed) Options forfeited/lapsed Options vested Options exercised Total number of options in force Number of shares allotted pursuant to exercise of options Extinguishment or modification of options Amount realised by exercise of options (`) 487,109,621 83,085,543 401,079,784 251,437,371 235,672,250 251,437,371 Nil 20,369,703,051 1. 2. 3. The numbers indicated include options granted till March 31, 2018 including those granted to wholetime Directors (WTDs)as per RBI approvals. For the year ended March 31, 2018, approx. 35.5 million options were approved by BGRNC at its meeting held on May 7, 2018 (FY2017: 36.3 million options bonus adjusted) which includes options granted to WTDs subject to RBI approval. For details on option movement during the year refer Financials-Schedule 18-Employee Stock Option Scheme. 37,507,933 options vested during FY2018 and ` 3,939,489,824 was realised by exercise of options during FY2018. Pursuant to the issuance of bonus shares by the Bank in June 2017, stock options were also adjusted with increase of one option for every 10 outstanding options. Accordingly, all numbers reported above have been re-stated. 56 DIRECTORS’ REPORT annual report 2017-2018  The following Key Managerial Personnel (other than wholetime Directors) and Senior Management Personnel (SMP) were granted ESOPs upto maximum of 365,750 options, aggregating to 3,768,545 in FY2018. The numbers reported here are adjusted with increase of one option for every 10 outstanding options pursuant to the issuance of bonus shares by the Bank in June 2017. Sr. no. name 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Madhivanan B Prasanna Balachander Rakesh Jha Sanjay Chougule G Srinivas T. K. Srirang Anita Pai Partha Dey Sanker Parameswaran Saurabh Singh Supritha Shirish Shetty Sujit Ganguli Ajay Gupta Murali Ramakrishnan Amit Palta Narayanan N R Kumar Ashish Loknath Mishra Anuj Bhargava Avijit Saha Subir Saha Anil Kaul grade Group Executive Group Executive Group Executive (Chief Financial Officer) Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager (Company Secretary) Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager Senior General Manager 1. For the year-ended March 31, 2018 the numbers indicated are the options granted during the year FY2018. 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 ` 10.46 in fiscal 2018 compared to basic EPS of ` 10.56. Based on the intrinsic value of options, no compensation cost was recognised during fiscal 2018. However, if the Bank had used the fair value of options based on the binomial tree model, compensation cost in fiscal 2018 would have been higher by ` 3.52 billion including additional cost of ` 0.07 billion due to change in exercise period and proforma profit after tax would have been ` 64.25 billion. On a proforma basis, the Bank’s basic and diluted earnings per share would have been ` 10.01 and ` 9.91 respectively. The key assumptions used to estimate the fair value of options granted during fiscal 2018 are given below: Risk-free interest rate Expected life Expected volatility Expected dividend yield 7.06% to 7.59% 3.90 to 6.90 years 31.71% to 32.92% 0.73% to 1.81% The weighted average fair value of options granted during fiscal 2018 was ` 86.43 (` 76.72 during fiscal 2017). The Bank has an ‘Employees Stock Option Scheme – 2000’ (ESOS scheme) framed in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 (Regulations). The Scheme has been amended from time to time with the approval of the Members and as per the amendments last approved by the Members vide a Postal Ballot resolution passed on June 12, 2017 the Exercise Period was defined as the period commencing from the date of 57 vesting and which will expire on completion of such period not exceeding ten years from the date of vesting of Options as may be determined by the Board Governance, Remuneration & Nomination Committee (“BGNRC”) for each grant. The Board Governance Remuneration & Nomination Committee and Board at its meetings held on May 7, 2018 with the objective to further enhance employee efforts to execute the current strategy and align the compensation payout schedules for senior management to the time horizon of risks approved the amendment to the definition of Exercise Period as given below: “The “Exercise Period” would commence from the date of vesting and will expire on completion of such period not exceeding five years from the date of vesting of Options as may be determined by the Board Governance Remuneration & Nomination Committee for each grant”. The amendment is intended to cover only future grants to be made and would come into effect only after approval by Members and will not cover grants already made. As per the Regulations, any variation to the terms of the Scheme requires the approval of Members by way of a special resolution. There are no other changes to the existing terms of the Scheme. COnSERVaTIOn OF EnERgY, TECHnOlOgY aBSORPTIOn, FOREIgn EXCHangE EaRnIngS anD OUTgO The Bank has undertaken various initiatives for energy conservation at its premises, further details are given under Principle 6 of Section E of the Business Responsibility Report. The Bank has used information technology extensively in its operations, for more details please refer the section on Information Technology under Business Overview. UPDaTE On RECEnT DEVElOPMEnTS aT THE BanK The Audit Committee of the Bank under direction given by the Board of Directors has instituted an independent enquiry, headed by a former Supreme Court Judge, Hon’ble Mr. Justice B. N. Srikrishna (Retd.), to consider various allegations relating to the MD and CEO, Ms. Chanda Kochhar. The allegations have been levelled against Ms. Kochhar through media articles, a whistleblower complaint and complaints written by a private individual to senior government officials and regulators. The allegations include nepotism, quid pro quo and claims that Ms. Kochhar, by not disclosing conflicts of interest caused by certain transactions between certain borrowers of the Bank and entities controlled by Ms. Kochhar’s spouse, committed infractions under applicable regulations and the Bank’s Code of Conduct. The independent enquiry is supported by an independent law firm and a forensic firm. The independent enquiry is under way. In addition, SEBI issued a show-cause notice to Ms. Kochhar and to the Bank in May 2018 related to the allegations. The Bank is in the process of responding to the relevant allegations in the notice which pertain to the Bank. The Central Bureau of Investigation (CBI) also initiated a preliminary enquiry against various individuals and firms including unknown officers and/or officials of the Bank. Ms. Kochhar is on a leave of absence while the independent enquiry takes place. In the interim, Mr. Sandeep Bakhshi has been appointed as Chief Operating Officer, subject to approval of the Reserve Bank of India (RBI), and reports directly to the Board of Directors during her absence. gREEn InITIaTIVES In CORPORaTE gOVERnanCE In line with the ‘Green Initiative’ since the last five years, the Bank has effected electronic delivery of Notice of Annual General Meeting and Annual Report to those Members whose e-mail IDs were registered with the respective Depository Participants and downloaded from the depositories viz. National Securities Depository Limited/Central Depository Services (India) Limited. The Companies Act, 2013 and the underlying rules as well as Regulation 36 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, permit the dissemination of financial statements and annual report in electronic mode to the Members. Your Directors are thankful to the Members for actively participating in the Green Initiative and seek your continued support for implementation of the green initiative. 58 DIRECTORS’ REPORT annual report 2017-2018 DIRECTORS’ RESPOnSIBIlITY STaTEMEnT The Directors confirm: 1. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 2. 3. 4. 5. 6. 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 of the Bank for that period; 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, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities; that they have prepared the annual accounts on a going concern basis; that they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. aCKnOWlEDgEMEnTS ICICI Bank is grateful to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India 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 to 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. July 27, 2018 For and on behalf of the Board girish Chandra Chaturvedi 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, 2018. Sandeep Bakhshi Chief Operating Officer (Designate) July 27, 2018 anup Bagchi Executive Director 59 Annexure A Performance and financial position of subsidiaries and associates of the Bank as on March 31, 2018 Name of the entity Parent ICICI Bank Limited Subsidiaries Indian ICICI Securities Primary Dealership Limited ICICI Securities Limited ICICI Home Finance Company Limited ICICI Trusteeship Services Limited ICICI Investment Management Company Limited ICICI Venture Funds Management Company Limited ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Trust Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Pension Funds Management Company Limited Foreign ICICI Bank UK PLC ICICI Bank Canada ICICI International Limited ICICI Securities Holdings Inc. ICICI Securities Inc. Other consolidated entities Indian ICICI Strategic Investments Fund Foreign NIL Minority interests Associates Indian I-Process Services (India) Private Limited NIIT Institute of Finance Banking and Insurance Training Limited ICICI Merchant Services Private Limited India Infradebt Limited India Advantage Fund III India Advantage Fund IV Foreign NIL Joint Ventures NIL Inter-company adjustments Total net assets/net profit 1. Total assets minus total liabilities. 2. Insignificant. 60 net assets1 Share in profit or loss % of total net assets Amount % of total net profit Amount ` in million 95.1% 1,051,589.4 87.9% 67,774.2 0.9% 0.7% 1.5% 0.0%2 0.0%2 0.2% 6.2% 4.8% 0.0%2 0.7% 0.0%2 3.0% 2.5% 0.0%2 0.0%2 0.0%2 9,742.6 8,250.9 16,133.2 6.5 109.6 2,179.8 68,852.6 52,750.4 14.6 8,233.3 263.3 33,027.6 27,670.1 92.8 127.2 181.2 1.4% 7.2% 0.8% 0.0%2 0.0%2 0.1% 21.0% 11.2% 0.0%2 8.1% (0.0%)2 (2.1%) 2.9% 0.0%2 0.0%2 0.1% 1,116.3 5,533.6 642.5 0.6 0.7 111.8 16,198.3 8,617.8 1.9 6,255.5 (6.6) (1,646.7) 2,222.6 4.6 0.1 43.6 0.0%2 231.3 0.0%2 13.3 - (5.4%) - (60,081.9) - (18.0%) - (13,873.6) - - - - - - - - - - - - - - - 0.0%2 - 0.6% 0.0%2 (0.0%)2 - 2.9 - 432.5 10.9 (7.9) - - - - (10.2%) (113,077.5) 100.0% 1,106,297.0 - (21.2%) 100.0% - (16,327.0) 77,121.9 DIRECTORS’ REPORT annual report 2017-2018Annexure B FOrM no. Mr-3 FOr THe FInAnCIAL YeAr enDeD 31ST MArCH, 2018 (Pursuant to Section 204 (1) of the Companies Act, 2013 and rule no. 9 of the Companies (Appointment and remuneration of Managerial Personnel) rules, 2014) To, The Members, ICICI Bank Limited We have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by ICICI Bank Limited (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon. Based on our verification of the Company’s books, papers, minute books, forms and returns filed and other records maintained by the Company, the information provided by the Company, its officers, agents and authorised representatives during the conduct of secretarial audit, the explanations and clarifications given to us and the representations made by the Management, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2018, generally complied with the statutory provisions listed hereunder and also that the Company has proper Board processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records made available to us and maintained by the Company for the financial year ended on 31st March, 2018 according to the provisions of: (i) The Companies Act, 2013 (the Act) and the rules made thereunder; (ii) The Securities Contract (Regulation) Act, 1956 (‘SCRA’) and the rules made thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; (v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) (a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015; (c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009 and amendments from time to time; (d) The Securities and Exchange Board of India ( Share Based Employees Benefits) Regulations, 2014; (e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (Not applicable to the Company during the audit period); 61 (g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; (Not applicable to the Company during the audit period) and (h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; (Not applicable to the Company during the audit period) (i) The Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 (j) The Securities and Exchange Board of India (Bankers to an Issue) Regulations, 1994 (k) The Securities and Exchange Board of India (Debenture Trustee) Regulations, 1993 (l) The Securities and Exchange Board of India (Custodian of Securities) Regulations, 1996 (m) The Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (n) The Securities and Exchange Board of India (Foreign Portfolio Investors) Regulations, 2014 (vi) Other laws applicable specifically to the Company namely: (a) Banking Regulation Act, 1949, Master Circulars, Notifications and Guidelines issued by the RBI from time to time (b) The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (c) Recovery of Debts Due to Banks and Financial Institutions Act, 1993 (d) The Shops and Establishments Act, 1953 We have also examined compliance with the applicable clauses of the following: (i) Secretarial Standards issued by The Institute of Company Secretaries of India with respect to board and general meetings. (ii) The Listing Agreements entered into by the Company with BSE Limited and National Stock Exchange of India Limited read with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During the period under review, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, standards etc. mentioned above subject to the following observation: In reference to Show cause notice issued by RBI dated September 6, 2017 and supplementary show cause notice dated November 07, 2017 and as mentioned by RBI in its press release dated March 29, 2018, RBI has through an order dated March 26, 2018, imposed a monetary penalty of ` 589.00 million on ICICI Bank for non-compliance with directions/ guidelines issued by RBI. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1) (c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. We further report that: The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice was given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. 62 DIRECTORS’ REPORT annual report 2017-2018 Decisions at the Board Meetings were taken unanimously. We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. We further report that during the audit period 1. 2. 3. 4. Pursuant to approval by the Board of Directors of the Bank on June 05, 2017, the Bank sold equity shares representing 7.0% shareholding in ICICI Lombard General Insurance Company Ltd. in the initial public offer (IPO) during the three months ended September 30, 2017 for a total consideration of ` 2,099.43 crores. Pursuant to approval by the Board of Directors of the Bank on November 07, 2017, the Bank sold equity shares representing 20.78% shareholding in ICICI Securities Limited. in the initial public offer (IPO) during the three months ended March 31, 2018 for a total consideration of ` 3,480.12 crores. The shareholders of the Bank approved the issue of bonus shares of ` 2 each in the proportion of 1:10, i.e. 1 (One) bonus equity share of ` 2 each for every 10 (Ten) fully paid-up equity shares held (including shares underlying ADS), through postal ballot on June 12, 2017. Accordingly, the Bank allotted 582,984,544 equity shares as bonus shares on June 24, 2017. Obtained approval of members by way of special resolution under Section 42 of the Act to borrow from time to time, by way of issue of non-convertible securities including but not limited to bonds and non-convertible debentures in one or more tranches of upto ` 25,000 crores on private placement basis. 5. Issued and allotted various Non-Convertible Bonds in nature of Debentures of face value of ` 10,00,000/- each aggregating to ` 7,702 crores on private placement basis in the domestic market. Place: Mumbai Date : May 7, 2018 For Parikh Parekh & Associates Company Secretaries Signature: P. n. Parikh Partner FCS No: 327 CP No: 1228 This Report is to be read with our letter of even date which is annexed as Annexure A and forms an integral part of this report. 63 Annexure A’ To, The Members ICICI Bank Limited Our report of even date is to be read along with this letter. 1. 2. 3. 4. 5. 6. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit. We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the process and practices, we followed provide a reasonable basis for our opinion. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company. Where ever required, we have obtained the Management representation about the Compliance of laws, rules and regulations and happening of events etc. The Compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. For Parikh Parekh & Associates Company Secretaries Signature: P. n. Parikh Partner FCS No: 327 CP No: 1228 Place: Mumbai Date : May 7, 2018 64 DIRECTORS’ REPORT annual report 2017-2018 Annexure C FOrM nO. AOC-2 (Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014) Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto 1. Details of contracts or arrangements or transactions not at arm’s length basis in fiscal 2018 Nil 2. Details of material contracts or arrangement or transactions at arm’s length basis in fiscal 2018 Sr. No. Name of the related party Nature of relationship Nature of contracts/ transactions Duration of contracts Others Term deposits placed with the Bank Various maturities Salient terms of contracts/ transactions Interest at applicable coupon rates ` in million 21,594.8 1 2 3 4 5 6 7 8 9 Life Insurance Corporation of India India Infradebt Limited Associate Subsidiary Subsidiary ICICI Securities Primary Dealership Limited ICICI Securities Primary Dealership Limited ICICI Securities Primary Dealership Limited ICICI Bank UK PLC Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary ICICI Securities Primary Dealership Limited ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Life Insurance Company Limited ICICI Securities Primary Dealership Limited ICICI Bank Canada Subsidiary Subsidiary Subsidiary Investment in bonds/ debentures of related party Short-term lendings by the Bank Various maturities Issued at prevailing market rates 5,600.0 Various maturities Interest at prevailing market rates 139,490.0 Reverse repurchase transactions Various maturities Interest at prevailing market rates 23,044.5 Short-term borrowing by the Bank 1 day Interest at prevailing market rates 1,000.0 Risk participation transaction Purchases of investment securities of third parties 5 years Various maturities At competitive market rates At market prices 1,291.6 40,378.9 4,096.6 1,114.9 Sale of investment securities of third parties Repatriation of equity share capital - - At market prices 14,785.9 10,693.1 At face value 5,065.0 65 Salient terms of contracts/ transactions At market prices ` in million 876,500.0 8,139.1 2,565.6 1,350.2 622.4 582.5 2,172.8 865.0 8,241.9 1,907.8 1,894.5 1,297.6 711.5 1,403.9 17,068.7 Commission on guarantee at negotiated rates Outstanding balance at March 31, 2018. Maintained for normal banking transactions Outstanding balance at March 31, 2018. Maintained for normal banking transactions Sale of loans given to customers at competitive market rates Interest on bonds at applicable rates Sr. No. Name of the related party Nature of relationship Nature of contracts/ transactions Duration of contracts 10 11 Subsidiary ICICI Securities Primary Dealership Limited ICICI Bank UK PLC Subsidiary Subsidiary ICICI Prudential Life Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Lombard General Insurance Company Limited ICICI Securities Limited ICICI Bank UK PLC Subsidiary Subsidiary Subsidiary Subsidiary Principal amounts of derivatives such as swaps and forwards contracts Various maturities Guarantees given by the Bank Various maturities 12 ICICI Bank UK PLC Subsidiary Current account deposits by the Bank - - Current account deposits with the Bank Others Subsidiary Life Insurance Corporation of India ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Securities Limited India Infradebt Limited ICICI Bank UK PLC Subsidiary Subsidiary Subsidiary Associate Life Insurance Corporation of India ICICI Prudential Asset Management Company Limited 13 14 15 16 66 Sale of loans 3.01 years Others Interest expenses Various maturities Subsidiary Fee income - Distribution fee 1,340.5 DIRECTORS’ REPORT annual report 2017-2018Sr. No. Name of the related party Nature of relationship Nature of contracts/ transactions Duration of contracts Subsidiary Commission income on insurance products - 17 18 19 20 21 22 ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited I-Process Services (India) Private Limited ICICI Merchant Services Private Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Life Insurance Company Limited ICICI Securities Limited ICICI Foundation for Inclusive Growth Life Insurance Corporation of India Salient terms of contracts/ transactions Commission for corporate agency services to solicit and procure the sale and distribution of the policies Subsidiary Associate Associate Expenses towards service provider arrangements 1 year 10 years Outsourcing of services and resources Merchant management fee Subsidiary Insurance premium paid Subsidiary Subsidiary Reimbursement of expenses paid Others Donation paid Others Dividend paid - - - - - Staff welfare insurance at competitive market rates Insurance policy for retail loan borrowers On actual basis - Dividend on equity shares Dividend on equity shares 23 ICICI Prudential Subsidiary Dividend received Life Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Securities Limited ICICI Securities Primary Dealership Limited Subsidiary Subsidiary Subsidiary ` in million 8,767.0 1,099.2 4,516.6 1,902.3 1,241.9 900.8 545.9 560.0 1,509.0 5,435.9 2,268.6 1,771.8 672.2 July 27, 2018 Girish Chandra Chaturvedi Chairman 67 Annexure D FOrM nO. MGT-9 extract of Annual return as on the financial year ended on March 31, 2018 [Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014] I. reGISTrATIOn AnD OTHer DeTAILS: CIn registration Date name of the Company L65190GJ1994PLC021012 January 5, 1994 ICICI Bank Limited Category/Sub-Category of the Company Company limited by shares/Indian Non-Government Company Address of the registered office and contact details ICICI Bank Tower, Near Chakli Circle, Old Padra Road, Vadodara - 390 007, Gujarat, India. Tel.: -(0265-6722239) Email : companysecretary@icicibank.com Whether listed company Yes name, Address and Contact details of registrar and Transfer Agent, if any 3i Infotech Limited Tower 5, 3rd to 6th Floor, International Infotech Park, Vashi, Navi Mumbai - 400 703, India Tel. : +91-22-7123 8000 Fax : +91-22-7123 8098 Email : investor@icicibank.com II. PrInCIPAL BuSIneSS ACTIVITIeS OF THe COMPAnY All the business activities contributing 10% or more of the total turnover of the company shall be stated: Sr. No. Name and Description of main products/services 1 Banking and Financial Services NIC Code of the product/service 64191 % to total turnover of the Company 100% The Bank is a publicly held banking company engaged in providing a wide range of banking and financial services including retail banking, corporate banking and treasury operations. 68 DIRECTORS’ REPORT annual report 2017-2018 III. PArTICuLArS OF HOLDInG, SuBSIDIArY AnD ASSOCIATe COMPAnIeS Name and address of the Company CIN/GLN* Sr. No. 1 2 3 4 5 6 7 8 ICICI Bank Canada, Canada 150 Ferrand Drive Suite 1200, Toronto, ON M3C 3E5 Canada ICICI Bank UK PLC, UK Registered Office: One Thomas More Square Five Thomas More Street London E1W 1YN ICICI Home Finance Company Limited Registered Office: ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 ICICI International Limited, Mauritius Registered Office: IFS Court, Twenty Eight, Cybercity, Ebene, Mauritius. ICICI Investment Management Company Limited Registered Office: ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 ICICI Lombard General Insurance Company Limited Registered Office: ICICI Lombard House, 414, Veer Savarkar Marg, Near Siddhivinayak Temple Pradhadevi, Mumbai 400 025 ICICI Prudential Life Insurance Company Limited Registered Office: ICICI PruLife Towers 1089 Appasaheb Marathe Marg Prabhadevi Mumbai 400 025 ICICI Securities Primary Dealership Limited Registered Office: ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai 400 020 Holding/ Subsidiary/ Associate Subsidiary Company % of shares held Applicable Section 100.00% 2(87) Subsidiary Company 100.00% 2(87) U65922MH1999PLC120106 Subsidiary 100.00% 2(87) Company Subsidiary Company 100.00% 2(87) U65990MH2000PLC124773 Subsidiary 100.00% 2(87) Company L67200MH2000PLC129408 Subsidiary 55.92% 2(87) Company L66010MH2000PLC127837 Subsidiary 54.88% 2(87) Company U72900MH1993PLC131900 Subsidiary 100.00% 2(87) Company 69 Name and address of the Company CIN/GLN* Holding/ Subsidiary/ Associate % of shares held Applicable Section ICICI Securities Limited Registered Office: ICICI Centre H. T. Parekh Marg, Churchgate, Mumbai 400 020 ICICI Securities Holding Inc., USA Registered Office: 251 Little Falls Drive Wilmington, DE 19808 United States of America ICICI Securities Inc., USA 251 Little Falls Drive Wilmington, DE 19808 United States of America ICICI Trusteeship Services Limited Registered Office: ICICI Bank Towers Bandra-Kurla Complex Mumbai 400 051 ICICI Venture Funds Management Company Limited Registered Office: ICICI Venture House, Ground Floor Appasaheb Marathe Marg Prabhadevi Mumbai 400 025 ICICI Prudential Asset Management Company Limited Registered Office: 12th floor, Narain Manzil 23, Barakhamba Road New Delhi 110 001 ICICI Prudential Trust Limited Registered Office: 12th floor, Narain Manzil 23, Barakhamba Road New Delhi 110 001 ICICI Prudential Pension Funds Management Company Limited Registered Office: ICICI Prulife Towers 1089, Appasaheb Marathe Marg, Prabhadevi Mumbai 400 025 India Infradebt Limited Registered Office: ICICI Bank Towers, Bandra-Kurla Complex, Mumbai 400 051 L67120MH1995PLC086241 Subsidiary 79.22% 2(87) Company Subsidiary Company 100.00% 2(87) Subsidiary Company 100.00% 2(87) U65991MH1999PLC119683 Subsidiary 100.00% 2(87) Company U72200MH1989PLC166901 Subsidiary 100.00% 2(87) Company U99999DL1993PLC054135 Subsidiary 51.00% 2(87) Company U74899DL1993PLC054134 Subsidiary 50.80% 2(87) Company U66000MH2009PLC191935 Subsidiary 100.00% 2(87) Company U65923MH2012PLC237365 Associate Company 38.09% 2(6) Sr. No. 9 10 11 12 13 14 15 16 17 70 DIRECTORS’ REPORT annual report 2017-2018Sr. No. 18 19 Name and address of the Company ICICI Merchant Services Private Limited Registered Office: 74, Kalpataru Square, Off Andheri Kurla Road Kondivita Lane, Andheri (East) Mumbai, MH 400 059 IN I-Process Services (India) Private Limited Registered Office: Acme Plaza, 4th Floor, Unit # 408-409, Andheri -Kurla Road, Opp.Sangam Cinema, Mumbai 400 059 20 NIIT Institute of Finance Banking and Insurance Training Limited Registered Office: 8, Balaji Estate, First Floor Guru Ravi Das Marg, Kalkaji New Delhi South Delhi DL 110 019 21 Rajasthan Asset Management Company Private Limited # Registered Office: 7th Floor, Ganga Heights, Bapu Nagar, Tonk Road, Jaipur, Rajasthan – 302 015 22 OTC Exchange of India Limited # 23 Registered Office: 92-93 Maker Tower F, Cuffe Parade, Mumbai 400 005 Falcon Tyres Limited # Registered Office: K R S Road, Metagalli, Mysore, Karnataka 570 016 24 Shree Renuka Sugars Limited # Registered Office: Bc 105, Povlock Road, Off Havelock Road, Cantonment, Belgaum-590 001. Belgaum-590 001. KA 590 001 25 National Investment and Infrastructure Fund Limited# Registered Office: 12th Floor, IFCI Tower 61-Nehru Place New Delhi South Delhi DL 110 019 CIN/GLN* Holding/ Subsidiary/ Associate U74140MH2009PTC194399 Associate Company % of shares held Applicable Section 19.01% 2(6) U72900MH2005PTC152504 Associate Company 19.00% 2(6) U80903DL2006PLC149721 Associate Company 18.79% 2(6) U65999RJ2002PTC017380 Associate Company 24.30% 2(6) U67120MH1990NPL058298 Associate Company 20.00% 2(6) L25114KA1973PLC002455 Associate Company 26.39% 2(6) L01542KA1995PLC019046 Associate Company 31.75% 2(6) U74900DL2015PLC287894 Associate Company 38.34% 2(6) *CIN has been mentioned for Indian subsidiaries/Associate Companies. #These companies are not considered as associates in the financial statements, in accordance with the provisions of AS 23 on ‘Accounting for Investments in Associates in Consolidated Financial Statements’. 71 IV. SHAreHOLDInG PATTern (equITY SHAre CAPITAL BreAk-uP AS PerCenTAGe OF TOTAL equITY) – (i) Category-wise Shareholding Sl No A (1) Category of shareholders Promoters Indian a) b) c) d) e) Individual / HUF Central Govt State Govt(s) Bodies Corp. Banks/Financial Institutions f) Any Other Sub-total (A) (1) :- (2) Foreign a) NRIs – Individuals b) Other – Individuals c) d) Bodies Corp. Banks/ Financial Institutions e) Any Other Sub-total (A) (2):- Total Shareholding of Promoter (A) = (A) (1)+(A)(2) Public Shareholding Institutions B (1) No. of shares held at the beginning of the year (April 1, 2017) no. of shares held at the beginning of the year (March 31, 2018) Demat Physical Total % of Total Shares Demat Physical Total % change during the year % of Total Shares 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 - - - - - - - - - - - - - - - - - - - - - - - - - - - - a) Mutual Funds 871,718,537 69,260 871,787,797 14.97 1,104,410,402 51,765 1,104,462,167 17.18 2.21 b) c) d) e) f) g) h) Banks / Financial Institutions Central Govt State Govt(s) Venture Capital Funds 5,804,781 109,200 5,913,981 10,776,155 390 10,776,545 0 0 0 0 0 0 0.10 0.19 - - 2,996,700 75,104 3,071,804 10,880,378 428 10,880,806 0 0 0 0 0 0 Insurance Companies 886,917,375 1,100 886,918,475 15.23 863,752,987 1,060 863,754,047 FIIs 2,040,935,491 116,800 2,041,052,291 35.04 2,342,948,530 30,646 2,342,979,176 Foreign Venture Capital Funds 0 0 0 0 0 0 - - 0.02 0.07 950,580 4,224,966 220,538 385,700 825,008 1,045,546 385,700 0.05 0.17 - - 13.44 36.45 - - 0.02 0.01 (0.05) (0.02) - - (1.79) 1.41 - - (0.00) (0.07) i) Other (specify) Foreign Banks FII – DR Provident Funds/ Pension Funds Alternative Investment Fund IEPF j) k) l) 2,00,490 750,090 4,224,966 32,812,592 153,412 0 0 0 0 0 32,812,592 0.56 52,643,783 153,412 0 0 - 192,0162 4,735,293 0 0 0 0 52,643,783 0.82 0.26 192,0162 4,735,293 0.03 0.07 68.23 0.03 0.07 2.05 Sub-total (B) (1) :- 3,853,543,799 1,046,840 3,854,590,639 66.18 4,384,894,473 984,011 4,385,878,484 72 DIRECTORS’ REPORT annual report 2017-2018 No. of shares held at the beginning of the year (April 1, 2017) no. of shares held at the beginning of the year (March 31, 2018) Demat Physical Total % of Total Shares Demat Physical Total % change during the year % of Total Shares 123,296,948 11,90,230 124,487,178 0 3,000 3,000 100,056,844 1,123,487 101,180,331 0 3,300 3,300 2.14 0.00 - 1.57 0.00 - (0.56) (0.00) - 260,207,775 26,218,780 286,426,555 4.92 263,067,319 23,169,117 286,236,436 4.45 (0.46) 41,088,460 144475 41,232,935 0.71 53,205,457 309,622 53,515,079 0.83 0.12 Sl No Category of shareholders (2) Non-Institutions a Bodies Corporate i ii Indian Overseas b Individuals i ii Individual shareholders holding nominal share capital upto `1 lakh Individual shareholders holding nominal share capital excess of `1 lakh c d NBFCs registered with RBI Others (specify) 1,122,769 0 1,122,769 0.02 - 948,746 0 948,746 0.01 (0.00) Trust 1,807,680 1,075 1,808,755 0.03 2,535,352 1,550 2,536,902 3,395,695 0.06 4,030,610 4,030,610 0.06 0.00 0 0 116,622 0 116,622 0 0 0 Directors & their Relatives (Resident) Non-Resident Indian Directors 3,395,695 0 0 0 Foreign Nationals 121,844 21,000 142,844 Non-Resident Indians 19,206,584 298,435 19,505,019 Clearing Member Hindu Undivided Families Foreign Companies Foreign Bodies – DR NRI – DR 10,579,726 0 10,579,726 6,889,725 33,305 6,923,030 0 143,200 809,756 700 0 0 143,200 809,756 700 Sub-total (B) (2) :- 468,527,662 28,053,500 496,581,162 - 0.00 0.33 0.18 0.12 0.00 0.01 0.00 8.52 18,526,666 332,942 18,859,608 13,480,657 50 13,480,707 7,003,579 34,500 7,038,079 0 155,019 294,358 0 0 0 155,019 294,358 0 463,266,210 25,129,587 488,395,797 4,322,071,461 29,100,340 4,351,171,801 74.70 4,848,160,683 26,113,598 4,874,274,281 75.83 1.13 Total Public Shareholding (B) = (B)(1)+(B)(2) c Shares held by Custodian for GDrs & ADrs 1,473,304,334 0 1,473,304,334 25.30 1,553,716,495 0 1,553,716,495 Grand Total (A+B+C) 5,795,375,795 29,100,340 5,824,476,135 100.00 6,401,877,178 26,113,598 6,427,990,776 Percentages have been rounded off to the nearest decimals (ii) Shareholding of Promoters N.A. – ICICI Bank Limited does not have any promoters. (iii) Change in Promoters’ Shareholding (please specify, if there is no change) N.A. – ICICI Bank Limited does not have any promoters. - 0.04 - 0.01 - 0.00 0.29 0.21 0.11 0.00 0.00 - 7.60 - (0.00) (0.04) 0.03 (0.01) (0.00) (0.01) (0.00) (0.91) 24.17 100.00 (1.13) 0.00 73 (iv) Shareholding of top ten shareholders (other than Directors, Promoters and Deutsche Bank Trust Company Americas as Depository of ADS holders)* Top Ten Shareholders Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company % of total shares of the company no of shares No of shares 608,927,224 10.45 608,927,224 10.45 Life Insurance Corporation of India At the beginning of the year April 7, 2017 Increase April 14, 2017 Decrease April 21, 2017 Decrease May 5, 2017 Decrease June 21, 2017 Decrease June 24, 2017 Increase June 30, 2017 Increase June 30, 2017 Decrease July 7, 2017 Decrease July 7, 2017 Increase July 21, 2017 Decrease July 28, 2017 Decrease August 4, 2017 Decrease August 11, 2017 Decrease August 18, 2017 Decrease August 25, 2017 Decrease September 1, 2017 Decrease September 6, 2017 Decrease September 8, 2017 Decrease September 15, 2017 Decrease September 22, 2017 Decrease October 31, 2017 Decrease November 3, 2017 Decrease November 10, 2017 Decrease November 17, 2017 Decrease November 24, 2017 Decrease December 1, 2017 Decrease 1,800 1,664,176 2,831,503 800,000 10,000 35 60,354,514 1,900 100,000 100,000 8,818,644 9,441,099 13,173,430 10,894,151 255,000 1,110,000 1,045,080 120,000 233,366 780,000 1,000,000 1,382,969 1,735,150 1,180,100 2,764,875 1,962,997 1,300,000 74 0.00 0.03 0.05 0.01 0.00 0.00 0.94 0.00 0.00 0.00 0.14 0.15 0.21 0.17 0.00 0.02 0.02 0.00 0.00 0.01 0.02 0.02 0.03 0.02 0.04 0.03 0.02 608,929,024 10.51 607,264,848 10.42 604,433,345 10.38 603,633,345 10.36 603,623,345 10.35 603,623,380 10.35 663,977,894 10.35 663,975,994 10.35 663,875,994 10.35 663,975,994 10.35 655,157,350 10.22 645,716,251 10.07 632,542,821 9.86 621,648,670 9.69 621,393,670 9.69 620,283,670 9.67 619,238,590 9.65 619,118,590 9.65 618,885,224 9.65 618,105,224 9.63 617,105,224 9.62 615,722,255 9.59 613,987,105 9.57 612,807,005 9.55 610,042,130 9.50 608,079,133 9.47 606,779,133 9.45 DIRECTORS’ REPORT annual report 2017-2018Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 9.44 % of total shares of the company 0.01 605,999,133 780,000 no of shares No of shares Top Ten Shareholders December 8, 2017 Decrease December 15, 2017 Decrease December 22, 2017 Decrease December 30, 2017 Decrease January 5, 2018 Decrease January 12, 2018 Decrease January 12, 2018 Increase January 19, 2018 Decrease January 26, 2018 Decrease February 2, 2018 Decrease February 9, 2018 Decrease February 23, 2018 Increase March 2, 2018 Increase March 9, 2018 Increase At the end of the year 1,271,000 1,052,713 742,000 1,016,792 12,800 12,800 530,000 745,700 2,474,121 675,000 2,307,038 1,128,000 2,325,500 603,252,345 364,368,485 675,768 3,341,132 36,035,158 Dodge and Cox International Stock Fund At the beginning of the year June 16, 2017 Decrease June 21, 2017 Decrease June 30, 2017 Increase August 4, 2017 Decrease August 11, 2017 Decrease September 1, 2017 Decrease September 6, 2017 Decrease September 8, 2017 Decrease October 27, 2017 Increase March 31, 2018 Increase At the end of the year 2,271,413 4,703,900 2,758,962 2,292,805 2,236,100 4,713,600 388,897,176 2,412,187 0.02 0.02 0.01 0.02 0.00 0.00 0.01 0.01 0.04 0.01 0.04 0.02 0.04 9.38 604,728,133 9.42 603,675,420 9.40 602,933,420 9.39 601,916,628 9.37 601,903,828 9.37 601,916,628 9.37 601,386,628 9.36 600,640,928 9.35 598,166,807 9.31 597,491,807 9.30 599,798,845 9.33 600,926,845 9.35 603,252,345 9.39 603,252,345 9.38 6.26 364,368,485 6.26 0.01 0.06 0.56 0.04 0.04 0.07 0.04 0.04 0.03 0.07 6.05 363,692,717 360,351,585 396,386,743 393,974,556 391,703,143 386,999,243 384,240,281 381,947,476 384,183,576 388,897,176 388,897,176 6.24 6.18 6.18 6.14 6.11 6.03 5.99 5.95 5.99 6.05 6.05 Government of Singapore At the beginning of the year April 7, 2017 Increase 63,125,358 1.08 63,125,358 1.08 4,155 0.00 63,129,513 1.09 75 Top Ten Shareholders April 7, 2017 Decrease April 14, 2017 Increase April 21, 2017 Increase April 28, 2017 Decrease May 5, 2017 Decrease May 19, 2017 Increase May 26, 2017 Increase June 2, 2017 Increase June 9, 2017 Increase June 21, 2017 Decrease June 24, 2017 Increase June 30, 2017 Increase July 7, 2017 Increase July 7, 2017 Decrease July 21, 2017 Increase July 28, 2017 Decrease August 4, 2017 Decrease August 11, 2017 Decrease August 18, 2017 Decrease September 1, 2017 Decrease September 6, 2017 Decrease September 6, 2017 Increase September 8, 2017 Decrease September 15, 2017 Decrease September 15, 2017 Increase September 22, 2017 Increase October 6, 2017 Decrease October 13, 2017 Decrease October 20, 2017 Increase October 27, 2017 Increase 76 Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 1.09 % of total shares of the company 0.00 63,076,241 no of shares No of shares 53,272 3,630,020 0.06 66,706,261 1.15 1,557,532 0.03 68,263,793 1.17 5,134 313,319 524,202 942,200 0.00 68,258,659 1.17 0.01 67,945,340 1.17 0.01 68,469,542 1.18 0.02 69,411,742 1.19 10,938,398 0.19 80,350,140 1.38 110,860 40,653 0.00 80,461,000 1.38 0.00 80,420,347 1.38 531 0.00 80,420,878 1.38 8,041,499 0.13 88,462,377 1.38 291,586 593,749 134,104 0.00 88,753,963 1.38 0.01 88,160,214 1.37 0.00 88,294,318 1.38 583,611 0.01 87,710,707 1.37 836,543 0.01 86,874,164 1.35 731,953 0.01 86,142,211 1.34 63,143 0.00 86,079,068 1.34 1,001,315 0.02 85,077,753 1.33 1,115,412 0.02 83,962,341 1.31 251,562 0.00 84,213,903 1.31 470,816 0.01 83,743,087 1.31 190,810 0.00 83,552,277 1.30 6,097 0.00 83,558,374 1.30 350,002 0.01 83,908,376 1.31 677,443 0.01 83,230,933 1.30 3,312,567 0.05 79,918,366 1.25 2,655,141 0.04 82,573,507 1.29 9,353,594 0.15 91,927,101 1.43 DIRECTORS’ REPORT annual report 2017-2018Top Ten Shareholders November 3, 2017 Increase November 10, 2017 Increase November 17, 2017 Decrease November 24, 2017 Decrease December 1, 2017 Decrease December 8, 2017 Decrease December 15, 2017 Decrease December 22, 2017 Decrease December 22, 2017 Increase January 5, 2018 Decrease January 19, 2018 Increase January 26, 2018 Increase February 2, 2018 Increase February 9, 2018 Decrease February 16, 2018 Decrease February 23, 2018 Decrease March 2, 2018 Decrease March 9, 2018 Decrease March 16, 2018 Increase March 23, 2018 Increase March 23, 2018 Decrease March 31, 2018 Increase At the end of the year Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 1.49 % of total shares of the company 0.06 3,971,022 95,898,123 no of shares No of shares 3,000,000 0.05 98,898,123 1.54 17,953 0.00 98,880,170 1.54 69,598 0.00 98,810,572 1.54 1,095,013 0.02 97,715,559 1.52 1,178,389 0.02 96,537,170 1.50 1,121,511 0.02 95,415,659 1.49 168,899 0.00 95,246,760 1.48 268,440 0.00 95,515,200 1.49 36,087 0.01 95,479,113 1.50 4,929,428 0.08 101,230,987 1.58 2,320,473 0.04 103,551,460 1.61 191,441 0.00 103,742,901 1.61 72,303 0.00 103,670,598 1.61 44,482 0.00 103,626,116 1.61 172,218 0.00 103,453,898 1.61 1,095,175 0.02 102,358,723 1.59 1,447,389 0.02 100,911,334 1.57 134,128 0.00 101,045,462 1.57 94,615 0.00 101,140,077 1.57 28,454 0.00 101,111,623 1.57 268,610 0.00 101,380,233 1.58 101,380,233 1.58 101,380,233 1.58 43,275,005 300,000 HDFC Trustee Company Limited-HDFC Prudence Fund At the beginning of the year April 7, 2017 Increase April 14, 2017 Increase April 21, 2017 Increase April 28, 2017 Increase May 5, 2017 Increase May 12, 2017 Increase 4,000,000 1,000,000 2,000,000 5,400,000 169,000 0.74 43,275,005 0.74 0.01 43,575,005 0.75 0.02 44,575,005 0.77 0.03 0.07 0.00 0.09 46,575,005 50,575,005 50,744,005 56,144,005 0.80 0.87 0.87 0.96 77 Top Ten Shareholders May 26, 2017 Increase June 2, 2017 Decrease June 9, 2017 Increase June 30, 2017 Increase July 7, 2017 Increase July 21, 2017 Increase July 28, 2017 Increase August 18, 2017 Increase September 1, 2017 Increase September 22, 2017 Increase September 30, 2017 Increase October 6, 2017 Increase October 13, 2017 Increase November 3, 2017 Decrease November 10, 2017 Decrease November 17, 2017 Decrease December 8, 2017 Increase December 22, 2017 Increase December 30, 2017 Increase January 5, 2018 Increase January 12, 2018 Decrease January 19, 2018 Decrease January 26, 2018 Decrease February 2, 2018 Increase February 9, 2018 Increase March 2, 2018 Increase At the end of the year Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 1.01 % of total shares of the company 0.05 59,144,005 3,000,000 no of shares No of shares 9,102,500 1,200,000 6,624,150 12,512,750 1,500,000 2,000,000 1,000,000 2,160,000 1,000,000 2,270,000 1,000,000 4,630,000 5,087,500 4,191,000 266,750 1,000,000 2,000,000 178,750 9,025,500 926,750 9,189,750 8,041,000 7,964,000 2,183,000 12,534,500 93,121,405 0.16 0.02 0.10 0.20 0.02 0.03 0.02 0.03 0.02 0.04 0.02 0.07 0.08 0.07 0.00 0.02 0.03 0.00 0.14 0.01 0.14 0.13 0.12 0.03 0.20 1.45 50,041,505 51,241,505 57,865,655 70,378,405 71,878,405 73,878,405 74,878,405 77,038,405 78,038,405 80,308,405 81,308,405 85,938,405 80,850,905 76,659,905 76,393,155 77,393,155 79,393,155 79,571,905 88,597,405 87,670,655 78,480,905 70,439,905 78,403,905 80,586,905 93,121,405 93,121,405 0.86 0.88 0.90 1.10 1.12 1.15 1.17 1.20 1.22 1.25 1.27 1.34 1.26 1.19 1.19 1.21 1.24 1.24 1.38 1.37 1.22 1.10 1.22 1.25 1.45 1.45 HDFC Trustee Company Limited-HDFC equity Fund At the beginning of the year May 12, 2017 Increase 2,000,000 56,434,718 0.97 56,434,718 0.97 0.03 58,434,718 1.00 78 DIRECTORS’ REPORT annual report 2017-2018Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 1.00 % of total shares of the company 0.09 64,278,189 5,843,471 no of shares No of shares Top Ten Shareholders June 30, 2017 Increase October 13, 2017 Increase At the end of the year Government Pension Fund Global At the beginning of the year April 7, 2017 Increase April 14, 2017 Increase May 5, 2017 Decrease June 9, 2017 Decrease June 16, 2017 Decrease June 30, 2017 Increase July 7, 2017 Increase July 21, 2017 Increase August 4, 2017 Decrease September 1, 2017 Increase September 22, 2017 Increase September 30, 2017 Increase October 13, 2017 Decrease October 27, 2017 Increase October 31, 2017 Decrease November 10, 2017 Decrease November 17, 2017 Increase November 24, 2017 Increase December 8, 2017 Increase December 15, 2017 Decrease January 19, 2018 Decrease January 26, 2018 Decrease February 2, 2018 Decrease February 9, 2018 Increase February 16, 2018 Increase 1,000,000 65,278,189 0.02 1.02 65,278,189 65,278,189 1.02 1.02 59,371,058 1.02 59,371,058 1.02 930,000 0.02 60,301,058 1.04 1,692,741 0.03 61,993,799 1.06 923,949 4,000,000 1,534,519 5,553,533 700,000 500,000 472,285 292,302 784,327 244,186 377,109 3,700,000 341,716 1,628,598 1,231,896 1,468,104 1,369,684 1,297,316 1,467,622 466,529 758,483 477,980 477,983 0.02 0.07 0.03 0.09 0.01 0.01 0.01 0.00 0.01 0.00 0.01 0.06 0.01 0.03 0.02 0.02 0.02 0.02 0.02 0.01 0.01 0.01 0.01 61,069,850 57,069,850 55,535,331 61,088,864 61,788,864 62,288,864 61,816,579 62,108,881 62,893,208 63,137,394 62,760,285 66,460,285 66,118,569 64,489,971 65,721,867 67,189,971 68,559,655 67,262,339 65,794,717 65,328,188 64,569,705 65,047,685 65,525,668 1.05 0.98 0.95 0.95 0.96 0.97 0.96 0.97 0.98 0.98 0.98 1.04 1.03 1.00 1.02 1.05 1.07 1.05 1.02 1.02 1.01 1.01 1.02 79 Top Ten Shareholders February 23, 2018 Decrease March 2, 2018 Decrease March 31, 2018 Decrease At the end of the year Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 1.01 % of total shares of the company 0.01 65,041,442 no of shares No of shares 484,226 2,861,862 2,816,825 59,362,755 0.04 0.04 0.92 62,179,580 59,362,755 59,362,755 0.97 0.92 0.92 Centaura Investments (Mauritius) PTe Limited At the beginning of the year June 30, 2017 Increase At the end of the year 52,857,713 4,805,246 48,052,467 43,318,100 The new India Assurance Company Limited At the beginning of the year June 23, 2017 Increase June 30, 2017 Increase July 14, 2017 Increase At the end of the year 195,000 4,536,810 15,000 48,064,910 0.83 48,052,467 0.83 0.07 0.82 52,857,713 52,857,713 0.82 0.82 0.74 43,318,100 0.74 0.00 0.07 0.00 0.75 43,513,100 48,049,910 48,064,910 48,064,910 0.75 0.75 0.75 0.75 ICICI Prudential Balanced Fund At the beginning of the year April 14, 2017 Increase May 12, 2017 Increase May 26, 2017 Decrease June 2, 2017 Decrease June 9, 2017 Decrease June 30, 2017 Increase July 14, 2017 Increase August 11, 2017 Increase August 18, 2017 Increase September 15, 2017 Increase October 6, 2017 Increase October 13, 2017 Increase October 20, 2017 Increase November 17, 2017 Decrease 80 22,000,000 0.38 22,000,000 0.38 2,100,000 0.04 24,100,000 0.41 276,758 595,201 2,000,000 326,552 3,145,500 2,231,615 1,779,604 1,685,152 1,379,804 3,554,077 2,617,244 753,100 2,173,208 0.00 0.01 0.03 0.01 0.05 0.03 0.03 0.03 0.02 0.06 0.04 0.01 0.03 24,376,758 23,781,557 21,781,557 21,455,005 24,600,505 26,832,120 28,611,724 30,296,876 31,676,680 35,230,757 37,848,001 38,601,101 36,427,893 0.42 0.41 0.37 0.37 0.38 0.42 0.45 0.47 0.49 0.55 0.59 0.60 0.57 DIRECTORS’ REPORT annual report 2017-2018Top Ten Shareholders December 1, 2017 Increase December 8, 2017 Increase January 5, 2018 Increase January 12, 2018 Increase January 19, 2018 Decrease February 23, 2018 Decrease March 2, 2018 Increase March 9, 2018 Increase March 31, 2018 Increase At the end of the year Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 0.59 % of total shares of the company 0.02 37,988,102 1,560,209 no of shares No of shares 2,011,898 1,000,000 62,364 1,062,364 1,270,500 856,000 4,237,215 3,390,875 47,213,590 0.03 0.02 0.00 0.02 0.02 0.01 0.07 0.05 0.73 40,000,000 41,000,000 41,062,364 40,000,000 38,729,500 39,585,500 43,822,715 47,213,590 47,213,590 0.62 0.64 0.64 0.62 0.60 0.62 0.68 0.73 0.73 575,124 197,945 56,953 48,085 19,550 1,824,398 2,974,234 HDFC Standard Life Insurance Company Limited 46,774,018 At the beginning of the year May 26, 2017 Increase June 2, 2017 Decrease June 9, 2017 Decrease June 16, 2017 Decrease June 21, 2017 Increase June 23, 2017 Decrease June 30, 2017 Increase July 14, 2017 Increase July 21, 2017 Increase July 28, 2017 Increase August 4, 2018 Decrease August 11, 2018 Increase August 18, 2018 Decrease August 25, 2018 Decrease September 1, 2017 Decrease September 6, 2017 Increase September 15, 2017 Increase September 22, 2017 Decrease 4,519 29,947 52,063 39,575 329,396 158,338 3,040 44,987 31,310 300,000 200,000 0.80 46,774,018 0.80 0.03 0.00 0.00 0.00 0.00 48,598,416 48,541,463 48,343,518 48,295,433 48,314,983 -0.01 47,739,859 0.05 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 50,714,093 50,744,040 50,902,378 51,231,774 51,200,464 51,252,527 50,952,527 50,907,540 50,904,500 50,909,019 50,948,594 50,748,594 0.83 0.83 0.83 0.83 0.83 0.82 0.79 0.79 0.79 0.80 0.80 0.80 0.79 0.79 0.79 0.79 0.79 0.79 81 Top Ten Shareholders September 30, 2017 Decrease October 6, 2017 Decrease October 13, 2017 Decrease October 27, 2017 Decrease November 3, 2017 Increase November 10, 2017 Increase November 17, 2017 Increase November 24, 2017 Increase December 1, 2017 Decrease December 8, 2017 Increase December 15, 2017 Increase December 22, 2017 Decrease December 30, 2017 Decrease January 5, 2018 Decrease January 12, 2018 Increase January 19, 2018 Decrease January 26, 2018 Decrease February 2, 2018 Decrease February 9, 2018 Decrease February 16, 2018 Increase February 23, 2018 Decrease March 2, 2018 Increase March 9, 2018 Decrease March 13, 2018 Decrease March 14, 2018 Decrease March 16, 2018 Decrease March 23, 2018 Decrease March 31, 2018 Decrease At the end of the year Shareholding at the beginning of the year Cumulative Shareholding during the year % of total shares of the company 0.76 % of total shares of the company 0.03 49,084,369 no of shares No of shares 1,664,225 499,408 599,532 760,349 27,297 147,000 251,342 129,498 590 1,486,152 228,271 49,633 63,511 14,634 136,179 348,348 368,649 963,234 967,523 53,165 756,150 1,046,318 685,001 237,731 93,772 250,339 218,677 89,291 45,623,219 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.02 0.00 0.00 0.00 0.00 0.00 0.01 0.01 0.01 0.02 0.00 0.01 0.02 0.01 0.00 0.00 0.00 0.00 0.00 0.71 48,584,961 47,985,429 47,225,080 47,252,377 47,399,377 47,650,719 47,780,217 47,779,627 49,265,779 49,494,050 49,444,417 49,380,906 49,366,272 49,502,451 49,154,103 48,785,454 47,822,220 46,854,697 46,907,862 46,151,712 47,198,030 46,513,029 46,275,298 46,181,526 45,931,187 45,712,510 45,623,219 45,623,219 0.76 0.75 0.75 0.74 0.74 0.74 0.74 0.74 0.77 0.77 0.77 0.77 0.77 0.77 0.77 0.76 0.74 0.73 0.73 0.72 0.73 0.72 0.72 0.72 0.71 0.71 0.71 0.71 * The above mention details have been provided by our RTA and relied upon. 82 DIRECTORS’ REPORT annual report 2017-2018 (v) Shareholding of Directors and key Managerial Personnel Sl. No. 1. 2. 3. 4. 5. 6. 7. Name of the Director M. K. Sharma At the beginning of the year June 24, 2017 Allotment of Bonus shares At the end of the year Uday Chitale@ At January 17, 2018 At the end of the year Dileep Choksi At the beginning of the year June 24, 2017 Allotment of Bonus shares At the end of the year Chanda Kochhar At the beginning of the year June 24, 2017 Allotment of Bonus shares August 10, 2017 Allotment October 3, 2017 Allotment October 23, 2017 Allotment February 8, 2018 Allotment February 22, 2018 Allotment March 5, 2018 Allotment March 26, 2018 Allotment At the end of the year N. S. Kannan At the beginning of the year June 24, 2017 Allotment of Bonus shares At the end of the year Vishakha Mulye At the beginning of the year June 24, 2017 Allotment of Bonus shares February 22, 2018 Allotment At the end of the year Vijay Chandok At the beginning of the year April 3, 2017 Allotment April 5, 2017 Sale April 7, 2017 Sale May 5, 2017 Allotment June 24, 2017 Allotment of Bonus shares June 30, 2017 Sale August 7, 2017 Sale August 17, 2017 Allotment August 21, 2017 Allotment August 22, 2017 Sale August 24, 2017 Sale August 24, 2017 Allotment August 28, 2017 Sale August 29, 2017 Sale Shareholding at the beginning of the year Cumulative Shareholding during the Year No. of shares % of total shares of the company no. of shares % of total shares of the company 50,000 5,000 55,000 825 0 2,500 250 2,750 2,286,625 228,662 10,000 10,000 10,000 10,000 10,000 15,000 17,500 2,597,787 426,125 42,612 468,737 5,88,625 58,862 192,500 839,987 700 3,000 700 3000 3,400 340 1,800 700 2,300 4,700 1,240 2,300 2,400 1,700 2,000 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.01 0.00 0.01 0.01 0.00 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 50,000 55,000 55,000 825 825 2,500 2,750 2,750 2,286,625 2,515,287 2,525,287 2,535,287 2,545,287 2,555,287 2,565,287 2,580,287 2,597,787 2,597,787 426,125 468,737 468,737 5,88,625 647,487 839,987 839,987 700 3,700 3,000 0 3,400 3,740 1,940 1,240 3,540 8,240 7,000 4,700 7,100 5,400 3,400 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.04 0.01 0.01 0.01 0.01 0.01 0.01 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 83 Sl. No. Name of the Director September 6, 2017 Sale September 18, 2017 Allotment September 21, 2017 Allotment October 9, 2017 Allotment October 16, 2017 Allotment October 26, 2017 Allotment October 30, 2017 Allotment October 30, 2017 Sale November 1, 2017 Sale November 2, 2017 Sale November 6, 2017 Sale November 6, 2017 Allotment November 15, 2017 Sale November 17, 2017 Sale December 11, 2017 Allotment December 18, 2017 Allotment December 20, 2017 Sale December 22, 2017 Sale December 28, 2017 Allotment February 6, 2018 Sale February 15, 2018 Sale March 15, 2018 Allotment March 19, 2018 Allotment At the end of the year Anup Bagchi At the beginning of the year April 27, 2017 Allotment May 8, 2017 Sale At the end of the year 8. Shareholding at the beginning of the year Cumulative Shareholding during the Year No. of shares % of total shares of the company 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,700 1,400 2,350 4,850 4,850 4,900 4,900 1,650 8,400 3,150 3,150 4,950 1,600 4,550 4,700 9,300 1,500 2,000 11,500 14,000 4,000 4,400 12,500 28,300 no. of shares % of total shares of the company 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1,700 3,100 5,450 10,300 15,150 20,050 24,950 23,300 14,900 11,750 8,600 13,550 11,950 7,400 12,100 21,400 19,900 17,900 29,400 15,400 11,400 15,800 28,300 28,300 0 37,500 37,500 0 0.00 0.00 0.00 0.00 0 37,500 37,500 0 0.00 0.00 0.00 0.00 @ Uday Chitale was appointed as non-executive Director effective January 17, 2018. The cumulative shareholding column reflects the balance as on day end. Sl. No. 1. 2. Name of the Key Managerial Personnel Rakesh Jha At the beginning of the year June 24, 2017 Allotment of Bonus shares At the end of the year P. Sanker At the beginning of the year June 24, 2017 Allotment of Bonus shares August 21, 2017 Allotment September 28, 2017 Allotment At the end of the year Shareholding at the beginning of the year Cumulative Shareholding during the year No. of shares % of total shares of the company no. of shares % of total shares of the company 13,500 1,350 14,850 5,000 500 13,000 20,000 38,500 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 13,500 14,850 14,850 5,000 5,500 18,500 38,500 38,500 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 The cumulative shareholding column reflects the balance as on day end. 84 DIRECTORS’ REPORT annual report 2017-2018 V. InDeBTeDneSS Indebtedness of the Company including interest outstanding/accrued but not due for payment Indebtedness at the beginning of the financial year i) ii) Principal Amount Interest due but not paid iii) Interest accrued but not due Total (i+ii+iii) Change in Indebtedness during the financial year (see note 1 & 2) • Addition • Reduction net Change Indebtedness at the end of the financial year i) ii) Principal Amount Interest due but not paid iii) Interest accrued but not due Total (i+ii+iii) Secured Loans, excluding deposits Unsecured Loans Deposits ` in crore Total Indebtedness 0.95 147,555.20 - 468.45 469.40 - 2,293.05 149,848.25 16,456.25 0.95 16,455.30 51,778.74 32,931.57 18,847.17 16,456.25 166,402.38 - - 411.77 2,389.66 16,868.02 168,792.03 - - - - - - - - - - - 147,556.15 - 2,761.50 150,317.65 68,234.98 32,932.52 35,302.47 182,858.62 - 2,801.43 185,660.05 Data is pertaining to Schedule 4 borrowings under “Secured Loans/unsecured loans”. Notes: 1. Movement in short-term market borrowing is shown on net basis. 2. Unamortised premium and accrual of discount is included under “Addition” row. 3. 4. 5. Principal amount for secured and unsecured loan consists of Schedule 4 borrowings balance. Secured loans include borrowings under Collateralised Borrowing and Lending Obligation, and transactions under Liquidity Adjustment Facility, Marginal Standing Facility and REPO. Being a banking company, there are no public deposits. VI. reMunerATIOn OF DIreCTOrS AnD keY MAnAGerIAL PerSOnneL A. remuneration to Managing Director, Wholetime Directors and/or Manager: Sl. No. 1 Particulars of Remuneration Chanda kochhar n. S. kannan Vishakha Mulye Vijay Chandok Anup Bagchi Total (`) Amount in ` Gross Salary (a) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 Salary and Allowances for fiscal 2018 - (A) 56,295,608 34,705,212 35,258,483 33,162,340 32,741,820 192,163,463 85  Bonus paid in fiscal 2018 including deferred bonuses for previous years - (B) (b) Value of perquisites u/s 17(2) of the Income-tax Act, 1961 2,068,811 1,386,781 0 1,271,214 0 4,726,806 Perquisites - (C) 1,115,365 6,387,107 5,259,653 7,406,199 2,322,175 22,490,499 (c) Profits in lieu of salary u/s section 17(3) of the Income-tax Act, 1961 Stock Option (Perquisite on Employee Stock Option exercised in Fiscal 2018) Sweat Equity Commission (as % of Profit/ Others) Others 2 3 4 5 0 10,301,700 0 0 0 0 0 0 0 0 0 0 0 0 35,284,425 10,537,150 6,003,375 62,126,650 0 0 0 0 0 0 0 0 0 0 0 0 (A)+(B)+(C) Total remuneration paid in fiscal 2018 (excludes perquisites on Stock Options exercised in Fiscal 2018 as mentioned in point 2) Ceiling as per the Act1 59,479,784 42,479,100 40,518,136 41,839,753 35,063,995 219,380,768 1. Being a Banking Company, the provisions of Banking Regulation Act, 1949 apply to the Bank and the remuneration of every wholetime Director is subject to the approval of RBI. The remuneration is however well within the limits prescribed under the Companies Act, 2013. B. remuneration to other Directors: Independent Directors 1. Independent Directors Particulars of Remuneration • Fee for attending Board/ Committee meetings • Commission • Others, please specify (see Note 1) Total (1) M. k. Sharma uday Chitale Dileep Choksi neelam Dhawan Homi khusrokhan M. S. ramachandran Tushaar Shah V. k. Sharma V. Sridar name of Directors 2,080,000 - 360,000 1,920,000 240,000 - - 1,000,000 2,200,000 1,000,000 180,000 440,000 1,600,000 1,000,000 1,000,000 1,000,000 1,000,000 900,000 Total Amount 99,20,000 6,000,000 3,416,667 5,496,667 360,000 2,920,000 240,000 3,200,000 3,416,667 1,180,000 1,900,000 1,440,000 2,600,000 19,336,667 2. Other non-executive Directors – Please refer note 2 Total (2) - - - - - - - - Total (B)=(1+2) 3,416,667 360,000 2,920,000 240,000 3,200,000 1,180,000 1,900,000 1,440,000 2,600,000 19,336,667 Total Managerial remuneration Overall Ceiling as per the Act (refer Note 3) Notes: 1. 2. Pursuant to Section 35B of the Banking Regulation Act, 1949 the appointment/re-appointment and remuneration payable to the Chairman of a Bank is subject to approval of RBI. The annual remuneration as initially approved by RBI for Mr. M. K. Sharma with effect from July 1, 2015 was ` 3,000,000 and was further revised with effect from July 1, 2016 to ` 3,500,000. The remuneration is paid in the month of April in each financial year and is reckoned for the period commencing from the beginning of May of the previous year and ending on the last day of April of the subsequent year. Accordingly in FY2018, a gross amount of ` 3,416,667 was paid as remuneration to Mr. M. K. Sharma. During the year, Mr. Amit Agrawal was a non-executive Director nominated by the Government of India. As a Government Nominee Director he was not eligible to be paid any sitting fees, he was only entitled to reimbursement of expenses for attending Board/Committee Meetings. 86 DIRECTORS’ REPORT annual report 2017-2018 3. All Independent Directors are paid sitting fees for attending Board and Committee Meetings. Additionally, Independent Directors are paid profit linked commission as permitted under RBI guidelines except for Chairman who is paid an annual remuneration with the approval of RBI as mentioned in Note 1. All non-executive/independent Directors are entitled to reimbursement of expenses for attending Board/Committee Meetings. The remuneration is however well within the limits prescribed under the Companies Act, 2013. C. reMunerATIOn TO keY MAnAGerIAL PerSOnneL OTHer THAn MD/MAnAGer/WTD Sl. No. 1 Particulars of Remuneration Gross Salary (A) Salary as per provisions contained in section 17(1) of the Income-tax Act, 1961 Salary and allowances for Fiscal 2018 - (A) Bonus paid in Fiscal 2018 - (B) Value of perquisites u/s 17(2) of the Income-tax Act, 1961 Perquisites – (C) Profits in lieu of salary u/s 17(3) of the Income-tax Act, 1961 (B) (C) 2 3 4 5 Stock Option (Perquisite on Employee Stock Option exercised in Fiscal 2018) Sweat Equity Commission (as % of Profit/Others) Others (A)+(B)+(C) Total remuneration paid in Fiscal 2018 (excludes perquisites on Stock Options exercised in Fiscal 2018 as mentioned in point 2) P. Sanker rakesh Jha Company Secretary Amount in ` CFO Total (`) 18,181,050 5,205,564 22,114,676 10,015,833 40,295,726 15,221,397 2,499,134 4,756,407 7,255,541 0 4,377,230 0 0 0 0 0 0 0 0 0 4,377,230 0 0 0 25,885,748 36,886,916 62,772,664 VII. PenALTIeS / PunISHMenT/ COMPOunDInG OF OFFenCeS: Type Section of the Companies Act Brief Description Details of Penalty / Punishment/ Compounding fees imposed Authority [RD / NCLT/ Court] Appeal made, if any (give Details) A. COMPANY Penalty Punishment Compounding B. DIRECTORS Penalty Punishment Compounding OTHER OFFICERS IN DEFAULT Penalty Punishment Compounding C. July 27, 2018 None None None Girish Chandra Chaturvedi Chairman 87 Annexure e Annual report on Corporate Social responsibility Activities 1. A brief outline of the company’s CSr policy, including overview of projects or programs proposed to be undertaken and a reference to the web-link to the CSr policy and projects or programs Corporate Social Responsibility (CSR) has been a long-standing commitment at ICICI Bank. The Bank’s contribution to social sector development includes several pioneering interventions and is implemented through the involvement of stakeholders within the Bank and through the broader community. The Bank established the ICICI Foundation for Inclusive Growth (ICICI Foundation) in 2008 with a view to significantly expand the activities in the area of CSR. Over the years, ICICI Foundation has developed projects in specific areas, particularly in the area of skill development, and has built capabilities for direct project implementation as opposed to extending financial support to other organisations. The CSR Policy of the Bank sets the framework guiding the Bank’s CSR activities. It outlines the governance structure, operating framework, monitoring mechanism, and CSR activities that would be undertaken. The CSR Committee is the governing body that articulates the scope of CSR activities and ensures compliance with the CSR policy. The Bank’s CSR activities are largely focused in the areas of education, health, skill development and financial inclusion and other activities as the Bank may choose to select in fulfilling its CSR objectives. The CSR policy was approved by the Committee in July 2014, and subsequently was put up on the Bank’s website. Web-link to the Bank’s CSR policy: http://www.icicibank.com/managed-assets/docs/about-us/ICICI-Bank-CSR-Policy.pdf 2. The Composition of the CSr Committee The Bank’s CSR Committee comprises two independent Directors and the Managing Director & CEO of the Bank, and is chaired by an independent Director. The composition of the Committee is set out below: • Mr. Radhakrishnan Nair, Chairman (Chairman effective July 1, 2018) • Mr. Dileep Choksi • Ms. Chanda Kochhar. • Mr. Anup Bagchi (inducted as a member effective July 1, 2018) The functions of the Committee include: review of CSR initiatives undertaken by the ICICI Group and ICICI Foundation; formulation and recommendation to the Board of a CSR Policy indicating the activities to be undertaken by the company and recommendation of the amount of the expenditure to be incurred on such activities; reviewing and recommending the annual CSR plan to the Board; making recommendations to the Board with respect to the CSR initiatives, policies and practices of the ICICI Group; monitoring the CSR activities, implementation of and compliance with the CSR Policy; and reviewing and implementing, if required, any other matter related to CSR initiatives as recommended/suggested by RBI or any other body. 3. Average net profit of the company for last three financial years The average net profit of the company for the last three financial years calculated as specified by the Companies Act, 2013 for FY2018 was ` 85.10 billion. 4. Prescribed CSr expenditure (two per cent of the amount as in item 3 above) The prescribed CSR expenditure requirement for FY2018 is ` 1,702.0 million. 5. Details of CSr spent during the financial year (a) Total amount to be spent for the financial year Total amount spent towards CSR during FY2018 was ` 1,703.8 million. (b) Amount unspent, if any Nil 88 DIRECTORS’ REPORT annual report 2017-2018 (c) Manner in which the amount spent during the financial year is detailed below: S. No CSR Project or activity identified Sector in which the project is covered 2. Projects or programs Local area or 1. other Specify the state and district where projects or programs was undertaken Amount outlay (budget) project or program wise (` mn) Amount spent on the projects or programs Sub-heads Direct 1. expenditure on projects or programs Overheads (` mn) 2. Cumulative expenditure upto the reporting period (` mn) Amount spent direct or through implementing agency* Pan-India 520.0 560.0 1,745.0 Projects of ICICI Foundation for Inclusive Growth Promoting education, awareness, employment, enhancing vocational skills, livelihood enhancement projects Rural development Pan-India 1,105.9 1,040.6 4,678.6 Amount spent through ICICI Foundation for Inclusive Growth. The Foundation was set up in 2008 to focus on activities in the area of CSR Direct and through Bank’s business correspondent network Armed Forces Flag Day Fund, Kendriya Sainik Board Pan-India - 50.0 50.0 Pan-India 30.0 63.0 30.0 23.2 56.2 71.3 Disha Trust - 1 2. 3. 4. Rural development and related activities Armed forces welfare Financial Literacy Measures for the benefit of armed forces veteran, war widows and their dependents Promoting education 5. Miscellaneous Women - empowerment, promoting education, promoting healthcare, awareness campaign, Swachh Bharat, environment protection 6 7 In case the company has failed to spend the 2% of the average net profits of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report. Not applicable. A responsibility statement of the CSr Committee that the implementation and monitoring of CSr Policy, is in compliance with CSr objectives and Policy of the company. The CSR Committee hereby confirms that the implementation and monitoring of CSR activities is in compliance with CSR objectives and the CSR Policy of the company. Anup Bagchi Executive Director July 27, 2018 radhakrishnan nair CSR Committee Chairman 89 Annexure F Dividend distribution policy 1. Introduction ICICI Bank Limited (the Bank or ICICI Bank) is a public company incorporated under the Companies Act, 1956 and licensed as a Bank under the Banking Regulation Act, 1949. The Bank has been making profits since inception and has been paying equity share dividends in accordance with the guidelines of Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI), Companies Act, 1956, Companies Act, 2013 and Banking Regulation Act, 1949. This policy documents the guidelines on payment of dividends, and sets out the key considerations for arriving at the dividend payment decision. The Board will have the flexibility to determine the level of dividend based on the considerations laid out in the policy and other relevant developments. 2. regulatory framework The Bank while proposing equity share dividend will ensure compliance with the RBI guidelines relating to declaration of dividend, capital conservation requirements under guidelines on Basel III norms issued by RBI, provisions of the Banking Regulation Act, 1949, the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, provisions of the Companies Act, 2013 and guidelines provided under the section titled “Dividends” in the Articles of Association (AOA) of the Bank. 3. Approval process The Board of Directors of the Bank would take into account the following aspects while deciding on the proposal for dividend: a) profitability and key financial metrics; b) the interim dividend paid, if any; c) the auditors’ qualifications pertaining to the statement of accounts, if any; d) e) whether dividend/coupon payments for non-equity capital instruments (including preference shares) have been made; the Bank’s capital position and requirements as per Internal Capital Adequacy Assessment Process (ICAAP) projections and regulatory norms; and f) the applicable regulatory requirements The dividend decision would be subject to consideration of any other relevant factors, including, for example: • • • External factors including state of the domestic and global economy, capital market conditions and dividend policy of competitors; Tax implications including applicability and rate of dividend distribution tax; Shareholder expectations The decision regarding dividend shall be taken only by the Board at its Meeting and not by a Committee of the Board or by way of a Resolution passed by circulation. Final dividend shall be paid only after approval at an Annual General Meeting (AGM) of the Bank. Shareholder approval is not required for payment of interim dividend. 90 DIRECTORS’ REPORT annual report 2017-2018 4. utilisation of retained earnings The Bank would utilise the retained earnings for general corporate purposes, including organic and inorganic growth, investments in subsidiaries/associates and/or appropriations/drawdowns as per the regulatory framework. The Board may decide to employ the retained earnings in ensuring maintenance of an optimal level of capital adequacy, meeting the Bank’s future growth/expansion plans, other strategic purposes and/or distribution to shareholders, subject to applicable regulations. 5. Parameters for various classes of shares Currently, the Bank has only one class of equity shareholders. In the absence of any other class of equity shares and/or equity shares with differential voting rights, the entire distributable profit for the purpose of declaration of dividend is considered for the equity shareholders. The Bank has preference shares on which a fixed rate of dividend is appropriated out of profits. 6. Circumstances under which the shareholders may or may not expect dividend The Board of the Bank may vary the level of dividend or not recommend any dividend based on the regulatory eligibility criteria for recommendation of dividend, including any regulatory restriction placed on the Bank on declaration of dividend. There may also be obligations that the Bank could have undertaken under the terms of perpetual non-cumulative preference shares or debt capital instruments pursuant to applicable regulations which might prohibit the Bank from declaring dividend in certain circumstances. The Board of the Bank may vary the level of dividend or not recommend any dividend based on the capital and reserves position of the Bank. The Board may recommend lower or no dividends if it is of the view that there is a need to conserve capital. The Board may recommend higher dividends, subject to applicable regulations, if the capital and reserves position supports a higher distribution to the shareholders. 7. review The dividend policy of the Bank would be reviewed annually, or earlier if material changes take place in the applicable regulations. 91 AuDITOr’S CerTIFICATe On COrPOrATe GOVernAnCe To the Members of ICICI Bank Limited InDePenDenT AuDITOrS’ CerTIFICATe On COMPLIAnCe WITH THe COrPOrATe GOVernAnCe requIreMenTS unDer SeBI (LISTInG OBLIGATIOnS AnD DISCLOSure requIreMenTS) reGuLATIOnS, 2015 1. This certificate is issued in accordance with the terms of our engagement letter dated 18 September 2017. 2. This report contains details of compliance of conditions of Corporate Governance by ICICI Bank Limited (the ‘Company’) for the year ended 31 March 2018, as stipulated in Regulations 17-27, clauses (b) to (i) of Regulation 46 (2) and paragraphs C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘Listing Regulations’), pursuant to the Listing Agreement of the Company with Stock exchanges. MAnAGeMenT’S reSPOnSIBILITY FOr COMPLIAnCe WITH THe COnDITIOnS OF THe LISTInG reGuLATIOnS 3. The compliance with the conditions of Corporate Governance is the responsibility of the Company’s management, including the preparation and maintenance of all relevant supporting records and documents. This responsibility includes the design, implementation and maintenance of internal control and procedures to ensure the compliance with the conditions of the Corporate Governance stipulated in the Listing Regulations. AuDITOrS’ reSPOnSIBILITY 4. Our examination was limited to procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. 5. 6. 7. Pursuant to the requirements of the Listing Regulations, it is our responsibility to provide a reasonable assurance whether the Company has complied with the conditions of Corporate Governance as stipulated in the Listing Regulations for the year ended 31 March 2018. We conducted our examination in accordance with the Guidance Note on Reports or Certificates for Special Purposes and Guidance Note on Certification of Corporate Governance, both, issued by the Institute of Chartered Accountants of India (‘ICAI’). The Guidance Note on Reports or Certificates for Special Purposes requires that we comply with the ethical requirements of the Code of Ethics issued by ICAI. We have complied with the relevant applicable requirements of the Standard on Quality Control (‘SQC’) 1, Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information, and Other Assurance and Related Services Engagements. OPInIOn 8. In our opinion, and to the best of our information and according to the explanations given to us and the representations provided by the Company, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Regulations. 9. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company. reSTrICTIOn On uSe 10. The certificate is addressed and provided to the members of the Company solely for the purpose to enable the Company to comply with the requirement of the Listing Regulations, and it should not be used by any other person or for any other purpose. Accordingly, we do not accept or assume any liability or any duty of care for any other purpose or to any other person to whom this certificate is shown or into whose hands it may come without our prior consent in writing. Mumbai July 27, 2018 92 For B S r & Co. LLP Chartered Accountants Firm’s Registration No: 101248W/W-100022 Venkataramanan Vishwanath Partner Membership No: 113156 annual report 2017-2018Business Overview Banking Business retail Banking ICICI Bank has always played a pioneering role in transforming retail banking in the country. The retail franchise is supported by a wide distribution network and strong digital and technological capabilities. The Bank’s network of 4,867 branches and 14,367 ATMs as at March 31, 2018 is the largest network among private sector banks in India. The Bank offers a comprehensive suite of products and services catering to the full spectrum of customers’ financial needs - savings and investments, payments and transactions, credit, protection from risks and advisory services. The Bank continuously endeavours to understand and forecast customer expectations to innovate and to re-imagine banking. It is relentlessly pursuing the goal of an enriching banking experience for its customers and is digitising acquisition, operations and services to make processes more efficient. The Bank has invested in service automation through Natural Language Processing (NLP) and Artificial Intelligence (AI). ICICI Bank is the first bank in the country to offer AI-led chatbot services, on both its website and mobile application. ICICI Bank’s AI-powered virtual personal assistant, iPal, handles around 1.3 million queries a month with nearly 90% success in resolution. Customers visiting our branches are enabled to fulfil most of their routine banking needs like cash deposit, cash withdrawal, fund transfer and non-financial services digitally through Insta Banking at kiosks. More than 73% of all cash deposits happened through self-service channels during the year. Digital transactions in savings accounts have crossed 80% in fiscal 2018. Further, the Bank has adopted software robotics to power its operations and has deployed 750 software robotics that are handling close to two million transactions daily. ICICI Bank had launched the Unified Payments Interface (UPI) for its mobile banking application and digital wallet, Pockets, in partnership with the National Payments Corporation of India in fiscal 2017. UPI enables bank account holders (of banks participating in UPI) to send and receive money instantly and round-the-clock using a Virtual Payment Address (VPA) without entering additional bank account details. At March 31, 2018, the Bank had over 13 million UPI IDs using various platforms. The Bank has partnerships with varied web-based service providers for offering payment services using the UPI platform which is creating new dimensions in the payment ecosystem. The Bank has tied up as the key financial partner for enabling seamless digital transactions for customers of leading online service providers like cab aggregators and online food delivery platform. For example, the Bank’s partnership with a leading online cab service provider has helped customers pay their fare through the Bank's mobile banking platforms, iMobile and Pockets. The Bank has also launched a co-branded credit card offering cashbacks and accelerated reward points to the customers. One of India’s largest online food ordering and delivery platform has partnered with ICICI Bank to offer UPI-based payment facility to its customers and enable automated cash deposit by delivery partners at the Bank’s ATMs and branches. Truecaller, in its maiden foray into the financial payments space, partnered with ICICI Bank to enable customers of Truecaller to do financial transactions using the UPI platform. In a first-of-its-kind partnership between a bank and a payments platform, Paytm and ICICI Bank partnered to jointly launch Paytm-ICICIBank Postpaid offering access to instant credit to customers. The Bank uses big data based algorithms for real-time credit assessment of customers, including credit bureau checks, and based on the credit score of the customer the Bank offers interest-free credit for up to 45 days. As a start, this is being offered to customers of the Bank using the Paytm app and would eventually be extended to non-ICICI Bank customers. The Bank also leads many partnerships in enabling government departments to make payments towards welfare schemes through the Public Financial Management System (PFMS) and collections through the Non-Tax Receipt Portal (NTRP). The Bank also offers various integrated collections and payments solutions for development authorities (DAs) and urban local bodies (ULBs). In line with the philosophy of ‘Ready For You. Ready For Tomorrow’, the Bank has developed several technology- powered products that are creating ease and efficiency and also generating savings for the Bank. Through analytics, the Bank has powered products like Insta Loan and Insta Card that enable immediate disbursal of personal loans and generation of a credit card for the Bank’s existing customers. The Bank has introduced digital processes in the opening 93 of current accounts using tablets and smartphones making the account opening process paperless. The Bank uses APIs for real-time validation of Know Your Customer documents and swift processing of documents. During fiscal 2018, the Bank also introduced an instant, completely digital and paperless account opening process for Public Provident Fund (PPF) and National Pension System (NPS) accounts. In another pioneering initiative, the Bank launched ‘Money Coach’, an automated personal finance management and mutual fund platform on iMobile. Algorithms help customers navigate their investments from building an investible corpus, creating goals and getting suggestions on how to meet their goals to investing their surplus in suggested mutual funds. Sophisticated data models generate a financial health report for the customer. The report includes an overview and suggestions on important ratios related to spending and savings. During the year, the Bank launched Connected Banking - an industry-first integration of business management and banking. ICICI Bank current account holders can now securely connect their bank account to their business management and accounting software. This helps them in eliminating data entry, automating reconciliation, providing multiple payment options to their customers, requesting working capital loans and paying suppliers directly. Home buyers are an important segment in the Bank’s retail business and the Bank is committed to supporting the aspirations of these customers. In the affordable housing segment, the Bank has disbursed more than ` 67.00 billion in the form of home loans in the last four years under the scheme Pratham. ICICI Bank has a customised offering for women customers – the Advantage Women Savings Account. This is an account that goes beyond regular banking and offers several benefits including avenues for skill building and personality development courses. During fiscal 2018, the Bank launched a unique #FundYourOwnWorth campaign that encourages women to invest in themselves. Over 18,900 entries were received during the two-month campaign period and the campaign won three awards at the second edition of the Vdonxt Awards. ICICI Bank’s efforts at building a superior retail franchise helped the Bank to win the award for the ‘Best Retail Bank’ in India at The Asian Banker Excellence in Retail Financial Services International Awards 2018 for the fifth year in a row. The Bank achieved robust growth in retail assets and liabilities during fiscal 2018. Savings deposits grew by 17.0% to ` 2,009.67 billion as at March 31, 2018. The retail loan portfolio (including business banking and rural banking) grew by 20.6% and stood at ` 2,900.60 billion at March 31, 2018. The share of retail loans in total loans increased from 51.8% on March 31, 2017 to 56.6% on March 31, 2018. rural and inclusive Banking group ICICI Bank’s rural business continued to focus on the twin goals of furthering financial inclusion and promoting sustainable growth. During fiscal 2018, the Bank’s network expanded to 2,433 branches in rural and semi-urban locations and as at March 31, 2018, 50% of the Bank’s total branch network were in these locations. Of these, 552 branches were in villages that were previously unbanked (as per the 2011 Census). The Bank also services its rural customers through an extensive network of Business Correspondents (BC) who reach out to under-banked locations. The Bank had a network of 5,920 service points, as at March 31, 2018. ICICI Bank offers a comprehensive suite of financial products and services to its rural customers and leverages state-of-the- art technologies to meet the financial requirements of diverse customers including farmers, traders, rural entrepreneurs and low-income segments. The Bank’s commitment towards its rural customers is reflected in the strong 19.0% growth in the rural portfolio to ` 442.85 billion during fiscal 2018. ICICI Bank provides timely and hassle-free credit to its customers and constantly endeavours to reduce transaction costs. In fiscal 2018, ICICI Bank issued over 100,000 Kisan Credit Cards (KCCs) to support farmers by providing them with input credit for growing crops, including for horticulture. During the same period, the Bank also covered more than 3 lakh KCC customers under the Pradhan Mantri Fasal Bima Yojana, by insuring their crops under this policy. ICICI Bank is actively involved in financing post-harvest storage across the value chain. During fiscal 2018, the Bank disbursed more than ` 50.00 billion to farmers, aggregators and processors for storing agricultural produce in government and private warehouses. In addition, ICICI Bank extended working capital facilities to self-employed entrepreneurs in rural and semi- urban markets. The Bank continued to scale its Self-Help Group (SHG) programme to cater to the financial needs of 94 Business Overviewannual report 2017-2018women entrepreneurs. ICICI Bank has provided loans to over 4.0 million women beneficiaries through 325,000 SHGs. Of these, 1.6 million women were ‘first time borrowers’, who had not taken a loan from any formal financial institution before this. The Bank continues to drive its agenda of financial inclusion, and at March 31, 2018, it had opened over 21 million Basic Savings Bank Deposit Accounts (BSBDA) through its branch and BC network. Of these, around 4.0 million accounts were under the Pradhan Mantri Jan Dhan Yojana (PMJDY). The Bank encourages and enables these account holders to transact digitally. ICICI Bank is promoting the three schemes launched under the government’s Jan Suraksha Yojana (JSY), i.e., Pradhan Mantri Jeevan Jyoti Bima Yojana for providing life insurance, Pradhan Mantri Suraksha Bima Yojana for providing accident insurance and Atal Pension Yojana for providing pension benefits. As at March 31, 2018, a total of 4.4 million customers had been enrolled under the three JSY schemes, which was the highest among private sector banks. ICICI Bank is committed to introducing innovative solutions for customers in rural India. Mera iMobile, the unique mobile app launched in fiscal 2017 is now being used by more than half a million customers, and over 1.1 million transactions were carried out using this application during fiscal 2018. This application was enhanced during fiscal 2018 with additional features like crop advisory and agriculture-related news, Insta Banking, gold loans renewals, and railway ticket booking. The Bank also launched Express Loans, an integrated platform to simplify loan processing by expediting preliminary credit decisions using Aadhaar-based customer verification, online credit bureau checks and algorithms to ascertain creditworthiness of the applicant. ICICI Bank and ICICI Foundation have jointly embarked on a pioneering village empowerment and transformation initiative, the ‘ICICI Digital Villages’ programme. This programme encompasses digitisation of commercial activities, providing vocational training and providing credit and market linkages to villagers to enable access to sustainable means of livelihood. The programme has already covered over 600 villages across 21 states, and continues to grow. small & Medium enterprises Small and medium enterprises (SMEs) are a vibrant and important segment of the Indian economy as they play a critical role in the economic value chain, in employment generation and in facilitating inclusive growth in the economy. While the role of SMEs in the economy is well-recognised, they also require support in meeting the challenges of a competitive environment in a rapidly transforming Indian economy. ICICI Bank offers a comprehensive suite of banking products and services to help SMEs in meeting their business and growth requirements. The Bank leverages its retail network for sourcing and servicing SME customers and has set up dedicated SME desks across major branches. The Bank has specialised teams for handling current accounts, trade finance, cash management services and doorstep banking needs of its SME clients. The internet banking platform has been designed keeping in mind the needs of SMEs. As part of its initiatives to reach out to customers, the Bank conducts various knowledge-sharing events and has developed recognition platforms such as the Emerging India Awards and SME Elite 50 in partnership with large media conglomerates to honour the achievements of SMEs. ICICI Bank has developed products to meet specific financial needs of SMEs. Instant working capital loans through Insta Overdraft are being offered on digital lending platforms. Insta OD enables pre-qualified current account customers of the Bank to instantly avail overdraft facility without having to visit a branch or submit physical documents. The Bank’s experience in partnering with SMEs has enabled it to develop various techniques for assessing credit risks for this sector. These credit models allow the Bank to provide solutions customised to the needs of its SME clients. ICICI Bank has also implemented a digital workflow for loan processing thereby enhancing customer experience. ICICI Bank also offers online end-to-end supply chain financing solutions and vendor bill discounting through small-ticket funding to SMEs that are channel partners of large corporates. The Bank continues to pursue a strategy of calibrated growth of the SME portfolio, with higher focus on managing concentration risks, diversification of portfolio, monitoring and enhancement of collateral. 95 wholesale Banking group ICICI Bank’s Wholesale Banking Group (WBG) offers financial solutions to domestic private sector corporates, multinational corporations (MNCs), public sector undertakings (PSUs), financial institutions and non-bank financial companies. Product offerings for corporate clients include a suite of standardised as well as customised financial services for management of working capital, trade transactions including exports, cash management services, transaction banking, treasury management and meeting capital expenditure requirements. The group offers both rupee and foreign currency denominated financing solutions to its clients. WBG has adopted a two-pronged strategy of improving both portfolio quality and earnings quality. The group continues to leverage technology and digitisation to offer superior and customised solutions to its clients. In fiscal 2018, in line with the Bank’s strategy of enhancing the quality of its portfolio, the group focussed on incremental lending to higher rated corporates. WBG was also successful in significant resolution and recovery of large assets. With a view to improving portfolio quality, special attention was given to accounts requiring proactive steps for resolution and recovery in the existing portfolio. ICICI Bank’s approach to resolution and recovery involves working with sponsors for deleveraging through sale of assets and businesses, working with all stakeholders to ensure improvement in the operations and cash flow generation of borrowers and enforcement of contractual rights. Credit monitoring of the existing portfolio is of paramount importance. WBG strengthened its credit monitoring by deploying state-of-the-art systems and analytical tools for effective monitoring and analysis of our portfolio. Teams are also using analytics to develop early warning mechanisms for proactive monitoring. WBG continued to focus on enhancing the quality of income along with development of new income streams. The group diversified its income streams by widening the client base through new client acquisition and by increasing focus on non-credit, predictable income including transaction banking. Renewed emphasis was placed on granularity of income streams by offering clients a range of products and services. The Corporate Banking Group (CBG) is the principal coverage group of WBG. It focusses both on developing new relationships and enhancing existing relationships through continuous engagement with clients. The team collaborates with relevant groups such as the Commercial Banking Group, Markets Group and Syndications Group to address specific needs of clients. The coverage team not only focusses on deal origination but also acts as a single point of contact for clients to cater to their requirements across businesses and products. The Commercial Banking Group manages banking transactions, trade-based requirements and cash management needs of corporate clients. The group focusses on delivering superior client service levels through 30 mega branches spread across the country. The Commercial Banking Group is an important part of WBG’s strategy to improve earnings quality by generating sustainable income streams. The Markets Group works with clients and provides risk-based solutions to address the currency and interest rate risks that clients’ businesses are subject to. The Markets Group closely interfaces with clients for arranging market-related funding products. The Syndications Group leverages relationships with corporates and other financial intermediaries to originate and distribute loans. ICICI Bank’s Syndications Group is one of the leaders in the loan syndication market for corporate and project finance transactions. The group is an active player in the Indian primary and secondary loan distribution markets and maintains strong relationships with financial market participants like banks, financial institutions, non-banking financial companies and insurance companies. The Syndications Group also interfaces with market participants like private equity players, sovereign wealth funds and alternate investment funds. Going forward, WBG will continue to work on deepening existing relationships and sourcing new clients while focussing on profitability and credit quality. international Banking group ICICI Bank’s international banking branches are focussed on providing end-to-end solutions to meet the international banking requirements of its Indian corporate clients. The group also offers banking solutions to local corporates in countries where ICICI Bank has a presence with a view to leveraging the economic and trade corridors with India and between the countries where we have a presence. 96 Business Overviewannual report 2017-2018The International Banking Group has positioned itself as the preferred partner for global corporations seeking to expand their presence in India. The Bank has also selectively built a portfolio of multinational and local corporate assets in some of the host countries to develop a local commercial and corporate franchise. ICICI Bank has been playing a pioneering role in promoting blockchain in the banking industry. In August 2016, ICICI Bank became the first bank in the country and among the first few globally to successfully undertake pilot transactions in international trade finance and remittances. The Bank has now introduced a blockchain trade platform enabling its customers to execute transactions in a time and cost efficient manner within a secure environment. More than 250 corporates, including the country’s leading companies have signed up on the Bank’s blockchain application for undertaking domestic & international trade transactions. This is the highest number of participants on any blockchain platform in the country. ICICI Bank won the Celent Model Bank Awards 2018 in the ‘Emerging Innovation’ category for initiatives undertaken in the trade finance and supply chain segment in blockchain. ICICI Bank takes pride in being the preferred bank for non-resident Indians (NRIs) in key global markets. India continues to be the highest recipient of inward remittances globally. The Bank has maintained its position in the domestic remittances market by offering innovative and customer-friendly products and customised service offerings that meet the requirements of the widely dispersed NRI population. ICICI Bank’s international footprint consists of subsidiaries in the United Kingdom and Canada, branches in the United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Dubai International Finance Centre, South Africa, China and Qatar Financial Centre and representative offices in the United Arab Emirates, Bangladesh, Malaysia, Indonesia, Offshore Banking Unit (OBU) and IFSC Banking Unit (IBU). The Bank’s wholly-owned subsidiary ICICI Bank UK Plc had seven branches in the United Kingdom and a branch each in Belgium and Germany. ICICI Bank Canada had eight branches. During the year, the Bank continued its focus on managing risks in its international banking business. The Bank’s international banking subsidiaries at Canada and United Kingdom have continued to focus on diversifying their portfolio, enhancing franchise strengths in identified products and businesses while optimising capital structure to enhance returns on equity. ICICI Bank Canada repatriated equity share capital aggregating CAD 100 million during fiscal 2018. Treasury ICICI Bank’s treasury operations comprise of the Asset Liability Management Group, Structural Rate Risk Management Group, Markets Group and Proprietary Trading Group. The Asset Liability Management Group manages the Bank’s liquidity. The Structural Rate Risk Management Group manages the securities portfolio held for compliance with statutory and regulatory requirements. The Group focusses on optimising the yield on the overall portfolio, while maintaining an appropriate portfolio duration in the broader context of the interest rate environment. The Markets Group offers foreign exchange and derivatives solutions to clients. The Bank provides global coverage of markets with a detailed insight into markets. ICICI Bank is a major player in this segment and enables and empowers its clients with regular market updates as well as quantitative and qualitative research on topics related to the macroeconomic environment and financial markets. It is also a leading player in private placements of bonds and debentures. The Proprietary Trading Group manages trading positions within the approved risk limits. It deals in fixed income, equity and forex markets. The Bank continues to receive awards and recognition in this area. It has been recognised as the ‘Best Derivatives House of the Year - India’ and ‘Best Structured Products House of the Year - India’ by The Asset Magazine, 'Best Foreign Exchange Provider – India’, by The Global Finance Magazine and 'House Of The Year – India’ by Asia Risk magazine. risk Management Managing risk is an integral part of the banking business. ICICI Bank aims at achieving an appropriate trade-off between risk and returns. The key risks that the Bank is exposed to include credit, market, liquidity, operational (including information security), legal, compliance and reputation risks. The Bank has put in place an Enterprise Risk Management 97 framework that articulates its risk appetite and drills down the same into a limit framework for various risk categories. The risk governance framework ensures oversight, monitoring for vulnerability mapping and an integrated evaluation for effective risk management. The Board of Directors provides oversight on all the risks assumed by the Bank. The Board has established Committees with specific terms of reference to facilitate focussed oversight. Policies approved by the Board of Directors or Committees of the Board from time to time constitute the governing framework for each type of risk. 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. Every year, the Risk Committee approves a detailed calendar of reviews. The calendar of reviews includes reviews of risk management policies in relation to various risks; risk profile of the Bank, its overseas banking subsidiaries and key non-banking subsidiaries; assessment of capital adequacy based on the risk profile of the balance sheet and status with respect to the implementation of advanced approaches under the Basel framework. The Credit Committee also approves a detailed calendar of reviews every year covering the Bank’s exposure to various industries and outlook for those industries, analysis of non-performing loans, overdues, incremental sanctions and specific review of key portfolios. A summary of the reviews carried out by the Credit Committee and Risk Committee is reported to the Board of Directors. The Bank has dedicated groups (Risk Management Group, Compliance Group, Corporate Legal Group, Internal Audit Group and Financial Crime Prevention and Reputation Risk Management Group) with a mandate to identify, assess and monitor the Bank’s principal risks in accordance with well-defined policies and procedures. The Corporate Legal Group and Financial Crime Prevention and Reputation Risk Management Group report to an Executive Director. The Audit Committee provides direction to and monitors the quality of the compliance and internal audit function. The Risk Management Group, Compliance Group and Internal Audit Groups have administrative reporting to an Executive Director. These groups are independent of all business operations and coordinate with representatives of the business units to implement the Bank’s risk management methodologies. Credit Risk Credit risk entails the risk of loss that may occur from any party’s failure to abide by the terms and conditions of any financial contract, principally the failure to make required payments to the Bank. All credit risk related aspects are governed by a Credit and Recovery policy, approved by the Bank’s Board of Directors. The Credit and Recovery policy outlines the type of products that can be offered, customer categories, targeted customer profile and the credit approval process including limits. The Bank measures, monitors and manages credit risk at an individual borrower level and at the portfolio level for non-retail borrowers. The credit risk for retail borrowers is managed at the portfolio level. The credit risk associated with any corporate financing proposal is assessed based on an analysis of the borrower and the industry in which the borrower operates. The Bank has developed internal credit rating methodologies for rating obligors. The rating serves as a key input in the approval as well as post-approval credit processes. The Bank’s structured and standardised credit approval process includes a well-established procedure of comprehensive appraisal. The Bank has also established a Country Risk Management Policy, which addresses the identification, measurement, monitoring and reporting of country risk. The Bank has a framework for conducting asset reviews. The risk based review framework outlines the review schedule wherein the frequency of asset review is higher for cases with higher exposure and/or lower credit ratings. These reviews are conducted periodically (quarterly, half-yearly or yearly) based on the review schedule. Relevant industry knowledge is constantly updated through field visits and interactions with clients, sector regulators and industry experts. The appraisal and execution of project finance transactions involves a detailed evaluation of the 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 its due diligence process, the Bank appoints consultants, including technical advisors, business analysts, legal counsel and insurance consultants, whenever necessary. Risk mitigating factors in project finance loans include creation of debt service reserves and channelling of 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. 98 Business Overviewannual report 2017-2018The Bank has refined and strengthened its framework for managing concentration risk, including limits/thresholds with respect to single borrower and group exposure. Limits have been set up for group and borrower exposures based on rating and track record. In case of retail loans, sourcing and approval have been segregated to maintain independence. The Credit Risk Management Group has oversight on the credit risk issues for retail assets including vetting of all credit policies and operating notes proposed for approval by the Board of Directors or forums authorised by the Board. This Group is also involved in portfolio monitoring for all retail assets and suggesting and implementing policy changes. The Retail Credit and Policy Group is an independent unit focussing on policy formulation and portfolio tracking and monitoring. This group also includes the Credit Administration Unit that services various retail business units for credit underwriting. In addition, there is also a Business Intelligence Unit to provide support for analytics, scorecard development and database management. The credit officers evaluate retail credit proposals on the basis of the product policy vetted by the Credit Risk Management Group and approved by the Committee of Executive Directors. These criteria vary across product segments but typically include factors like the borrower’s income, the loan-to-value ratio and demographic parameters. Reports from credit bureaus also serve as an important input in making credit decisions. The technical valuations in case of residential mortgages are conducted by empanelled valuers or technical teams. External agencies (field investigation agencies and credit processing agencies) are used to facilitate comprehensive due diligence. The process includes visits to offices and homes in case of loans to individual borrowers. In addition, the credit officer checks a centralised delinquent database and reviews the borrower’s credit behaviour before sanctions. The Bank also avails the services of fraud-control agencies operating in India to check applications before disbursements. The Credit Monitoring Group, the Treasury Control and Services Group and the Operations Group track the operational adherence to regulations, policies and internal approvals. The Bank has centralised operations to manage operational risk in most back-office processes of the Bank’s retail loan business. ICICI Bank has established the Financial Crime Prevention Group (FCPG), as a dedicated and independent group overseeing/handling the fraud prevention, detection, investigation, monitoring, reporting and awareness creation activities. The segregation of responsibilities and oversight by groups external to the business groups ensure the presence of adequate checks and balances. The Bank’s credit approval authorisation framework is laid down by the Board of Directors. Several levels of credit approval authorities have been established for corporate banking activities like the Credit Committee of the Board of Directors, the Committee of Executive Directors (COED), the Committee of Senior Management, the Committee of Executives (Credit) and the Regional Committee (Credit). The authorisation framework is risk based with lower rated borrowers and/ or larger exposures being escalated to higher committees. Retail Credit Forums and Small Enterprise Group Forums have been created for approval of retail loans and credit facilities to small enterprises and agriculture-based enterprises respectively. In addition, the Bank conducts programme lending, which involves a cluster-based approach, wherein a lending programme is implemented for a group of individuals and/or business entities that comply with certain laid down parameterised norms. All such programmes and applicable limits are pre-approved by the COED. Individual executives are also delegated with powers to approve lending within the exposure limits set by the Board of Directors, in case of retail products and programmes. Market Risk Market risk arises when movements in market factors (foreign exchange rates, interest rates, credit spreads and equity prices) impact the Bank’s income or the market value of its portfolios. Exposure to market risk is segregated into two portfolios i.e. the trading and structural banking books. Trading portfolios comprise positions arising from market making activity and trading on own account. The trading book comprises of fixed income securities and equities in the held- for-trading and available-for-sale categories and interest rate/foreign exchange derivatives which are marked-to-market. Market risk on the trading portfolio is assessed and managed through measures such as net overnight open position limits, price value of one basis point, value-at-risk and stop loss limits. The structural banking book comprises the non-trading portfolio, which includes the Bank’s corporate and retail assets and liabilities, derivative positions meeting the hedge effectiveness criteria and the held-to-maturity portfolio. The risks associated with non-trading portfolios are measured through metrics such as the duration of equity, earnings at risk and liquidity gap limits. The limits are stipulated in our Investment Policy, Asset Liability Management Policy and Derivatives Policy. These policies are reviewed and approved by the Bank’s Board of Directors. 99 The Asset Liability Management Committee (ALCO) consists of the Managing Director & CEO, wholetime Directors and senior executives. The ALCO meets periodically to review the Bank’s business profile and its impact on asset liability management. It determines the asset liability management strategy in light of the current and expected business environment. It reviews positions of the trading groups and the interest rate and liquidity gap positions on the banking book. The ALCO also sets deposit and benchmark lending rates. The Market Risk Management Group (MRMG) recommends changes in risk policies and processes and methodologies for quantifying and assessing market risks. Utilisation of risk limits including position limits and stop loss limits for the trading book are reported by the Treasury Control and Services Group (TCSG) and reviewed periodically. Foreign exchange risk is tracked through the net overnight open position limit. Interest rate risk is measured through the use of re-pricing gap analysis and duration analysis, and is tracked through interest rate risk limits approved by the ALCO. The Bank uses various measurement tools of liquidity risk, including the statement of structural liquidity, dynamic liquidity gap statements, liquidity ratios and stress testing. It maintains 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 including long-term bonds (for financing infrastructure projects and affordable housing). Loan maturities and sale of investments also provide liquidity. The Bank’s international branches are primarily funded by debt capital market issuances, lines of financing from export credit agencies, syndicated loans, bilateral loans and bank lines, while its international subsidiaries raise deposits from their local markets. Operational Risk 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 reputational risks. Operational risk is inherent in the Bank’s business activities in both domestic as well as overseas operations and spans a wide spectrum of issues. Operational risk can result from a variety of factors, including but not limited to failure to obtain proper internal authorisations, improperly documented transactions, failure of operational and information security procedures, computer systems, software or equipment, fraud, inadequate training and errors committed by employees. The Bank’s operational risk is 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 functions into front-office comprising business groups, middle offices for credit and treasury functions, back office comprising operations, corporate and support functions. The Bank’s operational risk management governance and framework is defined in the Operational Risk Management (ORM) Policy approved by the Board of Directors. The Policy is applicable across the Bank, including overseas branches. It ensures a clear accountability and responsibility for management and mitigation of operational risk, developing a common understanding of operational risk, and facilitating the business, operation and support groups to improve internal controls, thereby reducing the probability and potential impact of losses from operational risk incidents. The objective of the Bank’s operational risk management is to manage and control operational risks within targeted levels of operational risk consistent with the Bank’s risk appetite as specified in the ORM Policy. While the policy provides a broad framework, detailed standard operating procedures for operational risk management processes have been established. The Bank has adopted the ‘three lines of defence approach’ for internal operational risk management. The business, operation and support functions constitute the first line of defence and are responsible for managing the operational risks inherent in the products, processes, services and activities undertaken by them. A functionally independent Operational Risk Management Group (ORMG) is the second line of defence, complementing and challenging the business line’s operational risk management activities. The ORMG is responsible for the design, implementation and enhancement of the operational risk management framework. It also facilitates the business and operations groups in managing operational risks on an on-going basis. The Internal Audit Group (IAG) is the third line of defence. It undertakes an independent review to establish that the first and second lines are operating in line with the policies, regulations and internal standards defined for management of operational risk in the Bank. The operational risk management framework comprises identification and assessment of risks and controls, new products and process approval framework, measurement through operational risk incidents, monitoring through key risk indicators and mitigation through process and control enhancement and insurance. The Board-level Committees that undertake supervision and review of operational risk aspects are the Risk Committee, Fraud Monitoring Committee, 100 Business Overviewannual report 2017-2018Audit Committee and Information Technology Strategy Committee. The Bank has also constituted an Operational Risk Management Committee (ORMC) to oversee internal operational risk management. The ORM Policy specifies the composition, roles and responsibilities of the ORMC. Other executive level committees that oversee operational risk related aspects are Product and Process Approval Committee, Outsourcing Committee, Information Security Committee, Information Technology Steering Committee, Committee of Executive Directors and Business Continuity Management Steering Committee. Information Technology Risk The cyber security threat landscape for banks and financial institutions is constantly evolving and threats such as phishing campaigns, distributed denial of service attacks, malware, ransomware and exploitation of ATM vulnerabilities or vulnerabilities in systems provided to banks by software vendors are prevalent. The Bank has a governance framework for information security with oversight from the Information Technology Strategy Committee which is a Board-level Committee chaired by an independent Director. The security strategy at the Bank is based on the principles of “defence in depth” strategy in order to strengthen the management of IT risk and controls. This strategy is built on strong governance processes with segregation of duties and a stringent IT control framework. The Bank follows the three lines of defence approach with clearly defined roles and responsibilities. The first line of defence is the technology and business/operations groups whose responsibility is to identify, assess, control and mitigate risks and ensure implementation of applicable policies and guidelines. There are dedicated units for IT process and compliance and technology infrastructure management, which are distinct from business technology units. This provides an independent yet cohesive governance function within the first line of defence. Risk management functions like the Information Security Group, Operational Risk Management Group and Financial Crime Prevention Group form the second line of defence. These functions are distinct from the IT department and are responsible for achieving control objectives through segregation of duties and independent risk based reviews of processes and functions. The third line of defence is the independent Internal Audit Department (IAD). It provides independent assurance that the first and second lines are operating in line with policies, regulations and internal standards and comprehensive audits of information systems including concurrent audits are also conducted. The Bank has built strong resilience while designing its IT infrastructure. Redundancy is created at various layers including servers, storage and network. In addition, there is a practice of 24x7 monitoring and surveillance of systems by dedicated and specialised teams of IT Command Centre, Security Operations Centre and Network Operations Centre. The teams monitor systems from the standpoint of operations, availability and security and are equipped with the state-of-the-art tools and technologies. In the endeavour towards providing high availability and continuity of services to its customers, including high availability of customer-facing IT systems, the Bank has a Board-approved Business Contingency Plan which includes plans for recovery of its IT systems in the event of any disaster or contingency. The Bank has a Board-approved Cyber Security Policy which also incorporates a cyber-crisis management plan. The Bank also conducts vulnerability assessment and penetration testing periodically to mitigate the risk that may arise from security vulnerabilities. To regularly review the effectiveness of key IT controls, the Bank has empanelled auditing firms to conduct Statutory Audit of IT systems and controls on quarterly basis. The Bank has laid down processes for change management, identity management, access management and security operations and these processes are periodically reviewed and refined to keep abreast of emerging risks and to ensure that commensurate controls to mitigate such risks are put in place. Human resources ICICI Bank had launched #ICICI Lead the New last year, embarking on a journey of renewed commitment to make itself more agile and ensure that it is future ready. The Bank’s investment in capability building is focussed on exploring various themes such as cultivating deep domain skills, building a culture of data-enabled decision making and enabling its employees to deliver customer-centric solutions by training them on aspects of design thinking. 101 Under the aegis of #ICICI Lead the New, in fiscal 2018 the Bank undertook initiatives to reinforce various aspects of the cultural change represented by DYNAMIC. In line with the concept of DYNAMIC the Bank created the ICICI Centre of the New – ICON. It is a unique space at the corporate office which is positioned as a nucleus of the Bank’s DNA. This technology enabled space brings aspects of our DYNAMIC culture such as fostering innovation, collaboration, ideation to the forefront and reinforces a community feeling among employees. This unique space houses a ‘state-of-the-art’ cafeteria and is also used to test new products & services, conduct meetings, test ideas and have informal gatherings. ICON is also used as a fitness centre under our #befit programme. All services at ICON are completely cashless, and employees pay using NFC based Tap-n-Pay or QR-based UPI solutions. Ms. Chanda Kochhar, MD & CEO, launched ICON on January 5, 2018, as part of the Bank’s Foundation Day celebrations. At ICICI Bank, capability building is about creating a culture that promotes continuous learning, unlearning and relearning and fosters an enabling environment for innovation. With this vision, a new Learning and Development approach for ‘Capability Building’ was introduced. It helps to enhance in-house capabilities to build employee skillsets which are aligned to customer needs. It also enables the employees to respond to the changing needs of the customers by constantly up- skilling themselves. Some of the new programmes introduced are as follows: self employed segment (ses) academy: The SES Academy has developed programmes for relationship managers for loan groups, a programme on the Self Employed Segment for senior branch managers & regional heads in Retail Banking and a programme for relationship managers in Elite Trade Relations Group (ETRG). The modules are designed to enhance understanding and improve the application of knowledge using practical case studies and videos. Over 1,800 employees have been trained in this academy. Mortgage academy: The Mortgage Academy introduced programmes like Mortgage Specialist, Mortgage Affinity and Mortgage Expert Connect in response to the focus on the mortgage segment. The training initiatives help enhance the capability of employees in the mortgage team to offer effective solutions and service experience to customers. sMeag academy: The SMEAG Selling Skills Programme aims to enhance sales capability of relationship managers and solution managers for SME clients. It enables participants to add value to every client interaction they undertake. The courses include self-learning videos, case studies and client videos. wealth academy: A new programme was launched for investment specialists which enables them to appreciate the nuances of equity and debt markets, understand market dynamics and macro and micro economics. It aims to enhance the agility in service delivery and customise offerings to our clients including advising businesses on cross- border trade, leveraging current market positions and working capital cycles. internal Controls workshop: This was conducted to equip senior officials in business groups and control functions to provide resolutions to internal and external stakeholders. The workshop focusses on internal controls and risk mitigation. It also emphasises on the robustness of processes and internal controls followed at the Bank along with the safeguards that are in place to protect the system against any possible frauds. relationship Manager-wheels programme: This programme was launched for senior relationship managers to enable them to engage with customers and dealers effectively by enhancing their understanding of the auto industry, the channels and regulatory, credit and operational norms. Building a Design Thinking culture: The Bank conducted workshops on using Design Thinking as a framework for problem solving and providing solutions. Design Thinking is a process for creative problem solving. The entire senior leadership of the ICICI Group – participated in multiple workshops. The Design Thinking approach is now an integral part of human-centred design at the Bank. Building a Data-smart culture: We are investing in capability building through new training interventions in Data Analytics. The Bank offered this programme to over 400 senior managers through classroom as well as online e-learning modules. • • • • • • • • 102 Business Overviewannual report 2017-2018ICICI Bank continues to remain committed to enhancing employee experience by harnessing the power of technology. The Bank’s employee-centric HR app ‘Universe on the move’ includes a unique AI-based chatbot ‘Zeno’. The chatbot provides answers to queries raised by employees, thereby significantly improving their overall service experience. All requests for employee transfers are now routed through an autonomous system which prioritises them on pre-defined criteria using an in-built rule engine. This has ensured that employees experience a transparent, seamless and simple process without any human intervention. Employees always expect real-time feedback. The T360 App is a platform for recording event-based display of behaviours in a professional context in line with the Bank’s DNA anchors. It helps the Bank in gathering rich data on its people with respect to key leadership competencies. The tool has been designed and developed in-house, for providing periodic feedback. Feedback is garnered from senior leaders, who interact with the managers on a regular basis. This enables the Bank to collect more granular data on the individuals which is used as an input for the Bank’s people processes such as Talent Management. The Bank has institutionalised a robust leadership potential assessment and leadership development process. These processes identify and groom leaders who are ready to take next level roles. The Bank maintains a robust successor list for identified critical positions. The Bank also conducts interactive sessions with industry experts and management leaders as part of its leadership mentoring programme. For instance, a Leadership Mentoring Programme was conducted for the senior management of ICICI Group by Dr. Peter Senge. He is an American systems scientist and is a senior lecturer at the MIT Sloan School of Management, co-faculty at the New England Complex Systems Institute and the founder of the Society for Organisational Learning. In this session, he engaged with the senior management on themes of leadership, shared vision and learning organisation. ICICI Bank won the 'Best Company to Work For' Award in the Banking, Financial Services and Insurance sector, organised by the Business Today magazine, for the second year in a row. The Bank has been featured in the Top 5 list of employers across all industries. This is a recognition of the Bank's leadership in providing its employees with the best-in-class professional environment. information Technology ICICI Bank has always been at the forefront of leading transformation in the Indian banking industry by embracing emerging technologies. The Bank continues to re-invent and re-invest in technologies including mobility, cognitive intelligence, application programming interface (API) banking and blockchain to develop winning propositions for its customers. ICICI Bank took several steps to re-imagine existing products and services and create new offerings for customers across business lines. Technology and digitisation have been leveraged to create world-class front-end experiences for customers. Products like instant disbursal of personal loans through ATMs, instant overdrafts for MSMEs and online PPF accounts have created a new digital experience in the Bank’s offerings. The Bank has launched a first-of-its-kind online refund functionality on travel cards along with reloading facility on a real-time basis. The Bank has also launched voice- based international remittances and social media pay services on the Money2India app for NRI customers. For rural customers the unique app, ‘Mera iMobile’ allows rural customers to avail more than 135 banking services. ‘iDealz’ is a unique offering for corporate customers for performing various forex deals. The Bank has also enhanced its corporate banking mobile app, iBizz, with additional features and better user interface. ICICI Bank has embraced the open architecture framework and has entered into partnerships in payments and lending businesses with partners like Google and PayTM. The Bank is creating an ecosystem covering all broad segments of customer to merchant payments through various modes including APIs, SDKs (software developer kits) and proximity payment systems. This broad suite of APIs and SDKs have helped the Bank become one of the top banks in new-age payment systems like IMPS and UPI. ICICI Bank was the first bank in India and among the very few globally to have implemented Blockchain–Distributed Ledger technology for its customers on trade finance and remittances. The Bank led the creation of a first-of-its-kind consortium of over 14 private and public sector banks to digitise inland trade as a ‘Make in India’ initiative. 103 Enhancing the productivity of employees and bringing in process efficiencies have been focus areas for the Bank. With a view to enhance the productivity of the Bank’s relationship managers, a Relationship Manager (RM) Workbench was launched in fiscal 2018. This is a tool which provides managers with a 360 degree view of their clients and enables them with real-time information and better decision making. The Bank has also expanded the use of robotics to power its operations and has deployed 750 software robotics that are handling close to two million transactions daily, which is 20% of the Bank’s transactions. In the transition to the Goods and Services Tax system, the Bank has carried out elaborate exercises to ensure compliance with requirements and enhancing operational risk systems. Analytics plays an important role in providing superior experiences to customers. This year, ICICI Bank upgraded to a Big Data platform that has provided enhanced analytics and data processing capabilities. The platform has been deployed across various applications to enhance customer experience, improve employee productivity and to create risk management models. ICICI Bank has created its own private cloud to enable cloud computing. The Bank has also equipped itself with state- of-the-art infrastructure management systems which leverage Internet of Things (IOT) based technology in its Data Centre for optimal utilisation of energy and reduction of operational costs. The Bank strengthened and optimised its infrastructure further to create highly scalable core systems which are able to handle large transaction volumes with lower response times. During the year, ICICI Bank hosted the second edition of the Appathon which attracted 3,400 participants. The event, which is India’s largest virtual mobile app development challenge by a bank, aims at creating the next generation of digital banking applications. The Bank also set up Innovation Centres at Mumbai and Hyderabad which act as platforms for collaboration and co-development between ICICI Group and the broader fintech community. The Bank’s comprehensive information security framework has been developed with the principles of confidentiality, integrity and availability (CIA) at its core. This framework is strengthened on a continuous basis to address evolving areas like threat intelligence, security analytics, active defence, Advanced Persistent Threat (APT), email security and data security among others. ICICI Bank received several accolades for its efforts at harnessing technology during fiscal 2018. The Bank won six awards across categories at the IBA Banking Technology Awards 2018, the highest by any bank. ICICI Bank also won two awards at The Asian Banker Tech Innovation Awards 2017 in the ‘Most Innovative Application of Robotics’ and ‘Most Innovative Application of Emerging Technology’ categories. The Bank was ‘Highly Commended’ for the ‘Best Use of Emerging or Innovative Technology’ at the Banking Technology Awards 2017 for Blockchain and bagged the Celent award for application of blockchain technology. keY suBsiDiaries iCiCi Prudential Life insurance Company (iCiCi Life) ICICI Life offers a diverse range of long-term savings and protection products. The company witnessed a growth of 93.1% in its Value of New Business which stood at ` 12.86 billion in fiscal 2018 compared to ` 6.66 billion in fiscal 2017. ICICI Life’s total premium in fiscal 2018 was ` 270.69 billion as against ` 223.54 billion in fiscal 2017. The annualised premium equivalent for fiscal 2018 was ` 77.92 billion compared to ` 66.25 billion for fiscal 2017. The post-dividend Embedded Value registered a growth of 16.1% and stood at ` 187.88 billion at March 31, 2018 as against ` 161.84 billion at March 31, 2017. The total assets under management of ICICI Life stood at ` 1,395.32 billion at March 31, 2018. iCiCi Lombard general insurance Company (iCiCi general) ICICI Lombard (ICICI General) became the first general insurance company in India to be listed on the Indian Stock Exchanges in fiscal 2018. ICICI Bank sold 7.0% of its shareholding in ICICI General through an offer for sale in an initial public offering of the company’s shares. ICICI General was listed on the National Stock Exchange of India Limited and BSE Limited on September 27, 2017. During fiscal 2018, the Company’s Gross Domestic Premium Income (GDPI) rose to ` 123.57 billion, with a growth of 15.2% over fiscal 2017. ICICI General’s profit after tax grew by 22.8% to ` 8.62 billion in fiscal 2018 from ` 7.02 billion in fiscal 2017. The company’s combined ratio improved to 100.2% in fiscal 2018 from 103.9% in fiscal 2017. The return on equity increased to 20.8% in fiscal 2018 as against 20.3% in fiscal 2017. The 104 Business Overviewannual report 2017-2018company’s solvency ratio at March 31, 2018 was 2.05x against the minimum regulatory requirement of 1.5x. The robust performance was delivered on the back of increase in policies serviced to 23.52 million in fiscal 2018 compared to 17.73 million policies in fiscal 2017. iCiCi Prudential asset Management Company (iCiCi Prudential aMC) ICICI Prudential AMC, India’s largest asset manager, had an average quarterly assets under management (AUM) of ` 3,057.39 billion at March 31, 2018. The AMC achieved a profit after tax of ` 6.26 billion in fiscal 2018, an increase of 30% as compared to ` 4.80 billion in fiscal 2017. ICICI Prudential AMC’s overall market share in the domestic mutual fund business stood at 13.3% on a quarterly average basis. At March 31, 2018, the quarterly average equity mutual fund AUM (excluding exchange traded funds) managed by the AMC increased to ` 1,420.42 billion with a market share of 15.0%. During the year, ICICI Prudential AMC won the Best Equity Fund House award at the Outlook Money Awards 2017. It was recognised as the Best Fund House (India) by Global Banking & Finance Review Awards. The AMC also bagged two awards at the Asset Benchmark Research Awards - Top Investment House and ‘Most Astute Investor' in Asian local currency bonds. iCiCi venture Funds Management Company During fiscal 2018, ICICI Venture concluded five new investments with an aggregate capital outlay of ~USD 254 million across IAF Series 4 and AION (a strategic partnership between ICICI Venture and Apollo Global Management in the area of special situations). ICICI Venture also made nine full or partial exits across various funds for an aggregate realisation of ~USD 275 million. The final closing of its fourth private equity fund, IAF Series 4, was successfully concluded at ~USD 350 million (including co-investment capital) with new global investors joining the fund. ICICI Venture successfully concluded the first closing of its third real estate fund, iREIF, at ` 3.45 billion as against a target fund size of ` 5.00 billion. ICICI Venture made a net profit after tax of ` 111.8 million in fiscal 2018 compared to ` 92.7 million in fiscal 2017. iCiCi securities (isec) ICICI Securities completed its initial public offering in fiscal 2018. The Bank sold 20.78% of its shareholding in ICICI Securities in the initial public offering. ICICI Securities was listed on the National Stock Exchange of India Limited and BSE Limited on April 4, 2018. The company’s consolidated profit after tax was ` 5.58 billion in fiscal 2018, a growth of 65% compared to the consolidated profit after tax of ` 3.39 billion in fiscal 2017. Revenue grew 32% to ` 18.59 billion against ` 14.04 billion in fiscal 2017. ISec continued to maintain its leadership position in the equity brokerage space with over 4 million customer accounts. The ICICIDirect customers have access to high quality research and advisory services, backed by a robust technology platform to meet their financial goals. In the distribution business, ISec is the second largest non- bank mutual fund distributor in the country with assets under management of over ` 305 billion. The investment banking business also maintained its dominant position by managing 12 IPOs, FPOs and InvITs with a market share of 34% (in terms of issue size) in fiscal 2018. iCiCi securities Primary Dealership (i-sec PD) I-Sec PD maintained its leadership position in auction bidding and underwriting as well as in secondary market trading activity in fiscal 2018. I-Sec PD’s profit after tax was ` 1.12 billion in fiscal 2018 compared to ` 4.12 billion in fiscal 2017. The company remained profitable despite the sharp spike in yields in the second half of the year. This achievement can be attributed to dynamic portfolio management throughout the course of fiscal 2018. I-Sec PD managed multiple corporate debt placements aggregating to ` 1,248 billion in fiscal 2018 and maintained the 5th position in the PRIME League Tables in the year under consideration. The company is empanelled as one of the fund managers managing the corpus of both the Employee Provident Fund Organisation - India’s largest retirement fund and the Coal Mines Provident Fund - India’s second largest fund. This makes I-Sec PD one of the largest discretionary fund managers in the country. iCiCi Bank uk Plc. (iCiCi Bank uk) The operating income of ICICI Bank UK Plc. for fiscal 2018 at USD 83.2 million remained stable versus fiscal 2017 primarily driven by an improvement in net interest income. In fiscal 2018, ICICI Bank UK Plc. made a net loss of USD 25.5 million due to higher impairment provisions. At March 31, 2018, ICICI Bank UK had total assets of USD 3.88 billion compared to USD 3.48 billion at March 31, 2017. It had a capital adequacy ratio of 16.5% at March 31, 2018 compared to 18.4% at March 31, 2017. 105 iCiCi Bank Canada ICICI Bank Canada’s profit after tax for fiscal 2018 was CAD 44.2 million as compared to a loss of CAD 33.0 million in fiscal 2017. At March 31, 2018, ICICI Bank Canada had total assets of CAD 6.30 billion compared to CAD 6.33 billion at March 31, 2017. ICICI Bank Canada had a total capital adequacy ratio of 17.3% at March 31, 2018 compared to 21.8% at March 31, 2017. In line with the Bank’s strategy of rationalising capital, ICICI Bank Canada repatriated CAD 100.0 million of equity share capital during fiscal 2018. CreDiT raTing Rating agency ICRA Limited Credit Analysis and Research Limited (CARE) CRISIL Limited Moody's Investors Services1 S&P Global Ratings1 Japan Credit Rating Agency1 1. Senior foreign currency debt ratings Rating [ICRA] AAA CARE AAA CRISIL AAA Baa3 BBB- BBB+ Outlook Stable Stable Stable Stable Stable Stable vision To be the leading provider of financial services in India and enhance our positioning among global banks through sustainable value creation. Mission To create value for our stakeholders by: • being the financial services provider of first choice for our customers by delivering high quality, world-class products and services playing a proactive role in the full realisation of India’s potential and contributing positively in all markets where we operate maintaining high standards of governance and ethics; and balancing growth, profitability and risk to deliver and sustain healthy returns on capital • • 106 Business Overviewannual report 2017-2018ManageMent’s Discussion & analysis Business environMent Global economic growth improved during calendar year 2017, with expansion in both advanced and developing economies. According to the International Monetary Fund, global output grew by 3.9% during calendar year 2017 compared to a growth of 3.2% in calendar year 2016. The advanced economies grew by 2.3% led by the United States and the emerging and developing economies expanded by 4.8% in calendar year 2017. Other economic developments during the year included a pickup in global trade flows and a rise in global commodity prices, particularly petroleum and metal prices. There were risks of a trade war between key large economies with focus on protectionist policies increasing during the year. The economic environment in India was characterised by two distinct phases during fiscal 2018 owing to the transition to the Goods and Services Tax system. While economic activities slowed down during the transition in the first half of fiscal 2018, there was an improvement in economic growth during the latter part of the year. India’s Gross Domestic Product (GDP) grew by 6.7% during fiscal 2018 with growth during the six months ended March 31, 2018 higher at 7.4%. Growth in fiscal 2018 was however slower compared to a 7.1% increase in fiscal 2017. As per industry-wise growth estimates on gross value added (GVA) basis, the agriculture sector grew by 3.4%, the industrial sector by 5.5% and the services sector by 7.9% during fiscal 2018 compared to 6.3% growth in agriculture, 6.8% in industrial sector and 7.5% in services sector during fiscal 2017. Retail inflation, as measured by the Consumer Price Index (CPI), eased during the initial part of fiscal 2018 from 3.9% in March 2017 to 1.5% in June 2017, and then increased to 4.3% in March 2018. Core CPI inflation, excluding food and fuel products, increased from 4.9% in March 2017 to 5.4% in March 2018. Producers’ inflation, as measured by the Wholesale Price Index (WPI), decreased from 5.1% in March 2017 to a low of 0.9% in June 2017, and increased to 2.5% in March 2018. Average WPI inflation during fiscal 2018 was 2.9% compared to 1.7% during fiscal 2017. During fiscal 2018, the Reserve Bank of India (RBI) reduced the repo rate once by 25 basis points from 6.25% to 6.00% in August 2017. Accordingly, the reverse repo rate was revised to 5.75% and the marginal standing facility rate was revised to 6.25%. The reduction in the repo rate took the cumulative decline in the repo rate since January 2015, when the policy rate reduction cycle began, to 200 basis points. The policy stance, that was changed from accommodative to neutral in February 2017, continued in fiscal 2018 due to concerns on inflation rising and a focus on maintaining inflation at close to 4.0% on a durable basis. Trends in merchandise trade were mixed during fiscal 2018. Merchandise exports grew by 9.8% while merchandise imports grew at a faster pace by 19.6% during fiscal 2018. The growth in imports largely reflected the pickup in oil imports and imports excluding oil and gold. This led to an increase in the trade deficit to USD 156.83 billion in fiscal 2018 compared to a trade deficit of USD 108.50 billion in fiscal 2017. As a result, India’s current account deficit (CAD) increased from USD 15.30 billion in fiscal 2017 to USD 48.72 billion in fiscal 2018. As a proportion of India’s GDP, CAD increased from 0.7% in fiscal 2017 to 1.9% in fiscal 2018. Foreign direct investment (FDI) inflows into India moderated to USD 39.43 billion during fiscal 2018 compared to USD 42.22 billion during fiscal 2017. There was a net inflow of USD 22.16 billion from foreign portfolio investors (FPI) during fiscal 2018, with a net inflow of USD 1.62 billion in equity markets and USD 20.55 billion in debt markets. The equity market benchmark, the S&P BSE Sensex increased by 11.3% during fiscal 2018 to close at 32,969 at end-March 2018. The Rupee remained in the range of 64 to 66 levels through fiscal 2018, and depreciated marginally from ` 64.9 per USD at March 31, 2017 to ` 65.2 per USD at March 31, 2018. Yields on the benchmark 10-year Government securities remained stable in the range of 6.4% to 7.0% during April-August 2017. Yields increased sharply from September 2017 and touched peak levels of 7.8% on March 5, 2018, subsequently easing to 7.4% at end-March 2018. Yields on the benchmark government securities increased sharply during the latter part of fiscal 2018 due to multiple factors including rise in global yields with a sharp increase in U.S. government treasury yields, and domestic factors including a decline in systemic liquidity and fiscal and inflation related uncertainties. The first year retail premium underwritten in the life insurance sector (on weighted received premium basis) grew by 19.2% to ` 634.70 billion during fiscal 2018 compared to ` 532.18 billion during fiscal 2017. Gross premium of the non-life insurance sector (excluding specialised insurance institutions) grew by 18.0% to ` 1,415.07 billion during fiscal 2018 compared to ` 1,198.81 billion during fiscal 2017. The average assets under management of mutual funds increased by 26.0% from ` 18.30 trillion during the three months ended March 31, 2017 to ` 23.05 trillion for the three months ended March 31, 2018. With regard to trends in banking, deposit and credit growth in fiscal 2018 reflected the impact of the surge in deposits and moderation in credit during fiscal 2017 following the withdrawal of legal tender status of Specified Bank Notes in 107 November 2016. During fiscal 2018, banking system deposit growth moderated from 11.3% year-on-year at March 31, 2017 to 6.2% at March 30, 2018. There was a net increase of Rs. 6.7 trillion in total deposits in the banking system during the year. Growth in demand deposits moderated from 18.9% year-on-year at March 31, 2017 to 6.9% at March 30, 2018. Term deposit growth moderated from 10.3% year-on-year at March 31, 2017 to 6.1% at March 30, 2018. Non-food credit growth picked up gradually during fiscal 2018 to 10.2% year-on-year at March 30, 2018 compared to a growth of 5.2% at March 31, 2017. Based on sector-wise credit deployment data, credit growth in the services sector was 13.8%, retail 17.8%, agriculture 3.8% and industry 0.7% year-on-year at March 30, 2018. The banking system continued to experience stress on corporate asset quality. According to RBI’s Financial Stability Report, the gross Non-Performing Assets (NPA) ratio for the banking system increased from 7.8% at March 31, 2016 to 9.6% at March 31, 2017 and further to 11.6% at March 31, 2018. Total stressed loans (defined as non-performing loans and standard restructured advances) for the banking system increased from 11.7% at March 31, 2016 to 12.5% at March 31, 2018. In October 2017, the Government of India announced a recapitalisation package of ` 2.11 trillion for public sector banks. The recapitalisation package included budgetary provisions of ` 181.39 billion, recapitalisation bonds of ` 1.35 trillion and capital raising by banks. During fiscal 2018, the Government infused over ` 880.00 billion of capital in public sector banks. During fiscal 2018, significant steps were taken towards the resolution of stressed assets and provisioning by banks towards these assets. To facilitate the timely resolution of stressed assets, the Banking Regulation (Amendment) Ordinance, 2017 was promulgated in May 2017. The Banking Regulation (Amendment) Ordinance amended section 35A of the Banking Regulation Act, 1949 and inserted two new sections 35AA and 35AB. RBI was authorised to intervene and instruct banks to resolve specific stressed assets and initiate insolvency resolution process where required. RBI was also empowered to issue other directions for resolution, and could appoint authorities or committees to advise banks on the resolution of stressed assets. Subsequently, to facilitate timely decision making under the Joint Lenders’ Forum (JLF), RBI issued guidelines directing banks to adhere to timelines and implement any resolution plan approved by 60.0% of the creditors by value and 50% of the creditors by number at the JLF. The guidelines were made binding on all members. The Overseeing Committee, that was set up to oversee resolution under the Scheme for Sustainable Structuring of Stressed Assets (S4A), was reconstituted and expanded and the scope of cases to be referred to the Overseeing Committee was also extended to cases other than under S4A and having aggregate banking system exposure greater than ` 5.00 billion. In June 2017, RBI issued directions to banks to file for resolution under the Insolvency and Bankruptcy Code (IBC) with the National Company Law Tribunal (NCLT) in respect of 12 large stressed accounts. In August 2017, RBI identified additional accounts and directed banks to initiate an insolvency resolution process under the provisions of the IBC by December 31, 2017, if a resolution plan, where the residual debt was rated investment grade by two external credit rating agencies, was not implemented by December 13, 2017. RBI directed banks to make a provision for the identified cases to the extent of 50.0% of the secured portion and 100.0% of the unsecured portion of the outstanding loans or the provisions required as per the existing guidelines of RBI, whichever is higher, by March 31, 2018. The provision requirement was later revised from 50.0% on secured portion of debt to 40.0% by March 2018 and 50.0% by June 30, 2018. In November 2017, an ordinance amending the IBC was promulgated, to prevent wilful defaulters and promoters of entities classified as non-performing from bidding for the assets of a company under a resolution plan. The newly included Section 29A of the ordinance made certain persons, including wilful defaulters and those who had their accounts classified as non-performing assets for one year or more, ineligible to be a resolution applicant under a resolution plan. The amendments were later approved by Parliament and enacted in January 2018. In February 2018, RBI announced a revised framework for resolution of stressed assets aimed at time-bound resolution of non-performing and stressed borrowers. The framework withdrew the earlier resolution schemes (including the related stand-still benefits in asset classification of borrower accounts) like the Strategic Debt Restructuring (SDR), Change in Ownership of Borrowing Entities Outside SDR Scheme and S4A schemes. The guideline also requires commencement of proceedings under the IBC in respect of borrowers where a resolution satisfying specified criteria could not be achieved within a prescribed timeframe. According to the guidelines, banks would have to implement a resolution plan within 180 days in respect of any overdue account where aggregate exposure of the lenders is ` 20.00 billion or more and is in default on March 1, 2018. For any default in a borrower account after March 1, 2018, the resolution plan would have to be implemented within 180 days from the first instance of default by the borrower. In the event the resolution plan is not implemented within the stipulated timeline, the borrower would have to be referred to NCLT under the IBC. The resolution plan should necessarily have a minimum credit rating from one or two rating agencies depending on the size of exposure. The earlier schemes of regulatory forbearance including SDR, Change in Ownership of Borrowing Entities Outside SDR and S4A were withdrawn and JLF was discontinued. 108 ManageMent’s Discussion & analysisannual report 2017-2018other key regulatory developments during the year were as follows: • • • • • RBI deferred the implementation of Indian Accounting Standards (Ind AS) for banks by one year from April 1, 2018 to April 1, 2019. In view of the sharp increase in government bond yields during the second half of fiscal 2018, RBI allowed banks to spread provisioning for mark-to-market losses on investments held in the available-for-sale (AFS) and held-for- trading (HFT) categories for the quarters ended December 31, 2017 and March 31, 2018 equally over up to four quarters, commencing with the quarter in which the loss is incurred. With the aim of building adequate reserves to protect against sudden increase in yields, RBI advised banks to create an Investment Fluctuation Reserve (IFR) from fiscal 2019. A minimum amount equal to either the net profit on sale of investments during the year or net profit for the year excluding mandatory appropriations, whichever is lower, would have to be transferred to the IFR. The amount in the IFR should cover at least 2.0% of the HFT and AFS portfolio, on a continuing basis. Where feasible, this requirement should be achieved within a period of three years. IFR would be eligible for inclusion in tier 2 capital. In case the balance in the IFR is in excess of the minimum requirement of 2.0% of the HFT and AFS portfolio, banks can drawdown the excess amount at the end of the accounting year. If the balance is less than the minimum requirement, drawdown would be permitted only on meeting the minimum common equity tier 1/tier 1 capital requirements but cannot exceed the extent by which mark-to-market provisions surpass the net profit on sale of investments during the year. With regard to reserve requirements to be held by banks, the cash reserve ratio was maintained at 4.0% of net demand and time liabilities (NDTL) during fiscal 2018. The statutory liquidity ratio was reduced by 100 basis points (bps) with a 50 bps reduction from 20.5% of NDTL to 20.0% effective from the fortnight of June 24, 2017 and a further 50 bps reduction to 19.5% of NDTL from the fortnight starting October 14, 2017. RBI also reduced the ceiling on SLR holdings under the held-to-maturity (HTM) category from 20.5% to 20.0% by December 2017 and further to 19.5% by March 31, 2018. An internal study group report of RBI dated September 25, 2017 proposed that all floating rate loans extended from April 1, 2018 to be referenced to an external benchmark. The Group also suggested that the periodicity of resetting the interest rates be once a quarter and that banks should migrate all existing lending rates to the new benchmark without any additional charges for switchover within one year from the introduction of the external benchmark. RBI has yet to issue the necessary instructions/guidelines in this regard. Further, in February 2018, RBI proposed to harmonise the methodology of determining benchmark rates by linking the base rate to the marginal cost based lending rate. Final instructions/guidelines in this regard are awaited. • RBI rationalised the merchant discount rate (MDR) for debit card transactions. Key changes include categorisation of merchants on the basis of turnover, differentiated MDR for QR-code based transactions and ceiling on maximum permissible MDR. This is effective from January 1, 2018. strategy In fiscal 2018, the Bank continued to focus on its strategic priorities of improving the portfolio quality and enhancing the franchise. Within portfolio quality, the emphasis was on improving the portfolio mix with a focus on retail lending and lending to higher rated corporates, reducing concentration risks, resolution of stressed borrowers and proactive monitoring of loan portfolios across businesses. With regard to enhancing the franchise, the Bank focused on sustaining its robust funding profile including the proportion of current account and savings account deposits in total deposits, leveraging technology to improve customer experience and operating efficiency, and unlocking value from the investments in subsidiaries. The Bank maintained a strong capital position with capital adequacy ratios significantly above regulatory requirements. Going forward, the Bank’s focus would be on risk calibrated profitable growth. The priority would be on growing the retail portfolio with a focus on enhancing the customer franchise. The Bank would leverage all capabilities to be the trusted partner in serving its customers and become their banker of choice. The Bank would continue to invest in technology and preserve its digital leadership by offering best in class digital products to customers and automating internal processes to increase efficiency. The Bank would focus on lending to higher rated, well-established corporates and would remain 109 cautious in lending to projects under implementation. The focus would be on growing the Bank’s core operating profits. As a financial group with presence across customer segments, products and geographies, the Bank would leverage synergies across group companies. stanDalone Financials as Per inDian gaaP summary Profit after tax decreased by 30.9% from ` 98.01 billion in fiscal 2017 to ` 67.77 billion in fiscal 2018. The decrease in profit after tax was primarily due to a 10.7% decrease in non-interest income, 13.8% increase in provisions and contingencies and 6.4% increase in operating expenses, offset, in part, by a 5.9% increase in net interest income. Net interest income increased by 5.9% from ` 217.37 billion in fiscal 2017 to ` 230.26 billion in fiscal 2018 reflecting an increase of 6.5% in the average volume of interest-earning assets, offset, in part, by a marginal decline in the net interest margin from 3.25% in fiscal 2017 to 3.23% in fiscal 2018. Non-interest income decreased by 10.7% from ` 195.05 billion in fiscal 2017 to ` 174.19 billion in fiscal 2018 primarily due to a decrease in income from treasury-related activities, offset, in part, by an increase in fee income. Income from treasury-related activities decreased from ` 85.77 billion in fiscal 2017 to ` 58.02 billion in fiscal 2018 primarily due to a decrease in realised gains on government securities and other fixed income investments. Fee income increased by 9.4% from ` 94.52 billion in fiscal 2017 to ` 103.41 billion in fiscal 2018. During fiscal 2018, the Bank sold equity shares representing 7.00% shareholding in ICICI Lombard General Insurance Company Limited resulting in a net gain of ` 20.12 billion and equity shares representing 20.78% shareholding in ICICI Securities Limited resulting in a net gain of ` 33.20 billion through initial public offers (IPO). During fiscal 2017, the Bank sold equity shares representing 12.63% shareholding in ICICI Prudential Life Insurance Company Limited through an IPO resulting in a net gain of ` 56.82 billion. Operating expenses increased by 6.4% from ` 147.55 billion in fiscal 2017 to ` 157.04 billion in fiscal 2018 primarily due to an increase in staff cost and other administrative expenses. Provisions and contingencies (excluding provision for tax) increased by 13.8% from ` 152.08 billion in fiscal 2017 to ` 173.07 billion in fiscal 2018. The operating environment for Indian banks has remained challenging for the past few years particularly due to the stress in the Indian corporate sector. The Indian corporate sector has experienced a prolonged period of muted growth in sales and profits. Over the years, several challenges have impacted the sector including delays in project completion due to policy changes, delays in approvals like clearances on environment and land, judicial decisions like the deallocation of coal mines, significant decline in global commodity prices in fiscal 2015 and fiscal 2016 and adjustments to recent structural reforms such as demonetisation and Goods & Services Tax. These challenges resulted in lower than projected cash flows and the progress in reducing leverage in the corporate sector remained slow. As a result, there has been a substantial increase in the level of additions to non-performing loans, including slippages from restructured loans, into non-performing status for the banking sector and the Bank. Gross additions to the Bank’s NPAs in fiscal 2018 were ` 287.30 billion (fiscal 2017: ` 335.44 billion). The gross additions to non-performing loans include the impact of revised framework for resolution of stressed assets issued by RBI in February 2018 which withdrew the schemes of Strategic Debt Restructuring (SDR), change in ownership outside SDR and scheme for sustainable structuring of stressed assets (S4A) resulting in classification of loans under these schemes, which were not implemented, as non-performing. Gross NPAs (net of write-offs) increased from ` 425.52 billion at March 31, 2017 to ` 540.63 billion at March 31, 2018. Net NPAs increased from ` 254.51 billion at March 31, 2017 to ` 278.86 billion at March 31, 2018. The net NPA ratio decreased from 4.89% at March 31, 2017 to 4.77% at March 31, 2018. The income tax expense decreased by 55.5% from ` 14.78 billion in fiscal 2017 to ` 6.57 billion in fiscal 2018 due to a lower effective tax rate in fiscal 2018, primarily reflecting the composition of income. Net worth increased from ` 999.51 billion at March 31, 2017 to ` 1,051.59 billion at March 31, 2018 primarily due to accretion to reserves out of profit for the year, offset, in part, by payment of dividend. In fiscal 2018, the Bank made a provision for frauds amounting to ` 5.05 billion through reserves and surplus on certain non-retail accounts, which will be reversed and recognised through profit and loss account in the subsequent quarters of next fiscal year, as permitted by RBI. 110 ManageMent’s Discussion & analysisannual report 2017-2018Total assets increased by 13.9% from ` 7,717.91 billion at March 31, 2017 to ` 8,791.89 billion at March 31, 2018. Total advances increased by 10.4% from ` 4,642.32 billion at March 31, 2017 to ` 5,123.95 billion at March 31, 2018 primarily due to an increase in domestic advances by 15.1%, offset, in part, by a decline in overseas advances by 14.1%. Total deposits increased by 14.5% from ` 4,900.39 billion at March 31, 2017 to ` 5,609.75 billion at March 31, 2018. Current and savings account (CASA) deposits increased by 17.5% from ` 2,468.21 billion at March 31, 2017 to ` 2,899.25 billion at March 31, 2018. Term deposits increased by 11.4% from ` 2,432.17 billion at March 31, 2017 to ` 2,710.50 billion at March 31, 2018. The CASA ratio increased from 50.4% at March 31, 2017 to 51.7% at March 31, 2018. The Bank had a branch network of 4,867 branches at March 31, 2018 and an ATM network of 14,367 ATMs at March 31, 2018. The Bank is subject to the Basel III capital adequacy guidelines stipulated by RBI. The total capital adequacy ratio of the Bank at March 31, 2018 (after deduction of proposed dividend from capital funds) in accordance with RBI guidelines on Basel III was 18.42% with a Tier-1 capital adequacy ratio of 15.92% as compared to 17.39% with a Tier-1 capital adequacy ratio of 14.36% at March 31, 2017. operating results data The following table sets forth, for the periods indicated, the operating results data. Particulars Interest income Interest expense net interest income Non-interest income - Fee income1 - Treasury income - Dividend from subsidiaries - Other income (including lease income) operating income Operating expenses operating profit Provisions, net of write-backs Profit before tax Tax, including deferred tax Profit after tax ` in billion, except percentages Fiscal 2017 ` 541.56 324.19 217.37 Fiscal 2018 ` 549.66 319.40 230.26 % change 1.5% (1.5) 5.9 94.52 85.77 14.19 0.57 412.42 147.55 264.87 152.08 112.79 14.78 ` 98.01 103.41 58.02 12.14 0.62 404.45 157.04 247.41 173.07 74.34 6.57 ` 67.77 9.4 (32.4) (14.4) 8.8 (1.9) 6.4 (6.6) 13.8 (34.1) (55.5) (30.9%) Includes merchant foreign exchange income and margin on customer derivative transactions. 1. 2. All amounts have been rounded off to the nearest ` 10.0 million. 3. Prior period figures have been re-grouped/re-arranged, where necessary. Key ratios The following table sets forth, for the periods indicated, the key financial ratios. Particulars Return on average equity (%)1 Return on average assets (%)2 Earnings per share (`)3 Book value per share (`)3 Fee to income (%) Cost to income (%)4 Fiscal 2017 10.34 1.35 15.31 156.18 22.92 35.78 Fiscal 2018 6.60 0.87 10.56 163.60 25.57 38.83 Return on average equity is the ratio of the net profit after tax to the quarterly average equity share capital and reserves. 1. 2. Return on average assets is the ratio of net profit after tax to average assets. 3. Shareholders of the Bank approved the issue of bonus shares in ratio of 1:10 on June 12, 2017. Fiscal 2017 numbers have been re-stated. 4. Cost represents operating expense. Income represents net interest income and non-interest income. 111 net interest income and spread analysis The following table sets forth, for the periods indicated the net interest income and spread analysis. Particulars Interest income Interest expense net interest income Average interest-earning assets Average interest-bearing liabilities Net interest margin Average yield Average cost of funds Interest spread ` in billion, except percentages Fiscal 2017 ` 541.56 324.19 217.37 6,697.02 ` 5,943.14 3.25% 8.09% 5.45% 2.64% Fiscal 2018 ` 549.66 319.40 230.26 7,129.46 ` 6,382.35 3.23% 7.71% 5.00% 2.71% % change 1.5% (1.5) 5.9 6.5 7.4 - - - - 1. All amounts have been rounded off to the nearest ` 10.0 million. Net interest income increased by 5.9% from ` 217.37 billion in fiscal 2017 to ` 230.26 billion in fiscal 2018 reflecting an increase of 6.5% in the average volume of interest-earning assets, offset, in part, by a marginal decline in net interest margin by 2 basis points. The yield on average interest-earning assets decreased by 38 basis points from 8.09% in fiscal 2017 to 7.71% in fiscal 2018. The cost of funds decreased by 45 basis points from 5.45% in fiscal 2017 to 5.00% in fiscal 2018. The interest spread increased by 7 basis points from 2.64% in fiscal 2017 to 2.71% in fiscal 2018. The net interest margin decreased by 2 basis points from 3.25% in fiscal 2017 to 3.23% in fiscal 2018. The net interest margin for domestic operations increased marginally from 3.59% in fiscal 2017 to 3.60% in fiscal 2018. The cost of domestic funds decreased by 65 basis points from 5.96% in fiscal 2017 to 5.31% in fiscal 2018 primarily due to a decrease in cost of deposits. The yield on domestic interest-earning assets decreased by 49 basis points from 8.77% in fiscal 2017 to 8.28% in fiscal 2018 due to a decrease in yield on advances and investments. The net interest margin of overseas branches decreased by 81 basis points from 1.30% in fiscal 2017 to 0.49% in fiscal 2018 primarily due to a decrease in yield on interest-earning assets. The yield on overseas interest-earning assets decreased primarily due to a decrease in yield on advances. Yield on advances decreased by 42 basis points from 4.11% in fiscal 2017 to 3.69% in fiscal 2018 primarily due to non-accrual of interest income on NPAs and prepayment of high yielding loans. The cost of funds of overseas branches increased by 5 basis points from 2.98% in fiscal 2017 to 3.03% in fiscal 2018. The following table sets forth, for the periods indicated, the trend in yield, cost, spread and margin. Particulars 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 112 Fiscal 2017 8.09% 8.88 7.23 7.45 6.57 4.78 5.45 5.39 2.99 7.25 5.61 2.64 3.25% Fiscal 2018 7.71% 8.63 6.82 7.07 6.11 3.63 5.00 4.87 2.81 6.60 5.41 2.71 3.23% ManageMent’s Discussion & analysisannual report 2017-2018The yield on average interest-earning assets decreased by 38 basis points from 8.09% in fiscal 2017 to 7.71% in fiscal 2018 primarily due to the following factors: • The yield on domestic advances decreased by 56 basis points from 10.07% in fiscal 2017 to 9.51% in fiscal 2018 and the yield on overseas advances decreased by 42 basis points from 4.11% in fiscal 2017 to 3.69% in fiscal 2018. However, due to an increase in the proportion of domestic advances in total advances, the overall yield on average advances decreased by 25 basis points from 8.88% in fiscal 2017 to 8.63% in fiscal 2018. The decrease was primarily due to the following reasons: • • There have been significant additions to non-performing assets in fiscal 2017 and fiscal 2018. The Bank accounts for interest income on cash basis on NPAs. The Bank’s 1-year MCLR decreased by 100 basis points during fiscal 2017, of which a reduction of 75 basis points occurred in January 2017 subsequent to the demonetisation of currency notes. The incremental loans by the Bank during fiscal 2018 were made at lower rates due to reduction in the Bank’s MCLR during fiscal 2017. Further, many existing customers with floating rate loans have also re-priced their loans to a lower rate linked to MCLR during fiscal 2018. • • The yield on average interest-earning investments decreased from 7.23% in fiscal 2017 to 6.82% in fiscal 2018. The yield on Statutory Liquidity Ratio (SLR) investments decreased by 38 basis points from 7.45% in fiscal 2017 to 7.07% in fiscal 2018 primarily due to realisation of capital gains in the SLR portfolio and reset of the rate of interest on floating rate bonds at lower levels. The yield on non-SLR investments decreased by 46 basis points from 6.57% in fiscal 2017 to 6.11% in fiscal 2018 primarily due to a decrease in the yield on corporate bonds and debentures, commercial paper and mutual funds. The yield on other interest-earning assets decreased from 4.78% in fiscal 2017 to 3.63% in fiscal 2018 primarily due to a decrease in interest income on non-trading interest rate swaps, interest on income tax refund and the yield on Rural Infrastructure and Development Fund (RIDF) and related deposits. Interest income on non-trading interest rate swaps, which are undertaken to manage the market risk arising from the assets and liabilities, decreased from ` 7.07 billion in fiscal 2017 to ` 2.29 billion in fiscal 2018 primarily due to an increase in LIBOR during fiscal 2018 as compared to fiscal 2017. Interest on income tax refund was at ` 2.63 billion in fiscal 2018 (fiscal 2017: ` 4.51 billion). The receipt, amount and timing of such income depend on the nature and timing of determinations by tax authorities and are neither consistent nor predictable. The cost of funds decreased by 45 basis points from 5.45% in fiscal 2017 to 5.00% in fiscal 2018 primarily due to the following factors: • The cost of average deposits decreased by 52 basis points from 5.39% in fiscal 2017 to 4.87% in fiscal 2018 primarily due to a decrease in cost of term deposits and savings deposits and an increase in the proportion of CASA deposits in total deposits. The cost of term deposits decreased by 65 basis points from 7.25% in fiscal 2017 to 6.60% in fiscal 2018 primarily due to a decrease in the cost of domestic term deposits by 74 basis points from 7.40% in fiscal 2017 to 6.66% in fiscal 2018. The Bank reduced retail term deposit rates for select maturities in phases during fiscal 2017 and fiscal 2018. For example, the rate on retail term deposits with maturities between 390 days up to two years declined from 7.50% at April 1, 2016 to 7.00% at April 1, 2017. The rate was further reduced to 6.90% on May 17, 2017 and 6.75% on July 19, 2017. Effective August 19, 2017, the Bank reduced its interest rate on savings account deposits by 50 basis points on deposits below ` 5.0 million from 4.00% to 3.50%. The average CASA deposits increased from 43.7% of total average deposits in fiscal 2017 to 45.6% of total average deposits in fiscal 2018. 113 • The cost of borrowings decreased by 20 basis points from 5.61% in fiscal 2017 to 5.41% in fiscal 2018 primarily due to a decrease in interest expense on funding swaps and lower cost of refinance borrowings, offset, in part, by a decrease in term borrowings which are relatively lower cost. The Bank’s yield on advances, interest income, net interest income and net interest margin are likely to continue to be impacted going forward, due to the tightening of systemic liquidity, changes in benchmark lending rates and deposit rates, competitive market conditions, focus on lending to higher rated corporates, migration of I-Base rate linked floating rate loans to MCLR and non-accrual of income on NPAs. In the Statement on Development and Regulatory policies released by RBI in February 2018, RBI decided to harmonise the methodology of determining benchmark rates by linking the Base Rate to the MCLR with effect from April 1, 2018. RBI is yet to issue the necessary instructions. Further, an internal study group of RBI has proposed that all floating rate loans extended from April 1, 2018 be referenced to an external benchmark. The Group also suggested that the periodicity of resetting the interest rates be once a quarter and that banks should migrate all existing lending rates to the new benchmark without any additional charges for switchover within a year. Any change in the methodology of determining benchmark rates may impact our interest income, yield on advances, net interest income and net interest margin. The following table sets forth, for the period indicated, the trend in average interest-earning assets and average interest- bearing liabilities: Particulars Advances Interest-earning investments1 Other interest-earning assets total interest-earning assets Deposits Borrowings1,2 total interest-bearing liabilities ` in billion, except percentages Fiscal 2017 ` 4,459.84 1,573.06 664.12 6,697.02 4,242.69 1,700.45 ` 5,943.14 Fiscal 2018 ` 4,736.93 1,695.33 697.20 7,129.46 4,809.02 1,573.33 ` 6,382.35 % change 6.2% 7.8 5.0 6.5 13.3 (7.5) 7.4% 1. Average investments and average borrowings include average short-term repurchase transactions. 2. Borrowings exclude preference share capital. 3. All amounts have been rounded off to the nearest ` 10.0 million. The average interest-earning assets increased by 6.5% from ` 6,697.02 billion in fiscal 2017 to ` 7,129.46 billion in fiscal 2018. The increase in average interest-earning assets was primarily on account of an increase in average advances by ` 277.09 billion and average interest-earning investments by ` 122.27 billion. Average advances increased by 6.2% from ` 4,459.84 billion in fiscal 2017 to ` 4,736.93 billion in fiscal 2018 primarily due to an increase in domestic advances, offset, in part, by a decrease in overseas advances. Average interest-earning investments increased by 7.8% from ` 1,573.06 billion in fiscal 2017 to ` 1,695.33 billion in fiscal 2018, primarily due to an increase in SLR investments by 6.4% from ` 1,181.10 billion in fiscal 2017 to ` 1,256.31 billion in fiscal 2018 and an increase in interest-earning non-SLR investments by 12.0% from ` 391.96 billion in fiscal 2017 to ` 439.02 billion in fiscal 2018. Average interest-earning non-SLR investments increased primarily due to an increase in investments in pass through certificates, commercial papers, mutual funds and equity shares, offset, in part, by maturity of investments in government bonds held by foreign branches. Average other interest-earning assets increased by 5.0% from ` 664.12 billion in fiscal 2017 to ` 697.20 billion in fiscal 2018 primarily due to an increase in call and term money lent, offset, in part, by a decrease in RIDF and related deposits. Average interest-bearing liabilities increased by 7.4% from ` 5,943.14 billion in fiscal 2017 to ` 6,382.35 billion in fiscal 2018 primarily due to an increase in average deposits by ` 566.33 billion, offset, in part, by a decrease in average borrowings by ` 127.12 billion. 114 ManageMent’s Discussion & analysisannual report 2017-2018Average deposits increased by 13.3% from ` 4,242.69 billion in fiscal 2017 to ` 4,809.02 billion in fiscal 2018 due to an increase in average CASA deposits by ` 339.05 billion and an increase in average term deposits by ` 227.28 billion. Average borrowings decreased by 7.5% from ` 1,700.45 billion in fiscal 2017 to ` 1,573.33 billion in fiscal 2018 primarily due to a decrease in foreign currency term borrowings, borrowings under liquidity adjustment facility with RBI and refinance borrowings. non-interest income The following tables set forth, for the periods indicated, the principal components of non-interest income. Particulars Fee income1 Income from treasury-related activities Dividend from subsidiaries Other income (including lease income) total non-interest income ` in billion, except percentages Fiscal 2017 ` 94.52 85.77 14.19 0.57 ` 195.05 Fiscal 2018 ` 103.41 58.02 12.14 0.62 ` 174.19 % change 9.4% (32.4) (14.4) 8.8 (10.7%) Includes merchant foreign exchange income and income on customer derivative transactions. 1. 2. All amounts have been rounded off to the nearest ` 10.0 million. Non-interest income primarily includes fee and commission income, income from treasury-related activities, dividend from subsidiaries and other income including lease income. The non-interest income decreased by 10.7% from ` 195.05 billion in fiscal 2017 to ` 174.19 billion in fiscal 2018 primarily due to a decrease in income from treasury-related activities, offset, in part, by an increase in fee income. Fee income Fee income primarily includes fees from corporate clients such as loan processing fees and transaction banking fees and fees from retail customers such as loan processing fees, fees from cards business, account servicing charges and third party referral fees. Fee income increased by 9.4% from ` 94.52 billion in fiscal 2017 to ` 103.41 billion in fiscal 2018 primarily due to an increase in transaction banking fees, third party referral fees, lending linked fees and income from forex and derivatives products, offset, in part, by a decrease in commercial banking fees. Profit/(loss) on treasury-related activities (net) Income from treasury-related activities includes income from sale of investments and unrealised profit/(loss) on account of revaluation of investments in the fixed income portfolio, equity and preference shares portfolio, units of venture funds and security receipts issued by asset reconstruction companies. Profit from treasury-related activities decreased from ` 85.77 billion in fiscal 2017 to ` 58.02 billion in fiscal 2018 primarily due to a decrease in realised gain on government securities and other fixed income investments due to an increase in yield on fixed income securities in the latter part of fiscal 2018. In fiscal 2018, the Bank made a net gain of ` 20.12 billion on sale of equity shares of ICICI Lombard General Insurance Company Limited and a net gain of ` 33.20 billion on sale of equity shares of ICICI Securities Limited through an offer for sale in their IPOs. In fiscal 2017, the Bank had made a net gain of ` 56.82 billion on sale of equity shares of ICICI Prudential Life Insurance Company Limited through offer for sale in their IPO. 115 Dividend from subsidiaries Dividend from subsidiaries decreased by 14.4% from ` 14.19 billion in fiscal 2017 to ` 12.14 billion in fiscal 2018. The following table sets forth, for the periods indicated, the details of dividend received from subsidiaries: Name of the entity ICICI Prudential Life Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Securities Limited ICICI Bank Canada ICICI Securities Primary Dealership Limited ICICI Home Finance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Trust total dividend Fiscal 2017 5.45 1.63 2.05 0.21 2.78 1.07 1.00 0.001 14.19 ` in billion Fiscal 2018 5.44 2.27 1.77 1.09 0.67 0.50 0.40 0.001 12.14 Insignificant amount. 1. 2. All amounts have been rounded off to the nearest ` 10.0 million. Other income (including lease income) Other income increased from ` 0.57 billion in fiscal 2017 to ` 0.62 billion in fiscal 2018. operating expense The following table sets forth, for the periods indicated, the principal components of operating expenses. Particulars Payments to and provisions for employees Depreciation on owned property (including non-banking assets) Other administrative expenses total operating expenses 1. All amounts have been rounded off to the nearest ` 10.0 million. ` in billion, except percentages Fiscal 2017 ` 57.34 7.58 82.63 ` 147.55 Fiscal 2018 ` 59.14 7.81 90.09 ` 157.04 % change 3.1% 3.0 9.0 6.4% Operating expenses primarily include employee expenses, depreciation on assets and other administrative expenses. Operating expenses increased by 6.4% from ` 147.55 billion in fiscal 2017 to ` 157.04 billion in fiscal 2018. Payments to and provisions for employees Employee expenses increased by 3.1% from ` 57.34 billion in fiscal 2017 to ` 59.14 billion in fiscal 2018 primarily on account of higher salary due to annual increments and promotions and an increase in average staff strength. The average staff strength increased from 79,671 for fiscal 2017 to 83,577 for fiscal 2018 (number of employees at March 31, 2017: 82,841 and at March 31, 2018: 82,724). The increase was primarily in retail and rural businesses. The employee base includes sales executives, employees on fixed term contracts and interns. This increase in cost was offset, in part, by a decrease in provision for retirement benefit obligations due to increase in the discount rate which is linked to the yield on government securities. Depreciation Depreciation on owned properties increased by 3.0% from ` 7.58 billion in fiscal 2017 to ` 7.81 billion in fiscal 2018. Other administrative expenses Other administrative expenses primarily include rent, taxes and lighting, advertisements, sales promotion, repairs and maintenance, direct marketing expenses and other expenditure. Other administrative expenses increased by 9.0% from ` 82.63 billion in fiscal 2017 to ` 90.09 billion in fiscal 2018. The increase in other administrative expenses was primarily due to an increase in retail business volumes. 116 ManageMent’s Discussion & analysisannual report 2017-2018Provisions and contingencies (excluding provisions for tax) The following table sets forth, for the periods indicated, the components of provisions and contingencies. Particulars Provision for non-performing and other assets1 Provision for investments (including credit substitutes) (net) Provision for standard assets Others total provisions and contingencies (excluding provision for tax) Includes restructuring related provision. 1. 2. All amounts have been rounded off to the nearest ` 10.0 million. ` in billion, except percentages Fiscal 2017 ` 146.86 6.09 (3.39) 2.52 ` 152.08 Fiscal 2018 ` 142.45 18.77 2.77 9.08 ` 173.07 % change (3.0%) - - - 13.8% Provisions are made by the Bank on standard, sub-standard and doubtful assets at rates prescribed by RBI. Loss assets and the unsecured portion of doubtful assets are provided for/written off as required by RBI guidelines. For loans and advances of overseas branches, provisions are made as per RBI regulations or host country regulations, whichever is higher. Provisions on retail non-performing loans are made at the borrower level in accordance with the retail assets provisioning policy of the Bank, subject to the minimum provisioning levels prescribed by RBI. The Bank holds specific provisions against non-performing loans and advances and against certain performing loans and advances in accordance with RBI directions, including RBI direction for provision on accounts referred to NCLT under IBC. The specific provisions on retail loans and advances held by the Bank are higher than the minimum regulatory requirement. In respect of non- retail loans reported as fraud to RBI and classified in doubtful category, the entire amount, without considering the value of security, is provided for over a period of four quarters starting from the quarter in which fraud has been detected. In respect of non-retail loans where there has been delay in reporting the fraud to RBI or which are classified as loss accounts, the entire amount is provided immediately. In case of fraud in retail accounts, the entire amount is provided immediately. Provision on loans and advances restructured/rescheduled is made in accordance with the applicable RBI guidelines on restructuring of loans and advances by banks. In addition to the specific provision on NPAs, the Bank maintains a general provision on standard loans and advances at rates prescribed by RBI. For standard loans and advances in overseas branches, the general provision is made at the higher of host country regulatory requirements and RBI requirements. The Bank also makes additional general provision on loans to specific borrowers in specific stressed sectors. The Bank makes floating provision as per a Board approved policy, which is in addition to the specific and general provisions made by the Bank. The floating provision can be utilised with the approval of the Board and RBI. Provisions and contingencies (excluding provisions for tax) increased from ` 152.08 billion in fiscal 2017 to ` 173.07 billion in fiscal 2018. Provision for advances in fiscal 2018 remained elevated at ` 142.45 billion as compared to ` 146.86 billion in fiscal 2017 primarily due to high additions to NPAs in the corporate and small and medium enterprises loan portfolio, provision on certain cases referred to NCLT under the provisions of IBC and provisions on loan classified as NPAs in earlier years. The additions to NPAs during fiscal 2018 included the impact of revised framework for resolution of stressed assets issued by RBI in February 2018, which superceded the earlier guidelines on SDR, change in ownership outside SDR (except projects under implementation) and S4A with immediate effect. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were withdrawn and the accounts were classified as per the extant RBI norms on asset classification. In fiscal 2018, the Bank also made a provision for frauds amounting to ` 5.25 billion through reserves and surplus on certain non-retail accounts, which will be reversed and recognised through the profit and loss account in fiscal 2019, as permitted by RBI. During the three months ended June 30, 2017 and September 30, 2017, RBI advised the banks to initiate insolvency resolution process under the provisions of IBC for certain specific accounts. RBI also required the banks to make provision 117 at 50% of the secured portion and 100% of the unsecured portion, or provision as per extant RBI guideline on asset classification norms, whichever is higher. Subsequently, in April 2018, RBI revised the provisioning requirements in respect of these specified cases from 50% of secured portion to 40% of secured portion at March 31, 2018 and to 50% of the secured portion at June 30, 2018. Provision for investments increased from ` 6.09 billion in fiscal 2017 to ` 18.77 billion in fiscal 2018 primarily due to provision on equity shares, bonds and debentures and preference shares on loan conversion cases under SDR/S4A schemes. Provision for standard assets increased from a write-back of ` 3.39 billion in fiscal 2017 to provision of ` 2.77 billion in fiscal 2018 primarily due to provision made on certain identified stressed sectors as per the RBI guidelines and increase in loan portfolio. In April 2017, RBI through its circular advised the banks that the provisioning rates prescribed under the prudential norms circular are the regulatory minimum and banks are encouraged to make provisions at higher rates in respect of advances to stressed sectors of the economy and had specifically highlighted the telecom sector. Accordingly, during fiscal 2018, the Bank as per its Board-approved policy made additional general provision amounting to ` 1.91 billion on standard loans to borrowers. The cumulative general provision held at March 31, 2018 was ` 25.91 billion (March 31, 2017: ` 23.13 billion). Other provisions and contingencies increased from ` 2.52 billion in fiscal 2017 to ` 9.08 billion in fiscal 2018 primarily due to provision on non-banking assets. tax expense The income tax expense decreased by 55.5% from ` 14.78 billion in fiscal 2017 to ` 6.57 billion in fiscal 2018. The effective tax rate decreased from 13.1% in fiscal 2017 to 8.8% in fiscal 2018, primarily reflecting the composition of income. Financial condition Assets The following table sets forth, at the dates indicated, the principal components of assets. assets Cash and bank balances Investments - Government and other approved investments1 - Equity investment in subsidiaries - Other investments Advances - Domestic - Overseas branches Fixed assets (including leased assets) Other assets - RIDF and other related deposits2 total assets ` in billion, except percentages At March 31, 2017 ` 757.13 1,615.07 1,085.39 103.23 426.45 4,642.32 3,892.39 749.93 78.05 625.34 241.13 ` 7,717.91 at March 31, 2018 ` 841.69 2,029.94 1,384.27 98.32 547.35 5,123.95 4,479.65 644.30 79.04 717.27 269.25 ` 8,791.89 % change 11.2% 25.7 27.5 (4.8) 28.4 10.4 15.1 (14.1) 1.3 14.7 11.7 13.9% 1. 2. Banks in India are required to maintain a specified percentage, currently 19.50% (at March 31, 2018), of their net demand and time liabilities by way of liquid assets like cash, gold or approved unencumbered securities. Deposits made in Rural Infrastructure Development Fund and other related deposits pursuant to shortfall in the amount required to be lent to certain specified sectors called priority sector as per RBI guidelines. 3. All amounts have been rounded off to the nearest ` 10.0 million. 118 ManageMent’s Discussion & analysisannual report 2017-2018Total assets of the Bank increased by 13.9% from ` 7,717.91 billion at March 31, 2017 to ` 8,791.89 billion at March 31, 2018, primarily due to a 10.4% increase in advances, 11.2% increase in cash and cash equivalents and 14.7% increase in other assets. 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 increased from ` 757.13 billion at March 31, 2017 to ` 841.69 billion at March 31, 2018 primarily due to an increase in balances with banks outside India and foreign currency term money lent, offset, in part, by a decrease in money at call and short notice. Investments Total investments increased by 25.7% from ` 1,615.07 billion at March 31, 2017 to ` 2,029.94 billion at March 31, 2018 primarily due to an increase in investments in government securities by ` 287.77 billion, commercial paper by ` 57.35 billion, bonds and debentures by ` 53.14 billion and certificate of deposits by ` 39.19 billion. At March 31, 2018, the Bank had an outstanding net investment of ` 34.38 billion in security receipts issued by asset reconstruction companies compared to ` 32.86 billion at March 31, 2017. Advances Net advances increased by 10.4% from ` 4,642.32 billion at March 31, 2017 to ` 5,123.95 billion at March 31, 2018 primarily due to an increase in domestic advances, offset, in part, by a decrease in overseas advances. Domestic advances increased by 15.1% from ` 3,892.39 billion at March 31, 2017 to ` 4,479.65 billion at March 31, 2018. Net advances of overseas branches decreased by 14.1% from ` 749.93 billion at March 31, 2017 to ` 644.30 billion at March 31, 2018. Fixed and other assets Fixed assets (net block) increased by 1.3% from ` 78.05 billion at March 31, 2017 to ` 79.04 billion at March 31, 2018. Other assets increased from ` 625.34 billion at March 31, 2017 to ` 717.27 billion at March 31, 2018 primarily due to an increase in trade receivables and RIDF and related deposits. RIDF and other related deposits made in lieu of shortfall in directed lending requirements increased from ` 241.13 billion at March 31, 2017 to ` 269.25 billion at March 31, 2018. 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 subordinated debt and preference share capital) - Domestic - Overseas branches Subordinated debt (included in Tier-1 and Tier-2 capital) - Domestic - Overseas branches Preference share capital1 Other liabilities total liabilities 1. Included in Schedule 4 - “Borrowings” of the balance sheet. 2. All amounts have been rounded off to the nearest ` 10.0 million. At March 31, 2017 ` 11.71 987.80 4,900.39 1,718.38 749.83 2,432.17 1,129.66 326.19 803.47 342.40 342.40 - 3.50 342.45 ` 7,717.91 at March 31, 2018 ` 12.92 1,038.68 5,609.75 2,009.67 889.58 2,710.50 1,510.25 696.30 813.95 314.84 314.84 - 3.50 301.96 ` 8,791.89 % change 10.3% 5.2 14.5 17.0 18.6 11.4 33.7 - 1.3 (8.0) (8.0) - 0.0 (11.8) 13.9% 119 Total liabilities (including capital and reserves) increased by 13.9% from ` 7,717.91 billion at March 31, 2017 to ` 8,791.89 billion at March 31, 2018 primarily due to a 14.5% increase in deposits and 23.9% increase in borrowings. Deposits Deposits increased by 14.5% from ` 4,900.39 billion at March 31, 2017 to ` 5,609.75 billion at March 31, 2018. Term deposits increased by 11.4% from ` 2,432.17 billion at March 31, 2017 to ` 2,710.50 billion at March 31, 2018. Savings account deposits increased by 17.0% from ` 1,718.38 billion at March 31, 2017 to ` 2,009.67 billion at March 31, 2018 and current account deposits increased by 18.6% from ` 749.83 billion at March 31, 2017 to ` 889.58 billion at March 31, 2018. The current and savings account deposits increased from ` 2,468.22 billion at March 31, 2017 to ` 2,899.25 billion at March 31, 2018. CASA ratio increased from 50.4% at March 31, 2017 to 51.7% at March 31, 2018. Total deposits at March 31, 2018 formed 75.5% of the funding (i.e., deposits and borrowings, other than preference share capital). Borrowings Borrowings increased by 23.9% from ` 1,475.56 billion at March 31, 2017 to ` 1,828.59 billion at March 31, 2018 primarily due to an increase in borrowings with RBI under liquidity adjustment facility, refinance borrowings and foreign currency call money borrowings, offset, in part, by a decrease in foreign currency subordinated bond borrowings. Borrowings of overseas branches increased by 1.3% from ` 803.47 billion at March 31, 2017 to ` 813.95 billion at March 31, 2018. Other liabilities Other liabilities decreased by 11.8% from ` 342.45 billion at March 31, 2017 to ` 301.96 billion at March 31, 2018 primarily due to a decrease in security deposits and bills payable. Equity share capital and reserves Equity share capital and reserves increased from ` 999.51 billion at March 31, 2017 to ` 1,051.59 billion at March 31, 2018 primarily due to accretion to reserves out of profit. In fiscal 2018, the Bank made a provision for frauds amounting to ` 5.25 billion through reserves and surplus on certain non-retail accounts, which will be reversed and recognised through the profit and loss account in the subsequent quarters of next fiscal year, as permitted by RBI. Off balance sheet items, commitments and contingencies The following table sets forth, for the periods indicated, the principal components of contingent liabilities. Particulars Claims against the Bank, not acknowledged as debts Liability for partly paid investments Notional principal amount of outstanding forward exchange contracts 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 and interest rate futures Other items for which the Bank is contingently liable total 1. All amounts have been rounded off to the nearest ` 10.0 million. ` in billion At March 31, 2017 ` 46.43 0.01 4,272.34 929.99 478.37 410.83 at March 31, 2018 ` 62.66 0.01 4,326.69 945.36 410.04 416.99 4,131.19 40.78 ` 10,309.94 6,592.93 137.76 ` 12,892.44 Contingent liabilities increased from ` 10,309.94 billion at March 31, 2017 to ` 12,892.44 billion at March 31, 2018 primarily due to an increase in notional amount of interest rate swaps and currency options. The notional amount of interest rate swaps and currency options increased from ` 4,131.19 billion at March 31, 2017 to ` 6,592.93 billion at March 31, 2018 primarily due to an increase in outstanding position of overnight index swaps. 120 ManageMent’s Discussion & analysisannual report 2017-2018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 and customer claims arising in fraud cases. In accordance with the Bank’s accounting policy and Accounting Standard 29, the Bank has reviewed and classified these items as possible obligations based on legal opinion/judicial precedents/assessment by the Bank. No provision in excess of provisions already made in the financial statements is considered necessary. Claims against the Bank, not acknowledged as debts increased from ` 46.43 billion at March 31, 2017 to ` 62.66 billion at March 31, 2018 primarily due to an increase in demands made in tax matters against the Bank. 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 offsetting 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. As a part of project financing and commercial banking activities, the Bank has issued guarantees to support regular business activities of clients. These generally represent irrevocable assurances that the Bank will make payments in the event that the customer fails to fulfil 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, including advance payment guarantee. 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 issued 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. Cash margins available to reimburse losses realised under guarantees amounted to ` 136.65 billion at March 31, 2018 compared to ` 84.60 billion at March 31, 2017. Other property or security may also be available to the Bank to cover potential losses under guarantees. The Bank is 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 ` 4.87 billion at March 31, 2018 compared to ` 5.11 billion at March 31, 2017. Other items for which the Bank is contingently liable increased from ` 40.78 billion at March 31, 2017 to ` 137.76 billion at March 31, 2018 primarily due to pending settlement for purchase/sale of Government of India securities where settlement date method of accounting is followed in accordance with RBI guidelines. Capital resources The Bank actively manages its capital to meet regulatory norms, current and future business needs and the risks in its businesses. The capital management framework of the Bank 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 The Bank is subject to the Basel III guidelines issued by RBI, effective from April 1, 2013, which are being implemented in a phased manner by March 31, 2019 as per the transitional arrangement provided by RBI for Basel III implementation. The Basel III rules on capital consist of measures for improving the quality, consistency and transparency of capital, enhancing risk coverage, introducing a supplementary leverage ratio, reducing pro-cyclicality and promoting counter- cyclical buffers and addressing systemic risk and inter-connectedness. At March 31, 2018, the Bank was required to maintain a minimum Common Equity Tier-1 (CET1) capital ratio of 7.475%, minimum Tier-1 capital ratio of 8.975% and minimum total capital ratio of 10.975%. The minimum total capital requirement includes a capital conservation buffer of 1.875% and capital surcharge of 0.10% on account of the Bank being designated as a Domestic Systemically Important Bank (D-SIB). Under Pillar 1 of the RBI guidelines on Basel III, the Bank follows the standardised approach for measurement of credit risk, standardised duration method for measurement of market risk and basic indicator approach for measurement of operational risk. 121 The following table sets forth the capital adequacy ratios computed in accordance with Basel III guidelines of RBI at March 31, 2017 and March 31, 2018. Basel iii CET1 capital Tier-1 capital Tier-2 capital total capital Credit Risk — Risk Weighted Assets (RWA) On balance sheet Off balance sheet Market Risk — RWA Operational Risk — RWA total rWa total capital adequacy ratio CET1 capital adequacy ratio Tier-1 capital adequacy ratio Tier-2 capital adequacy ratio ` in billion, except percentages At March 31, 2017 858.39 897.25 189.41 1,086.66 5,266.99 4,363.08 903.91 420.25 560.78 6,248.02 17.39% 13.74% 14.36% 3.03% at March 31, 20182 915.87 1,010.64 159.14 1,169.78 5,220.54 4,433.49 787.05 523.37 605.17 6,349.08 18.42% 14.43% 15.92% 2.50% 1. All amounts have been rounded off to the nearest ` 10.0 million. 2. The proposed dividend has been reduced from capital funds though not deducted from net worth for the purpose of financial reporting at March 31, 2018 At March 31, 2018, the Bank’s Tier-1 capital adequacy ratio was 15.92% as against the requirement of 8.975% and total capital adequacy ratio was 18.42% as against the requirement of 10.975%. Movement in the capital funds and risk weighted assets from March 31, 2017 to March 31, 2018 as per Basel III norms Capital funds (net of deductions) increased by ` 83.12 billion from ` 1,086.66 billion at March 31, 2017 to ` 1,169.78 billion at March 31, 2018 primarily due to inclusion of retained earnings for fiscal 2018, repatriation of capital from overseas banking subsidiary, sale of partial shareholding in subsidiaries and issuance of Additional Tier 1 (AT-1) capital instruments of ` 55.55 billion during fiscal 2018, offset, in part, by decrease in eligible amount of non-common equity capital due to application of Basel III grandfathering rules. Credit risk RWA decreased by ` 46.45 billion from ` 5,266.99 billion at March 31, 2017 to ` 5,220.54 billion at March 31, 2018 primarily due to a decrease of ` 116.86 billion in RWA for off-balance sheet assets, offset, in part, by an increase of ` 70.41 billion in RWA for on-balance sheet assets. Market risk RWA increased by ` 103.12 billion from ` 420.25 billion at March 31, 2017 to ` 523.37 billion at March 31, 2018 primarily due to an increase in the portfolio of equity investments and fixed income securities. Operational risk RWA increased by ` 44.39 billion from ` 560.78 billion at March 31, 2017 to ` 605.17 billion at March 31, 2018. The operational risk capital charge is computed based on 15% of the average of the previous three financial years’ gross income and is revised on an annual basis at June 30. RWA is arrived at by multiplying the capital charge by 12.5. RWA as a percentage of average assets was 81.8% at March 31, 2018 (at March 31, 2017: 85.9%). Internal assessment of capital The capital management framework of the Bank 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 undertaken at both the standalone bank level and the consolidated group level. The internal capital adequacy assessment 122 ManageMent’s Discussion & analysisannual report 2017-2018process encompasses capital planning for a four-year 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 covers the policies, processes, methodologies and frameworks established for the management of material risks. Stress testing, which is a key aspect of the internal capital adequacy assessment process and the risk management framework, provides an insight into the impact of extreme but plausible scenarios on the Bank’s risk profile and capital position. Based on the stress testing framework approved by the Board, the Bank conducts stress tests on various portfolios and assesses the impact on the capital ratios and the adequacy of capital buffers for current and future periods. The Bank periodically assesses and refines its stress testing framework 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 and the operating environment. The business and capital plans and the stress testing results of certain key group entities are integrated into the internal capital adequacy assessment process. Based on the internal capital adequacy assessment process, the Bank determines the level of capital that needs to be maintained 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; 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. The Bank continues to monitor relevant developments and believes that its current robust capital adequacy position and demonstrated track record of access to domestic and overseas markets for capital raising will enable it to maintain the necessary levels of capital as required by regulations while continuing to grow its business. asset Quality anD coMPosition loan concentration The Bank follows a policy of portfolio diversification and evaluates its total financing exposure to a particular industry in light of its forecasts of growth and profitability for that industry. The Bank’s Credit Risk Management Group monitors all major sectors of the economy and specifically tracks industries in which the Bank has credit exposures. The Bank monitors developments in various sectors to assess potential risks in its portfolio and new business opportunities. The Bank’s policy is to limit its portfolio to any particular industry (other than retail loans) to 15.0% of its total exposure. In addition, the Bank has strengthened its framework for managing concentration risk with respect to single borrower and group exposures, based on the internal rating and track record of the borrowers. The exposure limits for lower rated borrowers and groups are substantially lower than the regulatory limits. The following table sets forth, at the dates indicated, the composition of the Bank’s gross advances (net of write-offs). Particulars Retail finance1,2 Services – finance Power Road, ports, telecom, urban development and other infrastructure ` in billion, except percentages March 31, 2017 March 31, 2018 Total advances ` 2,440.38 273.05 302.84 % of total advances 50.6% 5.7 6.3 total advances ` 2,939.95 342.11 276.76 % of total advances 54.7% 6.4 5.1 228.80 4.7 204.50 3.8 123  March 31, 2017 March 31, 2018 Particulars Total advances Iron/steel and products Services – non-finance Crude petroleum/refining and petrochemicals Wholesale/retail trade Construction Mining Electronics and engineering Cement Food and beverages Metal & products (excluding iron & steel) Other industries3 total 235.62 180.77 66.59 115.70 98.71 108.01 73.75 75.40 70.37 89.72 464.89 ` 4,824.60 % of total advances 4.9 3.7 1.4 2.4 2.0 2.2 1.5 1.6 1.5 1.9 9.6 100.0% total advances 203.18 172.74 132.80 125.87 117.65 105.06 81.40 63.07 58.59 49.02 506.75 ` 5,379.45 % of total advances 3.8 3.2 2.5 2.3 2.2 1.9 1.5 1.2 1.1 0.9 9.4 100.0% 1. 2. 3. Includes home loans, automobile loans, commercial business loans, dealer financing and small ticket loans to small businesses, personal loans, credit cards, rural loans and loans against securities. Includes loans against FCNR deposits of ` 15.48 billion at March 31, 2018 (March 31, 2017: ` 14.99 billion). Other industries primarily include developer financing portfolio, gems and jewellery, chemical and fertilisers, textile, manufacturing products (excluding metal), automobiles, drugs and pharmaceuticals and FMCG. 4. All amounts have been rounded off to the nearest ` 10.0 million. The Bank’s capital allocation framework is focused on higher growth in retail and rural lending and selective lending to corporate sector with focus on an increase in lending to higher rated corporates. Given the focus on the above priorities, gross retail finance advances (including loans against FCNR deposits) increased by 20.5% in fiscal 2018 compared to an increase of 11.5% in total gross advances. As a result, the share of gross retail finance advances increased from 50.6% of gross advances at March 31, 2017 to 54.7% of gross advances at March 31, 2018. The proportion of exposure to borrowers internally rated A- and above, in the top 20 borrowers (excluding banks) increased from 75.3% at March 31, 2017 to 96.0% at March 31, 2018. The following table sets forth, at the dates indicated, the composition of the Bank’s gross (net of write-offs) outstanding retail finance portfolio. Particulars Home loans Rural loans Automobile loans Personal loans Business banking1 Commercial business Credit cards Others2,3 total retail finance portfolio3 March 31, 2017 March 31, 2018 ` in billion, except percentages Total retail advances ` 1,281.90 370.25 256.09 143.65 126.88 150.26 75.44 35.91 ` 2,440.38 % of total retail advances 52.5% 15.2 10.5 5.9 5.2 6.2 3.1 1.4 100.0% total retail advances ` 1,505.43 443.06 294.91 211.82 175.24 173.18 96.39 39.92 ` 2,939.95 % of total retail advances 51.2% 15.1 10.0 7.2 6.0 5.9 3.3 1.3 100.0% Includes dealer financing and small ticket loans to small businesses. Includes loans against securities Includes loans against FCNR deposits of ` 15.48 billion at March 31, 2018 (March 31, 2017: ` 14.99 billion). 1. 2. 3. 4. All amounts have been rounded off to the nearest ` 10.0 million. The net domestic retail loan portfolio of the Bank grew by 20.6% during fiscal 2018. 124 ManageMent’s Discussion & analysisannual report 2017-2018Directed lending RBI requires banks to lend to certain sectors of the economy. Such directed lending comprises priority sector lending and export credit. Priority Sector Lending and Investment The RBI guidelines on priority sector lending require banks to lend 40.0% of their adjusted net bank credit (ANBC), to fund certain types of activities carried out by specified borrowers. The definition of ANBC includes bank credit in India adjusted by bills rediscounted with the RBI and other approved financial institutions and certain investments including priority sector lending certificates and investments in Rural Infrastructure Development Fund and other specified funds on account of priority sector shortfall and is computed with reference to the outstanding amount at corresponding date of the preceding year as prescribed by the RBI guidelines ‘Master Direction – Priority Sector Lending – Targets and Classification’. Further RBI allows exclusion from ANBC for loans extended in India against incremental foreign currency non-resident (bank)/non-resident external deposits during specified period and funds raised by way of issue of long-term bonds for financing infrastructure and low-cost housing, subject to certain limits. As prescribed by RBI’s Master Direction on ‘Priority Sector Lending - Targets and Classification’ dated July 7, 2016, the priority sectors include categories such as agriculture, micro, small and medium enterprises, education, housing, social infrastructure, renewable energy and export credit. Out of the overall target of 40.0%, banks are required to lend a minimum of 18.0% of their ANBC to the agriculture sector. Sub-targets of 8.0% for lending to small & marginal farmers (out of agriculture) and 7.5% lending target to micro-enterprises have been introduced from fiscal 2016. The RBI has directed banks to maintain direct lending to non-corporate farmers at the banking system’s average level for the last three years, failing which banks will attract penalties for the shortfall. The RBI would notify the banks of the banking system’s average level at the beginning of each year. RBI has notified a target level of 11.78% of ANBC for this purpose for fiscal 2018. The banks are also required to lend 10.0% of their ANBC to certain borrowers under the “weaker section” category. Priority sector lending achievement is evaluated on a quarterly average basis from fiscal 2017 instead of only at the year-end. The Bank is required to comply with the priority sector lending requirements prescribed by RBI from time to time. The shortfall in the amount required to be lent to the priority sectors and weaker sections may be required to be deposited in funds with government sponsored Indian development banks like the National Bank for Agriculture and Rural Development, the Small Industries Development Bank of India, the National Housing Bank, MUDRA Limited and other financial institutions as decided by RBI from time to time, based on the allocations made by RBI. These deposits have a maturity of up to seven years and carry interest rates lower than market rates. At March 31, 2018, the Bank’s total investment in such bonds was ` 269.25 billion, which was fully eligible for consideration in overall priority sector lending achievement. As prescribed by the RBI guideline, the Bank’s priority sector lending achievement is computed on a quarterly average basis from fiscal 2017 onwards. Total average priority sector lending for fiscal 2018 was ` 1,500.78 billion (fiscal 2017: ` 1,399.41 billion) constituting 37.7% (fiscal 2017: 39.9%) of ANBC, against the requirement of 40.0% of ANBC. The average lending to the agriculture sector was ` 587.55 billion (fiscal 2017: ` 547.36 billion) constituting 14.8% (fiscal 2017: 15.6%) of ANBC against the requirement of 18.0% of ANBC. The average advances to weaker sections were ` 246.63 billion (fiscal 2017: ` 220.87 billion) constituting 6.2% (fiscal 2017: 6.3%) of ANBC against the requirement of 10.0% of ANBC. Average lending to small and marginal farmers was ` 170.72 billion (fiscal 2017: ` 142.16 billion) constituting 4.3% (fiscal 2017: 4.1%) of ANBC against the requirement of 8.0% of ANBC. The average lending to micro enterprises was ` 266.32 billion (fiscal 2017: ` 241.22 billion) constituting 6.7% (fiscal 2017: 6.9%) of ANBC against the requirement of 7.5% of ANBC. The average lending to non-corporate farmers was ` 352.03 billion (fiscal 2017: ` 300.86 billion) constituting 8.9% (fiscal 2017: 8.6%) of ANBC against the requirement of 11.78% of ANBC. classification of loans The Bank classifies its assets as performing and non-performing in accordance with RBI guidelines. Under RBI guidelines, an asset is generally 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. RBI guidelines also require an asset to be classified as non-performing based on certain other criteria like restructuring of a loan, inability of a borrower to complete a project funded by the Bank within stipulated timelines and certain other non-financial parameters. In respect of borrowers where loans and advances made by overseas branches are identified 125 as impaired as per host country regulations for reasons other than record of recovery, but which are standard as per RBI guidelines, the amount outstanding in the host country is classified as non-performing. RBI has separate guidelines for classification of loans for projects under implementation which are based on the date of commencement of commercial production and date of completion of the project as originally envisaged at the time of financial closure. For infrastructure projects, a loan is classified as non-performing if it fails to commence commercial operations within two years from the documented date of commencement and for non-infrastructure projects, the loan is classified as non-performing if it fails to commence operations within 12 months from the documented date of such commencement. RBI also has separate guidelines for restructured loans. Upto March 31, 2015, a fully secured standard asset could be restructured by re-schedulement of principal repayments and/or the interest element, but had to be separately disclosed as a restructured asset. The diminution in the fair value of the restructured loan, if any, measured in present value terms, was either written off or a provision was made to the extent of the diminution involved. Similar guidelines applied for restructuring of sub-standard loans. Loans restructured after April 1, 2015 (excluding loans given for implementation of projects in the infrastructure sector and non-infrastructure sector and which are delayed up to a specified period) by re- schedulement of principal repayments and/or the interest element are classified as non-performing. For such loans, the diminution in the fair value of the loan, if any, measured in present value terms, has to be provided for in addition to the provisions applicable to non-performing loans. On February 12, 2018, RBI issued a revised framework for resolution of stressed assets, which superceded the existing guidelines on SDR, change in ownership outside SDR (except projects under implementation) and S4A with immediate effect. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were withdrawn and the accounts were classified as per the extant RBI norms on asset classification. RBI also clarified the definition of restructuring to include any concession to the borrower where time for payment of settlement amount exceeds three months. The following table sets forth, at the dates indicated, information regarding asset classification of the Bank’s gross non- performing assets (net of write-offs, interest suspense and derivative income reversals). Particulars Non-performing assets Sub-standard assets Doubtful assets Loss assets total non-performing assets1 ` in billion At March 31, 2017 at March 31, 2018 ` 145.07 259.08 21.37 ` 425.52 ` 75.51 450.03 15.09 ` 540.63 Includes advances, lease receivables and credit substitutes like debentures and bonds. Excludes preference shares. 1. 2. All amounts have been rounded off to the nearest ` 10.0 million. The following table sets forth, at the dates indicated, information regarding the Bank’s non-performing assets (NPAs). Year ended March 31, 2015 March 31, 2016 March 31, 2017 March 31, 2018 Gross NPA1 ` 152.42 ` 267.21 ` 425.52 ` 540.63 ` in billion, except percentages Net customer assets ` 4,516.34 ` 4,972.29 ` 5,209.52 ` 5,848.78 % of net NPA to net customer assets2 1.40% 2.67% 4.89% 4.77% Net NPA ` 63.25 ` 132.97 ` 254.51 ` 278.86 1. Net of write-offs, interest suspense and derivatives income reversal. 2. 3. All amounts have been rounded off to the nearest ` 10.0 million. Includes advances, lease receivables and credit substitutes like debentures and bonds. Excludes preference shares. 126 ManageMent’s Discussion & analysisannual report 2017-2018The following table sets forth, at March 31, 2017 and March 31, 2018, the composition of gross non-performing assets by industry sector. Particulars Retail finance1 Power Mining Iron/steel and products Construction Services – non-finance Road, ports, telecom, urban development and other infrastructure Crude petroleum/refining and petrochemicals Electronics and engineering Shipping Food and beverages Manufacturing products (excluding metal) Wholesale/retail trade Cement Metal & products (excluding iron & steel) Other industries2 total March 31, 2017 Amount ` 36.67 63.64 39.32 80.39 31.29 36.15 23.04 0.49 3.18 14.34 6.36 5.29 7.03 53.78 0.04 24.51 ` 425.52 % 8.6% 15.0 9.2 18.9 7.4 8.5 5.4 0.1 0.7 3.4 1.5 1.2 1.7 12.6 0.0 5.8 100.0% ` in billion, except percentages March 31, 2018 amount ` 47.14 105.35 89.72 68.54 59.65 47.71 26.90 18.37 15.47 11.75 6.72 8.83 6.20 - - 28.28 ` 540.63 % 8.7% 19.5 16.6 12.7 11.0 8.8 5.0 3.4 2.9 2.2 1.2 1.6 1.1 - - 5.3 100.0% 1. 2. Includes home loans, automobile loans, commercial business loans, dealer financing and small ticket loans to small businesses, personal loans, credit cards, rural loans and loans against securities. Other industries primarily include textile, chemical and fertilizers, gems and jewellery, drugs and pharmaceuticals, FMCG, automobiles and developer financing. 3. All amounts have been rounded off to the nearest ` 10.0 million. The operating environment for Indian banks has remained challenging for the past few years particularly due to the stress in the Indian corporate sector. The Indian corporate sector has experienced a prolonged period of muted growth in sales and profits. Over the years, several challenges have impacted the sector including an elongation of working capital cycles and a high level of receivables, including from the government, significant challenges in project completion and cash flow generation due to policy changes, delays in approvals like clearances on environment and land, judicial decisions like the deallocation of coal mines, significant decline in global commodity prices in fiscal 2015 and fiscal 2016 and adjustments to recent structural reforms such as demonetisation and Goods & Services Tax. These challenges resulted in lower than projected cash flows and the progress in reducing leverage in the corporate sector remained slow. As a result, there has been a substantial increase in the level of additions to non-performing loans, including slippages from restructured loans, into non-performing status for the banking sector and the Bank. In fiscal 2018, the gross additions to NPAs amounted to ` 287.30 billion primarily due to addition to gross NPAs in the power sector of ` 53.66 billion, mining sector of ` 51.49 billion, services-non finance sector of ` 26.56 billion and food and beverages sector of ` 22.94 billion. The gross additions to non-performing loans includes the impact of revised framework for resolution of stressed assets issued by RBI in February 2018 which withdrew the schemes of SDR, change in ownership outside SDR and S4A resulting in classification of loans under these schemes, which were not implemented, as non-performing. In fiscal 2018, the Bank recovered/upgraded non-performing assets amounting to ` 81.07 billion and wrote-off/sold non-performing assets amounting to ` 91.12 billion. As a result, gross NPAs (net of write-offs) of the Bank increased from ` 425.52 billion at March 31, 2017 to ` 540.63 billion at March 31, 2018. Net NPAs increased from ` 254.51 billion at March 31, 2017 to ` 278.86 billion at March 31, 2018. The ratio of net NPAs to net customer assets decreased from 4.89% at March 31, 2017 to 4.77% at March 31, 2018. 127 At March 31, 2018, gross non-performing loans in the retail portfolio were 1.61% of gross retail loans compared to 1.51% at March 31, 2017 and net non-performing loans in the retail portfolio were 0.65% of net retail loans compared to 0.52% at March 31, 2017. The provision coverage ratio at March 31, 2018 including cumulative technical/prudential write-offs was 60.5% (March 31, 2017: 53.6%). Excluding cumulative technical/prudential write-offs, the provision coverage ratio was 47.7% (March 31, 2017: 40.2%). The gross outstanding loans to borrowers whose facilities have been restructured decreased from ` 45.48 billion at March 31, 2017 to ` 15.95 billion at March 31, 2018 primarily due to slippages of ` 22.84 billion from restructured loans to non-performing category. The net outstanding loans to borrowers whose facilities have been restructured decreased from ` 42.65 billion at March 31, 2017 to ` 15.53 billion at March 31, 2018. The aggregate non-fund based outstanding to borrowers whose loans were restructured was ` 3.96 billion at March 31, 2018 (March 31, 2017: ` 16.87 billion). The Bank had disclosed its fund-based exposure and outstanding non-fund based facilities internally rated below investment grade (excluding borrowers classified as non-performing or restructured) at March 31, 2016 to the iron and steel, mining, power, rigs and cement sectors and promoter entities internally rated below investment grade where the underlying was partly linked to these sectors, amounting to ` 440.65 billion. The aggregate fund based exposure and outstanding non-fund based facilities to companies that were internally rated below investment grade in the above sectors and promoter entities decreased from ` 440.65 billion at March 31, 2016 to ` 190.39 billion at March 31, 2017, which further decreased to ` 47.28 billion at March 31, 2018. The decrease during fiscal 2018 was on account of slippage of loans of ` 135.50 billion to non-performing category, a net reduction in exposure of ` 20.25 billion, exclusion of outstanding non-fund based facilities for borrowers classified as NPAs amounting to ` 12.34 billion and upgrade of ratings of loans of ` 0.17 billion, offset, in part, by a downgrade of ratings of loans of ` 25.16 billion. The total non-fund based outstanding to borrowers classified as non-performing was ` 29.80 billion at March 31, 2018. At March 31, 2018, the Bank had implemented S4A in five standard borrower accounts with an aggregate balance outstanding of ` 5.47 billion, comprising ` 2.87 billion of sustainable debt and ` 2.61 billion of unsustainable debt. Of these accounts, one account with an aggregate balance outstanding of ` 0.20 billion had been classified as a non- performing asset and two accounts with an aggregate balance outstanding of ` 0.94 billion had been classified as standard restructured at March 31, 2018. The aggregate non-fund based outstanding to these borrowers (excluding standard restructured accounts and accounts classified as NPAs) was ` 14.97 billion at March 31, 2018. Further, the Bank has implemented S4A in one NPA borrower account with an aggregate balance outstanding of ` 2.27 billion, comprising ` 1.33 billion of sustainable debt (upgraded to standard) and ` 0.94 billion of unsustainable debt. The outstanding loans where change of ownership scheme was invoked for projects under implementation were ` 2.35 billion at March 31, 2018 (March 31, 2017: Nil). In fiscal 2016, RBI had issued guidelines permitting banks to refinance long-term project loans to infrastructure and other core industries at periodic intervals (5/25 scheme) without such refinancing being considered as restructuring. Accordingly, the portfolio of such loans for which refinancing under the 5/25 scheme had been implemented was ` 60.59 billion at March 31, 2018 out of which ` 21.20 billion was classified as performing loans. Of the loans of ` 21.20 billion, about ` 7.52 billion were loans to companies which were internally rated below investment grade in the key sectors mentioned above. The Bank became aware in March 2018 of an anonymous whistleblower complaint alleging incorrect asset classifications stemming from claimed irregular transactions in borrower accounts, incorrect accounting of interest income and non- performing asset recoveries as fees and overvaluation of collateral securing corporate loans. The allegations related to fiscal 2016 and earlier. The Bank conducted an internal enquiry of these allegations under its Whistle Blower Policy, which was carried out by the Head of the Internal Audit Group and supervised directly by the Audit Committee, without the involvement of any other member of the Bank’s senior management. The enquiry resulted in an Interim Report that was reviewed in detail by the Audit Committee and the statutory auditors before the finalisation of the accounts for the year ended March 31, 2018 and has been submitted to the RBI. In certain accounts, transactions were observed that may have delayed the classification of the account as non-performing in earlier years. Further, the Bank has reviewed certain additional accounts for any similar irregular transactions as alleged in the complaint. Based on the Interim Report 128 ManageMent’s Discussion & analysisannual report 2017-2018and review undertaken for additional loan accounts, the Bank has concluded that the likely impact of these allegations is not material to the financial statements for the year ended March 31, 2018 or earlier periods reported in this annual report. The Bank has, since April 2016, implemented enhanced internal controls, relating to review of loan accounts which satisfy certain threshold parameters, primarily relating to size, credit rating and days-past-due, for identification of non-performing assets. The Bank also assessed and concluded that internal control over financial reporting was found to be effective as at March 31, 2018. The Bank, at the direction of the Audit Committee and with the assistance of external counsel, is continuing to investigate all of the allegations made by the whistleblower. In addition, as a large and internationally active bank with operations and listing of its equity and debt instruments in multiple jurisdictions, the Bank is regularly engaged with regulators, including the United States Securities and Exchange Commission (“SEC”), on a range of matters, including regarding the March 2018 complaint. Even before this complaint, the Bank has been responding to requests for information from the SEC investigatory staff regarding an enquiry relating to the timing and amount of the Bank’s loan impairment provisions taken under U.S. GAAP. The Bank evaluates loans for impairment under U.S. GAAP for the purpose of preparing the annual footnote reconciling the Bank’s Indian GAAP financial statements to U.S. GAAP. The Bank has voluntarily complied with all requests of the U.S. SEC investigatory staff for information and interviews related to the Bank’s U.S. GAAP loan impairment process. 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. The standalone segmental report for fiscal 2018, 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 RBI guidelines on the Basel III 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 RBI guidelines for the Bank. • treasury includes the entire investment portfolio of the Bank. • other Banking includes 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 requirement and directed lending requirements. Retail banking segment The profit before tax of the segment increased by 32.6% from ` 53.85 billion in fiscal 2017 to ` 71.41 billion in fiscal 2018, primarily due to increase in net interest income and non-interest income. Net interest income increased by 18.7% from ` 113.27 billion in fiscal 2017 to ` 134.48 billion in fiscal 2018, primarily due to growth in the average loan portfolio and an increase in average CASA deposits. Non-interest income increased by 14.2% from ` 57.53 billion in fiscal 2017 to ` 65.72 billion in fiscal 2018, primarily due to increase in fees from credit card portfolio, transaction banking fees, third party product distribution fees and lending linked fees. Non-interest expenses increased by 8.1% from ` 112.26 billion in fiscal 2017 to ` 121.34 billion in fiscal 2018, primarily due to increase in employee cost and other administrative expenses reflecting increase in business volume. Provisions (net of write-back) increased by 58.8% from ` 4.69 billion in fiscal 2017 to ` 7.45 billion in fiscal 2018, primarily due to increase in provisions on retail products like auto loans, home loans, personal loans and credit cards. 129 Wholesale banking segment The loss (before tax) of the segment increased by 11.4% from ` 74.34 billion in fiscal 2017 to ` 82.81 billion in fiscal 2018, primarily due to decrease in net interest income. Net interest income decreased by 7.2% from ` 65.71 billion in fiscal 2017 to ` 60.97 billion in fiscal 2018, primarily due to non-accrual of interest income on loans classified as non-performing. Non-interest income increased marginally by 1.7% from ` 35.30 billion in fiscal 2017 to ` 35.91 billion in fiscal 2018. On February 12, 2018, RBI issued a revised framework for resolution of stressed assets, which superceded the existing guidelines on SDR, change in ownership outside SDR (except projects under implementation) and S4A with immediate effect. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were withdrawn and the accounts were classified as per the extant RBI norms on asset classification during fiscal 2018. Provisions during fiscal 2018 remained elevated at ` 146.68 billion as compared to ` 142.94 billion in fiscal 2017, primarily due to higher additions to NPA, higher provision on certain cases referred to NCLT under the provisions of the Insolvency and Bankruptcy Code, 2016 (IBC) and further provisions on loans classified as NPAs in earlier years. Treasury segment The profit before tax of the segment decreased from ` 126.71 billion in fiscal 2017 to ` 81.14 billion in fiscal 2018, primarily due to decrease in realised gain on government securities and increase in provisions during fiscal 2018 as compared to fiscal 2017. Non-interest income decreased by 29.3% from ` 101.43 billion in fiscal 2017 to ` 71.70 billion in fiscal 2018, primarily due to decrease in realised gain on government securities and dividend from subsidiaries during fiscal 2018. Non-interest income of fiscal 2017 included gain on sale of equity shares of ICICI Prudential Life Insurance Company Limited of ` 56.82 billion (before tax and after IPO expenses) through IPO. Non-interest income of fiscal 2018 included gain on sale of equity shares of ICICI Lombard General Insurance Company Limited of ` 20.12 billion (before tax and after IPO expenses) and ICICI Securities Limited of ` 33.20 billion (before tax and after IPO expenses) through IPO. Provisions increased from ` 4.17 billion in fiscal 2017 to ` 18.87 billion in fiscal 2018, primarily due to higher provisions on equity shares, preference shares, bonds and debentures acquired on loan conversion cases under SDR/S4A schemes. Other banking segment Profit before tax of other banking segment decreased from ` 6.57 billion in fiscal 2017 to ` 4.60 billion in fiscal 2018, primarily due to decrease in net interest income. Net interest income decreased from ` 6.79 billion in fiscal 2017 to ` 4.30 billion in fiscal 2018, primarily due to decrease in interest on income tax refund from ` 4.51 billion in fiscal 2017 to ` 2.63 billion in fiscal 2018. consoliDateD Financials as Per inDian gaaP The consolidated profit after tax decreased by 17.9% from ` 101.88 billion in fiscal 2017 to ` 77.12 billion in fiscal 2018 primarily due to a decrease in the profit of ICICI Bank, ICICI Securities Primary Dealership Limited, ICICI Home Finance Company Limited and ICICI Bank UK PLC, offset, in part, by an increase in profit of ICICI Bank Canada, ICICI Lombard General Insurance Company Limited, ICICI Securities Limited and ICICI Prudential Asset Management Company Limited. At March 31, 2018, the consolidated Tier-1 capital adequacy ratio was 15.56% as against the current requirement of 8.975% and total consolidated capital adequacy ratio was 17.90% as against the current requirement of 10.975%. ICICI Prudential Life Insurance Company Limited market share was 11.8% in fiscal 2018 based on new business written (on a retail weighted new business premium basis) according to the Life Insurance Council. The Value of New Business (VNB) margin was 16.5% for fiscal 2018 compared to 10.1% for fiscal 2017. The VNB increased from ` 6.66 billion for fiscal 2017 to ` 12.86 billion for fiscal 2018. Embedded Value of ICICI Prudential Life Insurance Company Limited was ` 187.88 billion at March 31, 2018 compared to ` 161.84 billion at March 31, 2017. Net premium earned increased from 130 ManageMent’s Discussion & analysisannual report 2017-2018` 221.55 billion in fiscal 2017 to ` 268.11 billion in fiscal 2018. The profit after tax decreased from ` 16.82 billion in fiscal 2017 to ` 16.20 billion in fiscal 2018 primarily due to an increase in transfer to linked funds and provision for policyholder liabilities, offset, in part, by an increase in net earned premium. ICICI Lombard General Insurance Company Limited achieved, an overall market share of 8.2% during fiscal 2018 on the basis of gross direct premium according to the General Insurance Council of India. Net earned premium increased by 12.1% from ` 61.64 billion in fiscal 2017 to ` 69.12 billion in fiscal 2018 primarily due to an increase in health and motor insurance business. The profit after tax increased from ` 7.02 billion in fiscal 2017 to ` 8.62 billion in fiscal 2018 primarily due to an increase in net earned premium, offset, in part, by a decrease in commission income and an increase in claims and benefits paid. The profit after tax of ICICI Prudential Asset Management Company increased from ` 4.80 billion in fiscal 2017 to ` 6.26 billion in fiscal 2018 primarily due to an increase in fee income, offset, in part, by an increase in administrative expenses and staff cost. Average assets under management (AUM) for mutual funds increased from ` 2,214.79 billion in fiscal 2017 to ` 2,963.42 billion in fiscal 2018. Average AUM for equity schemes increased from ` 777.15 billion in fiscal 2017 to ` 1,327.30 billion in fiscal 2018. The consolidated profit after tax of ICICI Securities Limited and its subsidiaries increased from ` 3.39 billion in fiscal 2017 to ` 5.58 billion in fiscal 2018 primarily due to an increase in fee income, offset, in part, by an increase in staff cost and other administrative expenses. The profit after tax of ICICI Securities Primary Dealership decreased from ` 4.12 billion in fiscal 2017 to ` 1.12 billion in fiscal 2018 primarily due to a decrease in trading gains. Trading gains decreased primarily due to an increase in yield on government securities. During fiscal 2018, yield on 10-year government securities increased by 74 basis points as compared to a decrease of 80 basis points during fiscal 2017. The profit after tax of ICICI Home Finance Company decreased from ` 1.83 billion in fiscal 2017 to ` 0.64 billion in fiscal 2018 primarily due to an increase in provision on loans and investments and a decrease in fee income and net interest income. Net NPAs increased from ` 0.66 billion at March 31, 2017 to ` 2.04 billion at March 31, 2018. The profit after tax of ICICI Venture Fund Management Company Limited increased from ` 0.09 billion in fiscal 2017 to ` 0.11 billion in fiscal 2018. ICICI Bank Canada made a profit after tax of CAD 44.2 million (` 2.22 billion) in fiscal 2018 compared to a loss of CAD 33.0 million (` 1.69 billion) in fiscal 2017. Loss in fiscal 2017 was primarily due to higher provisions on loans. Net NPAs decreased from CAD 10.9 million (` 0.53 billion) at March 31, 2017 to Nil at March 31, 2018. Loss of ICICI Bank UK PLC increased from USD 16.1 million (` 1.08 billion) in fiscal 2017 to USD 25.5 million (` 1.65 billion) in fiscal 2018 primarily due to higher specific provisions on loans. Net NPAs decreased from USD 225.6 million (` 14.63 billion) at March 31, 2017 to USD 194.0 million (` 12.64 billion) at March 31, 2018. The consolidated assets of the Bank and its subsidiaries and other consolidating entities increased from ` 9,857.25 billion at March 31, 2017 to ` 11,242.81 billion at March 31, 2018. Consolidated advances increased from ` 5,153.17 billion at March 31, 2017 to ` 5,668.54 billion at March 31, 2018. 131 The following table sets forth, for the periods and at the dates indicated, the profit/(loss) and total assets of our principal subsidiaries. Profit after tax total assets1 ` in billion Company Fiscal 2017 Fiscal 2018 ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Securities Limited (consolidated) ICICI Securities Primary Dealership Limited ICICI Home Finance Company Limited ICICI Venture Funds Management Company Limited ICICI Bank Canada ICICI Bank UK PLC ` 16.82 7.02 4.80 3.39 4.12 1.83 0.09 (1.69) (1.08) ` 16.20 8.62 6.26 5.58 1.12 0.64 0.11 2.22 (1.65) At March 31, 2017 ` 1,247.43 233.51 9.97 20.47 128.19 92.82 3.88 308.26 226.38 at March 31, 2018 ` 1,417.24 297.41 11.29 28.49 172.10 100.60 3.31 319.93 253.96 1. Total assets are as per the classification used in the consolidated financial statements and hence the total assets as per the subsidiary's financial statements may differ. 2. See also “Financials- Statement pursuant to Section 129 of the Companies Act, 2013”. 3. All amounts have been rounded off to the nearest ` 10.0 million. Migration to indian accounting standards (ind as) Banks in India currently prepare their financial statements as per the guidelines issued by RBI, the Accounting Standards notified under section 133 of the Companies Act, 2013 and generally accepted accounting principles in India (Indian GAAP). In January 2016, the Ministry of Corporate Affairs issued the roadmap for implementation of new Indian Accounting Standards (Ind AS), converged with International Financial Reporting Standards (IFRS), for scheduled commercial banks, insurance companies and non-banking financial companies (NBFCs). The roadmap required banks to migrate to Ind AS for accounting periods beginning from April 1, 2018 onwards, with comparatives for the periods ending March 31, 2018 or thereafter. In April 2018, the RBI through its statement on Developmental and Regulatory Policies has deferred the implementation of Ind AS by one year primarily due to pending legislative amendments in the Third Schedule to Banking Regulation Act, 1949 and level of preparedness of many banks. The key impact areas for the Bank include accounting of financial instruments, employee stock options, consolidation accounting, deferred tax and implementation of technology systems. Of these, the accounting of financial assets differs significantly from Indian GAAP in many areas, which include classification, fair valuation, expected credit losses, effective interest rate accounting and derecognition. The Bank’s Ind AS implementation project also focuses on technical evaluation of GAAP differences, selection of accounting policies and choices, implementation of system changes, business impact analysis and re-orientation of business practices in the Bank through regular trainings and workshops. The Bank is in the process of formulating processes and methodologies for specific areas relating to Ind AS such as classification and measurement of financial instruments, effective interest rate accounting and measurement of expected credit loss allowance. Further, the Bank is in the process of implementing a centralised system solution to cater to Ind AS specific accounting requirements. For implementation of Ind AS, the Bank has formed a Steering Committee which meets regularly to supervise the progress of the project. An update on the implementation status is also submitted to the Audit Committee at quarterly intervals. 132 ManageMent’s Discussion & analysisannual report 2017-2018Key Financial indicators: last 10 years ) s e g a t n e c r e p d n a a t a d e r a h s r e p t p e c x e , n o i l l i b n i ` ( 8 1 0 2 7 1 0 2 6 1 0 2 5 1 0 2 4 1 0 2 3 1 0 2 2 1 0 2 1 1 0 2 0 1 0 2 9 0 0 2 5 7 . 9 0 6 , 5 9 3 . 0 0 9 , 4 6 2 . 4 1 2 , 4 3 6 . 5 1 6 , 3 4 1 . 9 1 3 , 3 4 1 . 6 2 9 , 2 0 0 . 5 5 5 , 2 2 0 . 6 5 2 , 2 7 1 . 0 2 0 , 2 8 4 . 3 8 1 , 2 5 9 . 3 2 1 , 5 2 3 . 2 4 6 , 4 4 6 . 2 5 3 , 4 2 2 . 5 7 8 , 3 3 0 . 7 8 3 , 3 9 4 . 2 0 9 , 2 8 2 . 7 3 5 , 2 6 6 . 3 6 1 , 2 6 0 . 2 1 8 , 1 1 1 . 3 8 1 , 2 s t i s o p e d l a t o T s e c n a v d a l a t o T 9 5 . 1 5 0 , 1 1 5 . 9 9 9 6 3 . 7 9 8 9 2 . 4 0 8 3 1 . 2 3 7 6 0 . 7 6 6 5 0 . 4 0 6 1 9 . 0 5 5 8 1 . 6 1 5 3 3 . 5 9 4 s e v r e s e r & l a t i p a c y t i u q E 9 8 . 1 9 7 , 8 1 9 . 7 1 7 , 7 5 9 . 6 0 2 , 7 9 2 . 1 6 4 , 6 2 4 . 6 4 9 , 5 5 9 . 7 6 3 , 5 9 6 . 0 9 8 , 4 4 3 . 2 6 0 , 4 0 0 . 4 3 6 , 3 1 0 . 3 9 7 , 3 s t e s s a l a t o T 2 % 4 . 8 1 2 % 4 . 7 1 2 % 6 . 6 1 2 % 0 . 7 1 2 % 7 . 7 1 1 % 7 . 8 1 1 % 5 . 8 1 1 % 5 . 9 1 1 % 4 . 9 1 1 % 5 . 5 1 o i t a r y c a u q e d a l a t i p a c l a t o T 6 2 . 0 3 2 7 3 . 7 1 2 4 2 . 2 1 2 0 4 . 0 9 1 5 7 . 4 6 1 6 6 . 8 3 1 4 3 . 7 0 1 7 1 . 0 9 4 1 . 1 8 7 6 . 3 8 e m o c n i t s e r e t n i t e N % 3 2 . 3 % 5 2 . 3 % 9 4 . 3 % 8 4 . 3 % 3 3 . 3 % 1 1 . 3 % 3 7 . 2 % 4 6 . 2 % 9 4 . 2 % 3 4 . 2 i n g r a m t s e r e t n i t e N 7 7 . 7 6 1 0 . 8 9 6 2 . 7 9 5 7 . 1 1 1 0 1 . 8 9 5 2 . 3 8 5 6 . 4 6 1 5 . 1 5 5 2 . 0 4 8 5 . 7 3 x a t r e t f a t i f o r P 6 5 . 0 1 1 3 . 5 1 3 2 . 5 1 6 5 . 7 1 5 4 . 5 1 3 1 . 3 1 0 2 . 0 1 3 2 . 8 6 4 . 0 1 5 2 . 5 1 4 1 . 5 1 9 3 . 7 1 9 3 . 5 1 8 0 . 3 1 7 1 . 0 1 9 1 . 8 7 5 . 6 5 5 . 6 4 1 . 6 3 1 . 6 4 , 3 ) d e t u l i D ( e r a h s r e p s g n n r a E i 4 , 3 ) c i s a B ( e r a h s r e p s g n n r a E i % 6 . 6 % 3 . 0 1 % 3 . 1 1 % 3 . 4 1 % 7 . 3 1 % 9 . 2 1 % 1 . 1 1 % 6 . 9 % 9 . 7 % 7 . 7 y t i u q e e g a r e v a n o n r u t e R 0 5 . 1 0 5 . 2 0 0 . 5 0 0 . 5 0 6 . 4 0 0 . 4 0 3 . 3 0 8 . 2 0 4 . 2 0 2 . 2 3 e r a h s r e p d n e d v D i i e c a f a g n i v a h s e r a h s y t i u q e e v i f o t n i 0 1 ` f o e r a h s y t i u q e e n o f o n o i s i v i d - b u s e h t d e v o r p p a k n a B e h t l f o s r e d o h e r a h s e h t , 5 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u D . d e t n e s e r p s d o i r e p e h t f o h c a e r o f n o i s i v i d - b u s f o t c e f f e e h t s t c e l f e r n o i t a m r o f n i e r a h s r e P . h c a e 2 ` f o e u a v l 0 1 y r e v e r o f h c a e 2 ` f o e r a h s y t i u q e s u n o b ) e n O ( 1 . e . i , 0 1 : 1 f o n o i t r o p o r p e h t n i , s e r a h s s u n o b d e u s s i k n a B e h t , 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u D s d o i r e p e h t f o h c a e r o f e u s s i s u n o b f o t c e f f e e h t s t c e l f e r n o i t a m r o f n i e r a h s r e P . ) S D A g n i y l r e d n u s e r a h s i g n d u l c n i ( l d e h s e r a h s y t i u q e p u - d a p i y l l u f ) n e T ( . d e t n e s e r p . k r o w e m a r f I I . k r o w e m a r f I I I l l e s a B r e p s a d e t a u c l a c n e e b s a h o i t a r l l e s a B r e p s a d e t a u c l a c n e e b s a h o i t a r y c a u q e d a l a t i p a c l a t o T y c a u q e d a l a t i p a c l a t o T . 1 . 2 . 3 . 4 133 Standalone Financial StatementS 134 annual report 2017-2018independent auditorS’ report To the members of ICICI Bank Limited Report on the audit of standalone financial statements We have audited the accompanying standalone financial statements of ICICI Bank Limited (the ‘Bank’), which comprise the Balance Sheet as at 31 March 2018, the Profit and Loss Account, the Cash Flow Statement for the year then ended, and notes to the standalone financial statements, including a summary of the significant accounting policies and other explanatory information in which are incorporated the returns for the year ended on that date audited by the branch auditors of the Bank’s branches at Singapore, Bahrain, Hong Kong, Dubai, Qatar, China, South Africa, New York and Sri Lanka. Management's responsibility for the standalone financial statements The Bank's Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (the ‘Act’) with respect to the preparation of these standalone financial statements that give a true and fair view of the state of affairs, profit / loss and cash flows of the Bank in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Act, provisions of Section 29 of the Banking Regulation Act, 1949 and the circulars, guidelines and directions issued by Reserve Bank of India (‘RBI’) from time to time. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Bank and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. In preparing the standalone financial statements, management is responsible for assessing the Bank’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Bank or to cease operations, or has no realistic alternative but to do so. Auditor's responsibility Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit of standalone financial statements of the Bank including its branches in accordance with the Standards on Auditing (the ‘Standards’) specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the standalone financial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Bank's preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Bank's Directors, as well as evaluating the overall presentation of the standalone financial statements. We are also responsible to conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may 135 independent auditorS’ report cast significant doubt on the Bank’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the standalone financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause an entity to cease to continue as a going concern. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their report referred to in the Other Matter paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Banking Regulation Act, 1949 as well as the Act 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, of the state of affairs of the Bank as at 31 March 2018, and its profit and its cash flows for the year ended on that date. Other matter We did not audit the financial statements of Singapore, Bahrain, Hong Kong, Dubai, Qatar, China, South Africa, New York and Sri Lanka branches included in the standalone financial statements of the Bank, whose financial statements reflect total assets of Rs. 1,352,287 million as at 31 March 2018, total revenues of Rs. 53,427 million for the year ended 31 March 2018 and net cash inflow amounting to Rs. 53,283 million for the year ended 31 March 2018. The financial statements of these branches have been audited by other auditors, duly qualified to act as auditors in the country of incorporation of the said branches, whose reports have been furnished to us by Management of the Bank and our opinion, in so far as it relates to the amounts and disclosures included in respect of these branches, is based solely on the report of such other auditors. Our opinion is not modified in respect of this matter. Report on other legal and regulatory requirements The Balance Sheet and the Profit and Loss Account have been drawn up in accordance with the provisions of Section 29 of the Banking Regulation Act, 1949 read with Section 133 of the Act. As required by sub-section (3) of Section 30 of the Banking Regulation Act, 1949, 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 purpose of our audit and have found them to be satisfactory; (b) The transactions of the Bank, which have come to our notice, have been within the powers of the Bank; and (c) Since the key operations of the Bank are automated with the key applications integrated to the core banking systems, the audit is carried out centrally as all the necessary records and data required for the purposes of our audit are available therein. However, during the course of our audit we have visited 106 branches. As stated above, returns from branches were received duly audited by other auditors and were found adequate for the purpose of our audit. Further, as required by Section 143 (3) of the Act, we report that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purpose of our audit; (b) In our opinion, proper books of account as required by law have been kept by the Bank so far as it 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; 136 annual report 2017-2018independent auditorS’ report (c) The reports on the accounts of the branch offices of the Bank audited under Section 143 (8) of the Act by the branch auditors have been sent to us and have been properly dealt with by us in preparing this report; (d) The Balance Sheet, the Profit and Loss Account and the Cash Flow Statement dealt with by this report are in agreement with the books of account and with the returns received from the branches not visited by us; (e) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, to the extent they are not inconsistent with the accounting policies prescribed by RBI; (f) On the basis of the written representations received from the directors as on 31 March 2018 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164 (2) of the Act; (g) With respect to the adequacy of the internal financial controls with reference to the standalone financial statements of the Bank and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure A’; and (h) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us: (i) The Bank has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 40 to the standalone financial statements; (ii) The Bank has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 40 to the standalone financial statements; (iii) There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Bank; and (iv) The disclosures required on holdings as well as dealing in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016 as envisaged in notification G.S.R. 308(E) dated 30 March 2017 issued by the Ministry of Corporate Affairs is not applicable to the Bank. Mumbai 7 May 2018 For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W–100022 Venkataramanan Vishwanath Partner Membership No:113156 137 anneXure a to the Independent Auditors’ Report of even date on the Standalone Financial Statements of ICICI Bank Limited Report on the Internal Financial Controls under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 1. We have audited the internal financial controls over financial reporting of ICICI Bank Limited (the ‘Bank’) as at 31 March 2018 in conjunction with our audit of the standalone financial statements of the Bank for the year ended on that date. Management’s responsibility for internal financial controls 2. The Bank’s Board of Directors is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the ‘Guidance Note’) issued by the Institute of Chartered Accountants of India (the ‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Bank’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and timely preparation of reliable financial information, as required under the Companies Act, 2013 (the ‘Act’). Auditor’s responsibility 3. Our responsibility is to express an opinion on the Bank’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note and the Standards on Auditing (the ‘Standards’), issued by the ICAI and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. 4. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. 5. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in the Other Matter paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Bank’s internal financial controls system over financial reporting. Meaning of internal financial controls over financial reporting 6. A bank's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A bank's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the bank; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the bank are being made only in accordance with authorizations of management and directors of the bank; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the bank's assets that could have a material effect on the financial statements. 138 annual report 2017-2018anneXure a to the Independent Auditors’ Report of even date on the Standalone Financial Statements of ICICI Bank Limited Inherent limitations of internal financial controls over financial reporting 7. Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion 8. In our opinion, the Bank has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Bank considering the essential components of internal control stated in the Guidance Note issued by the ICAI. Other matter 9. Our aforesaid report under Section 143 (3) (i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to overseas branches, is based on the corresponding reports of the branch auditors. Our opinion is not modified in respect of this matter. Mumbai 7 May 2018 For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W–100022 Venkataramanan Vishwanath Partner Membership No:113156 139 Financial Statements of ICICI Bank Limited Balance SHeet at March 31, 2018 Schedule At 31.03.2018 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 TOTAL ASSETS Contingent liabilities Bills for collection Significant accounting policies and notes to accounts 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 1 2 3 4 5 6 7 8 9 10 11 12 17 & 18 ` in ‘000s At 31.03.2017 11,651,071 62,562 987,797,070 4,900,390,648 1,475,561,521 342,451,588 7,717,914,460 317,024,051 440,106,563 1,615,065,454 4,642,320,842 78,052,072 625,345,478 7,717,914,460 12,858,100 55,699 1,038,675,565 5,609,752,085 1,828,586,206 301,963,958 8,791,891,613 331,023,817 510,669,991 2,029,941,808 5,123,952,856 79,035,149 717,267,992 8,791,891,613 12,892,440,018 285,883,604 10,309,937,127 226,231,852 For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Director DIN-00043268 Chanda Kochhar Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Ajay Mittal Chief Accountant 140 annual report 2017-2018Financial Statements of ICICI Bank Limited proFit and loSS account for the year ended March 31, 2018 I. INCOME Interest earned Other income TOTAL INCOME II. EXPENDITURE Interest expended Operating expenses Provisions and contingencies (refer note 18.40) TOTAL EXPENDITURE III. 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 Revenue and other reserves Transfer to Special Reserve Dividend paid during the year Corporate dividend tax paid during the year Balance carried over to balance sheet TOTAL Significant accounting policies and notes to accounts Earnings per share1 (refer note 18.1) Basic (`) Diluted (`) Face value per share (`) Schedule 13 14 15 16 17 & 18 Year ended 31.03.2018 549,658,922 174,196,326 723,855,248 ` in ‘000s Year ended 31.03.2017 541,562,793 195,044,831 736,607,624 319,400,463 157,039,436 179,641,120 656,081,019 324,189,585 147,550,576 166,856,557 638,596,718 67,774,229 187,449,376 255,223,605 98,010,906 171,321,884 269,332,790 16,944,000 10,541 25,654,600 - 7,000,000 6,000,000 14,574,649 87,261 184,952,554 255,223,605 24,503,000 9,824 52,933,000 - - 4,500,000 9,456 (71,866) 187,449,376 269,332,790 10.56 10.46 2.00 15.31 15.25 2.00 The Schedules referred to above form an integral part of the Profit and Loss Account. 1. Pursuant to the issue of bonus shares by the Bank during the year ended March 31, 2018, earnings per share has been restated for the year ended March 31, 2017. As per our Report of even date. For and on behalf of the Board of Directors For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Director DIN-00043268 Chanda Kochhar Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Ajay Mittal Chief Accountant 141 Financial Statements of ICICI Bank Limited caSH Flow Statement for the year ended March 31, 2018 Cash flow from/(used in) operating activities Profit before taxes Adjustments for: Depreciation and amortisation Net (appreciation)/depreciation on investments1 Provision in respect of non-performing and other assets General provision for standard assets Provision for contingencies & others Income from subsidiaries, joint ventures and consolidated entities (Profit)/loss on sale of fixed assets Adjustments for: (Increase)/decrease in investments (Increase)/decrease in advances 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/(used in) operating activities (i)+(ii)+(iii) Cash flow from/(used in) investing activities Redemption/sale from/(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 flow from/(used in) investing activities Cash flow from/(used in) financing activities Proceeds from issue of share capital (including ESOPs) Proceeds from long-term borrowings Repayment of long-term borrowings Net proceeds/(repayment) of short-term borrowings Dividend and dividend tax paid Net cash flow from/(used in) financing activities Effect of exchange fluctuation on translation reserve Net increase/(decrease) in cash and cash equivalents (A) + (B) + (C) + (D) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year (i) (ii) (iii) (A) (B) (C) (D) Year ended 31.03.2018 ` in ‘000s Year ended 31.03.2017 74,345,555 112,786,097 8,926,673 (24,564,830) 142,445,162 2,771,076 9,080,155 (12,140,645) (38,027) 200,825,119 23,193,089 (648,694,293) 709,361,437 (66,412,242) (52,290,284) (34,842,293) (32,946,347) 133,036,479 60,860,496 12,140,645 (8,240,963) 219,081 (454,667,276) (389,688,017) 3,939,495 339,671,083 (329,302,704) 341,537,066 (14,661,910) 341,183,030 31,702 84,563,194 757,130,614 841,693,808 8,818,212 (65,120,985) 147,343,302 (3,392,346) 2,042,186 (14,190,348) (21,151) 188,264,967 325,906 (475,008,889) 686,133,562 (17,190,477) 56,675,413 250,935,515 (46,972,358) 392,228,124 58,779,642 14,190,348 (7,832,191) 116,323 5,200,126 70,454,248 1,772,579 312,175,179 (411,326,836) (174,602,302) (31,806,516) (303,787,896) (451,281) 158,443,195 598,687,419 757,130,614 1. For the year ended March 31, 2018, includes gain on sale of a part of equity investment in the subsidiaries, ICICI Lombard General Insurance Company Limited and ICICI Securities Limited, through initial public offers (IPO) (year ended March 31, 2017: gain on sale of a part of equity investment in a subsidiary, ICICI Prudential Life Insurance Company Limited, through IPO). 2. Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short notice. As per our Report of even date. For and on behalf of the Board of Directors For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Director DIN-00043268 Chanda Kochhar Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 142 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Ajay Mittal Chief Accountant annual report 2017-2018Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet SCHEDULE 1 - CAPITAL Authorised capital 10,000,000,000 equity shares of ` 2 each (March 31, 2017: 6,375,000,000 equity shares of ` 2 each)1 15,000,000 shares of ` 100 each (March 31, 2017: 15,000,000 shares of ` 100 each)2 350 preference shares of ` 10.0 million each (March 31, 2017: 350 preference shares of ` 10.0 million each)3 Equity share capital Issued, subscribed and paid-up capital 5,824,476,135 equity shares of ` 2 each (March 31, 2017: 5,814,768,430 equity shares) Add: 603,514,6414 equity shares of ` 2 each (March 31, 2017: 9,707,705 equity shares) issued during the year Add: 266,089 equity shares of ` 10 each forfeited (March 31, 2017: 266,089 equity shares) TOTAL CAPITAL At 31.03.2018 ` in ‘000s At 31.03.2017 20,000,000 1,500,000 12,750,000 1,500,000 3,500,000 3,500,000 11,648,952 11,629,537 1,207,029 12,855,981 2,119 12,858,100 19,415 11,648,952 2,119 11,651,071 1. 2. 3. 4. 5. Pursuant to the approval of shareholders, the Bank has increased its authorised share capital during the year ended March 31, 2018. 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 dated March 30, 2010, the issued and paid-up preference shares are grouped under Schedule 4 - 'Borrowings'. Represents 582,984,544 equity shares issued as bonus shares pursuant to approval by the shareholders of the Bank through postal ballot on June 12, 2017 and 20,530,097 equity shares (year ended March 31, 2017: 9,707,705 equity shares) issued pursuant to exercise of employee stock options during the year ended March 31, 2018. Each equity share of the Bank with face value of ` 10 was sub-divided into five equity shares with face value of ` 2 each on December 5, 2014. 143 Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) SCHEDULE 2 - RESERVES AND SURPLUS I. Statutory reserve Opening balance Additions during the year 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 year Closing balance V. Capital reserve Opening balance Additions during the year3 Deductions during the year Closing balance VI. Foreign currency translation reserve Opening balance Additions during the year Deductions during the year Closing balance VII. Revaluation reserve (refer note 18.34) Opening balance Additions during the year4 Deductions during the year5 Closing balance VIII. Reserve fund Opening balance Additions during the year6 Deductions during the year Closing balance IX. Revenue and other reserves Opening balance Additions during the year Deductions during the year Closing balance X. Balance in profit and loss account7 TOTAL RESERVES AND SURPLUS 1. Represents amount on account of exercise of employee stock options. 144 At 31.03.2018 ` in ‘000s At 31.03.2017 212,024,519 16,944,000 - 228,968,519 83,790,000 6,000,000 - 89,790,000 322,970,033 3,905,298 (1,165,969) 325,709,362 - - - - 187,521,519 24,503,000 - 212,024,519 79,290,000 4,500,000 - 83,790,000 321,212,411 1,757,622 - 322,970,033 - - - - 102,607,125 25,654,600 - 128,261,725 49,674,125 52,933,000 - 102,607,125 16,531,658 31,702 - 16,563,360 30,421,420 249,101 (638,616) 30,031,905 55,858 10,542 - 66,400 31,947,081 7,638,615 - 39,585,696 179,698,598 1,038,675,565 16,982,939 - (451,281) 16,531,658 28,174,747 2,760,256 (513,583) 30,421,420 46,034 9,824 - 55,858 31,433,498 513,583 - 31,947,081 187,449,376 987,797,070 annual report 2017-2018Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) 2. 3. 4. 5. 6. 7. Represents amount utilised on account of issuance of bonus shares during the year ended March 31, 2018. Includes appropriations made for profit on sale of investments in held-to-maturity category, net of taxes and transfer to Statutory Reserve and profit on sale of land and buildings, net of taxes and transfer to Statutory Reserve. Represents gain on revaluation of premises carried out by the Bank. Represents amount transferred from Revaluation Reserve to General Reserve on account of incremental depreciation charge on revaluation amounting to ` 572.4 million (year ended March 31, 2017: ` 494.9 million) and revaluation surplus on assets sold amounting to ` 66.2 million (year ended March 31, 2017: ` 18.7 million) for the year ended March 31, 2018. Includes appropriations made to Reserve Fund in accordance with regulations applicable to Sri Lanka branch. Includes deduction amounting to ` 5,254.0 million as provision for frauds on non-retail accounts, which will be reversed and recognised through profit and loss account in the subsequent quarters of the next financial year as permitted by RBI. Refer note 18.43 - Details of provisioning pertaining to fraud accounts. SCHEDULE 3 - DEPOSITS A. I. Demand deposits From banks i) ii) From others Savings bank deposits II. III. Term deposits i) ii) From banks From others TOTAL DEPOSITS B. I. Deposits of branches in India II. Deposits of branches outside India TOTAL DEPOSITS At 31.03.2018 ` in ‘000s At 31.03.2017 66,198,901 823,383,452 2,009,670,527 52,925,544 696,908,936 1,718,384,859 115,526,501 2,594,972,704 5,609,752,085 97,676,104 2,334,495,205 4,900,390,648 5,560,172,442 49,579,643 5,609,752,085 4,831,184,802 69,205,846 4,900,390,648 145 Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) SCHEDULE 4 - BORROWINGS I. Reserve Bank of India Borrowings in India i) 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) v) Application money-bonds vi) Capital instruments a) b) c) d) Innovative Perpetual Debt Instruments (IPDI) (qualifying as additional Tier 1 capital) Hybrid debt capital instruments issued as bonds/debentures (qualifying as Tier 2 capital) Redeemable Non-Cumulative Preference Shares (RNCPS) (350 RNCPS of ` 10.0 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 2 capital) TOTAL BORROWINGS IN INDIA II. Borrowings outside India i) Capital instruments Hybrid debt capital instruments issued as bonds/debentures (qualifying as Tier 2 capital) ii) Bonds and notes iii) Other borrowings TOTAL BORROWINGS OUTSIDE INDIA TOTAL BORROWINGS At 31.03.2018 ` in ‘000s At 31.03.2017 115,920,000 26,811,250 - 6,485,000 - 228,142,451 - 103,500,002 209,052,250 - 188,734,247 - 94,800,000 39,430,000 84,035,112 84,982,344 3,500,000 3,500,000 136,007,107 898,268,170 159,625,635 586,257,228 - 414,847,916 515,470,120 930,318,036 1,828,586,206 58,365,000 420,662,435 410,276,858 889,304,293 1,475,561,521 1. Secured borrowings in I and II above amount to Nil (March 31, 2017: Nil) except borrowings of ` 164,562.5 million (March 31, 2017: ` 9.5 million) under collateralised borrowing and lending obligation, market repurchase transactions with banks and financial institutions and transactions under liquidity adjustment facility and marginal standing facility. 146 annual report 2017-2018Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS Bills payable1 I. Inter-office adjustments (net) II. Interest accrued III. IV. Sundry creditors V. General provision for standard assets (refer note 18.20) VI. Others (including provisions)1,2 TOTAL OTHER LIABILITIES AND PROVISIONS At 31.03.2018 71,724,980 976,360 32,725,823 65,150,053 25,906,623 105,480,119 301,963,958 ` in ‘000s At 31.03.2017 81,674,074 1,759,072 31,641,555 72,389,126 23,126,189 131,861,572 342,451,588 1. Balances in travel and prepaid card accounts amounting to ` 10,910.4 million have been re-classified from line item 'VI. Others (including provisions)' to line item 'I. Bills payable' for the year ended March 31, 2017, in accordance with RBI guidelines. 2. Includes specific provision for standard loans amounting to ` 7,967.1 million (March 31, 2017: ` 21,023.8 million). SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA Cash in hand (including foreign currency notes) I. II. Balances with Reserve Bank of India in current accounts TOTAL CASH AND BALANCES WITH RESERVE BANK OF INDIA 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 In current accounts i) ii) In other deposit accounts iii) Money at call and short notice TOTAL TOTAL BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE At 31.03.2018 ` in ‘000s At 31.03.2017 80,447,910 250,575,907 331,023,817 71,939,219 245,084,832 317,024,051 At 31.03.2018 ` in ‘000s At 31.03.2017 2,770,626 2,078,261 3,697,412 103,856 190,613,750 26,044,514 221,507,151 167,043,020 43,441,376 78,678,444 289,162,840 510,669,991 285,000,000 3,130,204 291,931,472 82,887,328 17,763,767 47,523,996 148,175,091 440,106,563 147 Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) 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 and other related investments) TOTAL INVESTMENTS IN INDIA II. Government securities Investments outside India [net of provisions] i) ii) Subsidiaries and/or joint ventures abroad (includes equity and preference shares) iii) Others (equity shares, bonds and certificate of deposits) TOTAL INVESTMENTS OUTSIDE INDIA TOTAL INVESTMENTS A. B. Investments in India Gross value of investments Less: Aggregate of provision/depreciation/(appreciation) Net investments Investments outside India Gross value of investments Less: Aggregate of provision/depreciation/(appreciation) Net investments TOTAL INVESTMENTS At 31.03.2018 ` in ‘000s At 31.03.2017 1,391,852,905 - 23,780,704 153,889,101 61,488,797 1,104,083,563 - 27,419,207 100,750,028 62,405,039 331,088,034 1,962,099,541 247,041,706 1,541,699,543 23,477,202 21,051,830 36,826,862 7,538,203 67,842,267 2,029,941,808 40,817,388 11,496,693 73,365,911 1,615,065,454 2,003,754,441 41,654,900 1,962,099,541 1,576,298,484 34,598,941 1,541,699,543 73,275,153 5,432,886 67,842,267 2,029,941,808 74,196,748 830,837 73,365,911 1,615,065,454 1. During the year ended March 31, 2018, the Bank sold a part of its equity investment in the subsidiaries, ICICI Lombard General Insurance Company Limited and ICICI Securities Limited, through initial public offers (IPO) (year ended March 31, 2017: sale of a part of equity investment in a subsidiary, ICICI Prudential Life Insurance Company Limited, through IPO). 2. Refer note 18.11 - Investments and note 18.12 - Non-SLR Investments. 148 annual report 2017-2018Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) Bills purchased and discounted1 SCHEDULE 9 - ADVANCES [net of provisions] A. i) ii) Cash credits, overdrafts and loans repayable on demand iii) Term loans TOTAL ADVANCES Secured by tangible assets (includes advances against book debts) B. i) ii) Covered by bank/government guarantees iii) Unsecured TOTAL ADVANCES I. C. Advances in India i) Priority sector ii) Public sector iii) Banks iv) Others TOTAL ADVANCES IN INDIA II. Advances outside India i) Due from banks ii) Due from others a) Bills purchased and discounted b) Syndicated and term loans c) Others TOTAL ADVANCES OUTSIDE INDIA TOTAL ADVANCES 1. Net of bills re-discounted amounting to Nil (March 31, 2017: Nil). At 31.03.2018 282,717,624 1,302,545,244 3,538,689,988 5,123,952,856 3,772,296,920 81,194,562 1,270,461,374 5,123,952,856 ` in ‘000s At 31.03.2017 205,535,584 1,025,441,344 3,411,343,914 4,642,320,842 3,590,021,442 85,095,391 967,204,009 4,642,320,842 929,701,682 197,704,530 777,335 3,351,468,495 4,479,652,042 1,065,527,064 129,991,400 3,448,842 2,693,419,652 3,892,386,958 18,706,876 3,727,321 89,025,272 379,320,030 157,248,636 644,300,814 5,123,952,856 60,382,775 505,610,525 180,213,263 749,933,884 4,642,320,842 149 Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) SCHEDULE 10 - FIXED ASSETS I. Premises Gross block At cost at March 31 of preceding year Additions during the year1 Deductions during the year Closing balance Less: Depreciation to date2 Net block3 II. Other fixed assets (including furniture and fixtures) Gross block At cost at March 31 of preceding year Additions during the year Deductions during the year Closing balance Less: Depreciation to date4 Net block III. Assets given on lease Gross block At cost at March 31 of preceding year Additions during the year Deductions during the year Closing balance Less: Depreciation to date, accumulated lease adjustment and provisions5 Net block TOTAL FIXED ASSETS At 31.03.2018 ` in ‘000s At 31.03.2017 72,701,320 1,501,268 (281,464) 73,921,124 (13,795,329) 60,125,795 69,336,049 3,795,192 (429,921) 72,701,320 (12,189,563) 60,511,757 53,522,935 7,493,392 (1,431,327) 59,585,000 (43,090,256) 16,494,744 50,133,048 6,167,987 (2,778,100) 53,522,935 (38,397,243) 15,125,692 16,904,628 - (189,999) 16,714,629 (14,300,019) 2,414,610 79,035,149 17,299,544 - (394,916) 16,904,628 (14,490,005) 2,414,623 78,052,072 Includes revaluation gain amounting to ` 249.1 million on account of revaluation carried out by the Bank (March 31, 2017: ` 2,760.3 million). Includes depreciation charge amounting to ` 1,754.3 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 1,721.9 million), including depreciation charge of ` 572.4 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 494.9 million) on account of revaluation. Includes assets of ` 37.4 million (March 31, 2017: ` 72.0 million) which are held for sale. Includes depreciation charge amounting to ` 6,053.1 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 5,854.6 million). The depreciation charge/lease adjustment/provisions is an insignificant amount for the year ended March 31, 2018 (year ended March 31, 2017: insignificant amount). 1. 2. 3. 4. 5. 150 annual report 2017-2018Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Balance Sheet (Contd.) 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 V. Non-banking assets acquired in satisfaction of claims1,2,3 VI. Advances for capital assets VII. Deposits VIII. Deferred tax assets (net) (refer note 18.42) IX. Deposits in Rural Infrastructure and Development Fund X. Others4 TOTAL OTHER ASSETS At 31.03.2018 - 69,899,215 61,699,162 1,375 19,650,832 1,215,031 14,146,176 74,770,217 269,249,912 206,636,072 717,267,992 ` in ‘000s At 31.03.2017 - 57,769,472 55,371,313 1,180 25,327,852 1,734,228 11,246,046 54,722,268 241,126,021 178,047,098 625,345,478 1. 2. 3. 4. During the year ended March 31, 2018, the Bank acquired assets amounting to ` 952.6 million (year ended March 31, 2017: ` 16,252.2 million) in satisfaction of claims under debt-asset swap transactions with certain borrowers. Assets amounting to ` 279.1 million were sold during the year ended March 31, 2018 (year ended March 31, 2017: ` 500.3 million). During the year ended March 31, 2018, the Bank converted certain non-banking assets into banking assets amounting to ` 345.6 million (year ended March 31, 2017: ` 288.5 million). Represents balance net of provision held amounting to ` 13,184.2 million (March 31, 2017: ` 7,401.2 million). Includes receivable amounting to ` 3,988.7 million pertaining to a non-performing loan sold during the year ended March 31, 2018, which was received by the Bank on April 2, 2018. Claims against the Bank not acknowledged as debts Liability for partly paid investments SCHEDULE 12 - CONTINGENT LIABILITIES I. II. III. Liability on account of outstanding forward exchange contracts1 IV. Guarantees given on behalf of constituents a) In India b) Outside India V. Acceptances, endorsements and other obligations VI. Currency swaps1 VII. VIII. Other items for which the Bank is contingently liable TOTAL CONTINGENT LIABILITIES Interest rate swaps, currency options and interest rate futures1 At 31.03.2018 ` in ‘000s At 31.03.2017 62,660,192 12,455 4,326,689,229 46,433,936 12,455 4,272,338,374 747,815,379 197,543,699 410,036,446 416,989,369 6,592,928,249 137,765,000 12,892,440,018 726,798,240 203,192,612 478,371,361 410,829,581 4,131,188,719 40,771,849 10,309,937,127 1. 2. Represents notional amount. Refer note 18.16 - Exchange traded interest rate derivatives and currency derivatives and note 18.17 - Forward rate agreement (FRA)/Interest rate swaps (IRS)/Cross currency swaps (CCS). 3. Refer note 18.36 - Description of contingent liabilities. 151 Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Profit and Loss Account SCHEDULE 13 - INTEREST EARNED Interest/discount on advances/bills I. Income on investments II. Interest on balances with Reserve Bank of India and other inter-bank funds III. IV. Others1,2 TOTAL INTEREST EARNED Year ended 31.03.2018 408,662,070 115,681,704 6,633,788 18,681,360 549,658,922 1. 2. Includes interest on income tax refunds amounting to ` 2,625.9 million (March 31, 2017: ` 4,507.1 million). Includes interest and amortisation of premium on non-trading interest rate swaps and foreign currency swaps. SCHEDULE 14 - OTHER INCOME Commission, exchange and brokerage I. Profit/(loss) on sale of investments (net)1,2 II. III. Profit/(loss) on revaluation of investments (net) IV. Profit/(loss) on sale of land, buildings and other assets (net)3 Profit/(loss) on exchange/derivative transactions (net) V. Income earned by way of dividends, etc. from subsidiary companies and/or VI. joint ventures abroad/in India VII. Miscellaneous income (including lease income) TOTAL OTHER INCOME Year ended 31.03.2018 87,894,054 63,058,535 (5,161,974) 38,027 15,431,519 12,140,645 795,520 174,196,326 ` in ‘000s Year ended 31.03.2017 396,033,926 113,770,721 4,954,607 26,803,539 541,562,793 ` in ‘000s Year ended 31.03.2017 80,348,880 88,139,431 (1,907,142) 21,151 13,552,152 14,190,348 700,011 195,044,831 1. 2. 3. For the year ended March 31, 2018, includes gain on sale of a part of equity investment in the subsidiaries, ICICI Lombard General Insurance Company Limited and ICICI Securities Limited, through initial public offers (IPO) (year ended March 31, 2017: gain on sale of a part of equity investment in a subsidiary, ICICI Prudential Life Insurance Company Limited, through IPO). Refer note 18.11 - Investments. Includes profit/(loss) on sale of assets given on lease. Interest on deposits Interest on Reserve Bank of India/inter-bank borrowings SCHEDULE 15 - INTEREST EXPENDED I. II. III. Others (including interest on borrowings of erstwhile ICICI Limited) TOTAL INTEREST EXPENDED Year ended 31.03.2018 234,287,704 9,493,244 75,619,515 319,400,463 ` in ‘000s Year ended 31.03.2017 228,716,676 9,967,203 85,505,706 324,189,585 152 annual report 2017-2018Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Profit and Loss Account (Contd.) SCHEDULE 16 - OPERATING EXPENSES Payments to and provisions for employees I. Rent, taxes and lighting1 II. III. 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. Law charges X. XI. Repairs and maintenance XII. XIII. Direct marketing agency expenses XIV. Other expenditure2 TOTAL OPERATING EXPENSES Postages, courier, telephones, etc. Insurance 1. Includes lease expense amounting to ` 8,966.3 million (March 31, 2017: ` 8,174.7 million). 2. Net of recoveries from group companies towards shared services. Year ended 31.03.2018 59,139,503 11,763,808 1,770,857 4,013,714 7,807,420 12 15,292 83,883 805,748 3,728,904 14,856,619 5,484,575 13,035,643 34,533,458 157,039,436 ` in ‘000s Year ended 31.03.2017 57,337,052 11,137,184 1,760,972 2,880,587 7,576,498 12 23,720 78,260 691,079 3,430,089 11,460,088 4,628,895 11,078,152 35,467,988 147,550,576 153 Financial Statements of ICICI Bank Limited ScHeduleS forming part of the Accounts 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. The Bank also has overseas branches in Bahrain, China, Dubai, Hong Kong, Qatar, Singapore, South Africa, Sri Lanka, United States of America and Offshore Banking units. 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 and the Accounting Standards notified under Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 to the extent applicable and practices generally prevalent in the banking industry in India. The Bank follows the historical cost convention and the accrual method of accounting, except in the case of interest and other income on non-performing assets (NPAs) where it is recognised upon realisation. The preparation of financial statements requires the management to make estimates and assumptions that 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) 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. Further, interest income was recognised upon realisation under the SDR, change in management outside SDR or S4A schemes, from the date of invocation till the end of stand-still period/implementation date. With effect from February 12, 2018, RBI has withdrawn these schemes and the interest income, for cases where the SDR, change in management outside SDR or S4A schemes were not implemented at that date, has been recognised as per the income recognition and asset classification norms of RBI. b) Income from finance 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. c) Income on discounted instruments is recognised over the tenure of the instrument on a constant yield basis. d) Dividend income is accounted on accrual basis when the right to receive the dividend is established. e) Loan processing fee is accounted for upfront when it becomes due. f) Project appraisal/structuring fee is accounted for on the completion of the agreed service. g) Arranger fee is accounted for as income when a significant portion of the arrangement/syndication is completed. h) Commission received on guarantees issued is amortised on a straight-line basis over the period of the guarantee. i) j) The annual/renewal fee on credit cards and debit cards are amortised on a straight-line basis over one year. Fees paid/received for priority sector lending certificates (PSLC) is amortised on straight-line basis over the period of the certificate. k) All other fees are accounted for as and when they become due. 154 annual report 2017-2018 l) 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. m) 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. 2. Investments Investments are accounted for in accordance with the extant RBI guidelines on investment classification and valuation as given below. 1. 2. 3. 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 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 closing quotes on the recognised stock exchanges or prices declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association (FIMMDA) /Financial Benchmark India Private Limited (FBIL), 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, including Pass Through Certificates, 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. The sovereign foreign securities and non-INR India linked bonds are valued on the basis of prices published by the sovereign regulator or counterparty quotes. 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. Depreciation/appreciation on securities, other than those acquired by way of conversion of outstanding loans, is aggregated for each category. Net appreciation in each category under each investment classification, if any, being unrealised, is ignored, while net depreciation is provided for. The depreciation on securities acquired by way of conversion of outstanding loans is fully provided for. Non- performing investments are identified based on the RBI guidelines. Depreciation on equity shares acquired and held by the Bank under SDR, S4A and change in management outside SDR schemes is provided over a period of four calendar quarters from the date of conversion of debt into equity in accordance with the RBI guidelines. With effect from February 12, 2018, the depreciation is provided over a period of four quarters for the schemes which have been implemented prior to that date as per extant RBI guidelines. 155 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) 4. Treasury bills, commercial papers and certificate of deposits being discounted instruments, are valued at carrying cost. 5. The units of mutual funds are valued at the latest repurchase price/net asset value declared by the mutual fund. 6. 7. 8. Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged to the profit and loss account. Cost of investments is computed based on the First-In-First-Out (FIFO) method. Equity investments in subsidiaries/joint ventures are classified under ‘Held to Maturity’ and ’Available for Sale’. The Bank assesses these investments for any permanent diminution in value and appropriate provisions are made. Profit/loss on sale of investments in the ‘Held to Maturity’ category is recognised in the profit and loss account and profit is thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit/loss on sale of investments in ‘Available for Sale’ and ‘Held for Trading’ categories is recognised in the profit and loss account. 9. Market repurchase, reverse repurchase and transactions with RBI under Liquidity Adjustment Facility (LAF) are accounted for as borrowing and lending transactions in accordance with the extant RBI guidelines. 10. 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. 11. At the end of each reporting period, security receipts issued by the 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 the 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 net asset value obtained from the asset reconstruction company from time to time, for valuation of such investments at each reporting period end. The security receipts which are outstanding and not redeemed as at the end of the resolution period are treated as loss assets and are fully provided for. 12. The Bank follows trade date method of accounting for purchase and sale of investments, except for government of India and state government securities where settlement date method of accounting is followed in accordance with RBI guidelines. 13. The Bank undertakes short sale transactions in dated central government securities in accordance with RBI guidelines. The short positions are categorised under HFT category and are marked to market. The mark-to- market loss is charged to profit and loss account and gain, if any, is ignored as per RBI guidelines. 3. Provision/write-offs on loans and other credit facilities The Bank classifies its loans and investments, including at overseas branches and overdues arising from crystallised derivative contracts, into performing and NPAs in accordance with RBI guidelines. Loans and advances held at the overseas branches that are identified as impaired as per host country regulations for reasons other than record of recovery, but which are standard as per the extant RBI guidelines, are classified as NPAs to the extent of amount outstanding in the host country. Further, NPAs are classified into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. In the case of corporate loans and advances, 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 loans and advances booked in overseas branches, which are standard as per the extant RBI guidelines but are classified as NPAs based on host country guidelines, provisions are made as per the host country regulations. For loans and advances booked in overseas branches, which are NPAs as per the extant RBI guidelines and as per host country guidelines, provisions are made at the higher of the provisions required under RBI regulations and host country regulations. Provisions on homogeneous retail loans and advances, subject to minimum provisioning requirements of RBI, are assessed on the basis of the ageing of the loans in the non- performing category. In respect of non-retail loans reported as fraud to RBI and classified in doubtful category, the entire amount, without considering the value of security, is provided for over a period of four quarters starting from the quarter in which fraud has been detected. In respect of non-retail loans where there has been delay in reporting 156 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 the fraud to the RBI or which are classified as loss accounts, the entire amount is provided immediately. In case of fraud in retail accounts, the entire amount is provided immediately. In respect of borrowers classified as non- cooperative borrowers or willful defaulters, the Bank makes accelerated provisions as per extant RBI guidelines. The Bank holds specific provisions against non-performing loans and advances and against certain performing loans and advances in accordance with RBI directions, including RBI direction for provision on accounts referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016. The assessment of incremental specific provisions is made after taking into consideration the existing specific provision held. The specific provisions on retail loans and advances held by the Bank are higher than the minimum regulatory requirements. a) Provision due to diminution in the fair value of restructured/rescheduled loans and advances is made in accordance with the applicable RBI guidelines. In respect of non-performing loans and advances 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 later, falls due, subject to satisfactory performance of the account during the period. Prior to February 12, 2018, standard restructured loans were upgraded to the standard category when satisfactory payment performance was evidenced during the specified period and after the loan reverted to the normal level of standard asset provisions/risk weights. With effect from February 12, 2018, non-performing and restructured loans are upgraded to standard only after satisfaction of certain payment and rating threshold criteria specified under RBI guidelines on Resolution of Stressed Assets – Revised Framework. 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. The Bank maintains general provision on performing loans and advances in accordance with the RBI guidelines, including provisions on loans to borrowers having unhedged foreign currency exposure, provisions on loans to specific borrowers in specific stressed sectors and provision on exposures to step-down subsidiaries of Indian companies. For performing loans and advances in overseas branches, the general provision is made at higher of host country regulations requirement and RBI requirement. In addition to the provisions required to be held according to the asset classification status, provisions are held for individual country exposures including indirect country risk (other than for home country exposure). The countries are categorised into seven risk categories namely insignificant, low, moderately low, moderate, moderately high, high and very high, and provisioning is made on exposures exceeding 180 days on a graded scale ranging from 0.25% to 25%. 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. The indirect exposure is reckoned at 50% of the exposure. 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. The Bank makes floating provision as per a Board approved policy, which is in addition to the specific and general provisions made by the Bank. The floating provision is utilised, with the approval of Board and RBI, in case of contingencies which do not arise in the normal course of business and are exceptional and non- recurring in nature and for making specific provision for impaired loans as per the requirement of extant RBI guidelines or any regulatory guidance/instructions. The floating provision is netted-off from advances. b) c) d) e) 4. 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. With effect from May 7, 2012, the RBI guidelines require the profit/premium arising from securitisation to be amortised over the life of the transaction based on the method prescribed in the guidelines. 157 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  In accordance with RBI guidelines, in case of non-performing/special mention account-2 loans sold to securitisation company (SC)/reconstruction company (RC), the Bank reverses the excess provision in profit and loss account in the year in which amounts are received. Any shortfall of sale value over the net book value on sale of such assets is recognised by the Bank in the year in which the loan is sold. 5. Property, Plant and Equipment Property, Plant and Equipment (PPE), other than premises, are carried at cost less accumulated depreciation and impairment, if any. Premises are carried at revalued amount, being fair value at the date of revaluation 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 PPE on a straight-line basis. The useful lives of the groups of PPE are given below. Asset Premises owned by the Bank Leased assets and improvements to leasehold premises ATMs1 Plant and machinery1 (including office equipment) Electric installations and equipments Computers Servers and network equipment1 Furniture and fixtures1 Motor vehicles1 Others (including software and system development expenses)1 Useful life 60 years 60 years or lease period whichever is lower 6-8 years1 5-10 years1 10-15 years 3 years 4-10 years1 5-10 years1 5 years1 4 years1 1. a) b) The useful life of assets is based on historical experience of the Bank, which is different from the useful life as prescribed in Schedule II to the Companies Act, 2013. Assets purchased/sold during the year are depreciated on a pro-rata basis for the actual number of days the asset has been capitalised. Items individually costing upto ` 5,000/- are depreciated fully over a period of 12 months from the date of purchase. c) Assets at residences of Bank’s employees are depreciated over the estimated useful life of 5 years. d) In case of revalued/impaired assets, depreciation is provided over the remaining useful life of the assets with reference to revised asset values. In case of premises, which are carried at revalued amounts, the depreciation on the excess of revalued amount over historical cost is transferred from Revaluation Reserve to General Reserve annually. e) The profit on sale of premises is appropriated to capital reserve, net of transfer to Statutory Reserve and taxes, in accordance with RBI guidelines. Non-Banking assets Non-Banking assets (NBAs) acquired in satisfaction of claims are carried at lower of net book value and net realisable value. Further, the Bank creates provision on non-banking assets as per specific RBI directions. 6. 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) relevant to the balance sheet date and the resulting gains/losses are included in the profit and loss account. 158 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018  Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated at relevant closing exchange rates notified by FEDAI at the balance sheet date and the resulting gains/ 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. Pursuant to RBI guideline, the Bank does not recognise the cumulative/proportionate amount of such exchange differences as income or expenses, which relate to repatriation of accumulated retained earnings from overseas 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 based on 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 based on 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 relevant to the balance sheet date. 7. Accounting for derivative contracts The Bank enters into derivative contracts such as interest rate and currency options, interest rate and currency futures, 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 liabilities and accounted pursuant to the principles of hedge accounting. Hedge swaps are accounted for on an accrual basis and are not marked to market unless their underlying transaction is marked to market. Foreign currency and rupee derivative contracts entered into for trading purposes are marked to market and the resulting gain or loss 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 options on the Bank’s equity shares 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 and amortised over the vesting period. The fair market price is the latest closing price, immediately prior to the grant date, which is generally the date of the meeting of the Board Governance, Remuneration & Nomination Committee 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. Employee Benefits Gratuity The Bank pays gratuity, a defined benefit plan, 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. The Bank makes contribution to a trust which administers the funds on its own account or through insurance companies. The actuarial gains or losses arising during the year are recognised in the profit and loss account. 159 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  Actuarial valuation of the gratuity liability is determined by an actuary appointed by the Bank. Actuarial valuation of gratuity liability is determined based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit method. Superannuation Fund and National Pension Scheme The Bank contributes 15.0% of the total annual basic salary of certain employees to superannuation funds, a defined contribution plan, managed and administered by insurance companies. Further, the Bank contributes 10.0% of the total basic salary of certain employees to National Pension Scheme (NPS), a defined contribution plan, which is managed and administered by pension fund management companies. The Bank also gives an option to its employees allowing them to receive the amount in lieu of such contributions along with their monthly salary during their employment. The amounts so contributed/paid by the Bank to the superannuation fund and NPS or to employee during the year are recognised in the profit and loss account. Pension The Bank provides for pension, a defined benefit plan covering eligible employees of erstwhile Bank of Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan. The Bank makes contribution to a trust which administers the funds on its own account or through insurance companies. The plan provides for pension payment including dearness relief 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. Actuarial valuation of the pension liability is determined by an actuary appointed by the Bank. Actuarial valuation of pension liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit method. The actuarial gains or losses arising during the year are recognised in the profit and loss account. Employees covered by the pension plan are not eligible for employer’s contribution under the provident fund plan. Provident Fund The Bank is statutorily required to maintain a provident fund, a defined benefit plan, as a part of retirement benefits to its employees. Each employee contributes a certain percentage of his or her basic salary and the Bank contributes an equal amount for eligible employees. The Bank makes contribution as required by The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 to Employees’ Pension Scheme administered by the Regional Provident Fund Commissioner. The Bank makes balance contributions to a fund administered by trustees. The funds are invested according to the rules prescribed by the Government of India. Actuarial valuation for the interest rate guarantee on the provident fund balances is determined by an actuary appointed by the Bank. The actuarial gains or losses arising during the year are recognised in the profit and loss account. The overseas branches of the Bank and its eligible employees contribute a certain percentage of their salary towards respective government schemes as per local regulatory guidelines. The contribution made by the overseas branches is recognised in profit and loss account at the time of contribution. Compensated absences The Bank provides for compensated absence 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 respectively. Deferred tax adjustments comprise changes in the deferred tax assets or liabilities during the year. 160 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018  Deferred tax assets and liabilities are recognised by considering the impact of timing differences between taxable income and accounting income for the current year, 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. However, in case of unabsorbed depreciation or carried forward loss, deferred tax assets will be recognised only if there is virtual certainty of realisation of such assets. Minimum Alternate Tax (MAT) credit is recognised as an asset to the extent there is convincing evidence that the Bank will pay normal income tax during specified period, i.e., the period for which MAT credit is allowed to be carried forward as per prevailing provisions of the Income Tax Act 1961. In accordance with the recommendation contained in the guidance note issued by ICAI, MAT credit is to be recognised as an asset in the year in which it becomes eligible for set off against normal income tax. The Bank reviews MAT credit entitlements at each balance sheet date and writes down the carrying amount to the extent there is no longer convincing evidence to the effect that the Bank will pay normal income tax during the specified period. 11. Impairment of Assets The Bank follows revaluation model of accounting for its premises and the recoverable amount of the revalued assets is considered to be close to its revalued amount. Accordingly, separate assessment for impairment of premises is not required. 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. The Bank estimates the probability of redemption of customer loyalty reward points using an actuarial method by employing an independent actuary and accordingly makes provision for these reward points. Actuarial valuation is determined based on certain assumptions regarding mortality rate, discount rate, cancellation rate and redemption rate. 13. Earnings per share (EPS) 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 on straight-line basis. 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. 161 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) SCHEDULE 18 NOTES FORMING PART OF THE ACCOUNTS The following disclosures have been made taking into account the requirements of Accounting Standards (ASs) and Reserve Bank of India (RBI) guidelines in this regards. 1. 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. Diluted earnings per equity share is computed using the weighted average number of equity shares and weighted average number of dilutive potential equity shares outstanding during the year. The following table sets forth, for the periods indicated, the computation of earnings per share. Particulars Basic Weighted average number of equity shares outstanding Net profit attributable to equity share holders Basic earnings per share (`) Diluted Weighted average number of equity shares outstanding Net profit attributable to equity share holders Diluted earnings per share (`)2 Nominal value per share (`) ` in million, except per share data Year ended March 31, 2017 Year ended March 31, 2018 6,417,180,759 67,774.2 10.56 6,401,835,901 98,010.9 15.31 6,482,375,300 67,774.2 10.46 2.00 6,428,315,579 98,010.9 15.25 2.00 1. Pursuant to the issue of bonus shares by the Bank during the year ended March 31, 2018, number of shares and per share information has been restated for the year ended March 31, 2017. 2. The dilutive impact is due to options granted to employees by the Bank. 2. Business/information ratios The following table sets forth, for the periods indicated, the business/information ratios. Sr. No. 1. 2. 3. 4. 5. 6. Particulars Interest income to working funds1 Non-interest income to working funds1 Operating profit to working funds1,2 Return on assets3 Net profit per employee4 (` in million) Business (average deposits plus average advances) per employee4,5 (` in million) Year ended March 31, 2018 7.06% 2.24% 3.18% 0.87% 0.8 Year ended March 31, 2017 7.43% 2.68% 3.64% 1.35% 1.2 107.8 98.9 1. For the purpose of computing the ratio, working funds represent the monthly average of total assets computed for reporting dates of Form X submitted to RBI under Section 27 of the Banking Regulation Act, 1949. 2. Operating profit is profit for the year before provisions and contingencies. For the purpose of computing the ratio, assets represent the monthly average of total assets computed for reporting dates of Form X submitted to RBI under Section 27 of the Banking Regulation Act, 1949. Computed based on average number of employees which include 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. 3. 4. 5. 162 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 3. Capital adequacy ratio The Bank is subject to the Basel III capital adequacy guidelines stipulated by RBI with effect from April 1, 2013. The guidelines provide a transition schedule for Basel III implementation till March 31, 2019. As per the guidelines, the Tier-1 capital is made up of Common Equity Tier-1 (CET1) and Additional Tier-1. At March 31, 2018, Basel III guidelines require the Bank to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 10.975% with minimum CET1 CRAR of 7.475% and minimum Tier-1 CRAR of 8.975%. The minimum total CRAR, Tier-1 CRAR and CET1 CRAR requirement include capital conservation buffer of 1.875% and additional capital requirement of 0.10% on account of the Bank being designated as Domestic Systemically Important Bank. The following table sets forth, for the periods indicated, computation of capital adequacy as per Basel III framework. Particulars CET1 CRAR (%) Tier-1 CRAR (%) Tier-2 CRAR (%) Total CRAR (%) Amount of equity capital raised Amount of Additional Tier-1 capital raised; of which a) b) Amount of Tier-2 capital raised; of which a) b) Perpetual Non-Cumulative Preference Shares Perpetual Debt Instruments Debt Capital Instruments Preference Share Capital Instruments [Perpetual Cumulative Preference Shares (PCPS)/Redeemable Non- Cumulative Preference Shares (RNCPS)/Redeemable Cumulative Preference Shares (RCPS)] ` in million, except percentages At March 31, 2017 13.74% 14.36% 3.03% 17.39% - At March 31, 2018 14.43% 15.92% 2.50% 18.42% - - 55,550.0 - 34,250.0 - - - - 4. Liquidity coverage ratio The Basel Committee for Banking Supervision (BCBS) had introduced the liquidity coverage ratio (LCR) in order to ensure that a bank has an adequate stock of unencumbered high quality liquid assets (HQLA) to survive a significant liquidity stress lasting for a period of 30 days. LCR is defined as a ratio of HQLA to the total net cash outflows estimated for the next 30 calendar days. As per the RBI guidelines, the minimum LCR required to be maintained by banks shall be implemented in a phased manner from January 1, 2015 as given below. Starting from January 1 Minimum LCR 2015 60.0% 2016 70.0% 2017 80.0% 2018 90.0% 2019 100.0% 163 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) d e d n e s h t n o m e e r h T d e d n e s h t n o m e e r h T d e d n e s h t n o m e e r h T d e d n e s h t n o m e e r h T d e d n e s h t n o m e e r h T 7 1 0 2 , 0 3 e n u J 7 1 0 2 , 0 3 r e b m e t p e S 7 1 0 2 , 1 3 r e b m e c e D 7 1 0 2 , 1 3 h c r a M 8 1 0 2 , 1 3 h c r a M l a t o T l a t o T l a t o T l a t o T l a t o T l a t o T l a t o T l a t o T l a t o T l a t o T e u a v l e u a v l e u a v l e u a v l e u a v l e u a v l e u a v l e u a v l e u l a v ) e g a r e v a ( ) e g a r e v a ( ) e g a r e v a ( ) e g a r e v a ( ) e g a r e v a ( ) e g a r e v a ( ) e g a r e v a ( ) e g a r e v a ( ) e g a r e v a ( e u l a v d e ) e g a r e v a ( d e t h g e w i d e t h g e w n u i d e t h g e w i d e t h g e w n u i d e t h g e w i d e t h g e w n u i d e t h g e w i d e t h g e w n u i d e t h g i e w - t h g i e w n u s t e s s a d u q i i l y t i l a u q h g H i l s r a u c i t r a P . r S . o N n o i l l i m n i ` l e p m i s e h T . k n a B e h t f o R C L e h t l i i f o s e u a v d e t h g e w d n a d e t h g e w n u f o e g a r e v a y l r e t r a u q e h t , d e t a c d n i i s d o i r e p e h t r o f , h t r o f l t e s s e b a t g n w o i l l o f e h T . s e u a v l y l i a d n o d e s a b d e t u p m o c n e e b s a h e g a r e v a 164 5 . 5 9 7 , 2 4 9 . A N . 7 . 2 0 3 , 2 3 9 . A N . 2 . 2 1 0 , 0 8 9 . A N . 1 . 1 6 3 , 1 7 9 . A N . 5 . 0 1 0 , 1 5 0 , 1 . . A N s t e s s a d u q i i l y t i l a u q h g h i l a t o T . 1 6 . 6 2 3 , 4 2 5 . 2 3 5 , 6 8 4 0 . 8 3 9 , 4 2 9 . 9 5 7 , 8 9 4 1 . 7 1 9 , 5 2 8 . 2 4 3 , 8 1 5 2 . 1 1 5 , 6 2 1 . 3 2 2 , 0 3 5 6 . 6 6 9 , 6 2 4 . 2 3 3 , 9 3 5 7 . 2 9 8 , 6 6 2 2 . 3 9 1 , 2 1 9 , 2 0 . 3 3 7 , 0 7 2 1 . 0 1 7 , 6 5 9 , 2 0 . 0 3 3 , 8 7 2 8 . 1 7 4 , 2 4 0 , 3 3 . 3 8 8 , 9 5 2 4 . 4 4 9 , 3 6 8 , 2 3 . 6 5 2 , 4 8 2 1 . 9 2 2 , 2 1 1 , 3 1 . 6 6 5 , 2 4 2 7 . 0 6 6 , 5 2 4 , 2 0 . 5 9 7 , 5 4 2 2 . 0 5 9 , 7 5 4 , 2 9 . 2 1 4 , 2 5 2 0 . 9 2 1 , 4 2 5 , 2 1 . 2 7 3 , 3 3 2 3 . 1 2 7 , 3 3 3 , 2 7 . 9 8 2 , 7 5 2 7 . 6 9 8 , 2 7 5 , 2 s t i s o p e d e b a t s l s s e L s t i s o p e d e b a t S l ) i ( ) i i ( : h c h w i f o , s r e m o t s u c s s e n i s u b l l a m s m o r f s t i s o p e d d n a s t i s o p e d l i a t e R . 2 s w o l f t u o h s a C 7 . 3 4 6 , 7 8 6 4 . 9 2 9 , 3 0 3 , 1 9 . 1 3 0 , 3 9 6 2 . 4 3 5 , 6 4 3 , 1 3 . 9 9 0 , 7 3 7 5 . 8 1 3 , 8 2 4 , 1 1 . 1 3 6 , 4 7 6 3 . 0 0 1 , 1 9 1 , 1 8 . 8 6 8 , 7 8 7 6 . 4 8 2 , 9 0 5 , 1 : h c h w i f o , i g n d n u f l l e a s e o h w d e r u c e s n U 4 . 8 0 4 , 3 7 6 . 3 3 6 , 3 9 2 5 . 8 9 4 , 3 7 2 . 4 9 9 , 3 9 2 4 . 2 9 1 , 0 8 8 . 9 6 7 , 0 2 3 7 . 6 6 5 , 8 6 8 . 6 6 2 , 4 7 2 4 . 6 3 2 , 3 8 6 . 5 4 9 , 2 3 3 ) s e i t r a p r e t n u o c l l a ( s t i s o p e d l a n o i t a r e p O 2 . 7 6 7 , 1 6 5 7 . 7 2 8 , 7 5 9 5 . 0 6 4 , 9 8 5 1 . 7 6 4 , 2 2 0 , 1 9 . 9 2 0 , 8 9 5 7 . 1 7 6 , 8 4 0 , 1 9 . 9 1 5 , 4 2 5 0 . 9 8 2 , 5 3 8 1 . 7 8 5 , 8 0 6 7 . 3 9 2 , 0 8 0 , 1 ) s e i t r a p r e t n u o c l l a ( s t i s o p e d l a n o i t a r e p o - n o N ) i ( ) i i ( 1 . 8 6 4 , 2 5 1 . 8 6 4 , 2 5 9 . 2 7 0 , 0 3 9 . 2 7 0 , 0 3 0 . 7 7 8 , 8 5 0 . 7 7 8 , 8 5 5 . 4 4 5 , 1 8 5 . 4 4 5 , 1 8 3 . 5 4 0 , 6 9 3 . 5 4 0 , 6 9 t b e d d e r u c e s n U ) i i i ( - . A N . - . A N . 2 . 5 1 . A N . 2 . 0 2 . A N . 5 . 0 . . A N i g n d n u f l l e a s e o h w d e r u c e S 1 . 6 5 7 , 8 1 1 8 . 4 3 2 , 1 1 5 4 . 2 2 9 , 7 1 1 1 . 2 3 9 , 9 3 5 0 . 6 4 6 , 7 1 1 4 . 1 0 6 , 4 1 5 3 . 6 2 9 , 8 4 1 2 . 4 8 6 , 0 5 5 1 . 2 1 1 , 2 0 1 9 . 2 1 4 , 2 1 4 : h c h w i f o , s t n e m e r i u q e r l a n o i t i d d A 5 . 9 5 1 , 9 5 5 . 9 5 1 , 9 5 6 . 7 2 8 , 7 5 6 . 7 2 8 , 7 5 3 . 0 4 0 , 9 5 3 . 0 4 0 , 9 5 5 . 5 5 3 , 4 8 5 . 5 5 3 , 4 8 2 . 3 7 8 , 4 5 2 . 3 7 8 , 4 5 s t n e m e r i u q e r l a r e t a l l o c r e h t o d n a s e r u s o p x e e v i t a v i r e d o t d e t a e r l s w o l f t u O ) i ( 1 . 7 4 3 1 . 7 4 3 8 . 7 4 3 8 . 7 4 3 9 . 1 2 3 9 . 1 2 3 7 . 4 5 3 7 . 4 5 3 3 . 1 2 3 3 . 1 2 3 t b e d n o g n d n u f i f o s s o l o t d e t a e r l s w o l f t u O ) i i ( s t c u d o r p 5 . 9 4 2 , 9 5 2 . 8 2 7 , 1 5 4 0 . 7 4 7 , 9 5 7 . 6 5 7 , 1 8 4 8 . 3 8 2 , 8 5 2 . 9 3 2 , 5 5 4 1 . 6 1 2 , 4 6 0 . 4 7 9 , 5 6 4 6 . 7 1 9 , 6 4 4 . 8 1 2 , 7 5 3 s e i t i l i c a f y t i d u q i i l d n a t i d e r C ) i i i ( 9 . 0 5 9 , 5 7 9 . 0 5 9 , 5 7 1 . 4 6 8 , 7 8 1 . 4 6 8 , 7 8 1 . 8 2 6 , 9 7 1 . 8 2 6 , 9 7 0 . 6 2 3 , 6 0 1 0 . 6 2 3 , 6 0 1 0 . 4 9 3 , 9 7 0 . 4 9 3 , 9 7 s n o i t a g i l b o g n d n u f i l a u t c a r t n o c r e h t O 3 . 5 5 4 , 8 6 3 . 3 2 3 , 3 1 8 , 1 3 . 9 3 7 , 7 6 7 . 2 4 3 , 0 7 7 , 1 8 . 1 8 5 , 2 7 1 . 3 8 2 , 5 9 8 , 1 4 . 5 4 7 , 8 6 6 . 5 5 7 , 4 2 8 , 1 5 . 2 2 5 , 4 7 6 . 6 6 1 , 0 4 9 , 1 s n o i t a g i l b o g n d n u f i t n e g n i t n o c r e h t O 7 . 8 9 6 , 7 1 2 , 1 . . A N 7 . 0 9 2 , 7 3 2 , 1 . . A N 4 . 0 0 3 , 5 8 2 , 1 . . A N 3 . 2 3 5 , 8 5 2 , 1 . . A N 2 . 4 5 1 , 8 2 3 , 1 . . A N s w o l f t u o h s a c l a t o T - 4 . 8 1 9 , 6 9 - 4 . 9 0 0 , 5 6 9 . 1 8 . 4 7 3 , 8 5 - 8 . 6 9 5 , 8 5 1 5 . 4 0 . 4 9 9 , 0 5 ) s o p e r e s r e v e r . g . e ( g n d n e i l d e r u c e S 4 . 9 4 3 , 1 3 2 0 . 0 0 3 , 3 0 3 1 . 3 7 3 , 6 5 2 7 . 2 9 2 , 3 3 3 0 . 2 7 0 , 9 9 2 9 . 4 1 5 , 2 6 3 6 . 7 4 6 , 7 2 2 1 . 8 4 6 , 6 9 2 4 . 1 8 0 , 4 6 3 3 . 8 6 2 , 2 3 4 s e r u s o p x e g n m r o f r e p y i l l u f m o r f s w o l f n I 5 . 5 9 7 , 2 4 9 . . A N 9 . 2 3 0 , 9 4 9 . A N . % 4 3 . 9 9 . . A N 7 . 2 0 3 , 2 3 9 5 . 2 3 4 , 6 4 9 % 1 5 . 8 9 . . A N . A N . . . A N 2 . 2 1 0 , 0 8 9 2 . 5 0 5 , 5 5 9 % 6 5 . 2 0 1 . . A N . A N . . . A N 1 . 1 6 3 , 1 7 9 1 . 3 3 5 , 4 9 9 % 7 6 . 7 9 . . A N . A N . . . A N 5 . 0 1 0 , 1 5 0 , 1 . . A N 4 . 8 7 2 , 6 3 9 % 5 2 . 2 1 1 . . A N . . A N 4 . 6 1 3 , 7 3 9 . 1 7 3 , 7 5 1 . 5 8 4 , 4 3 8 . 4 6 0 , 5 5 3 . 1 2 7 , 0 3 6 . 5 1 0 , 8 4 6 . 1 5 3 , 6 3 5 . 1 6 6 , 8 5 9 . 9 8 7 , 7 2 8 . 6 8 1 , 5 4 8 . 5 6 6 , 8 6 2 3 . 0 9 5 , 7 5 4 2 . 8 5 8 , 0 9 2 9 . 6 6 3 , 3 5 4 2 . 5 9 7 , 9 2 3 3 . 5 0 9 , 8 6 4 2 . 9 9 9 , 3 6 2 4 . 6 0 9 , 3 1 5 8 . 5 7 8 , 1 9 3 1 . 9 4 4 , 8 2 5 ) 2 1 ( - ) 8 ( s w o l f t u o h s a c t e n l a t o T s w o l f n i h s a c r e h t O s w o l f n i h s a c l a t o T A L Q H l a t o T ) % ( o i t a r e g a r e v o c i y t i d u q L i . 3 . 4 . 5 . 6 . 7 . 8 . 9 . 0 1 . 1 1 . 2 1 . 3 1 . 4 1 . 5 1 t n e m e g a n a M y t i l i b a L i t e s s A e h t f o t h g i s r e v o l a r t n e c e h t r e d n u ) G M L A ( p u o r G t n e m e g a n a M y t i l i b a L i t e s s A e h t y b d e g a n a m s i k n a B e h t f o y t i d u q L i i s a e s r e v o e h t r o F . y t i d u q i i l f o t n e m e g a n a m l l a r e v o e h t r o f l e b i s n o p s e r s i i a d n I - G M L A , k n a B e h t f o s n o i t a r e p o c i t s e m o d e h t r o F . ) O C L A ( e e t t i m m o C - g n o l r o f d e w o l l o f s i h c a o r p p a d e s i l a r t n e c a e l i h w , t n e m e g a n a m y t i d u q i i l y a d - o t - y a d r o f d e w o l l o f s i h c a o r p p a d e s i l a r t n e c e d a , k n a B e h t f o s e h c n a r b d n a y r t n u o c t s o h h t o b n o i t a r e d i s n o c o t n i g n i k a t i d e n a t n a m s i i s e h c n a r b s a e s r e v o e h t n i i y t i d u q L i . e c i f f O - d a e H h t i w n o i t a n d r o - o c i n i i g n d n u f m r e t . s n o i t a u g e r l I B R e h t Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 The Bank during the three months ended March 31, 2018 maintained average HQLA (after haircut) of ` 1,051,010.5 million (March 31, 2017: ` 971,361.1 million) against the average liquidity requirement of ` 842,650.4 million (March 31, 2017: ` 795,626.5 million) at minimum LCR requirement of 90.0% (March 31, 2017: 80.0%). HQLA primarily includes government securities in excess of minimum statutory liquidity ratio (SLR) and to the extent allowed under marginal standing facility (MSF) and facility to avail liquidity for LCR (FALLCR) of ` 815,035.6 million (March 31, 2017: ` 806,903.7 million). Additionally, cash balance in excess of cash reserve requirement with RBI and balances with central banks of countries where the Bank’s branches are located amounted to ` 160,400.8 million (March 31, 2017: ` 100,448.7 million). Further, average level 2 assets primarily consisting of AA- and above rated corporate bonds and commercial papers, amounted to ` 50,909.9 million (March 31, 2017: ` 36,348.1 million). At March 31, 2018, top liability products/instruments and their percentage contribution to the total liabilities of the Bank were term deposits 30.83% (March 31, 2017: 31.51%), savings account deposits 22.86% (March 31, 2017: 22.27%), bond borrowings 10.68% (March 31, 2017: 12.33%) and current account deposits 10.12% (March 31, 2017: 9.72%). Top 20 depositors constituted 6.20% (March 31, 2017: 7.04%) of total deposits of the Bank at March 31, 2018. Further, the total borrowings mobilised from significant counterparties (from whom the funds borrowed were more than 1.00% of the Bank’s total liabilities) were 8.92% (March 31, 2017: 10.26%) of the total liabilities of the Bank at March 31, 2018. The weighted cash outflows are primarily driven by unsecured wholesale funding which includes operational deposits, non-operational deposits and unsecured debt. During the three months ended March 31, 2018, unsecured wholesale funding contributed 59.32% (March 31, 2017: 53.60%) of the total weighted cash outflows. The non-operational deposits include term deposits with premature withdrawal facility. Retail deposits including deposits from small business customers and other contingent funding obligations contributed 21.40% (March 31, 2017: 20.65%) and 5.61% (March 31, 2017: 5.46%) of the total weighted cash outflows, respectively. The other contingent funding obligations primarily include bank guarantees (BGs) and letters of credit (LCs) issued on behalf of the Bank’s clients. In view of the margin rules for non-centrally cleared derivative transactions issued by the Basel Committee on Banking Supervision and RBI, currently in a draft stage, certain derivative transactions would be subject to margin reset and consequent collateral exchange would be as governed by Credit Support Annex (CSA). The margin rules are applicable for both the domestic and overseas operations of the Bank. The Bank has entered into CSAs which would require maintenance of collateral due to valuation changes on transactions under the CSA framework. The Bank considers the increased liquidity requirement on account of valuation changes in the transactions settled through Qualified Central Counterparties (QCCP) in India including the Clearing Corporation of India (CCIL) and other exchange houses as well as for transactions covered under CSAs. The potential outflows on account of such transactions have been considered based on the look-back approach prescribed in the RBI guidelines. The average LCR of the Bank for the three months ended March 31, 2018 was 112.25% (March 31, 2017: 97.67%). During the three months ended March 31, 2018, other than Indian Rupee, USD was the only significant foreign currency which constituted more than 5.00% of the balance sheet size of the Bank. The average LCR of the Bank for USD currency, computed based on month-end LCR values, was 112.57% for the three months ended March 31, 2018 (March 31, 2017: 44.51%). 5. Information about business and geographical segments Business Segments Pursuant to the guidelines issued by RBI on AS 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 (BCBS) document ‘International Convergence of Capital Measurement and Capital Standards: A Revised Framework’. This segment also includes income from credit cards, debit cards, third party product distribution and the associated costs. • Wholesale Banking includes all advances to trusts, partnership firms, companies and statutory bodies, which are not included under Retail Banking. 165 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) • Treasury includes the entire investment and derivative portfolio of the Bank. • Other Banking includes 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. The transfer pricing mechanism of the Bank is periodically reviewed. The segment results are determined based on the transfer pricing mechanism prevailing for the respective reporting periods. The following tables set forth, for the periods indicated, the business segment results on this basis. Sr. No. 1. 2. Particulars Revenue Less: Inter-segment revenue 3. 4. 5. 6. 7. Total revenue (1)–(2) Segment results Unallocated expenses Operating profit (4)-(5) Income tax expenses (including deferred tax credit) Net profit (6)-(7) 8. 9. Segment assets 10. Unallocated assets1 11. Total assets (9)+(10) 12. Segment liabilities 13. Unallocated liabilities 14. Total liabilities (12)+(13) 15. Capital expenditure 16. Depreciation ` in million For the year ended March 31, 2018 Retail Banking Wholesale Banking Treasury Other Banking Business Total 502,625.4 300,940.2 519,603.8 12,787.2 1,335,956.6 71,414.2 (82,813.0) 81,149.3 4,595.0 612,101.4 723,855.2 74,345.5 - 74,345.5 2,586,385.4 2,657,712.2 3,303,399.8 4,135,023.7 1,672,682.4 2,946,198.72 7,393.7 6,665.6 1,302.8 1,081.8 24.3 17.7 6,571.3 67,774.2 107,924.8 8,655,422.2 136,469.4 8,791,891.6 37,986.8 8,791,891.6 - 8,791,891.6 8,745.6 7,807.4 24.8 42.3 1. 2. Includes tax paid in advance/tax deducted at source (net) and deferred tax assets (net). Includes share capital and reserves and surplus. 166 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 Sr. No. 1. 2. Particulars Revenue Less: Inter-segment revenue 3. 4. 5. 6. 7. Total revenue (1)–(2) Segment results Unallocated expenses Operating profit (4)-(5) Income tax expenses (including deferred tax credit) Net profit (6)-(7) 8. Segment assets 9. 10. Unallocated assets1 11. Total assets (9)+(10) 12. Segment liabilities 13. Unallocated liabilities 14. Total liabilities (12)+(13) 15. Capital expenditure 16. Depreciation ` in million For the year ended March 31, 2017 Retail Banking Wholesale Banking Treasury Other Banking Business Total 453,911.8 306,405.7 545,629.9 18,640.9 1,324,588.3 53,853.0 (74,341.1) 126,707.0 6,567.3 587,980.7 736,607.6 112,786.2 - 112,786.2 2,136,950.4 2,612,652.8 2,748,218.4 3,678,085.9 1,495,191.4 2,510,968.22 6,547.3 6,396.2 616.2 1,108.6 19.4 15.6 14,775.2 98,011.0 109,999.3 7,607,820.9 110,093.6 7,717,914.5 33,669.0 7,717,914.5 - 7,717,914.5 7,202.9 7,576.5 20.0 56.1 1. 2. Includes tax paid in advance/tax deducted at source (net) and deferred tax assets (net). Includes share capital and reserves and surplus. Geographical segments The Bank reports its operations under the following geographical segments. • Domestic operations comprise branches in India. • Foreign operations comprise branches outside India and offshore banking units in India. The following table sets forth, for the periods indicated, geographical segment results. Revenues Domestic operations Foreign operations Total Assets Domestic operations Foreign operations Total Year ended March 31, 2018 685,764.0 38,091.2 723,855.2 At March 31, 2018 7,724,037.0 931,385.2 8,655,422.2 ` in million Year ended March 31, 2017 682,895.7 53,711.9 736,607.6 ` in million At March 31, 2017 6,661,570.6 946,250.3 7,607,820.9 Segment assets do not include tax paid in advance/tax deducted at source (net) and deferred tax assets (net). 167 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  The following table sets forth, for the periods indicated, capital expenditure and depreciation thereon for the geographical segments. Particulars Domestic operations Foreign operations Total 6. Maturity pattern ` in million Capital expenditure incurred during Year ended March 31, 2017 Year ended March 31, 2018 Depreciation provided during Year ended March 31, 2018 Year ended March 31, 2017 8,584.1 161.5 8,745.6 7,150.3 52.6 7,202.9 7,739.8 67.6 7,807.4 7,507.4 69.1 7,576.5 The following table sets forth, the maturity pattern of assets and liabilities of the Bank at March 31, 2018. Maturity buckets Day 1 2 to 7 days 8 to 14 days 15 to 30 days 31 days to 2 months 2 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 & Advances1 Investment securities1 Deposits1 Borrowings1 8,269.3 248,957.1 92,186.7 - ` in million Total foreign currency assets2 12,974.8 Total foreign currency liabilities2 1,597.0 45,366.0 51,069.5 114,084.8 176,811.3 211,245.8 448,622.1 552,756.4 1,240,469.0 905,127.2 1,370,131.5 5,123,952.9 220,653.2 80,973.0 100,440.0 40,682.1 54,101.1 99,057.9 191,411.3 274,485.7 275,685.9 443,494.5 2,029,941.8 435,307.2 142,865.4 83,340.3 195,498.1 161,686.7 294,857.1 487,247.8 557,322.3 1,586,822.7 1,572,617.8 5,609,752.1 155,100.1 31,043.3 48,153.1 51,716.4 78,375.8 97,585.3 215,439.8 531,721.2 267,450.8 352,000.4 1,828,586.2 320,146.2 18,014.4 45,594.1 67,639.3 60,259.6 104,404.0 113,605.0 162,479.4 88,163.8 227,599.5 1,220,880.1 8,076.4 23,194.4 42,027.0 29,495.8 74,672.7 119,756.2 211,011.2 418,914.5 117,477.0 113,742.0 1,159,964.2 1. 2. Includes foreign currency balances. Excludes off-balance sheet assets and liabilities. The following table sets forth the maturity pattern of assets and liabilities of the Bank at March 31, 2017. Maturity buckets Day 1 2 to 7 days 8 to 14 days 15 to 30 days 31 days to 2 months 2 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 & Advances1 Investment securities1 Deposits1 Borrowings 1 8,757.4 175,720.4 72,285.3 - 41,128.1 33,216.1 86,614.9 129,995.7 185,675.5 322,603.3 517,143.6 1,284,125.8 924,537.2 1,108,523.3 4,642,320.8 87,210.4 50,137.2 78,397.8 53,584.0 39,010.8 92,171.7 105,792.2 208,006.9 285,991.2 439,042.9 1,615,065.5 375,542.3 106,138.4 77,275.1 120,950.4 187,419.8 359,444.8 326,211.4 497,017.3 1,393,293.3 1,384,812.7 4,900,390.6 13,124.4 9,924.6 80,377.4 19,904.6 50,256.1 67,702.8 231,641.7 468,435.2 215,539.9 318,654.9 1,475,561.5 Total foreign currency assets2 14,070.1 172,411.2 17,866.8 37,280.8 46,376.4 48,937.3 76,970.3 110,974.7 234,380.5 171,209.0 212,846.9 1,143,324.0 ` in million Total foreign currency liabilities2 1,379.8 25,643.2 17,007.1 90,888.0 27,826.0 45,818.3 58,216.4 218,095.5 393,384.5 126,716.6 102,490.1 1,107,465.5 Includes foreign currency balances. Excludes off-balance sheet assets and liabilities. 1. 2. 168 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018  The estimates and assumptions used by the Bank for classification of assets and liabilities under the different maturity buckets is based on the returns submitted to RBI for the relevant periods. 7. Preference shares At March 31, 2018, certain government securities amounting to ` 3,338.9 million (March 31, 2017: ` 3,219.7 million) were earmarked against redemption of preference shares issued by the Bank. The preference shares have been subsequently redeemed after approval from RBI on April 20, 2018, as per the original terms of the issue. 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 10% of the aggregate number of the issued equity shares of the Bank on the date(s) of the grant of options in line with SEBI Regulations. Under the stock option scheme, eligible employees are entitled to apply for equity shares. In April 2016, exercise period was modified from 10 years from the date of grant or five years from the date of vesting, whichever is later, to 10 years from the date of vesting of options. In June 2017, exercise period was further modified to not exceed 10 years from the date of vesting of options as may be determined by the Board Governance, Remuneration & Nomination Committee to be applicable for future grants. Options granted after March 2014, vest in a graded manner over a three-year period with 30%, 30% and 40% of the grant vesting in each year, commencing from the end of 12 months from the date of grant other than certain options granted in April 2014 which vested to the extent of 50% on April 30, 2017 and the balance vested on April 30, 2018 and option granted in September 2015 which would vest to the extent of 50% on April 30, 2018 and balance 50% would vest on April 30, 2019. However, for the options granted in September 2015, if the participant’s employment terminates due to retirement (including pursuant to any early/voluntary retirement scheme), all the unvested options would lapse. Options granted in January 2018 would vest at the end of four years from the date of grant. Options granted prior to March 2014, vested 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 vested 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 September 2011 vested in a graded manner over a five-years period with 15%, 20%, 20% and 45% of grant vesting each year, commencing from the end of 24 months from the date of the grant. Pursuant to the issuance of bonus shares approved by the shareholders on June 12, 2017, stock options were also adjusted with increase of one option for every 10 outstanding options and the exercise prices of options were proportionately adjusted. Accordingly the option and exercise price numbers are re-stated. The exercise price of the Bank’s options, except mentioned below, is the last closing price on the stock exchange, which recorded highest trading volume preceding the date of grant of options. In February 2011, the Bank granted 16,692,500 options to eligible employees and whole-time Directors of the Bank and certain of its subsidiaries at an exercise price of ` 175.82. This exercise price was the average closing price on the stock exchange during the six months ended October 28, 2010. Of these options granted, 50% vested on April 30, 2014 and the balance 50% vested on April 30, 2015. Based on intrinsic value of options, no compensation cost was recognised during the year ended March 31, 2018 (year ended March 31, 2017: Nil). If the Bank had used the fair value of options based on binomial tree model, compensation cost in the year ended March 31, 2018 would have been higher by ` 3,526.6 million (year ended March 31, 2017: ` 5,107.5 million) including additional cost of ` 74.3 million (March 31, 2017: ` 1,393.1 million) due to change in exercise period and proforma profit after tax would have been ` 64,247.6 million (year ended March 31, 2017: ` 92,903.4 million). On a proforma basis, the Bank’s basic and diluted earnings per share would have been ` 10.01 (year ended March 31, 2017: ` 14.51) and ` 9.91 (year ended March 31, 2017: ` 14.45) respectively for the 169 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) year ended March 31, 2018. The following table sets forth, for the periods indicated, the key assumptions used to estimate the fair value of options granted. Particulars Risk-free interest rate Expected life Expected volatility Expected dividend yield Year ended Year ended March 31, 2018 March 31, 2017 7.06% to 7.59% 7.43% to 7.77% 3.90 to 6.90 years 3.89 to 5.89 years 31.71% to 32.92% 32.03% to 33.31% 0.73% to 1.81% 2.04% to 2.15% The weighted average fair value of options granted during the year ended March 31, 2018 was ` 86.43 (year ended March 31, 2017: ` 76.72). Risk free interest rates over the expected term of the option are based on the government securities yield in effect at the time of the grant. The expected term of an option is estimated based on the vesting term as well as expected exercise behavior of the employees who receive the option. Expected term of option is estimated based on the historical stock option exercise pattern of the Bank. Expected volatility during the estimated expected term of the option is based on historical volatility determined based on observed market prices of the Bank's publicly traded equity shares. Expected dividends during the estimated expected term of the option are based on recent dividend activity. The following table sets forth, for the periods indicated, the summary of the status of the Bank’s stock option plan. 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 1. Adjusted for bonus issuance. Stock options outstanding ` except number of options Year ended March 31, 2018 Year ended March 31, 2017 Number of options1 Weighted average exercise price Number of options Weighted average exercise price 226,715,682 35,137,770 5,114,1742 21,067,028 235,672,250 136,428,736 217.12 251.05 248.30 187.00 224.19 208.44 210,787,022 36,716,130 10,108,994 10,678,476 226,715,682 120,512,112 214.87 222.09 242.30 166.00 217.12 195.06 2. Adjusted on account of fractional entitlement payout due to issuance of bonus shares. The following table sets forth, the summary of stock options outstanding at March 31, 2018. Range of exercise price (` per share) Number of shares arising out of options Weighted average exercise price (` per share) 60-99 100-199 200-299 300-399 1,849,150 47,665,539 185,857,561 300,000 79.12 165.43 240.57 309.50 Weighted average remaining contractual life (Number of years) 4.91 4.85 9.43 13.79 The following table sets forth, the summary of stock options outstanding at March 31, 2017. Range of exercise price (` per share) Number of shares arising out of options Weighted average exercise price (` per share) 60-99 100-199 200-299 300-399 170 2,355,045 59,262,913 165,097,724 - 79.08 164.74 237.89 - Weighted average remaining contractual life (Number of years) 5.93 5.65 9.98 - Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018  The options were exercised regularly throughout the period and weighted average share price as per National Stock Exchange price volume data adjusted for bonus issue during the year ended March 31, 2018 was ` 296.94 (year ended March 31, 2017: ` 234.38). 9. Subordinated debt The following table sets forth, the details of subordinated debt bonds qualifying for Additional Tier-1 capital raised during the year ended March 31, 2018. Particulars Date of Issue Coupon Rate (%) Subordinate Additional Tier-1 September 20, 2017 8.55% (annually) Subordinate Additional Tier-1 Subordinate Additional Tier-1 October 4, 2017 March 20, 2018 8.55% (annually) 9.15% (annually) Tenure Perpetual1 Perpetual2 Perpetual3 ` in million Amount 10,800.0 4,750.0 40,000.0 1. 2. 3. Call option exercisable on September 20, 2022 and on every interest payment date thereafter (exercisable with RBI approval). Call option exercisable on October 4, 2022 and on every interest payment date thereafter (exercisable with RBI approval). Call option exercisable on June 20, 2023 and on every interest payment date thereafter (exercisable with RBI approval). The following table sets forth, the details of subordinated debt bonds qualifying for Additional Tier-1 capital raised during the year ended March 31, 2017. Particulars Subordinate Additional Tier-1 Date of Issue Coupon Rate (%) March 17, 2017 9.20% (annually) Tenure Perpetual1 ` in million Amount 34,250.0 1. Call option exercisable on March 17, 2022 and on every interest payment date thereafter (exercisable with RBI approval). During the year ended March 31, 2018, the Bank has not raised subordinated debt qualifying for Tier-2 capital (March 31, 2017: Nil). 10. Repurchase transactions The following tables set forth for the periods indicated, the details of securities sold and purchased under repo and reverse repo transactions respectively including transactions under Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF). Sr. No. Particulars Government Securities Corporate Debt Securities Securities sold under Repo, LAF and MSF i) ii) Securities purchased under Reverse Repo and LAF i) ii) Government Securities Corporate Debt Securities Minimum outstanding balance during the Maximum outstanding balance during the Daily average outstanding balance during the Year ended March 31, 2018 ` in million Outstanding balance at March 31, 2018 - - - - 129,841.0 1,000.0 15,706.0 4.4 115,920.0 - 323,000.0 2,000.0 70,930.9 7.7 170,390.0 - 1. Amounts reported are based on face value of securities under Repo and Reverse repo. 2. Amounts reported are based on lending/borrowing amount under LAF and MSF. 171 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Sr. No. Particulars Government Securities Corporate Debt Securities Securities sold under Repo, LAF and MSF i) ii) Securities purchased under Reverse Repo and LAF i) ii) Government Securities Corporate Debt Securities Minimum outstanding balance during the Maximum outstanding balance during the Daily average outstanding balance during the Year ended March 31, 2017 ` in million Outstanding balance at March 31, 2017 9.5 - - - 176,914.4 335.4 37,829.8 7.3 9.5 - 341,500.0 - 63,402.7 - 288,000.0 - 1. Amounts reported are based on face value of securities under Repo and Reverse repo. 2. Amounts reported are based on lending/borrowing amount under LAF and MSF. 11. 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. Sr. No. 1. Particulars Value of Investments i) Gross value of investments a) In India b) Outside India ii) Provision for depreciation c) In India d) Outside India iii) Net value of investments In India e) f) Outside India ` in million At March 31, 2018 At March 31, 2017 2,003,754.4 73,275.2 1,576,298.5 74,196.7 (41,654.9) (5,432.9) (34,598.9) (830.9) 1,962,099.5 67,842.3 1,541,699.6 73,365.8 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 35,429.8 28,923.0 (17,265.0) 47,087.8 33,021.8 9,357.6 (6,949.6) 35,429.8 During the year ended March 31, 2018, the Bank sold approximately 7.00% of its shareholding in ICICI Lombard General Insurance Company Limited in the IPO for a total consideration of ` 20,994.3 million and made a gain (net of IPO related expenses) of ` 20,121.5 million on this sale. Further, the Bank sold approximately 20.78% of its shareholding in ICICI Securities Limited in the IPO for a total consideration of ` 34,801.2 million and made a gain (net of IPO related expenses) of ` 33,197.7 million on this sale. During the year ended March 31, 2017, the Bank sold approximately 12.63% of its shareholding in ICICI Prudential Life Insurance Company Limited in the IPO for a total consideration of ` 60,567.9 million and made a gain (net of IPO related expenses) of ` 56,820.3 million on this sale. 172 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 The following table sets forth, for the periods indicated, break-up of other investments in Schedule 8. Investments I. In India Pass through certificates Commercial paper Certificate of deposits Security receipts Venture funds Others Total II. Outside India Certificate of deposits Shares Bonds Venture funds Total Grand total ` in million At March 31, 2018 At March 31, 2017 120,469.0 128,647.6 43,897.9 34,383.0 3,436.8 253.7 331,088.0 4,234.9 309.5 2,023.0 970.8 7,538.2 338,626.2 134,724.3 71,295.2 4,710.7 32,862.2 3,015.5 433.8 247,041.7 3,306.0 210.0 7,010.7 970.0 11,496.7 258,538.4 12. Investment in securities, other than government and other approved securities (Non-SLR investments) i) 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, 2018. Sr. No. Issuer 1. 2. 3. 4. 5. 6. 7. PSUs FIs Banks Private corporates Subsidiaries/ Joint ventures Others3,4 Provision held towards depreciation Total Amount Extent of private placement Extent of ‘below investment grade’ securities Extent of ‘unrated’ securities2,3 29,705.0 139,996.7 46,543.0 181,651.3 98,315.7 165,317.7 (a) 27,588.3 86,664.0 17,935.7 155,962.0 - 165,297.2 (46,917.7) 614,611.7 N.A. 453,447.2 (b) - - - 6,394.7 - 37,886.8 N.A. 44,281.5 (c) - 5.4 - 2,983.3 - - N.A. 2,988.7 ` in million Extent of ‘unlisted’ securities2,3 (d) 1,389.5 - - 17,811.4 - - N.A. 19,200.9 1. Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive. 2. 3. 4. Excludes equity shares, units of equity-oriented mutual fund, units of venture capital fund, pass through certificates, security receipts, commercial papers, certificates of deposit, non-convertible debentures (NCDs) with original or initial maturity up to one year issued by corporate (including NBFC), unlisted convertible debentures and securities acquired by way of conversion of debt. Excludes investments in non-Indian government securities by overseas branches amounting to ` 23,477.2 million. Excludes investments in non-SLR government of India securities amounting to ` 7,578.5 million. 173 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  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, 2017. Sr. No. Issuer 1. 2. 3. 4. 5. 6. 7. PSUs FIs Banks Private corporates Subsidiaries/ Joint ventures Others3,4 Provision held towards depreciation Total Amount Extent of private placement Extent of ‘below investment grade’ securities Extent of ‘unrated’ securities2,3 11,386.0 94,063.6 25,561.2 101,389.2 103,222.4 189,179.3 (a) 8,235.5 60,168.5 17,650.0 95,563.1 - 176,877.5 (34,871.6) 489,930.1 N.A. 358,494.6 (b) - - - 3,422.1 - 48,804.9 N.A. 52,227.0 (c) - - - 3,610.8 - - N.A. 3,610.8 ` in million Extent of ‘unlisted’ securities2,3 (d) 2,765.1 - - 5,817.6 - - N.A. 8,582.7 1. Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive. 2. 3. 4. Excludes equity shares, units of equity-oriented mutual fund, units of venture capital fund, pass through certificates, security receipts, commercial papers, certificates of deposit, non-convertible debentures (NCDs) with original or initial maturity up to one year issued by corporate (including NBFCs), unlisted convertible debentures and securities acquired by way of conversion of debt. Excludes investments in non-Indian government securities by overseas branches amounting to ` 21,051.8 million. Excludes investments in non-SLR government of India securities amounting to ` 18,686.3 million. 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 Year ended March 31, 2018 14,258.8 33,485.8 (9,304.3) 38,440.3 28,712.6 ` in million Year ended March 31, 2017 16,800.5 3,375.6 (5,917.3) 14,258.8 10,738.6 13. Sales and transfers of securities to/from Held to Maturity (HTM) category During the three months ended June 30, 2017, with the approval of Board of Directors, the Bank had transferred securities amounting to ` 243,620.6 million from held-to-maturity (HTM) category to available-for-sale (AFS) category, being transfer of securities at the beginning of the accounting year as permitted by RBI. Further, during the year ended March 31, 2018, the Bank sold securities from HTM category in 52 transactions amounting to a net book value of ` 44,039.5 million which was 4.69% of portfolio under HTM category at April 1, 2017 (year ended March 31, 2017: 1,547 transactions amounting to a net book value of ` 700,024.5 million, which was 70.60% of the HTM portfolio at April 1, 2016). The above sale is excluding sale to RBI under pre-announced open market operation auctions and repurchase of government securities by Government of India, as permitted by RBI guidelines. The market value of investments held in the HTM category was ` 1,549,786.6 million at March 31, 2018 (March 31, 2017: ` 1,229,543.3 million), which includes investments in unlisted subsidiaries/joint ventures at cost. 174 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 14. CBLO transactions Collateralised Borrowing and Lending Obligation (CBLO) is a discounted money market instrument, established by CCIL and approved by RBI, which involves secured borrowings and lending transactions. At March 31, 2018, the Bank had outstanding borrowings amounting to ` 48,642.5 million (March 31, 2017: Nil) and no outstanding lending (March 31, 2017: 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 ` 157,319.7 million at March 31, 2018 (March 31, 2017: ` 53,134.3 million). 15. Derivatives The Bank is a major participant in the financial derivatives market. The Bank deals in derivatives for balance sheet management, proprietary trading 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 Control and Service Group (TCSG) 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 Derivative policy of the Bank, which lays down the position 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 policy in relation to various risks including credit and recovery policy, investment policy, derivative policy, Asset Liability Management (ALM) policy and operational risk management policy. The RCB comprises independent directors and the Managing Director & 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 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 based on guidelines issued by RBI. 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) guidelines. Over the counter (OTC) 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. The following tables set forth, for the periods indicated, the details of derivative positions. Sr. No. 1. Particulars Derivatives (Notional principal amount) a) For hedging b) For trading 2. Marked to market positions3 a) Asset (+) b) Liability (-) At March 31, 2018 Currency derivative1 Interest rate derivative2 At March 31, 2017 Currency derivative1 Interest rate derivative2 ` in million 524.1 994,889.8 385,450.3 5,629,053.4 6,863.8 963,762.9 433,745.0 3,137,646.6 22,385.8 (13,461.6) 16,311.0 (17,429.8) 26,572.6 (18,953.5) 12,052.2 (13,850.9) 175 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Sr. No. 3. 4. Particulars Credit exposure4 Likely impact of one percentage change in interest rate (100*PV01)5 a) On hedging derivatives6 b) On trading derivatives 5. Maximum and minimum of 100*PV01 observed during the period a) On hedging6 Maximum Minimum b) On trading Maximum Minimum At March 31, 2018 Currency derivative1 72,907.7 Interest rate derivative2 74,451.6 At March 31, 2017 Currency derivative1 76,532.0 Interest rate derivative2 51,762.0 ` in million 1.3 1,425.2 12,597.9 370.1 31.4 1,092.1 12,293.4 719.7 31.6 1.1 1,425.2 735.3 14,133.6 10,992.5 1,732.1 2.0 97.2 30.6 1,488.4 1,044.5 16,705.8 11,876.5 1,680.7 648.3 1. 2. 3. 4. Exchange traded and OTC options, cross currency interest rate swaps and currency futures are included in currency derivatives. OTC Interest rate options, Interest rate swaps, forward rate agreements, swaptions and exchange traded interest rate derivatives are included in interest rate derivatives. For trading portfolio including accrued interest. Includes accrued interest and has been computed based on current exposure method. 5. Amounts given are absolute values on a net basis, excluding options. 6. The swap contracts entered into for hedging purpose would have an opposite and off-setting impact with the underlying on-balance sheet items. The following tables set forth, for the periods indicated, the details of forex contracts. Sr. No. Particulars Forex contracts (Notional principal amount) 1. 2. Marked to market positions a) Asset (+) b) Liability (-) Credit exposure1 Likely impact of one percentage change in interest rate (100*PV01)2 3. 4. 1. Computed based on current exposure method. 2. Amounts given are absolute values on a net basis. At March 31, 2018 Trading 4,049,874.7 Non-trading 276,814.5 At March 31, 2017 Trading 4,028,098.3 Non-trading 244,240.1 ` in million 18,880.0 (17,457.4) 124,398.4 921.0 (2,851.5) 6,523.2 29,561.4 (26,600.7) 133,187.7 550.8 (3,350.7) 5,539.7 63.5 2.4 37.0 8.8 The net overnight open position at March 31, 2018 was ` 992.6 million (March 31, 2017: ` 2,926.7 million). The Bank has no exposure in credit derivative instruments (funded and non-funded) including credit default swaps (CDS) and principal protected structures at March 31, 2018 (March 31, 2017: Nil). 176 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018  The Bank offers deposits to customers of its overseas 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, 2018, the net open notional position on this portfolio was Nil (March 31, 2017: Nil) with no mark-to-market gain/loss (March 31, 2017: Nil). The profit and loss impact on the aforementioned structured deposits portfolio on account of mark-to-market and realised profit and loss during the year ended March 31, 2018 was Nil (year ended March 31, 2017: net loss of ` 0.1 million). The non-Indian Rupee denominated 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 Fixed Income Money Market and Derivative Association (FIMMDA). The Indian Rupee denominated credit derivatives are marked to market by the Bank based on CDS curve published by FIMMDA. 16. Exchange traded interest rate derivatives and currency derivatives Exchange traded interest rate derivatives The following table sets forth, for the periods indicated, the details of exchange traded interest rate derivatives. Sr. No. 1. 2. 3. Particulars Notional principal amount of exchange traded interest rate derivatives undertaken during the year - 10 year Government Security Notional Bond Notional principal amount of exchange traded interest rate derivatives outstanding - 10 year Government Security Notional Bond Notional principal amount of exchange traded interest rate derivatives outstanding and not ‘highly effective’ 4. Mark-to-market value of exchange traded interest rate derivatives outstanding and not ‘highly effective’ ` in million At March 31, 2018 At March 31, 2017 52,811.0 11,324.8 1,000.0 N.A. N.A. 343.8 N.A. N.A. Exchange traded currency derivatives The following table sets forth, for the periods indicated, the details of exchange traded currency derivatives. Sr. No. 1. 2. 3. Particulars Notional principal amount of exchange traded currency derivatives undertaken during the year Notional principal amount of exchange traded currency derivatives options outstanding Notional principal amount of exchange traded currency derivatives outstanding and not ‘highly effective’ 4. Mark-to-market value of exchange traded currency derivatives outstanding and not ‘highly effective’ ` in million At March 31, 2018 At March 31, 2017 1,395,871.3 1,891,822.9 34,651.8 45,370.2 N.A. N.A. N.A. N.A. 177 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) 17. Forward rate agreement (FRA)/Interest rate swaps (IRS)/Cross currency swaps (CCS) The Bank enters into FRA, IRS and CCS contracts for balance sheet management and market making purposes whereby the Bank offers derivative products to its customers to enable them to hedge their interest rate risk and currency risk within the prevalent regulatory guidelines. A FRA is a financial contract between two parties to exchange interest payments for ‘notional principal’ amount on settlement date, for a specified period from start date to maturity date. Accordingly, on the settlement date cash payments based on contract rate and the settlement rate, which is the agreed bench-mark/reference rate prevailing on the settlement date, are made by the parties to one another. The benchmark used in the FRA contracts of the Bank is London Inter-Bank Offered Rate (LIBOR) of various currencies. An IRS is a financial contract between two parties exchanging or swapping a stream of interest payments for a ‘notional principal’ amount on multiple occasions during a specified period. The Bank deals in interest rate benchmarks like Mumbai Inter-Bank Offered Rate (MIBOR), Indian Government Securities Benchmark Rate (INBMK), Mumbai Inter-Bank Forward Offer Rate (MIFOR) and LIBOR of various currencies. A CCS is a financial contract between two parties exchanging interest payments and principal, wherein interest payments and principal in one currency would be exchanged for an equally valued interest payments and principal in another currency. These contracts are subject to the risks of changes in market interest rates and currency rates as well as the settlement risk with the counterparties. The following table sets forth, for the periods indicated, the details of the FRA/IRS. Particulars The notional principal of FRA/IRS 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 FRA/IRS Concentration of credit risk2 The fair value of FRA/IRS3 ` in million At March 31, 2018 5,956,569.2 At March 31, 2017 3,524,706.5 18,466.2 - 583.2 (6,363.0) 16,258.1 - 1,149.8 1,527.0 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. Sr. No. 1. 2. 3. 4. 5. 1. 2. 3. The following table sets forth, for the periods indicated, the details of the CCS. Particulars The notional principal of CCS1 Losses which would be incurred if all counter parties failed to fulfil their obligations under the agreement2 Collateral required by the Bank upon entering into CCS Concentration of credit risk3 Fair value of CCS4 CCS includes cross currency interest rate swaps and currency swaps. ` in million At March 31, 2018 416,989.4 At March 31, 2017 410,829.6 18,255.0 - 5,180.3 8,765.1 21,925.7 - 4,875.4 9,040.2 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. Sr. No. 1. 2. 3. 4. 5. 1. 2. 3. 4. 178 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 The following tables set forth, for the periods indicated, the nature and terms of FRA and IRS. Hedging Benchmark Type AUD LIBOR CHF LIBOR JPY LIBOR SGD SOR USD LIBOR Total Trading Fixed receivable v/s floating payable Fixed receivable v/s floating payable Fixed receivable v/s floating payable Fixed receivable v/s floating payable Fixed receivable v/s floating payable Benchmark Type EURIBOR EURIBOR EURIBOR GBP LIBOR GBP LIBOR INBMK INBMK JPY LIBOR JPY LIBOR JPY LIBOR MIBOR MIBOR MIFOR MIFOR USD LIBOR USD LIBOR USD LIBOR USD LIBOR v/s EURIBOR Others Total Fixed receivable v/s floating payable Floating receivable v/s fixed payable Floating receivable v/s floating payable Fixed receivable v/s floating payable Floating receivable v/s fixed payable Fixed receivable v/s floating payable Floating receivable v/s fixed payable Fixed receivable v/s floating payable Floating receivable v/s fixed payable Floating receivable v/s floating payable Fixed receivable v/s floating payable Floating receivable v/s fixed payable Fixed receivable v/s floating payable Floating receivable v/s fixed payable Fixed receivable v/s floating payable Floating receivable v/s fixed payable Floating receivable v/s floating payable Floating receivable v/s floating payable Fixed receivable v/s fixed payable At March 31, 2018 Notional principal 7,506.8 6,834.6 9,219.7 13,203.0 348,686.2 385,450.3 No. of deals 3 2 2 6 63 76 ` in million At March 31, 2017 Notional principal 7,436.6 6,482.7 8,698.8 12,299.3 398,827.5 433,745.0 No. of deals 3 2 2 6 72 85 ` in million At March 31, 2017 At March 31, 2018 Notional principal 9,277.1 11,122.3 401.6 5,551.3 7,948.5 14,250.0 30,195.3 2,000.6 1,093.0 613.6 1,829,058.7 1,540,590.7 332,795.0 293,635.0 694,365.7 733,965.6 56,026.6 647.4 7,580.9 5,571,118.9 No. of deals 32 20 1 12 14 26 48 10 3 1 2,507 2,362 657 620 923 771 61 2 91 Notional principal 32,922.4 33,566.3 1,594.8 2,946.0 3,507.8 14,250.0 31,594.2 3,066.5 1,104.4 581.3 666,907.7 641,374.2 251,265.0 264,975.0 568,287.2 517,591.0 45,935.4 1,492.1 8,000.2 8,161 3,090,961.5 No. of deals 19 13 3 8 7 26 49 14 4 1 1,130 1,130 495 544 689 485 51 2 93 4,763 The following tables set forth, for the periods indicated, the nature and terms of CCS. Hedging Benchmark1 Type USD LIBOR Total Fixed receivable v/s floating payable 1. Benchmark indicates floating leg of the fixed v/s floating CCS. ` in million At March 31, 2018 Notional principal 524.1 524.1 No. of deals 1 1 At March 31, 2017 Notional principal 6,863.8 6,863.8 No. of deals 3 3 179 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Trading Benchmark1 Type AUD BBSW V/s USD LIBOR Floating receivable v/s floating payable CHF LIBOR V/s USD LIBOR Floating receivable v/s floating payable CHF LIBOR V/s USD LIBOR Floating payable v/s floating receivable Fixed receivable v/s floating payable EURIBOR Floating receivable v/s fixed payable EURIBOR floating payable v/s Floating receivable EURIBOR V/s GBP LIBOR Floating receivable v/s floating payable EURIBOR V/s USD LIBOR EURIBOR V/s USD LIBOR Floating payable v/s floating receivable GBP LIBOR V/s USD LIBOR Floating receivable v/s floating payable GBP LIBOR V/s USD LIBOR Floating payable v/s floating receivable Floating receivable v/s floating payable HIBOR v/s USD LIBOR Floating receivable v/s fixed payable JPY LIBOR JPY LIBOR Fixed receivable v/s floating payable JPY LIBOR V/s USD LIBOR Floating receivable v/s floating payable JPY LIBOR V/s USD LIBOR Floating payable v/s floating receivable SGD SOR V/s USD LIBOR Floating receivable v/s floating payable SGD SOR V/s USD LIBOR Floating payable v/s floating receivable USD LIBOR USD LIBOR Others Total Fixed receivable v/s floating payable Floating receivable v/s fixed payable Fixed receivable v/s fixed payable 1. Benchmark indicates floating leg of the fixed v/s floating CCS. At March 31, 2018 Notional principal 15,534.4 7,081.3 - 954.2 - 2,742.7 6,601.8 4,677.9 275.1 4,283.8 12,889.4 1,829.2 3,144.8 13,741.1 4,083.6 13,156.0 325.9 92,755.5 111,817.1 120,571.5 416,465.3 No. of deals 3 3 - 15 - 2 9 10 2 4 2 3 15 13 4 9 2 269 118 235 718 ` in million At March 31, 2017 Notional principal 8,423.4 6,762.3 129.7 2,156.7 389.1 2,424.8 7,160.0 5,502.5 410.0 2,965.6 12,951.4 2,543.1 5,727.3 17,041.5 5,533.3 12,210.6 - 82,709.2 105,271.5 123,653.8 403,965.8 No. of deals 3 2 1 19 1 2 10 11 2 3 2 3 18 16 4 4 - 307 119 276 803 18. Non-performing assets 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 (%) Sr. No. 1. 2. Movement of NPAs (Gross) a) Opening balance1 b) Additions: Fresh NPAs during the year Sub-total (1) c) Reductions during the year • Upgradations • Recoveries (excluding recoveries made from upgraded accounts) Technical/prudential write-offs • • Write-offs other than technical/prudential write-offs Sub-total (2) d) Closing balance1 (1)-(2) 180 Year ended March 31, 2018 5.43% ` in million Year ended March 31, 2017 5.43% 421,593.9 286,349.5 707,943.4 262,212.5 335,466.1 597,678.6 (38,668.2) (9,703.4) (53,186.8) (67,720.7) (15,965.9) (175,541.6) 532,401.8 (44,462.2) (72,857.8) (49,061.3) (176,084.7) 421,593.9 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 Particulars Sr. No. 3. Movement of net NPAs a) Opening balance1 b) Additions during the year c) Reductions during the year d) Closing balance1 4. Movement of provision for NPAs (excluding provision on standard assets) a) Opening balance1 b) Addition during the year Sub-total (1) c) Write-off/(write-back) of excess provisions • • Write-back of excess provision on account of upgradations Write-back of excess provision on account of reduction in NPAs Provision utilised for write-offs • Sub-total (2) d) Closing balance1 (1)-(2) Year ended March 31, 2018 ` in million Year ended March 31, 2017 252,168.1 147,672.6 (121,605.1) 278,235.6 169,425.8 198,649.5 368,075.3 129,630.8 215,559.2 (93,021.9) 252,168.1 132,581.7 161,604.4 294,186.1 (14,289.9) (2,912.8) (15,956.7) (83,662.5) (113,909.1) 254,166.2 (7,904.6) (113,942.9) (124,760.3) 169,425.8 1. Net of write-off. The following table sets forth, for the periods indicated, the details of movement in technical/prudential write-off. Particulars Opening balance Add: Technical/prudential write-offs during the year Sub-total (1) Less: Recoveries made from previously technical/prudential written-off accounts during the year Less: Sacrifice made from previously technical/prudential written-off accounts during the year Sub-total (2) Closing balance (1)-(2) Year ended March 31, 2018 121,658.1 67,720.7 189,378.8 ` in million Year ended March 31, 2017 70,573.8 72,857.8 143,431.6 (2,040.2) (2,209.5) (15,210.2) (17,250.4) 172,128.4 (19,564.0) (21,773.5) 121,658.1 On February 12, 2018, RBI issued a revised framework for resolution of stressed assets, which superceded the existing guidelines on SDR, change in ownership outside SDR (except projects under implementation) and S4A with immediate effect. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were revoked and the accounts have been classified as per the extant RBI norms on income recognition and asset classification. Further, in accordance with RBI guidelines, the loans and advances held at the overseas branches that are identified as impaired as per host country regulations for reasons other than record of recovery, but which are standard as per the extant RBI guidelines, are classified as NPAs to the extent of amount outstanding in the host country. During the year ended March 31, 2018, the Bank has not classified any loans as NPAs at overseas branches (year ended March 31, 2017: ` 6,587.8 million) as per the requirement of these guidelines and not made any provision (year ended March 31, 2017: ` 3,993.7 million) on these loans. 181 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Divergence in asset classification and provisioning for NPAs In terms of the RBI circular no. DBR.BP.BC.No.63/21.04.018/2016-17 dated April 18, 2017, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever either (a) the additional provisioning requirements assessed by RBI exceed 15% of the published net profits after tax for the reference period or (b) the additional Gross NPAs identified by RBI exceed 15% of the published incremental Gross NPAs for the reference period, or both. Based on the condition mentioned in RBI circular, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI’s supervisory process for the year ended March 31, 2017. The following table sets forth, for the period indicated, details of divergence in the asset classification and provisioning as per RBI’s supervisory process for the year ended March 31, 2016. Particulars Sr. No. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Reported net profit after tax for the year ended March 31, 2016 11. Adjusted (notional) net profit after tax for the year ended March 31, 2016 after taking into Gross NPAs as reported by the Bank Gross NPAs as assessed by RBI1 Divergence in gross NPAs (2)-(1) Net NPAs as reported by the Bank Net NPAs as assessed by RBI Divergence in net NPAs (5)-(4) Provisions for NPAs as reported by the Bank Provisions for NPAs as assessed by RBI1 Divergence in provisioning (8)-(7) account the divergence in provisioning1 ` in million At March 31, 2016 262,212.5 313,258.6 51,046.1 129,630.8 169,968.9 40,338.1 132,581.7 143,289.7 10,708.0 97,262.9 90,260.7 1. Excludes investment in shares of ` 1,071.9 million with an additional provision requirement of ` 168.0 million and an impact of ` 109.9 million on net profit after tax for the year ended March 31, 2016. The impact of changes in classification and provisioning arising out of the RBI’s supervisory process for the year ended March 31, 2016 has been fully given effect to in the audited financial statements for the year ended March 31, 2017. Accounts covered under Insolvency and Bankruptcy Code, 2016 During three months ended June 30, 2017 and three months ended September 30, 2017, RBI advised the banks to initiate insolvency resolution process under the provisions of Insolvency and Bankruptcy Code, 2016 (IBC) for certain specific accounts. RBI also required the banks to make provision at 50% of the secured portion and 100% of unsecured portion, or provision as per extant RBI guideline on asset classification norms, whichever is higher. Subsequently, in April 2018, RBI revised the provisioning requirements in respect of these specified cases from 50% of secured portion to 40% of secured portion at March 31, 2018 and to 50% of the secured portion at June 30, 2018. Accordingly, the Bank has made the provision as per the April 2018 guidelines of RBI. 182 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 19. Floating provision During the year ended March 31, 2018, the Bank did not make any floating provision (year ended March 31, 2017, the Bank made floating provision of ` 15,150.0 million, which was subsequently utilised during the same year by allocating it to specific non-performing assets). The following table sets forth, for the periods indicated, the movement in floating provision held by the Bank. Particulars Opening balance1 Add: Provision made during the year Less: Provision utilised during the year Closing balance1 At March 31, 2018 1.9 - - 1.9 ` in million At March 31, 2017 1.9 15,150.0 (15,150.0) 1.9 1. Includes amount taken over from erstwhile Bank of Rajasthan upon amalgamation. 20. General provision on standard assets The general provision on standard assets held by the Bank at March 31, 2018 was ` 25,906.6 million (March 31, 2017: ` 23,126.2 million). The general provision on standard assets amounting to ` 2,771.1 million was made during the year ended March 31, 2018 (year ended March 31, 2017: provision reversed by ` 3,392.3 million) as per applicable RBI guidelines. RBI, through its circular dated January 15, 2014 had advised banks to create incremental provision on standard loans and advances to entities with unhedged foreign currency exposure (UFCE). The Bank assesses the UFCEs of the borrowers through its credit appraisal and internal ratings process. The Bank also undertakes reviews of such exposures through thematic reviews evaluating the impact of exchange rate fluctuations on the Bank’s portfolio on an yearly basis. The Bank has made provision against borrowers with UFCE amounting to ` 50.0 million during the year ended March 31, 2018 (year ended March 31, 2017: Nil). The Bank held incremental capital of ` 5,487.5 million at March 31, 2018 on advances to borrowers with UFCE (March 31, 2017: ` 4,120.0 million). On April 18, 2017, RBI through its circular advised that the provisioning rates prescribed as per the prudential norms circular are the regulatory minimum and banks are encouraged to make provisions at higher rates in respect of advances to stressed sectors of the economy and had specifically highlighted the telecom sector. Accordingly, during the year ended March 31, 2018, the Bank, as per its Board approved policy, has made additional general provision amounting to ` 1,911.5 million on standard loans to specific borrowers below certain rating threshold and in specific identified stressed sectors. 21. Provision Coverage Ratio The provision coverage ratio of the Bank at March 31, 2018 computed as per the extant RBI guidelines was 47.7% (March 31, 2017: 40.2%). 22. Priority Sector Lending Certificates (PSLCs) During the year ended March 31, 2018, the Bank purchased PSLCs under agriculture category amounting to ` 10,000.0 million (year ended March 31, 2017: Nil), general category amounting to ` 17,300.0 million (year ended March 31, 2017: ` 35,000.0 million) and small and marginal farmers category amounting to ` 25,000.0 million (year ended March 31, 2017: Nil). The Bank sold PSLCs amounting to ` 1,000.0 million under general category during the year ended March 31, 2018 (year ended March 31, 2017: Nil). 183 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) 23. Securitisation A. 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 till May 7, 2012. Particulars 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, 2018 - - - 28.1 Year ended March 31, 2017 - - - 11.6 1. Includes gain/(loss) on deal closures, gain amortised during the year and expenses relating to utilisation of credit enhancement. Particulars Outstanding credit enhancement (funded) Outstanding liquidity facility Net outstanding servicing asset/(liability) Outstanding subordinate contributions At March 31, 2018 3,469.7 0.1 (15.5) 1,469.7 ` in million At March 31, 2017 3,992.0 0.3 (19.9) 1,481.3 The outstanding credit enhancement in the form of guarantees amounted to Nil at March 31, 2018 (March 31, 2017: Nil) and outstanding liquidity facility in the form of guarantees amounted to ` 265.8 million at March 31, 2018 (March 31, 2017: ` 265.5 million). The outstanding credit enhancement in the form of guarantees for third party originated securitisation transactions amounted to ` 4,189.5 million at March 31, 2018 (March 31, 2017: ` 3,456.9 million) and outstanding liquidity facility for third party originated securitisation transactions amounted to Nil at March 31, 2018 (March 31, 2017: Nil). The following table sets forth, for the periods indicated, the details of provision for securitisation and direct assignment transactions. Particulars Opening balance Additions during the year Deductions during the year Closing balance Year ended March 31, 2018 802.7 25.0 (4.4) 823.3 ` in million Year ended March 31, 2017 745.3 63.6 (6.2) 802.7 B. The information on securitisation and direct assignment activity of the Bank as an originator as per RBI guidelines ‘Revisions to the Guidelines on Securitisation Transactions’ dated May 7, 2012 is given below. a. The Bank, as an originator, has not sold any loan through securitisation during the year ended March 31, 2018 (March 31, 2017: Nil). 184 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 b. The following table sets forth, for the periods indicated, the information on the loans sold through direct assignment. Sr. No. 1. 2. 3. Particulars Number of SPVs sponsored by the bank for securitisation transactions Total amount of assets sold through direct assignment during the year Total amount of exposures retained by the Bank to comply with Minimum Retention Requirement (MRR) a) Off-balance sheet exposures First loss • • Others b) On-balance sheet exposures First loss • • Others 4. Amount of exposure to securitisation transactions other than MRR a) Off-balance sheet exposures i) Exposure to own securitisation • • Others First loss ii) Exposure to third party securitisation First loss • • Others b) On-balance sheet exposures i) Exposure to own securitisation • • Others First loss ii) Exposure to third party securitisation First loss • • Others At March 31, 2018 ` in million At March 31, 2017 - - - - - 19.8 - - - - - - - - - - - - - 33.8 - - - 0.1 - - - 52.5 The overseas branches of the Bank, as originators, sold 15 loans through direct assignment amounting to ` 19,132.7 million during the year ended March 31, 2018 (year ended March 31, 2017: eight loans amounting to ` 11,143.5 million). 185 Financial Statements of ICICI Bank LimitedScheduleSforming 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 circular no. DBOD.BP.BC.No.98/21.04.132/2013-14 dated February 26, 2014. For the purpose of the valuation of the underlying security receipts issued by the underlying trusts managed by ARCs, the SRs are valued at their respective net asset values as advised by the ARCs. The following table sets forth, for the periods indicated, the details of the assets transferred. Particulars Number of accounts Aggregate value (net of provisions) of accounts sold to SC/RC Aggregate consideration3 Additional consideration realised in respect of accounts transferred in earlier years Aggregate gain/(loss) over net book value1,2,3 ` in million, except number of accounts Year ended March 31, 2018 12 2,718.5 3,039.3 Year ended March 31, 2017 35 37,095.2 32,268.1 - 320.8 - (4,827.1) 1. 2. 3. During the year ended March 31, 2018, there was no loss on sale of financial assets to ARCs (year ended March 31, 2017: loss of ` 7,043.5 million). During the year ended March 31, 2018, the Bank made a gain of ` 320.8 million (year ended March 31, 2017: gain of ` 2,216.4 million) on sale of financial assets to ARCs, out of which ` 200.2 million (year ended March 31, 2017: ` 1,883.8 million) is set aside towards the security receipts received on such sale. Excludes security receipts received amounting to ` 34.5 million towards interest overdue not recognised as income (year ended March 31, 2017: ` 359.2 million). The following tables set forth, for the periods indicated, the details of investments in security receipts (SRs). Particulars Net book value of investments in SRs which are - - - Backed by NPAs sold by the Bank as underlying1 Backed by NPAs sold by other banks/financial institutions (FIs)/ non-banking financial companies (NBFCs) as underlying Total ` in million At March 31, 2018 At March 31, 2017 23,803.5 24,194.4 52.6 23,856.1 172.0 24,366.4 1. During the year ended March 31, 2018, no investment in a security receipt was fully redeemed by the ARC (year ended March 31, 2017: one security receipt was fully redeemed) and there was no gain/loss to the Bank (year ended March 31, 2017: Nil). Sr. No. Particulars 1. 2. Book value of SRs backed by NPAs sold by the Bank as underlying Provision held against above Book value of SRs backed by NPAs sold by other banks/financial institutions/non-banking financial companies as underlying 186 At March 31, 2018 SRs issued within past five years SRs issued more than five years ago but within past eight years SRs issued more than eight years ago 26,502.2 2,698.7 - - - 52.6 - - - ` in million Total 26,502.2 2,698.7 52.6 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 ` in million Total - 26,554.8 2,698.7 23,856.1 ` in million Total Sr. No. Particulars Provision held against above Gross book value Total provision held against above Net book value At March 31, 2018 SRs issued within past five years - 26,502.2 2,698.7 23,803.5 SRs issued more than five years ago but within past eight years - 52.6 - 52.6 SRs issued more than eight years ago - - - - Sr. No. Particulars 1. 2. Book value of SRs backed by NPAs sold by the Bank as underlying Provision held against above Book value of SRs backed by NPAs sold by other banks/financial institutions/non-banking financial companies as underlying Provision held against above Gross book value Total provision held against above Net book value At March 31, 2017 SRs issued within past five years SRs issued more than five years ago but within past eight years SRs issued more than eight years ago 26,893.1 2,698.7 99.7 - 26,992.8 2,698.7 24,294.1 - - 12,467.9 12,467.9 39,361.0 15,166.6 72.3 - 72.3 - 72.3 417.0 417.0 12,884.9 12,884.9 - 589.0 417.0 39,950.0 15,583.6 24,366.4 25. Details of non-performing assets purchased/sold, excluding those sold to SC/RC The Bank did not purchase any non-performing assets in terms of the guidelines issued by RBI circular no. DBOD. BP.BC.No.98/21.04.132/2013-14 dated February 26, 2014 during the year ended March 31, 2018 (year ended March 31, 2017: Nil). The following table sets forth, for the periods indicated, details of non-performing assets sold, excluding those sold to SC/RC. ` in million, except number of accounts Particulars Number of accounts Aggregate value (net of provisions) of accounts sold, excluding those sold to SC/RC Aggregate consideration Aggregate gain/(loss) over net book value Year ended March 31, 2018 1 Year ended March 31, 2017 2 3,444.5 3,988.7 544.2 1,526.5 2,207.4 680.9 During the year ended March 31, 2018, the Bank did not sell any non-performing loan to an entity, other than to a financial intermediary (year ended March 31, 2017: one loan to a corporate for sale consideration of ` 39.3 million and gain of ` 39.3 million). 187 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) ) e ( l a t o T 1 0 . 1 - - - - - - - - - - - - - - - - - - 1 - 3 . 0 ) 7 . 0 ( ) a ( 1 0 . 1 d r a d n a t S - - - - - - - - ) 7 . 0 ( - - - - - - - - - - s t n u o c c a f o r e b m u n t p e c x e , n o i l l i m n i ` m s i n a h c e M g n i r u t c u r t s e R t b e D E M S r e d n U m s i n a h c e M R D C r e d n U u f t b u o D - b u S l u f t b u o D - b u S d r a d n a t S d r a d n a t S - - - - - - - - - - - - ) d ( s s o L l ) c ( - - - - - - - - - - - - - - - - - - - - - - - - ) b ( d r a d n a t S ) e ( l a t o T ) d ( s s o L 5 4 6 ) c ( 0 2 5 . 9 8 4 , 8 6 1 . 6 2 5 , 4 2 4 . 8 1 0 , 1 4 . 8 1 0 , 1 0 . 3 9 8 , 9 3 1 . 1 7 5 , 1 2 - - - - - - - - - - - - - - - - - - - - - ) 6 . 5 6 4 , 8 ( 4 . 7 2 5 , 5 2 6 . 7 7 6 . 7 7 ) 9 . 0 4 7 ( 4 . 4 7 9 , 4 1 ) b ( - - - - - - - - - - - - ) a ( 9 1 6 . 6 3 9 , 1 1 . 8 7 5 , 7 2 - - - - - - - ) 3 . 2 0 8 , 7 ( 4 . 5 7 4 , 0 1 . . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - . . A N . . A N . . A N - - - 1 1 0 . 6 0 6 , 5 1 9 . 5 5 0 , 2 1 . . A N . . A N . . A N . . A N . . A N . . A N - - - 1 - 3 . 0 3 4 5 . 0 8 2 , 6 4 1 . 0 1 3 , 6 3 5 8 . 6 7 2 8 . 6 7 2 0 3 9 . 3 3 8 , 1 4 2 . 7 7 6 , 5 3 ) 2 ( ) 1 ( ) 1 ( ) 4 . 3 4 7 , 3 1 ( ) 2 . 9 1 8 ( ) 4 . 3 4 7 , 3 1 ( ) 2 . 9 1 8 ( ) 2 . 4 2 9 , 2 1 ( ) 2 . 4 2 9 , 2 1 ( - - - - - - - - - ) 1 1 ( ) 0 . 6 0 6 , 5 1 ( ) 9 . 5 5 0 , 2 1 ( - - - 8 1 . 6 5 3 8 . 9 6 1 , 4 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d g n i r u t c u r t s e r h s e r F . 2 7 1 0 2 , 1 l i r p A t a s t n u o c c a d e r u t c u r t s e R . 1 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 8 1 0 2 y r o g e t a c d r a d n a t s d e r u t c u r t s e r o t s n o i t a d a r g p U . 3 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N d e d n e r a e y e h t g n i r u d s e s a c d e r u t c u r t s e r g n i t s i x e i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e d ( / e s a e r c n I . 4 , 7 1 0 2 , 1 l i r p A t a s e c n a v d a d r a d n a t s d e r u t c u r t s e R . 5 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 1 8 1 0 2 , 1 3 h c r a M g n i r u t c u r t s e R f o e p y T n o i t a c i f i s s a C l t e s s A . o N . r S s l i a t e D i / d n a g n n o i s i v o r p r e h g h t c a r t t a o t i e s a e c h c h w i d r a d n a t s d e r u t c u r t s e r s a n w o h s e b t o n d e e n e c n e h d n a 8 1 0 2 , 1 3 h c r a M t a i t h g e w k s i r l a n o i t i d d a r o 8 1 0 2 , 1 l i r p A t a s e c n a v d a i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N e h t g n i r u d s t n u o c c a d e r u t c u r t s e r f o s n o i t a d a r g n w o D . 6 8 1 0 2 , 1 3 h c r a M d e d n e r a e y i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N s t n u o c c a d e r u t c u r t s e r l f o e a s / y r e v o c e r / s f f o - e t i r W . 7 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 8 1 0 2 , 1 3 h c r a M t a s t n u o c c a d e r u t c u r t s e R . 8 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N s a ) t n e m t o l l a i g n d n e p y e n o m n o i t a c i l p p a i g n d u l c n i ( y t i u q e o t n i s n a o l f o n o i s r e v n o c , t n e m e v l o v e d d e s a b d n u f - n o n , t n e m e s r u b s i d h s e r f , t s e r e t n i d e u r c c a , n o i t a u t c u l f e t a r e g n a h c x e , y t i l i c a f t i d e r c h s a c f o n o i t a s i l i t u , s t n e m y a p e r o t e u d s i s t n u o c c a d e r u t c u r t s e r i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e d ( / e s a e r c n I . 1 . c t e , e m e h c s g n i r u t c u r t s e r f o t r a p . m s i n a h c e m R D C r e d n u s t e s s a n a o l d e r u t c u r t s e r f o s l i a t e d , 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t r o f , h t r o f t e s l s e b a t g n w o i l l o f e h T s t e s s a d e r u t c u r t s e r f o t c e p s e r n i n o i t a m r o f n I . 6 2 188 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 4 1 4 , 1 4 0 1 6 . 4 7 3 , 4 4 1 7 . 8 4 5 , 1 6 . 9 9 7 , 7 4 7 . 8 4 5 , 1 5 8 7 6 . 5 9 8 , 4 9 8 . 9 4 0 , 3 4 1 2 2 3 . 8 6 3 8 . 7 4 4 , 2 4 0 3 8 . 2 3 8 , 2 5 . 2 8 4 , 5 4 8 6 3 , 1 1 . 4 8 8 , 5 7 5 . 3 7 2 , 3 2 8 9 3 . 0 3 5 3 . 0 3 5 5 6 7 6 . 2 0 0 , 5 5 7 . 8 7 4 , 1 2 1 2 2 3 . 8 6 3 8 . 7 4 4 , 2 4 8 2 2 . 6 9 8 4 . 3 0 9 , 7 1 s t n u o c c a f o r e b m u n t p e c x e , n o i l l i m n i ` . s t e s s a n a o l d e r u t c u r t s e r r e h t o f o s l i a t e d , 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t r o f , h t r o f t e s l s e b a t g n w o i l l o f e h T ) e ( l a t o T ) d ( s s o L l ) c ( l a t o T u f t b u o D - b u S ) b ( d r a d n a t S ) a ( d r a d n a t S ) e ( l a t o T ) d ( s s o L ) c ( l u f t b u o D ) b ( ) a ( - b u S d r a d n a t S d r a d n a t S 2 s r e h t O g n i r u t c u r t s e R f o e p y T n o i t a c i f i s s a C l t e s s A . o N . r S s l i a t e D 5 7 3 5 . 1 2 7 , 3 5 7 . 6 0 3 , 9 2 2 6 . 0 6 . 0 9 4 1 8 . 9 5 6 , 3 5 6 . 4 7 2 , 9 2 8 1 2 3 . 7 5 3 . 1 3 - ) 4 . 0 ( ) 9 . 2 ( ) 7 ( ) 9 . 2 ( ) 9 . 2 ( - - 2 . 6 5 4 , 5 3 ) 0 . 9 4 6 , 2 2 ( 4 . 4 0 1 4 . 4 0 1 - - - - 7 . 4 7 6 , 9 1 ) 8 . 8 0 2 , 6 1 ( - - - - ) 1 ( ) 3 . 0 ( - - - - 1 . 0 6 3 8 . 3 8 6 . . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N 5 1 . 4 2 1 1 . 4 2 1 0 9 1 5 . 4 1 5 , 5 2 8 . 4 1 0 , 9 1 ) 0 6 1 ( ) 9 . 6 6 3 ( ) 4 . 0 4 4 , 2 ( ) 7 1 2 ( ) 8 ( ) 3 . 1 7 9 , 3 2 ( ) 3 . 2 2 8 ( ) 7 . 2 8 5 , 3 2 ( ) 3 . 2 2 8 ( ) 1 2 1 ( ) 8 . 6 8 9 , 2 2 ( ) 2 . 9 5 7 , 2 2 ( 2 7 5 , 1 6 9 3 0 0 , 1 5 . 5 3 8 , 1 5 1 6 . 2 5 9 3 . 4 7 8 , 4 3 1 ) 7 4 ( ) 6 . 5 ( ) 1 . 1 ( 1 3 2 8 . 8 5 6 8 . 3 2 . 0 8 8 . 2 - - - ) 4 . 0 ( ) 9 . 2 ( - ) 6 . 4 4 5 , 6 ( 1 . 7 7 6 , 5 1 8 . 8 2 9 , 9 ) 7 . 2 8 1 , 4 1 ( - - - ) 5 3 ( - - - - ) 1 . 8 3 8 , 2 2 ( ) 2 . 8 8 0 , 8 1 ( 1 . 0 6 3 8 . 3 8 6 ) 7 ( ) 9 . 2 ( ) 9 . 2 ( - 8 . 6 2 8 . 6 2 . . A N . . A N . . A N 5 1 . 4 2 1 1 . 4 2 1 5 7 3 5 . 1 2 7 , 3 5 7 . 6 0 3 , 9 2 2 6 . 0 6 . 0 3 9 4 1 3 8 . 9 5 6 , 3 5 3 6 . 4 7 2 , 9 2 8 1 2 3 . 7 5 3 . 1 3 - - - - 3 . 0 0 7 , 4 ) 9 . 7 6 4 , 5 1 ( - - - - ) 1 ( ) 3 . 0 ( 6 8 . 3 2 . 0 8 8 . 2 - - 4 . 8 5 2 , 1 7 . 1 0 2 , 5 . . A N . . A N . . A N . . A N . . A N . . A N - - - 9 7 1 5 . 8 0 9 , 9 9 . 8 5 9 , 6 ) 0 6 1 ( ) 9 . 6 6 3 ( ) 4 . 0 4 4 , 2 ( ) 4 2 ( ) 1 . 2 3 2 , 7 ( ) 3 . 2 3 0 , 6 ( d r a d n a t s d e r u t c u r t s e r s a n w o h s e b t o n d e e n e c n e h d n a 8 1 0 2 , 1 3 h c r a M t a i t h g e w k s i r l a n o i t i d d a r o 8 1 0 2 , 1 l i r p A t a s e c n a v d a i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N e h t g n i r u d s t n u o c c a d e r u t c u r t s e r f o s n o i t a d a r g n w o D . 6 8 1 0 2 , 1 3 h c r a M d e d n e r a e y i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N , 1 3 h c r a M d e d n e r a e y e h t g n i r u d g n i r u t c u r t s e r h s e r F . 2 7 1 0 2 , 1 l i r p A t a s t n u o c c a d e r u t c u r t s e R . 1 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 8 1 0 2 d e d n e r a e y e h t g n i r u d s e s a c d e r u t c u r t s e r g n i t s i x e i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e D ( / e s a e r c n I . 4 y r o g e t a c d r a d n a t s d e r u t c u r t s e r o t s n o i t a d a r g p U . 3 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N , 7 1 0 2 , 1 l i r p A t a s e c n a v d a d r a d n a t s d e r u t c u r t s e R . 5 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 1 8 1 0 2 , 1 3 h c r a M i / d n a g n n o i s i v o r p r e h g h t c a r t t a o t i e s a e c h c h w i 4 6 . 0 6 6 , 9 8 4 6 . 2 5 9 4 7 . 4 5 2 , 8 8 4 5 . 1 3 4 8 . 1 2 4 5 . 0 5 3 , 3 5 f o t r a p s a ) t n e m t o l l a i g n d n e p n o i t a c i l p p a i g n d u l c n i ( y t i u q e o t n i s n a o l f o n o i s r e v n o c , t n e m e v l o v e d d e s a b d n u f - n o n , t n e m e s r u b s i d h s e r f , t s e r e t n i d e u r c c a , n o i t a u t c u l f e t a r e g n a h c x e , y t i l i c a f t i d e r c h s a c f o n o i t a s i l i t u , s t n e m y a p e r o t e u d s i s t n u o c c a d e r u t c u r t s e r i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e d ( / e s a e r c n I . 1 . n o i t c e r i d s ’ I B R n o d e s a b d e r u t c u r t s e r s a d e i f i s s a l c d n a 7 1 0 2 , 1 3 h c r a M t a A P N e r e w h c i h w n o i l l i m 2 . 4 6 9 , 0 2 ` o t g n i t n u o m a s r e w o r r o b e e r h t o t s n a o l s e d u l c n I . s t n u o c c a e s e h t n o n o i l l i m 4 . 8 6 0 , 2 ` o t g n i t n u o m a n o i s i v o r p s d o h y l l l a n o i t i d d a k n a B e h T . m s i n a h c e m ) F L J ( m u r o F r e d n e L i t n o J r e d n u d e r u t c u r t s e r s e s a c e d u l c n i o s l a m s i n a h c e m ’ s r e h t O ‘ . c t e , e m e h c s g n i r u t c u r t s e r . 2 . 3 . 4 189 ) 1 4 ( ) 1 . 0 ( ) 6 . 6 5 1 ( ) 5 1 2 ( ) 3 . 9 3 8 , 9 ( ) 9 . 7 2 2 , 0 1 ( ) 7 ( ) 1 . 3 ( ) 1 . 3 ( ) 0 2 1 ( ) 0 . 5 3 8 , 9 ( ) 6 . 2 6 0 , 0 1 ( ) 7 4 ( ) 6 . 5 ( ) 1 . 1 ( 2 4 2 8 2 5 , 1 8 . 9 4 9 , 5 1 7 . 4 5 5 , 5 0 1 1 9 8 . 5 7 6 8 . 5 7 6 3 7 9 4 . 0 4 0 , 3 9 5 . 7 7 5 , 2 5 1 3 2 8 . 8 5 5 . 1 3 ) 1 4 ( ) 1 . 0 ( ) 6 . 6 5 1 ( 3 3 2 7 . 5 6 7 . 9 7 7 , 1 1 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 8 1 0 2 , 1 3 h c r a M t a s t n u o c c A d e r u t c u r t s e R . 8 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N s t n u o c c a d e r u t c u r t s e r l f o e a s / y r e v o c e r / s f f o - e t i r W . 7 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) ) e ( l a t o T 1 6 . 1 - - - - - - - - - - - - - - - - - - - 1 0 . 1 ) 6 . 0 ( - - - - - - - - - - - - ) d ( s s o L ) c ( ) b ( - - - - - - - - - - - - - - - - - - - - - - - - . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . - - - - - - - - - - - - - - - - - - - - - - - - - - - ) a ( 1 6 . 1 - - - - - - - - ) 6 . 0 ( - - - - - - - - - - ) e ( l a t o T ) d ( s s o L 5 6 7 ) c ( 6 2 1 . 4 1 6 , 0 2 1 8 . 5 3 0 , 2 6 . 8 3 2 , 2 4 8 . 5 3 0 , 2 0 . 7 1 9 , 1 6 8 . 4 2 5 , 5 3 - - - - - ) 5 . 4 1 ( ) 1 . 2 0 1 ( - - - - - - - - - - - ) 1 ( ) 5 . 3 9 1 ( ) 5 . 3 9 1 ( ) 5 . 9 7 9 , 3 2 ( ) 7 . 5 0 1 ( ) 5 . 5 1 3 , 1 1 ( ) 7 . 5 0 1 ( ) 6 . 3 4 2 , 2 2 ( ) 0 . 0 7 9 , 0 1 ( ) b ( - - - - - - - - - - - - ) a ( 2 3 0 . 8 7 6 , 4 3 . 1 6 6 , 6 5 - - - 1 4 . 1 9 0 . 9 7 1 - ) 8 . 9 3 2 ( ) 2 . 0 3 6 , 1 ( - - - - ) 8 . 0 1 4 , 1 ( 1 . 6 1 0 , 3 1 . A N . . A N . . A N . 3 5 . 6 3 8 5 . 6 3 8 1 1 7 . 4 8 3 , 5 2 6 . 2 7 7 , 4 1 . A N . . A N . . A N . . A N . . A N . . A N . - - - - 1 0 . 1 5 4 6 5 . 9 8 4 , 8 6 1 . 6 2 5 , 4 2 4 . 8 1 0 , 1 4 . 8 1 0 , 1 0 2 0 . 3 9 8 , 9 3 1 . 1 7 5 , 1 2 ) 0 2 ( ) 4 ( ) 6 1 ( ) 8 . 9 1 7 , 6 2 ( ) 2 . 8 4 7 , 1 ( ) 6 . 1 7 9 , 4 2 ( ) 0 . 1 1 3 , 9 1 ( ) 2 . 8 4 7 , 1 ( ) 8 . 2 6 5 , 7 1 ( - - - - - - - - - ) 4 1 ( ) 0 . 3 9 5 , 2 ( ) 0 . 2 3 6 , 7 2 ( - - - 9 1 6 . 6 3 9 , 1 1 . 8 7 5 , 7 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d g n i r u t c u r t s e r h s e r F . 2 6 1 0 2 , 1 l i r p A t a s t n u o c c a d e r u t c u r t s e R . 1 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 7 1 0 2 y r o g e t a c d r a d n a t s d e r u t c u r t s e r o t s n o i t a d a r g p U . 3 7 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N d e d n e r a e y e h t g n i r u d s e s a c d e r u t c u r t s e r g n i t s i x e i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e d ( / e s a e r c n I . 4 , 6 1 0 2 , 1 l i r p A t a s e c n a v d a d r a d n a t s d e r u t c u r t s e R . 5 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 1 7 1 0 2 , 1 3 h c r a M g n i r u t c u r t s e R f o e p y T n o i t a c i f i s s a C l t e s s A . o N . r S s l i a t e D i / d n a g n n o i s i v o r p r e h g h t c a r t t a o t i e s a e c h c h w i d r a d n a t s d e r u t c u r t s e r s a n w o h s e b t o n d e e n e c n e h d n a 7 1 0 2 , 1 3 h c r a M t a i t h g e w k s i r l a n o i t i d d a r o 7 1 0 2 , 1 l i r p A t a s e c n a v d a i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N e h t g n i r u d s t n u o c c a d e r u t c u r t s e r f o s n o i t a d a r g n w o D . 6 7 1 0 2 , 1 3 h c r a M d e d n e r a e y i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N s t n u o c c a d e r u t c u r t s e r l f o e a s / y r e v o c e r / s f f o - e t i r W . 7 7 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 7 1 0 2 , 1 3 h c r a M t a s t n u o c c a d e r u t c u r t s e R . 8 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N s t n u o c c a f o r e b m u n t p e c x e , n o i l l i m n i ` m s i n a h c e M g n i r u t c u r t s e R t b e D E M S r e d n U m s i n a h c e M R D C r e d n U l u f t b u o D - b u S d r a d n a t S d r a d n a t S l u f t b u o D - b u S d r a d n a t S d r a d n a t S . m s i n a h c e m R D C r e d n u s t e s s a n a o l d e r u t c u r t s e r f o s l i a t e d , 7 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t r o f , h t r o f t e s l s e b a t g n w o i l l o f e h T 190 s a ) t n e m t o l l a i g n d n e p y e n o m n o i t a c i l p p a i g n d u l c n i ( y t i u q e o t n i s n a o l f o n o i s r e v n o c , t n e m e v l o v e d d e s a b d n u f - n o n , t n e m e s r u b s i d h s e r f , t s e r e t n i d e u r c c a , n o i t a u t c u l f e t a r e g n a h c x e , y t i l i c a f t i d e r c h s a c f o n o i t a s i l i t u , s t n e m y a p e r o t e u d s i s t n u o c c a d e r u t c u r t s e r i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e d ( / e s a e r c n I . 1 . c t e , e m e h c s g n i r u t c u r t s e r f o t r a p Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 s t n u o c c a f o r e b m u n t p e c x e , n o i l l i m n i ` ) e ( l a t o T ) d ( s s o L 5 6 3 , 1 7 2 1 ) c ( 5 7 l a t o T l u f t b u o D 5 . 0 7 6 , 7 9 1 8 . 9 7 6 , 8 7 . 1 5 6 , 6 6 8 . 9 7 6 , 8 9 . 8 4 2 , 5 9 9 . 6 6 4 , 0 5 ) b ( ) a ( - b u S d r a d n a t S d r a d n a t S ) e ( l a t o T ) d ( s s o L 9 3 7 4 . 1 1 6 3 . 2 0 1 4 2 4 7 . 2 0 4 , 7 4 . 0 3 1 , 3 9 9 9 2 , 1 8 . 4 5 0 , 7 7 1 . 3 1 4 , 4 2 0 2 1 0 . 4 4 6 , 6 0 . 4 4 6 , 6 ) c ( 9 4 2 s r e h t O l u f t b u o D 9 . 1 3 3 , 3 3 1 . 2 4 9 , 4 1 ) b ( ) a ( - b u S d r a d n a t S d r a d n a t S 9 3 7 4 . 1 1 6 3 . 2 0 1 1 9 3 7 . 4 2 7 , 2 5 . 7 6 4 , 6 3 4 8 1 5 . 0 9 5 , 6 9 . 2 6 1 , 5 2 - - - 2 3 . 7 6 4 , 6 1 . 5 6 4 , 2 2 1 6 . 4 8 7 7 . 7 1 1 5 . 5 1 8 1 2 . 3 1 9 , 1 4 8 1 5 . 0 9 5 , 6 9 . 2 6 1 , 5 2 - - - 2 3 . 7 6 4 , 6 1 . 5 6 4 , 2 2 1 6 . 4 8 7 7 . 7 1 1 5 . 5 1 8 1 2 . 3 1 9 , 1 - ) 9 . 4 1 ( ) 9 . 7 0 1 ( ) 8 ( ) 4 . 6 ( ) 4 . 6 ( ) 2 ( ) 8 . 3 9 1 ( ) 6 . 3 9 1 ( - - - ) 1 . 5 8 2 , 9 2 ( ) 7 . 8 3 1 ( ) 1 . 3 7 8 , 1 1 ( ) 7 . 8 3 1 ( ) 5 . 9 5 2 , 6 2 ( ) 3 . 3 5 6 , 1 1 ( - - - - ) 3 ( ) 3 . 0 ( 3 1 1 . 2 9 6 . 5 8 1 - ) 4 . 0 ( ) 8 . 5 ( ) 8 ( ) 4 . 6 ( ) 4 . 6 ( ) 1 ( ) 3 . 0 ( ) 1 . 0 ( - - ) 1 . 1 8 ( ) 6 . 7 5 5 ( ) 9 . 6 8 8 , 2 ( ) 0 . 5 0 3 , 5 ( - ) 0 . 3 3 ( ) 0 . 3 3 ( - ) 3 . 3 8 6 ( ) 9 . 5 1 0 , 4 ( - - - - ) 3 ( ) 3 . 0 ( 2 1 6 . 6 7 . 0 - 7 . 8 5 1 ) 1 . 6 5 2 , 1 ( , 1 3 h c r a M d e d n e r a e y e h t g n i r u d g n i r u t c u r t s e r h s e r F . 2 6 1 0 2 , 1 l i r p A t a s t n u o c c a d e r u t c u r t s e R . 1 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 7 1 0 2 y r o g e t a c d r a d n a t s d e r u t c u r t s e r o t s n o i t a d a r g p U . 3 7 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N d e d n e r a e y e h t g n i r u d s e s a c d e r u t c u r t s e r g n i t s i x e i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e d ( / e s a e r c n I . 4 , 6 1 0 2 , 1 l i r p A t a s e c n a v d a d r a d n a t s d e r u t c u r t s e R . 5 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 1 7 1 0 2 , 1 3 h c r a M g n i r u t c u r t s e R f o e p y T n o i t a c i f i s s a C l t e s s A . o N . r S s l i a t e D . s t e s s a n a o l d e r u t c u r t s e r l a t o t f o s l i a t e d , 7 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t r o f , h t r o f t e s l s e b a t g n w o i l l o f e h T i / d n a g n n o i s i v o r p r e h g h t c a r t t a o t i e s a e c h c h w i - - - . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . - - - - - - . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . . A N . - - - 4 3 6 ) 3 . 9 1 1 , 4 ( 7 . 6 8 6 , 8 1 1 . 8 3 8 1 . 8 3 8 7 3 7 7 . 5 8 1 , 9 3 6 . 6 4 0 , 2 2 ) 3 5 4 ( ) 6 5 2 ( 4 3 6 . 9 4 1 ) 6 . 7 4 3 , 4 ( 6 . 0 7 6 , 5 4 . 8 5 0 , 1 ) 5 . 1 0 2 , 5 4 ( ) 5 . 8 0 7 , 2 ( 3 6 . 1 6 . 1 6 2 7 ) 3 5 4 ( ) 2 4 2 ( 0 . 4 7 2 , 7 6 . 9 4 1 ) 6 . 4 5 7 , 1 ( 0 . 1 0 8 , 3 1 4 . 8 5 0 , 1 ) 5 . 9 6 5 , 7 1 ( d r a d n a t s d e r u t c u r t s e r s a n w o h s e b t o n d e e n e c n e h d n a 7 1 0 2 , 1 3 h c r a M t a i t h g e w k s i r l a n o i t i d d a r o 7 1 0 2 , 1 l i r p A t a s e c n a v d a i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N e h t g n i r u d s t n u o c c a d e r u t c u r t s e r f o s n o i t a d a r g n w o D . 6 7 1 0 2 , 1 3 h c r a M d e d n e r a e y i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N ) 9 6 1 ( ) 1 2 ( ) 7 2 ( ) 5 . 9 3 0 , 5 4 ( ) 1 . 4 2 8 , 7 ( ) 8 . 0 5 5 , 5 3 ( ) 2 . 8 4 1 , 2 3 ( ) 1 . 4 2 8 , 7 ( ) 1 . 4 8 0 , 4 2 ( ) 3 6 ( ) 3 . 6 ( ) 2 . 1 ( ) 8 5 ( ) 9 4 1 ( ) 7 1 ( ) 1 1 ( ) 8 . 8 3 2 ( ) 2 . 7 3 8 , 2 1 ( ) 9 . 5 7 0 , 6 ( ) 3 . 1 2 5 , 6 ( ) 3 . 8 5 6 , 1 ( ) 7 . 9 1 3 , 8 1 ( ) 9 . 5 7 0 , 6 ( ) 2 . 9 7 5 , 0 1 ( ) 3 6 ( ) 3 . 6 ( ) 2 . 1 ( ) 8 5 ( ) 8 . 8 3 2 ( ) 3 . 8 5 6 , 1 ( 4 1 4 , 1 4 0 1 5 8 7 1 2 2 3 6 . 9 9 7 , 7 4 3 7 . 8 4 5 , 1 3 8 . 9 4 0 , 3 4 3 3 . 8 6 3 6 . 4 7 3 , 4 4 1 7 . 8 4 5 , 1 6 . 5 9 8 , 4 9 8 . 7 4 4 , 2 4 0 3 5 . 2 8 4 , 5 4 3 8 . 2 3 8 , 2 8 6 3 , 1 1 . 4 8 8 , 5 7 5 . 3 7 2 , 3 2 8 9 3 . 0 3 5 3 . 0 3 5 5 6 7 6 . 2 0 0 , 5 5 7 . 8 7 4 , 1 2 1 2 2 4 8 2 3 . 8 6 3 2 . 6 9 8 8 . 7 4 4 , 2 4 . 3 0 9 , 7 1 7 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t g n i r u d i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N 7 1 0 2 , 1 3 h c r a M t a s t n u o c c A d e r u t c u r t s e R . 8 i g n d n a t s t u o t n u o m A n o e r e h t n o i s i v o r P s r e w o r r o b f o . o N f o t r a p s a ) t n e m t o l l a i g n d n e p n o i t a c i l p p a i g n d u l c n i ( y t i u q e o t n i s n a o l f o n o i s r e v n o c , t n e m e v l o v e d d e s a b d n u f - n o n , t n e m e s r u b s i d h s e r f , t s e r e t n i d e u r c c a , n o i t a u t c u l f e t a r e g n a h c x e , y t i l i c a f t i d e r c h s a c f o n o i t a s i l i t u , s t n e m y a p e r o t e u d s i s t n u o c c a d e r u t c u r t s e r i f o g n d n a t s t u o l e v e l r e w o r r o b n i ) e s a e r c e d ( / e s a e r c n I . 1 . s t n u o c c a e s e h t n o n o i l l i m 1 . 4 2 2 , 6 ` o t g n i t n u o m a n o i s i v o r p s d o h y l l l a n o i t i d d a k n a B e h T . m s i n a h c e m F L J r e d n u d e r u t c u r t s e r s e s a c e d u l c n i o s l a m s i n a h c e m ’ s r e h t O ‘ . 2 . 3 . c t e , e m e h c s g n i r u t c u r t s e r 191 s t n u o c c a d e r u t c u r t s e r l f o e a s / y r e v o c e r / s f f o - e t i r W . 7 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  The following table sets forth, for the periods indicated, details of cases under Strategic Debt Restructuring (SDR) scheme (accounts which are currently under the stand-still period). Particulars Number of borrowers where SDR has been invoked Gross amount outstanding2,3 - Standard - NPA Gross amount outstanding for borrowers where conversion of debt to equity is pending2,3 - Standard - NPA Gross amount outstanding for borrowers where conversion of debt to equity has taken place2,3 - Standard - NPA ` in million, except number of borrowers At March 31, 20181 - At March 31, 2017 15 - - - - - - 64,475.4 - 12,076.0 - 52,399.4 - 1. With effect from February 12, 2018, RBI has withdrawn SDR scheme. Accordingly, at March 31, 2018, cases where SDR has been invoked but not implemented are classified as per the extant Income Recognition and Asset Classification norms of RBI and have not been included here. 2. At March 31, 2017, eight cases amounting to ` 23,182.5 million classified as standard restructured. 3. 4. Represents gross loans and credit substitutes. Cases where the Bank has not taken stand-still benefit for NPA are excluded. The Bank does not recognise any amount towards interest on the cases under SDR. With effect from February 12, 2018, RBI has withdrawn the scheme and the interest income, for cases where SDR were not implemented has been recognised as per the Income Recognition and Asset Classification norms of RBI. The following table sets forth, for the periods indicated, details for cases of change in ownership outside SDR scheme (accounts which are currently under the stand-still period). Particulars Number of borrowers where the Bank has decided to effect change in ownership Gross amount outstanding - Standard - NPA Gross amount outstanding for borrowers where conversion of debt to equity/invocation of pledge of equity shares is pending - Standard - NPA Gross amount outstanding for borrowers where conversion of debt to equity/invocation of pledge of equity shares has taken place - Standard - NPA Gross amount outstanding for borrowers where change in ownership is envisaged by issuance of fresh shares or sale of promoters equity - Standard - NPA 192 ` in million, except number of borrowers At March 31, 20181 At March 31, 2017 - - - - - - - - - 1 51,052.3 - 51,052.3 - - - - - Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 1. 2. 3. With effect from February 12, 2018, Reserve Bank of India (RBI) has withdrawn change of management outside SDR scheme. Accordingly, at March 31, 2018, cases where change of management outside SDR has been invoked but not implemented are classified as per the extant Income Recognition and Asset Classification norms of RBI and have not been included here. Represents gross loans and credit substitutes. Cases where the Bank has not taken stand-still benefit for NPA are excluded. The Bank does not recognise any amount towards interest on the cases under change of management outside SDR. With effect from February 12, 2018, RBI has withdrawn the scheme and the interest income, for cases where the change in management outside SDR were not implemented has been recognised as per the Income Recognition and Asset Classification norms of RBI. During the year ended March 31, 2018, the Bank has upgraded one NPA borrower to standard category subsequent to change in ownership in accordance with RBI circular dated February 12, 2018. At March 31, 2018, the borrower’s fund based outstanding was ` 15,452.7 million, which includes ` 10,262.0 million of credit substitutes and shares converted as per the resolution plan. The Bank holds an aggregate provision of ` 7,785.1 million against this borrower, which includes ` 6,508.2 million held against credit substitutes and shares. The following table sets forth, for the periods indicated, details for cases of change in ownership for projects under implementation (accounts which are currently under the stand-still period). Particulars Number of project loan borrowers where the Bank has decided to effect change in ownership Gross amount outstanding - Standard - Standard restructured - NPA ` in million, except number of borrowers At March 31, 2018 At March 31, 2017 1 2,346.3 - - - - - - The following table sets forth, for the periods indicated, details of cases where scheme for Sustainable Structuring of Stressed Assets (S4A) is implemented. Particulars Number of borrowers where S4A has been applied Total gross amount outstanding1 - Standard - NPA Gross amount outstanding in Part A - Standard - NPA Gross amount outstanding in Part B - Standard - NPA Provision held - Standard - NPA ` in million, except number of borrowers At March 31, 2018 6 At March 31, 2017 2 6,596.92 1,144.8 4,084.92 108.7 2,512.0 1,036.1 1,281.4 789.0 2,925.7 - 1,556.6 - 1,369.1 - 576.4 - 1. 2. Represents loans, credit substitutes and shares under S4A scheme. Includes outstanding amounting to ` 1,327.2 million which was upgraded to standard from NPA on implementation of S4A. 193 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  The Bank does not recognise any amount towards interest on the cases under S4A. With effect from February 12, 2018, RBI has withdrawn the scheme and the interest income, for cases where S4A were not implemented has been recognised as per the Income Recognition and Asset Classification norms of RBI. The following table sets forth, for the periods indicated, details of cases under flexible structuring of existing loans. Particulars Number of borrowers taken up for flexible structuring Amount of loans taken up for flexible structuring2 - Standard - NPA Exposure weighted average duration of loans taken up for flexible structuring - Before applying flexible structuring - After applying flexible structuring ` in million, except number of borrowers Year ended March 31, 2018 31 Year ended March 31, 2017 2 11,709.8 - 6,588.7 - 4.57 10.98 2.56 6.77 1. During the year ended March 31, 2018, two borrowers were taken up for flexible structuring, out of which one borrower was demerged into two entities through National Company Law Appellate Tribunal (NCLAT) order dated February 28, 2018. 2. Represents implementation amount. 27. Concentration of Deposits, Advances, Exposures and NPAs (I) Concentration of deposits, advances, exposures and NPAs Concentration of deposits Total deposits of 20 largest depositors Deposits of 20 largest depositors as a percentage of total deposits of the Bank Concentration of advances1 Total advances to 20 largest borrowers (including banks) Advances to 20 largest borrowers as a percentage of total advances of the Bank At March 31, 2018 347,959.8 ` in million At March 31, 2017 344,948.7 6.20% 7.03% At March 31, 2018 1,365,485.0 ` in million At March 31, 2017 1,176,210.0 14.11% 13.16% 1. Represents credit exposure (funded and non-funded) including derivatives exposures as per RBI guidelines on exposure norms. Concentration of exposures1 Total exposure to 20 largest borrowers/customers (including banks) Exposures to 20 largest borrowers/customers as a percentage of total exposure of the Bank At March 31, 2018 1,431,945.8 ` in million At March 31, 2017 1,209,099.8 13.95% 12.90% 1. Represents credit and investment exposures as per RBI guidelines on exposure norms. Concentration of NPAs Total exposure1 to top four NPA accounts 1. Represents gross exposure (funded and non-funded). 194 At March 31, 2018 154,385.3 ` in million At March 31, 2017 149,247.4 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 (II) Sector-wise advances Sr. No. Particulars Priority sector Agriculture and allied activities Advances to industries sector eligible as priority sector lending Services of which: Transport operators Wholesale trade Personal loans of which: Housing Vehicle loans Sub-total (A) Non-priority sector Agriculture and allied activities Advances to industries sector of which: Infrastructure Basic metal and metal products Services of which: Commercial real estate Wholesale trade Non-banking financial companies Personal loans1 of which: Housing Sub-total (B) Total (A)+(B) ` in million, except percentages At March 31, 2018 Gross NPAs Outstanding advances % of gross NPAs to total advances in that sector 393,267.6 12,330.0 231,019.8 75,247.9 14,846.4 36,832.9 243,380.3 229,255.3 11,946.7 942,915.6 4,387.3 1,599.6 165.5 971.5 2,498.2 2,255.3 120.2 20,815.1 - - 1,629,611.9 484,409.9 253,136.8 1,109,598.3 280,361.6 131,292.0 135,066.6 1,697,325.1 1,120,039.7 4,436,535.3 5,379,450.9 415,068.6 127,310.9 63,862.2 75,133.1 10,704.7 5,789.1 0.2 21,385.0 8,706.7 511,586.7 532,401.8 3.14% 1.90% 2.13% 1.12% 2.64% 1.03% 0.98% 1.01% 2.21% 0.00% 25.47% 26.28% 25.23% 6.77% 3.82% 4.41% 0.00% 1.26% 0.78% 11.53% 9.90% Excludes commercial business loans and dealer funding. Sub-sectors have been disclosed where advances exceed 10% of total advances in that sector at reporting date. Particulars Priority sector Agriculture and allied activities Advances to industries sector eligible as priority sector lending Services of which: Transport operators Wholesale trade ` in million, except percentages At March 31, 2017 Outstanding advances Gross NPAs % of gross NPAs to total advances in that sector 341,765.2 10,634.9 179,014.5 157,736.7 94,243.6 21,329.9 5,417.8 2,460.1 1,109.2 424.1 3.11% 3.03% 1.56% 1.18% 1.99% 195 A. 1 2 3 4 B. 1 2 3 4 1. 2. Sr. No. A. 1 2 3 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Particulars Personal loans of which: Housing Vehicle loans Sub-total (A) Non-priority sector Agriculture and allied activities Advances to industries sector of which: Infrastructure Basic metal and metal products Services of which: Commercial real estate Wholesale trade Non-banking financial companies Personal loans1 of which: Housing Sub-total (B) Total (A)+(B) Excludes commercial business loans and dealer funding. ` in million, except percentages At March 31, 2017 Outstanding advances Gross NPAs % of gross NPAs to total advances in that sector 401,622.2 259,814.7 130,646.7 1,080,138.6 4,805.5 2,241.1 2,233.1 23,318.3 - - 1,621,712.6 532,398.0 323,388.0 908,101.3 262,610.0 126,313.8 112,359.7 1,214,651.5 898,475.2 3,744,465.4 4,824,604.0 321,120.6 86,004.1 80,392.5 66,357.4 7,694.1 6,978.8 0.2 10,797.5 5,014.8 398,275.5 421,593.8 1.20% 0.86% 1.71% 2.16% - 19.80% 16.15% 24.86% 7.31% 2.93% 5.53% 0.00% 0.89% 0.56% 10.64% 8.74% Sub-sectors have been disclosed where advances exceed 10% of total advances in that sector at reporting date. Sr. No. 4 B. 1 2 3 4 1. 2. (III) Overseas assets, NPAs and revenue Particulars Total assets1 Total NPAs (net) Total revenue1 Year ended March 31, 2018 931,385.2 122,524.3 38,091.2 ` in million Year ended March 31, 2017 946,250.3 79,506.2 53,711.9 1. Represents the total assets and total revenue of foreign operations as reported in Schedule 18 of the financial statements, note no. 5 on information about business and geographical segments. (IV) Off-balance sheet special purpose vehicles (SPVs) sponsored (which are required to be consolidated as per accounting norms) for the year ended March 31, 2018 (a) The following table sets forth, the names of SPVs/trusts sponsored by the Bank/subsidiaries which are consolidated. Sr. No. A. B. 1. 2. 196 Name of the SPV sponsored1 ICICI Strategic Investments Fund2 India Advantage Fund-III2 India Advantage Fund-IV2 Domestic 1. 2. 3. Overseas None SPVs/Trusts which are consolidated and set-up/sponsored by the Bank/Subsidiaries of the Bank. The nature of business of the above entities is venture capital fund. Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 (b) The following table sets forth, the names of SPVs/trusts which are not sponsored by the Bank/subsidiaries and are consolidated. Sr. No. A. B. Name of the SPV Domestic None Overseas None 28. Intra-group exposure The following table sets forth, for the periods indicated, the details of intra-group exposure. Sr. No. 1. 2. 3. 4. Particulars Total amount of intra-group exposures Total amount of top 20 intra-group exposures Percentage of intra-group exposure to total exposures of the Bank on borrowers/customers Details of breach of limits on intra-group exposures and regulatory action thereon, if any At March 31, 2018 125,838.4 125,838.4 ` in million At March 31, 2017 91,990.1 91,990.1 1.23% Nil 0.98% Nil 29. Exposure to sensitive sectors The Bank has exposure 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 exposure to capital market sector. Sr. No. 1. 2. 3. 4. 5. 6. Particulars Direct investment in equity shares, convertible bonds, 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 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 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 i.e. where the primary security other than shares/convertible bonds/convertible debentures/units of equity oriented mutual funds does not fully cover the advances Secured and unsecured advances to stockbrokers and guarantees issued on behalf of stock brokers 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 At March 31, 2018 ` in million At March 31, 2017 24,451.5 26,647.1 1,336.0 1,574.9 49,530.2 53,953.3 - - 74,928.9 58,604.7 - - 197 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Particulars Sr. No. 7. 8. Bridge loans to companies against expected equity flows/issues 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 Financing to stockbrokers for margin trading 9. 10. All exposures to venture capital funds (both registered and unregistered) 11. Others Total exposure to capital market1 At March 31, 2018 - ` in million At March 31, 2017 324.3 - - 5,634.3 591.7 156,472.6 - - 5,263.1 2,307.3 148,674.7 1. At March 31, 2018, excludes investment in equity shares of ` 27,085.1 million (March 31, 2017: ` 18,098.1 million) exempted from the regulatory ceiling, out of which investments of ` 25,481.8 million (March 31, 2017: ` 17,887.0 million) were acquired under resolution schemes of RBI. The following table sets forth, for the periods indicated, the summary of exposure to real estate sector. Sr. No. I II 1. Particulars 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 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 sector At March 31, 2018 2,003,591.0 1,573,084.4 ` in million At March 31, 2017 1,764,643.6 1,361,624.8 188,656.5 400,703.7 29,802.9 25,370.6 4,432.3 189,766.3 185,680.7 365,609.4 37,409.4 33,382.6 4,026.8 135,414.3 189,766.3 - 2,193,357.3 135,414.3 - 1,900,057.9 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. 30. Factoring business At March 31, 2018, the outstanding receivables acquired by the Bank under factoring business were Nil (March 31, 2017: ` 2,061.0 million). 31. 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 States of America was 3.08% (March 31, 2017: 2.27%) and for Singapore was 1.13% (March 31, 2017: 1.20%). As the net funded exposure to United States of America and Singapore exceeded 1.0% of total funded assets, the Bank held a provision of ` 455.0 million on country exposure at March 31, 2018 (March 31, 2017: ` 375.0 million) based on RBI guidelines. 198 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 The following table sets forth, for the periods indicated, the details of exposure (net) and provision held by the bank. Risk category Insignificant Low Moderately Low Moderate Moderately High High Very High Total Exposure (net) at March 31, 2018 914,183.7 282,931.3 8,706.1 7,737.7 9,928.4 - - 1,223,487.2 Provision held at March 31, 2018 455.0 - - - - - - 455.0 Exposure (net) at March 31, 2017 741,032.4 203,202.9 10,958.7 15,919.2 - - - 971,113.2 ` in million Provision held at March 31, 2017 375.0 - - - - - - 375.0 32. Details of Single Borrower Limit and Borrower Group Limit exceeded by the Bank During the year ended March 31, 2018 and March 31, 2017, the Bank has complied with the RBI guidelines on single borrower and borrower group limit. 33. Unsecured advances against intangible assets The Bank has not made advances against intangible collaterals of the borrowers, which are classified as ‘Unsecured’ in the financial statements at March 31, 2018 (March 31, 2017: Nil). 34. Revaluation of fixed assets The Bank follows the revaluation model for its premises (land and buildings) as per AS 10 – ‘Property, Plant and Equipment’. The Bank had initially revalued its premises at March 31, 2016. In accordance with the Bank’s policy, annual revaluation was carried out during the year ended March 31, 2018 through external valuers, using methodologies such as direct comparison method and income generation method and the incremental amount has been taken to revaluation reserve. The revalued amount at March 31, 2018 was ` 56,637.9 million (March 31, 2017: ` 57,161.9 million) as compared to the historical cost less accumulated depreciation of ` 26,606.0 million (March 31, 2017: ` 26,740.5 million). The revaluation reserve is not available for distribution of dividend. 35. Fixed Assets The following table sets forth, for the periods indicated, the movement in software acquired by the Bank, as included in fixed assets. Particulars At cost at March 31 of preceding year Additions during the year Deductions during the year Depreciation to date Net block At March 31, 2018 15,066.6 3,573.5 (32.0) (14,033.0) 4,575.1 ` in million At March 31, 2017 13,136.6 1,950.3 (20.3) (11,807.7) 3,258.9 199 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) 36. 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 Liability for partly paid investments Liability on account of outstanding forward exchange contracts Guarantees given on behalf of constituents, acceptances, endorsements and other obligations Currency swaps, interest rate swaps, currency options and interest rate futures Other items for which the Bank is contingently liable This item represents demands made in certain tax and legal matters against the Bank in the normal course of business and customer claims arising in fraud cases. In accordance with the Bank’s accounting policy and AS 29, the Bank has reviewed and classified these items as possible obligations based on legal opinion/judicial precedents/assessment by the Bank. This item represents amounts remaining unpaid towards liability for partly paid investments. These payment obligations of the Bank do not have any profit/loss impact. The Bank enters into foreign exchange contracts in the normal course of its 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. 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 the customers fail to fulfil their financial or performance obligations. This item represents the notional principal amount 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 primarily include the amount of government securities bought/sold and remaining to be settled on the date of financial statements. This also includes the value of sell down options and other facilities pertaining to securitisation, the notional principal amounts of credit derivatives, amount applied in public offers under Application Supported by Blocked Amounts (ASBA), bill re-discounting, amount transferred to RBI under the Depositor Education and Awareness Fund (DEAF), exposure under partial credit enhancement, commitment towards contribution to venture fund and the amount that the Bank is obligated to pay under capital contracts. Capital contracts are job orders of a capital nature which have been committed. 37. Insurance business The following table sets forth, for the periods indicated, the break-up of income derived from insurance business. Sr. No. 1. 2. 3. 200 Particulars Income from selling life insurance policies Income from selling non-life insurance policies Income from selling mutual fund/collective investment scheme products Year ended March 31, 2018 8,821.1 1,133.5 ` in million Year ended March 31, 2017 9,644.2 888.9 4,999.5 2,681.3 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 38. Employee benefits Pension The following tables set forth, for the periods indicated, movement of the present value of the defined benefit obligation, fair value of plan assets and other details for pension benefits. Particulars Opening obligations Service cost Interest cost Actuarial (gain)/loss Liabilities extinguished on settlement 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 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) Cost1 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 Actual return on plan assets Expected employer’s contribution next year Investment details of plan assets Insurer managed funds Government of India securities Corporate bonds Equity securities in listed companies Others Assumptions Discount rate Salary escalation rate: On Basic pay On Dearness relief Estimated rate of return on plan assets Year ended March 31, 2018 16,686.9 275.0 1,113.1 (1,162.8) (1,399.0) (122.1) 15,391.1 16,888.1 1,433.4 (449.6) (1,554.5) 108.4 (122.1) 16,303.7 16,303.7 (15,391.1) ` in million Year ended March 31, 2017 14,191.6 253.7 1,116.5 2,436.0 (1,182.5) (128.4) 16,686.9 13,191.6 1,143.2 589.5 (1,313.9) 3,406.1 (128.4) 16,888.1 16,888.1 (16,686.9) (310.1) 602.5 275.0 1,113.1 (1,433.4) (713.2) 155.5 241.8 (361.2) 983.8 3,000.0 0.88% 48.98% 43.48% 6.00% 0.66% 7.45% 1.50% 7.00% 8.00% (68.4) 132.8 253.7 1,116.5 (1,143.2) 1,846.5 131.4 68.4 2,273.3 1,732.7 3,000.0 0.80% 47.80% 39.38% 6.02% 6.00% 6.75% 1.50% 7.00% 8.00% 201 1. Included in line item ‘Payments to and provision for employees’ of Schedule-16 Operating expenses. Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  Estimated rate of return on plan assets is based on the expected average long-term rate of return on investments of the Fund during the estimated term of the obligations. 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 Gratuity Year ended March 31, 2018 16,303.7 (15,391.1) Year ended March 31, 2017 16,888.1 (16,686.9) Year ended March 31, 2016 13,191.6 (14,191.6) Year ended March 31, 2015 10,103.4 (12,999.9) ` in million Year ended March 31, 2014 9,018.8 (10,209.9) (310.1) 602.5 (449.6) 290.1 (68.4) 132.8 589.5 (80.0) - (1,000.0) - (2,896.5) - (1,191.1) (4.1) 104.7 (29.1) 1,503.4 1,271.2 2,549.6 The following tables set forth, for the periods indicated, movement of the present value of the defined benefit obligation, fair value of plan assets and other details 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 Liability transferred from/to other companies Benefits paid Obligations at the end of the year Opening plan assets, at fair value Expected return on plan assets Actuarial gain/(loss) Contributions Asset transferred from/to other companies Benefits paid Closing plan assets, at fair value Year ended March 31, 2018 8,701.8 0.4 8,702.2 893.4 599.3 (318.5) 14.7 4.4 (807.8) 9,087.7 8,559.0 689.6 (115.9) 650.5 4.5 (807.8) 8,979.9 ` in million Year ended March 31, 2017 7,386.8 (2.7) 7,384.1 716.6 587.8 723.8 - 68.1 (778.6) 8,701.8 6,933.0 527.7 454.5 1,354.3 68.1 (778.6) 8,559.0 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) 8,979.9 (9,087.7) - (107.8) 8,559.0 (8,701.8) - (142.8) 202 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 Particulars Cost1 Service cost Interest cost Expected return on plan assets Actuarial (gain)/loss Past service cost Exchange fluctuation loss/(gain) Effect of the limit in para 59(b) of AS 15 on ‘employee benefits’ Net cost Actual return on plan assets Expected employer’s contribution next year Investment details of plan assets Insurer managed funds Government of India securities Corporate bonds Special deposit schemes Equity Others Assumptions Discount rate Salary escalation rate Estimated rate of return on plan assets Year ended March 31, 2018 ` in million Year ended March 31, 2017 893.4 599.3 (689.6) (202.6) 14.7 0.4 - 615.6 573.7 1,500.0 - 27.49% 48.70% 3.25% 15.70% 4.86% 7.60% 7.00% 8.00% 716.6 587.8 (527.7) 269.3 - (2.7) - 1,043.3 982.2 1,500.0 - 19.70% 51.94% 3.41% 14.92% 10.03% 6.75% 7.00% 8.00% 1. Included in line item ‘Payments to and provision for employees’ of Schedule-16 Operating expenses. Estimated rate of return on plan assets is based on the expected average long-term rate of return on investments of the Fund during the estimated term of the obligations. 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, 2018 8,979.9 (9,087.7) Year ended March 31, 2017 8,559.0 (8,701.8) Year ended March 31, 2016 6,933.0 (7,386.7) Year ended March 31, 2015 6,570.7 (6,754.6) ` in million Year ended March 31, 2014 5,729.9 (5,818.5) - (107.8) (115.9) 162.0 - (142.8) 454.5 125.2 - (453.7) (345.7) 120.1 - (183.9) 589.1 - (88.6) (29.5) 41.9 217.6 The estimates of future salary increases, considered in actuarial valuation, take into consideration inflation, seniority, promotion and other relevant factors. 203 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Provident Fund (PF) As there is no liability towards interest rate guarantee on exempt provident fund on the basis of actuarial valuation, the Bank has not made any provision for the year ended March 31, 2018 (year ended March 31, 2017: Nil). The following tables set forth, for the periods indicated, movement of the present value of the defined benefit obligation, fair value of plan assets and other details for provident fund. Particulars Opening obligations Service cost Interest cost Actuarial (gain)/loss Employees contribution Liability transferred from/to other companies Benefits paid Obligations at end of the year Opening plan assets Expected return on plan assets Actuarial gain/(loss) Employer contributions Employees contributions Asset transferred from/to other companies Benefits paid Closing plan assets Plan assets at the end of the year Present value of the defined benefit obligations at the end of the year Asset/(liability) Cost1 Service cost Interest cost Expected return on plan assets Actuarial (gain)/loss Net cost Actual return on plan assets Expected employer's contribution next year Investment details of plan assets Government of India securities Corporate bonds Special deposit scheme Others Assumption Discount rate Expected rate of return on assets Discount rate for the remaining term to maturity of investments Average historic yield on the investment Guaranteed rate of return Year ended March 31, 2018 22,596.8 1,233.8 1,512.4 412.4 2,314.8 304.8 (2,850.6) 25,524.4 22,596.8 1,960.4 (35.6) 1,233.8 2,314.8 304.8 (2,850.6) 25,524.4 25,524.4 (25,524.4) - ` in million Year ended March 31, 2017 19,920.6 1,097.0 1,549.2 252.8 2,116.6 225.7 (2,565.1) 22,596.8 19,920.6 1,828.8 (26.8) 1,097.0 2,116.6 225.7 (2,565.1) 22,596.8 22,596.8 (22,596.8) - 1,233.8 1,512.4 (1,960.4) 448.0 1,233.8 1,924.8 1,320.2 46.67% 46.57% 2.12% 4.64% 7.60% 8.95% 7.55% 8.90% 8.65% 1,097.0 1,549.2 (1,828.8) 279.6 1,097.0 1,802.0 1,173.8 43.38% 50.20% 2.40% 4.02% 6.75% 8.55% 7.09% 8.89% 8.65% 1. Included in line item ‘Payments to and provision for employees’ of Schedule-16 Operating expenses. 204 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 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, 2018 Year ended March 31, 2017 Year ended March 31, 2016 Year ended March 31, 2015 Year ended March 31, 2014 25,524.4 (25,524.4) 22,596.8 (22,596.8) 19,920.6 17,746.8 15,689.8 (19,920.6) (17,746.8) (15,693.3) ` in million - - (35.6) 412.4 - - (26.8) 252.8 - - - - - (3.5) 8.7 346.4 (150.5) 199.0 322.3 (49.1) The Bank has contributed ` 1,982.2 million to provident fund for the year ended March 31, 2018 (year ended March 31, 2017: ` 1,823.6 million), which includes compulsory contribution made towards employee pension scheme under Employees Provident Fund and Miscellaneous Provisions Act, 1952. Superannuation Fund The Bank has contributed ` 207.2 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 197.4 million) to Superannuation Fund for employees who had opted for the scheme. National Pension Scheme (NPS) The Bank has contributed ` 76.8 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 64.4 million) to NPS for employees who had opted for the scheme. Compensated absence The following table sets forth, for the periods indicated, movement in provision for compensated absence. Particulars Cost1 Assumptions Discount rate Salary escalation rate ` in million Year ended March 31, 2018 Year ended March 31, 2017 675.3 7.60% 7.00% 728.9 6.75% 7.00% 1. Included in line item ‘Payments to and provision for employees’ of Schedule-16 Operating expenses. 205 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) 39. Movement in provision for credit cards/debit cards/savings accounts and direct marketing agents reward points The following table sets forth, for the periods indicated, movement in provision for credit cards/debit cards/savings accounts reward points. Particulars 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, 2018 1,627.3 1,573.0 (1,307.4) 1,892.9 ` in million Year ended March 31, 2017 1,417.5 1,725.4 (1,515.6) 1,627.3 1. The closing provision is based on the actuarial valuation of accumulated credit cards/debit cards/savings accounts reward points. The following table sets forth, for the periods indicated, movement in provision for reward points to direct marketing agents. Particulars 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 points 40. Provisions and contingencies Year ended March 31, 2018 201.5 101.1 (123.0) 179.6 ` in million Year ended March 31, 2017 168.1 145.4 (112.0) 201.5 The following table sets forth, for the periods indicated, the break-up of provisions and contingencies included in profit and loss account. Particulars Provisions for depreciation of investments Provision towards non-performing and other assets1,2 Provision towards income tax - Current3 - Deferred Floating provision Other provisions and contingencies4 Total provisions and contingencies Year ended March 31, 2018 18,773.4 142,445.2 ` in million Year ended March 31, 2017 6,088.2 146,859.5 26,618.5 (20,047.2) - 11,851.2 179,641.1 21,801.2 (7,026.0) - (866.3) 166,856.6 1. 2. 3. Includes provision towards NPA amounting to ` 163,793.6 million (March 31, 2017: ` 164,334.2 million). During the year ended March 31, 2017, the Bank has fully utilised an amount of ` 36,000.0 million from collective contingency and related reserve. During the year ended March 31, 2018, the Bank has recognised Minimum Alternate Tax (MAT) credit as an asset amounting to ` 2,178.0 million, as the normal income tax liability related to the year ended March 31, 2017 was less than the MAT computed as per section 115JB of the Income tax Act, 1961. The MAT asset has been fully utilised against the normal income tax liability for the year ended March 31, 2018. 4. Includes general provision made towards standard assets amounting to ` 2,771.1 million (March 31, 2017: reversal of provision by ` 3,392.4 million). The Bank has assessed its obligations arising in the normal course of business, including pending litigations, proceedings pending with tax authorities and other contracts including derivative and long term contracts. In accordance with the provisions of AS 29 on ‘Provisions, Contingent Liabilities and Contingent Assets’, the Bank recognises a provision for material foreseeable losses when it has a present obligation as a result of a past event 206 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 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. 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 as contingent liabilities in the financial statements. The Bank does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. The following table sets forth, for the periods indicated, the movement in provision for legal and fraud cases, operational risk and other contingencies. Particulars Opening provision Movement during the year (net) Closing provision 1. Excludes provision towards sundry expenses. 41. Provision for income tax Year ended March 31, 2018 7,861.3 3,135.3 10,996.6 ` in million Year ended March 31, 2017 6,146.6 1,714.7 7,861.3 The provision for income tax (including deferred tax) for the year ended March 31, 2018 amounted to ` 6,571.3 million (March 31, 2017: ` 14,775.1 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 transactions with international related parties and specified transactions with domestic related parties are primarily at arm's length so that the above legislation does not have material impact on the financial statements. 42. Deferred tax At March 31, 2018, the Bank has recorded net deferred tax assets of ` 74,770.2 million (March 31, 2017: ` 54,722.3 million), which have 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. Particulars Deferred tax assets Provision for bad and doubtful debts Foreign currency translation reserve3 Others Total deferred tax assets Deferred tax liabilities Special reserve deduction Depreciation on fixed assets Interest on refund of taxes3 Total deferred tax liabilities Total net deferred tax assets/(liabilities) At March 31, 20181 ` in million At March 31, 20172 102,010.3 861.2 6,603.6 109,475.1 28,653.2 4,974.6 1,077.1 34,704.9 74,770.2 78,109.5 5,721.3 4,565.4 88,396.2 26,870.6 5,243.7 1,559.6 33,673.9 54,722.3 1. 2. 3. Tax rate of 34.944% is adopted based on Finance Act, 2018. Tax rate of 34.608% is adopted based on Finance Act, 2017. These items are considered in accordance with the requirements of Income Computation and Disclosure Standards (ICDS). 207 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)  As per ICDS and subsequent circular issued by Central Board of Direct Taxes, during the year ended March 31, 2017, the Bank had recognised tax expense and deferred tax asset on closing balance of Foreign Currency Translation Reserve (FCTR) at March 31, 2017. Delhi High Court struck down certain part of ICDS in November 2017. Further, pursuant to amendments in Income tax Act, 1961 through Finance Act, 2018, the movement during the year in FCTR has become taxable effective from April 1, 2016. Accordingly, tax expense of ` 4,159.0 million and equal amount of deferred tax asset on the opening balance of FCTR at April 1, 2016 recognised earlier under ICDS has been reversed. 43. Details of provisioning pertaining to fraud accounts The following table sets forth, for the periods indicated, the details of provisioning pertaining to fraud accounts. Particulars Number of frauds reported Amount involved in frauds Provision made1 Unamortised provision debited from balance in profit and loss account under ‘Reserves and Surplus’ 1. Excludes amount written off and interest reversal. ` in million, except number of frauds Year ended March 31, 2017 3,359 4,210.7 584.9 Year ended March 31, 2018 2,9381 5,895.71 2,087.5 199.8 - Additionally, during the year ended March 31, 2018, the Bank accounted for three borrower accounts with outstanding of ` 7,948.7 million as fraud and made a provision of ` 2,894.5 million through profit and loss account and ` 5,054.2 million through balance in profit and loss account under ‘Reserves and Surplus’. As permitted by RBI, provision made through balance in profit and loss account under ‘Reserves and Surplus’ will be reversed and recognised through profit and loss account in the subsequent quarters of the next financial year. 44. Proposed dividend on equity and preference shares The Board of Directors at its meeting held on May 7, 2018 has recommended a dividend of ` 1.50 per equity share for the year ended March 31, 2018 (year ended March 31, 2017: ` 2.50 per equity share). The declaration and payment of dividend is subject to requisite approvals. The Board at its meeting held on April 2, 2018 recommended an interim dividend of ` 100.00 per preference share for the year ended March 31, 2018. The interim dividend will be placed for ratification by the shareholders as final dividend. The Board of Directors had recommended a dividend of ` 100.00 per preference share for the year ended March 31, 2017. According to the revised AS 4 - ‘Contingencies and events occurring after the balance sheet date’ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, the Bank has not accounted for proposed dividend (including tax) as a liability for the year ended March 31, 2018. However, the Bank has reckoned proposed dividend in determining capital funds in computing capital adequacy ratio at March 31, 2018. 45. Dividend distribution tax Dividend received from Indian subsidiaries, on which dividend distribution tax has been paid by them and dividend received from overseas subsidiaries, on which tax has been paid under section 115BBD of the Income Tax Act, 1961, have been reduced from dividend to be distributed by the Bank for the purpose of computation of dividend distribution tax as per section 115-O of the Income Tax Act, 1961. 208 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 46. 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. I. Related parties Subsidiaries ICICI Bank Canada, ICICI Bank UK PLC, ICICI Home Finance Company Limited, ICICI International Limited, ICICI Investment Management Company Limited, ICICI Lombard General Insurance Company Limited, ICICI Prudential Asset Management Company Limited, ICICI Prudential Life Insurance Company Limited, ICICI Prudential Pension Funds Management Company Limited, ICICI Prudential Trust Limited, ICICI Securities Holdings Inc., ICICI Securities Inc., ICICI Securities Limited, ICICI Securities Primary Dealership Limited, ICICI Trusteeship Services Limited and ICICI Venture Funds Management Company Limited. Associates/joint ventures/other related entities ICICI Merchant Services Private Limited, ICICI Strategic Investments Fund1, India Advantage Fund-III, India Advantage Fund-IV, India Infradebt Limited, I-Process Services (India) Private Limited, NIIT Institute of Finance, Banking and Insurance Training Limited, Comm Trade Services Limited and ICICI Foundation for Inclusive Growth. 1. Entity consolidated as per Accounting Standard (AS) 21 on ‘Consolidated Financial Statements’. Akzo Nobel India Limited and FINO PayTech Limited ceased to be related parties effective from April 30, 2016 and January 5, 2017 respectively. Key management personnel Ms. Chanda Kochhar, Mr. N. S. Kannan, Ms. Vishakha Mulye, Mr. Vijay Chandok1, Mr. Anup Bagchi2, Mr. K. Ramkumar3 and Mr. Rajiv Sabharwal4. 1. 2. 3. 4. Identified as related party effective from July 28, 2016. Identified as related party effective from February 1, 2017. Ceased to be related party effective close of business hours on April 30, 2016. Ceased to be related party effective close of business hours on January 31, 2017. Relatives of key management personnel Mr. Deepak Kochhar, Mr. Arjun Kochhar, Ms. Aarti Kaji, Mr. Mahesh Advani, Ms. Rangarajan Kumudalakshmi, Ms. Aditi Kannan, Ms. Sudha Narayanan, Mr. Raghunathan Narayanan, Mr. Rangarajan Narayanan, Mr. Vivek Mulye, Ms. Vriddhi Mulye, Dr. Gauresh Palekar, Ms. Shalaka Gadekar, Ms. Manisha Palekar, Ms. Poonam Chandok1, Ms. Saluni Chandok1, Ms. Simran Chandok1, Mr. C. V. Kumar1, Ms. Shad Kumar1, Ms. Sanjana Gulati1, Ms. Mitul Bagchi2, Mr. Aditya Bagchi2, Mr. Shishir Bagchi2, Mr. K. Jayakumar3, Ms. J. Krishnaswamy3, Ms. Sangeeta Sabharwal4, Mr. Kartik Sabharwal4 and Mr. Arnav Sabharwal4. 1. 2. 3. 4. Identified as related party effective from July 28, 2016. Identified as related party effective from February 1, 2017. Ceased to be related party effective close of business hours on April 30, 2016. Ceased to be related party effective close of business hours on January 31, 2017. 209 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) II. Transactions with related parties The following table sets forth, for the periods indicated, the significant transactions between the Bank and its related parties. Items Interest income Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Fee, commission and other income Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Commission income on guarantees issued Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Income on custodial services Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Gain/(loss) on forex and derivative transactions (net)2 Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Dividend income Subsidiaries Associates/joint ventures/others Total Insurance claims received Subsidiaries Associates/joint ventures/others Total 210 Year ended March 31, 2018 ` in million Year ended March 31, 2017 489.1 29.4 9.0 0.1 527.6 12,080.3 13.9 0.01 0.01 12,094.2 35.2 0.1 - - 35.3 26.8 - - - 26.8 44.5 (0.0)1 - - 44.5 12,140.6 62.9 12,203.5 127.5 - 127.5 691.9 43.5 10.7 0.2 746.3 11,198.9 17.6 0.2 0.01 11,216.7 25.5 0.01 - - 25.5 10.4 1.5 - - 11.9 478.6 - - - 478.6 14,190.3 - 14,190.3 116.4 - 116.4 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 Items Recovery of lease of premises, common corporate and facilities expenses Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Payment of lease of premises, common corporate and facilities expenses Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Recovery for secondment of employees Subsidiaries Associates/joint ventures/others Total Reimbursement of expenses from related parties Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Interest expense Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Remuneration to wholetime directors3 Key management personnel Total Reimbursement of expenses to related parties Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Insurance premium paid Subsidiaries Associates/joint ventures/others Total Year ended March 31, 2018 ` in million Year ended March 31, 2017 1,611.1 69.2 - - 1,680.3 1,474.9 64.5 - - 1,539.4 73.1 - - - 73.1 11.2 8.7 19.9 1.4 3.3 - - 4.7 303.6 5.4 10.2 3.1 322.3 232.9 232.9 784.5 0.1 - - 784.6 2,869.0 - 2,869.0 85.5 - - - 85.5 29.3 8.0 37.3 1.6 - - - 1.6 339.3 15.6 6.7 2.9 364.5 223.5 223.5 543.5 0.2 - - 543.7 1,830.5 - 1,830.5 211 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)Items Brokerage, fee and other expenses Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Donation given Subsidiaries Associates/joint ventures/others Total Dividend paid Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Purchase of investments Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Investment in certificate of deposits (CDs)/bonds issued by the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Investments in the securities issued by related parties Subsidiaries Associates/joint ventures/others Total Sale of investments Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total 212 Year ended March 31, 2018 ` in million Year ended March 31, 2017 503.9 6,833.4 - - 951.7 5,919.6 - - 7,337.3 6,871.3 - 560.0 560.0 - - 8.3 0.01 8.3 - 475.0 475.0 - - 17.7 0.01 17.7 50,279.2 7,074.0 - - - - - - 50,279.2 7,074.0 - - - - - - 6,462.0 6,462.0 5,018.9 - - - 5,018.9 - 5,779.5 5,779.5 29,950.3 15,486.1 - - - - - - 29,950.3 15,486.1 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018Items Redemption/buyback of securities Subsidiaries Associates/joint ventures/others Total Unfunded risk participation Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Sale of loans Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Purchase of fixed assets Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Sale of fixed assets Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Year ended March 31, 2018 ` in million Year ended March 31, 2017 5,065.0 190.1 5,255.1 5,862.2 566.1 6,428.3 1,291.6 2,075.2 - - - - - - 1,291.6 2,075.2 1,403.9 - - - 1,403.9 - - - - - 1.2 10.8 - - - 1.2 2.2 - - - 2.2 - - - 10.8 1.2 - - - 1.2 1. 2. Insignificant amount. 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. 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. 3. Excludes the perquisite value on account of employee stock options exercised. 213 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) III. Material transactions with related parties The following table sets forth, for the periods indicated, the material transactions between the Bank and its related parties. 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. Particulars Year ended March 31, 2018 ` in million Year ended March 31, 2017 ICICI Home Finance Company Limited ICICI Securities Primary Dealership Limited ICICI Prudential Asset Management Company Limited ICICI Securities Primary Dealership Limited ICICI Prudential Life Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Lombard General Insurance Company Limited ICICI Securities Primary Dealership Limited ICICI Bank UK PLC ICICI Prudential Life Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Lombard General Insurance Company Limited ICICI Home Finance Company Limited Interest income 1. 2. Fee, commission and other income 1. 2. 3. Commission income on guarantees issued 1. ICICI Bank UK PLC Income on custodial services 1. 2. Gain/(loss) on forex and derivative transactions (net)1 1. 2. 3. 4. 5. 6. Dividend income 1. 2. 3. 4. Insurance claims received 1. 2. Recovery of lease of premises, common corporate and facilities expenses 1. 2. 3. 4. 5. Payment of lease of premises, common corporate and facilities expenses 1. 2. Recovery for secondment of employees 1. 2. 3. ICICI Home Finance Company Limited ICICI Securities Limited ICICI Bank UK PLC ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Life Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Securities Limited ICICI Securities Primary Dealership Limited ICICI Securities Limited I-Process Services (India) Private Limited ICICI Investment Management Company Limited ICICI Venture Funds Management Company Limited ICICI Home Finance Company Limited ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited 214 368.5 111.6 8,818.7 1,360.8 1,213.7 33.3 23.7 3.1 (565.1) 535.3 54.0 14.8 8.7 (7.9) 5,435.9 2,268.6 1,771.8 672.3 85.3 42.2 377.5 288.0 260.6 232.7 226.4 66.3 2.0 10.1 8.7 - 558.7 89.3 9,675.3 86.6 937.3 24.1 8.1 2.3 (258.0) 825.0 11.8 10.6 14.7 (113.1) 5,449.1 1,629.5 2,050.3 2,782.9 85.1 31.3 346.7 269.8 275.2 183.7 201.3 66.5 10.5 9.8 8.0 17.6 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 Particulars Year ended March 31, 2018 ` in million Year ended March 31, 2017 ICICI Prudential Life Insurance Company Limited ICICI Securities Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Life Insurance Company Limited India Infradebt Limited ICICI Home Finance Company Limited ICICI Bank Canada ICICI Securities Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Life Insurance Company Limited Reimbursement of expenses from related parties 1. 2. 3. Interest expense 1. 2. Remuneration to wholetime directors2 1. Ms. Chanda Kochhar 2. Mr. N. S. Kannan 3. Ms. Vishakha Mulye 4. Mr. Vijay Chandok3 5. Mr. Anup Bagchi4 7. Mr. K. Ramkumar5 6. Mr. Rajiv Sabharwal6 Reimbursement of expenses to related parties 1. 2. 3. Insurance premium paid 1. 2. Brokerage, fee and other expenses 1. 2. Donation given 1. Dividend paid 1. Ms. Chanda Kochhar 2. Mr. N. S. Kannan 3. Ms. Vishakha Mulye 4. Mr. Vijay Chandok3 5. Mr. Anup Bagchi4 6. Mr. Rajiv Sabharwal6 Purchase of investments 1. 2. Investment in certificate of deposits (CDs)/bonds issued by the Bank 1. 2. 3. Investments in the securities issued by related parties 1. ICICI Prudential Life Insurance Company Limited ICICI Bank UK PLC ICICI Securities Primary Dealership Limited ICICI Securities Primary Dealership Limited ICICI Prudential Life Insurance Company Limited I-Process Services (India) Private Limited ICICI Merchant Services Private Limited ICICI Foundation for Inclusive Growth India Infradebt Limited 3.3 1.4 - 190.0 87.1 63.3 45.1 43.1 44.1 37.3 N.A. N.A. 553.8 193.6 2.4 1,699.5 1,169.5 4,516.6 2,303.1 - 1.4 0.1 93.5 218.4 58.7 40.7 36.7 26.1 8.5 11.1 41.7 0.3 - 509.9 1,271.0 559.5 3,572.8 2,318.4 560.0 475.0 5.7 1.1 1.5 0.07 - N.A. 42,642.3 6,045.6 - - - 11.7 2.1 2.6 - - 1.4 2,124.0 4,685.2 3,250.0 1,018.9 750.0 6,462.0 5,779.5 215 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)ICICI Prudential Life Insurance Company Limited ICICI Securities Primary Dealership Limited ICICI Lombard General Insurance Company Limited Particulars ICICI Bank Canada India Advantage Fund-III India Advantage Fund-IV Sale of investments 1. 2. 3. Redemption/buyback of investments 1. 2. 3. Unfunded risk participation 1. ICICI Bank UK PLC Sale of loans 1. Purchase of fixed assets 1. 2. 3. 4. 5. Sale of fixed assets 1. 2. ICICI Bank UK PLC ICICI Home Finance Company Limited ICICI Securities Primary Dealership Limited ICICI Securities Limited ICICI Prudential Life Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Asset Management Company Limited ICICI Securities Limited Year ended March 31, 2018 ` in million Year ended March 31, 2017 16,353.3 12,379.0 1,218.0 5,065.0 108.2 81.9 10,700.3 2,512.4 2,273.4 5,862.2 41.3 35.6 1,291.6 2,075.2 1,403.9 1.1 0.1 - - - 2.2 - - - 4.0 4.3 1.9 0.5 - 1.2 1. 2. 3. 4. 5. 6. 7. 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. 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. Excludes the perquisite value on account of employee stock options exercised. Identified as related party effective from July 28, 2016. Identified as related party effective from February 1, 2017. Ceased to be related party effective close of business hours on April 30, 2016. Ceased to be related party effective close of business hours on January 31, 2017. Insignificant amount. IV. Related party outstanding balances The following table sets forth, for the periods indicated, the balance payable to/receivable from related parties. Items Deposits with the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total 216 At March 31, 2018 ` in million At March 31, 2017 7,652.6 1,070.4 146.1 120.8 8,989.9 5,069.8 3,749.2 145.2 56.2 9,020.4 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 Items Investments of related parties in the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Call/term money borrowed Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Reverse repurchase Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Payables2 Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Deposits by the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Call/term money lent Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Investments of the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total At March 31, 2018 ` in million At March 31, 2017 3,477.6 - 7.9 0.01 3,485.5 - - - - - 23,044.5 - - - 23,044.5 515.1 749.8 0.01 0.01 1,264.9 886.9 - - - 886.9 3,000.0 - - - 3,000.0 98,315.7 4,147.6 - - 102,463.3 3,522.8 - 6.6 0.01 3,529.4 - - - - - - - - - - 9.0 729.4 0.01 0.01 738.4 540.0 - - - 540.0 - - - - - 103,222.4 4,326.8 - - 107,549.2 217 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)Items Advances Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Receivables2 Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Guarantees/letters of credit/indemnity given by the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Guarantees/letters of credit/indemnity issued by related parties Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Swaps/forward contracts (notional amount) Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Unfunded risk participation Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total At March 31, 2018 ` in million At March 31, 2017 4,077.2 - 161.1 0.7 4,239.0 1,608.2 1.9 - - 1,610.1 13,747.5 1.1 - - 13,748.6 1,983.4 - - - 1,983.4 731,169.6 - - - 731,169.6 1,279.4 - - - 1,279.4 4,784.8 - 204.0 0.9 4,989.7 1,292.9 5.9 - - 1,298.8 11,674.6 7.7 - - 11,682.3 3,862.0 - - - 3,862.0 288,432.8 - - - 288,432.8 2,070.0 - - - 2,070.0 Insignificant amount. Excludes mark-to-market on outstanding derivative transactions. At March 31, 2018, 38,444,750 (March 31, 2017: 34,321,540, after adjusting for bonus shares issued by the Bank during the year ended March 31, 2018) employee stock options for key management personnel were outstanding. During the year ended March 31, 2018, 408,119 (March 31, 2017: 1,115,730), after adjusting for bonus shares issued by the Bank during the year ended March 31, 2018, employee stock options with total exercise price of ` 60.0 million (March 31, 2017: ` 170.9 million) were exercised by the key management personnel. 1. 2. 3. 4. 218 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 V. Related party maximum balances The following table sets forth, for the periods indicated, the maximum balance payable to/receivable from related parties. Items Deposits with the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Investments of related parties in the Bank1 Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Call/term money borrowed Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Reverse repurchase Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Payables1,3 Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Deposits by the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Call/term money lent Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Year ended March 31, 2018 ` in million Year ended March 31, 2017 26,475.9 5,613.6 198.2 550.5 32,838.2 3,529.3 - 7.9 0.02 3,537.2 1,000.0 - - - 1,000.0 23,044.5 - - - 23,044.5 515.1 1,191.8 0.1 0.1 1,707.1 4,426.2 - - - 4,426.2 8,450.0 - - - 8,450.0 40,191.5 5,258.0 293.7 62.3 45,805.5 5,068.9 - 7.1 0.02 5,076.0 - - - - - - - - - - 232.7 729.4 0.1 0.02 962.2 1,778.7 - - - 1,778.7 10,000.0 - - - 10,000.0 219 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Items Investments of the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Advances Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Receivables3 Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Guarantees/letters of credit/indemnity given by the Bank Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Guarantees/letters of credit/indemnity issued by related parties1 Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Swaps/forward contracts (notional amount) Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Unfunded risk participation Subsidiaries Associates/joint ventures/others Key management personnel Relatives of key management personnel Total Year ended March 31, 2018 ` in million Year ended March 31, 2017 103,222.4 6,099.8 - - 109,322.2 20,158.8 - 203.6 3.1 20,365.5 1,683.7 137.1 - - 1,820.8 14,043.2 9.8 - - 14,053.0 4,155.1 - - - 4,155.1 853,591.5 - - - 853,591.5 3,562.2 - - - 3,562.2 110,374.0 4,326.9 - - 114,700.9 14,157.5 0.2 206.7 8.6 14,373.0 1,681.5 69.7 - - 1,751.2 15,167.0 7.7 - - 15,174.7 3,862.0 - - - 3,862.0 303,545.4 - - - 303,545.4 2,075.2 - - - 2,075.2 1. 2. 3. Maximum balance is determined based on comparison of the total outstanding balances at each quarter end during the financial year. Insignificant amount. Excludes mark-to-market on outstanding derivative transactions. 220 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 VI. Letters of comfort The Bank has issued letters of comfort on behalf of its banking subsidiary ICICI Bank UK PLC to Financial Services Authority, UK (now split into two separate regulatory authorities, the Prudential Regulation Authority and the Financial Conduct Authority) to confirm that the Bank intends to financially support ICICI Bank UK PLC in ensuring that it meets all of its financial obligations as they fall due. The Bank has issued an undertaking on behalf of ICICI Securities Inc. for Singapore dollar 10.0 million (currently equivalent to ` 498.2 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 each (currently equivalent to ` 126.6 million), aggregating to Canadian dollar 17.5 million (currently equivalent to ` 886.4 million). The aggregate amount of ` 1,384.6 million at March 31, 2018 (March 31, 2017: ` 1,314.5 million) is included in the contingent liabilities. The letters of comfort in the nature of letters of awareness that were outstanding at March 31, 2018 issued by the Bank on behalf of its subsidiaries in respect of their borrowings made or proposed to be made, aggregated to ` 12,363.0 million (March 31, 2017: ` 12,363.0 million). In addition to the above, the Bank has also issued letters of comfort in the nature of letters of awareness on behalf of its subsidiaries for other incidental business purposes. These letters of awareness are in the nature of factual statements or confirmation of facts and do not create any financial impact on the Bank. 47. Details of amount transferred to The Depositor Education and Awareness Fund (the Fund) of RBI The following table sets forth, for the periods indicated, the movement in amount transferred to the Fund. Particulars Opening balance Add: Amounts transferred during the year Less: Amounts reimbursed by the Fund towards claims during the year Closing balance Year ended March 31, 2018 4,841.2 1,906.2 (92.8) 6,654.6 ` in million Year ended March 31, 2017 3,584.1 1,346.0 (88.9) 4,841.2 48. Small and micro enterprises The following table sets forth, for the periods indicated, details relating to enterprises covered under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. Sr. No. Particulars At March 31, 2018 Principal Interest Principal ` in million At March 31, 2017 Interest 1. 2. 3. 4. 5. The Principal amount and the interest due thereon remaining unpaid to any supplier The amount of interest paid by the buyer in terms of Section 16, along with the amount of the payment made to the supplier beyond the due date The amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the due date during the year) but without adding the interest specified under MSMED Act, 2006 The amount of interest accrued and remaining unpaid The amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowed as a deductible expenditure under Section 23 - - - - 30.8 - 0.5 - - - - - - - - - - - - - 221 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) 49. 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, 2018 was ` 627.2 million (year ended March 31, 2017: Nil). As mentioned by RBI in its press release dated March 29, 2018, RBI has through an order dated March 26, 2018, imposed a monetary penalty of ` 589.0 million on the Bank for non-compliance with directions/guidelines issued by RBI. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1) (c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. During the year ended March 31, 2018, an overseas regulator imposed a composition sum of ` 38.2 million for non-adherence of rules under AML regulations at one of the Bank’s overseas branches, resulting from regulatory inspection conducted in 2013 and subsequently, pursuant to consultant’s review of records, relating to the period of May 2012 to April 2014. In February 2015, penalty was imposed on several banks, including the Bank, by the Financial Intelligence Unit - India for failure in reporting of attempted suspicious transactions, with respect to the incidents concerning the media sting operation in September 2013. A penalty of ` 1.4 million was levied on the Bank, which the Bank had paid and filed an appeal against the penalty with the Appellate Tribunal. In June 2017, the Appellate Tribunal ruled that the penalty was not sustainable and asked the appellant banks to be careful and report such matters in future. 50. Disclosure on Remuneration Compensation Policy and practices (A) Qualitative Disclosures a) Information relating to the bodies that oversee remuneration. • Name, composition and mandate of the main body overseeing remuneration The Board Governance, Remuneration and Nomination Committee (BGRNC/ Committee) is the body which oversees the remuneration aspects. The functions of the Committee include recommending appointments of Directors to the Board, identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommending to the Board their appointment and removal, formulate a criteria for the evaluation of the performance of the whole time/ independent Directors and the Board and to extend or continue the term of appointment of independent Director on the basis of the report of performance evaluation of independent Directors, recommending to the Board a policy relating to the remuneration for the Directors, Key Managerial Personnel and other employees, recommending to the Board the remuneration (including performance bonus and perquisites) to wholetime Directors (WTDs), commission and fee payable to non- executive Directors subject to applicable regulations, approving the policy for and quantum of bonus payable to members of the staff including senior management and key managerial personnel, formulating the criteria for determining qualifications, positive attributes and independence of a Director, framing policy on Board diversity, framing guidelines for the Employee Stock Option Scheme (ESOS) and decide on the grant of the Bank’s stock options to employees and WTDs of the Bank and its subsidiary companies. • External consultants whose advice has been sought, the body by which they were commissioned, and in what areas of the remuneration process The Bank did not take advice from an external consultant on any area of remuneration during the year ended March 31, 2018. • Scope of the Bank’s remuneration policy (eg. by regions, business lines), including the extent to which it is applicable to foreign subsidiaries and branches The Compensation Policy of the Bank, as last amended during the year ended March 31, 2018 and approved by the BGRNC and the Board at their meeting held on May 3, 2017, pursuant to the guidelines issued by RBI, covers all employees of the Bank, including those in overseas branches of the Bank. In addition to the Bank’s Compensation Policy guidelines, the overseas branches also adhere to relevant local regulations. 222 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 • Type of employees covered and number of such employees All employees of the Bank are governed by the Compensation Policy. The total number of permanent employees of the Bank at March 31, 2018 was 81,548. b) Information relating to the design and structure of remuneration processes. • Key features and objectives of remuneration policy The Bank has under the guidance of the Board and the BGRNC, followed compensation practices intended to drive meritocracy within the framework of prudent risk management. This approach has been incorporated in the Compensation Policy, the key elements of which are given below. • • Effective governance of compensation: The BGRNC has oversight over compensation. The Committee defines Key Performance Indicators (KPIs) for WTDs and equivalent positions and the organisational performance norms for bonus based on the financial and strategic plan approved by the Board. The KPIs include both quantitative and qualitative aspects. The BGRNC assesses organisational performance as well as the individual performance for WTDs and equivalent positions. Based on its assessment, it makes recommendations to the Board regarding compensation for WTDs and equivalent positions and bonus for employees, including senior management and key management personnel. Alignment of compensation philosophy with prudent risk taking: The Bank seeks to achieve a prudent mix of fixed and variable pay, with a higher proportion of variable pay at senior levels and no guaranteed bonuses. Compensation is sought to be aligned to both financial and non- financial indicators of performance including aspects like risk management and customer service. In addition, the Bank has an employee stock option scheme aimed at aligning compensation to long term performance through stock option grants that vest over a period of time. Compensation of staff in financial and risk control functions is independent of the business areas they oversee and depends on their performance assessment. • Whether the remuneration committee reviewed the firm’s remuneration policy during the past year, and if so, an overview of any changes that were made During the year ended March 31, 2018, the Bank’s Compensation Policy was reviewed by the BGRNC and the Board at their meeting held on May 3, 2017. The disclosures were reviewed pursuant to RBI circular on Disclosures in Financial Statements. • Discussion of how the Bank ensures that risk and compliance employees are remunerated independently of the businesses they oversee The compensation of staff engaged in control functions like Risk and Compliance depends on their performance, which is based on achievement of the key results of their respective functions. Their goal sheets do not include any business targets. c) Description of the ways in which current and future risks are taken into account in the remuneration processes. • Overview of the key risks that the Bank takes into account when implementing remuneration measures The Board approves the risk framework for the Bank and the business activities of the Bank are undertaken within this framework to achieve the financial plan. The risk framework includes the Bank’s risk appetite, limits framework and policies and procedures governing various types of risk. KPIs of WTDs & equivalent positions, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as the desired funding profile and asset quality. The BGRNC takes into consideration all the above aspects while assessing organisational and individual performance and making compensation-related recommendations to the Board. 223 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) • Overview of the nature and type of key measures used to take account of these risks, including risk difficult to measure The annual performance targets and performance evaluation incorporate both qualitative and quantitative aspects including asset quality, provisioning, increase in stable funding sources, refinement/improvement of the risk management framework, effective management of stakeholder relationships and mentoring key members of the top and senior management. • Discussion of the ways in which these measures affect remuneration Every year, the financial plan/targets are formulated in conjunction with a risk framework with limit structures for various areas of risk/lines of business, within which the Bank operates to achieve the financial plan. To ensure effective alignment of compensation with prudent risk taking, the BGRNC takes into account adherence to the risk framework in conjunction with which the financial plan/targets have been formulated. KPIs of WTDs and equivalent positions, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as the desired funding profile and asset quality. The BGRNC takes into consideration all the above aspects while assessing organisational and individual performance and making compensation-related recommendations to the Board. • Discussion of how the nature and type of these measures have changed over the past year and reasons for the changes, as well as the impact of changes on remuneration. The nature and type of these measures have not changed over the past year and hence, there is no impact on remuneration. d) Description of the ways in which the Bank seeks to link performance during a performance measurement period with levels of remuneration • Overview of main performance metrics for Bank, top level business lines and individuals The main performance metrics include profits, loan growth, deposit growth, risk metrics (such as quality of assets), compliance with regulatory norms, refinement of risk management processes and customer service. The specific metrics and weightages for various metrics vary with the role and level of the individual. • Discussion of how amounts of individual remuneration are linked to the Bank-wide and individual performance The BGRNC takes into consideration above mentioned aspects while assessing performance and making compensation-related recommendations to the Board regarding the performance assessment of WTDs and equivalent positions. The performance assessment of individual employees is undertaken based on achievements compared to their goal sheets, which incorporate various aspects/metrics described earlier. • Discussion of the measures the Bank will in general implement to adjust remuneration in the event that performance metrics are weak, including the Bank’s criteria for determining ‘weak’ performance metrics The Bank’s Compensation Policy outlines the measures the Bank will implement in the event of a reasonable evidence of deterioration in financial performance. Should such an event occur in the manner outlined in the policy, the BGRNC may decide to apply malus on none, part or all of the unvested deferred variable compensation. e) Description of the ways in which the Bank seeks to adjust remuneration to take account of the longer term performance • Discussion of the Bank’s policy on deferral and vesting of variable remuneration and, if the fraction of variable remuneration that is deferred differs across employees or groups of employees, a description of the factors that determine the fraction and their relative importance 224 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018  The quantum of bonus for an employee does not exceed a certain percentage (as stipulated in the compensation policy) of the total fixed pay in a year. Within this percentage, if the quantum of bonus exceeds a predefined threshold percentage of the total fixed pay, a part of the bonus is deferred and paid over a period. These thresholds for deferrals are same across employees. • Discussion of the Bank’s policy and criteria for adjusting deferred remuneration before vesting and (if permitted by national law) after vesting through claw back arrangements The deferred portion of variable pay is subject to malus, under which the Bank would prevent vesting of all or part of the variable pay in the event of an enquiry determining gross negligence, breach of integrity or in the event of a reasonable evidence of deterioration in financial performance. In such cases, variable pay already paid out may also be subjected to clawback arrangements, as applicable. f) Description of the different forms of variable remuneration that the Bank utilises and the rationale for using these different forms • Overview of the forms of variable remuneration offered. A discussion of the use of different forms of variable remuneration and, if the mix of different forms of variable remuneration differs across employees or group of employees, a description of the factors that determine the mix and their relative importance The Bank pays performance linked retention pay (PLRP) to its front-line staff and junior management and performance bonus to its middle and senior management. PLRP aims to reward front line and junior managers, mainly on the basis of skill maturity attained through experience and continuity in role which is a key differentiator for customer service. The Bank also pays variable pay to sales officers and relationship managers in wealth management roles while ensuring that such pay-outs are in accordance with applicable regulatory requirements. The Bank ensures higher proportion of variable pay at senior levels and lower variable pay for front- line staff and junior management levels. (B) Quantitative disclosures The following table sets forth, for the period indicated, the details of quantitative disclosure for remuneration of WTDs (including MD and CEO) and equivalent positions. Particulars Number of meetings held by the BGRNC Remuneration paid to its members during the financial year (sitting fees) Number of employees who received a variable remuneration award1 Number and total amount of sign-on awards made Number and total amount of guaranteed bonuses awarded Details of severance pay, in addition to accrued benefits Breakdown of amount of remuneration awards for the financial year Fixed2 Variable3 - Deferred - Non-deferred Share-linked instruments3,4 Total amount of deferred remuneration paid out during the year Total amount of outstanding deferred remuneration Cash Shares (nos.) Shares-linked instruments4 ` in million, except numbers Year ended March 31, 2017 10 0.5 6 - - - Year ended March 31, 2018 7 0.3 4 - - - 222.7 - - - 4,526,500 6.1 N.A. - 14,825,250 231.5 - - - 5,071,000 16 6.1 - 14,747,150 225 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) Particulars Other forms Total amount of outstanding deferred remuneration and retained remuneration exposed to ex-post explicit and/or implicit adjustments Total amount of reductions during the year due to ex-post explicit adjustments Total amount of reductions during the year due to ex-post implicit adjustments ` in million, except numbers Year ended March 31, 2017 - Year ended March 31, 2018 - - - - 6.1 - - 1. 2. 3. 4. Includes deferred remuneration paid during the year to retired WTDs. Fixed pay includes basic salary, supplementary allowances, superannuation, contribution to provident fund and gratuity fund by the Bank. For the years ended March 31, 2018 and March 31, 2017, variable pay and share-linked instruments represent amounts paid/options awarded for the years ended March 31, 2017 and March 31, 2016 respectively, as per RBI approvals. For the year ended March 31, 2018, ` 90.4 million of variable pay (year ended March 31, 2017: ` 75.6 million) and 4,307,500 share-linked instruments (year ended March 31, 2017: 4,526, 500 option) are subject to RBI approval. Pursuant to the issuance of bonus shares by the Bank on June 24, 2017, the share-linked instruments have been adjusted with increase of one option for every 10 outstanding options. Payment of compensation in the form of profit related commission to the non-executive directors The Board at its meeting held on September 16, 2015 and the shareholders at their meeting held on July 11, 2016 approved the payment of profit related commission of ` 1.0 million per annum to be paid to each non-executive Director of the Bank (excluding government nominee and part-time Chairman) subject to the availability of net profits at the end of each financial year. The Bank accordingly recognised an amount of ` 5.1 million as profit related commission payable to the non- executive Directors during the year ended March 31, 2018, subject to requisite approvals. For the year ended March 31, 2017, the Bank had recognised an amount of ` 6.0 million as profit related commission payable to the non-executive Directors, which was paid in August 2017 after obtaining the shareholders' approval in the Annual General Meeting of the Bank. 51. Corporate Social Responsibility The gross amount required to be spent by the Bank on Corporate Social Responsibility (CSR) related activities during the year ended March 31, 2018 was ` 1,702.0 million (March 31, 2017: ` 1,997.3 million). The following table sets forth, for the periods indicated, the amount spent by the Bank on CSR related activities. ` in million Particulars Sr. No. 1. 2. Construction/acquisition of any asset On purposes other than (1) above - 1,361.6 - 1,703.8 - 980.1 Year ended March 31, 2018 In cash Total Year ended March 31, 2017 In cash Total Yet to be paid in cash - 342.2 Yet to be paid in cash - 843.5 - 1,823.6 The following table sets forth, for the periods indicated, the details of related party transactions pertaining to CSR related activities. Sr. No. 1. 2. Related Party ICICI Foundation FINO PayTech Limited Total 226 Year ended March 31, 2018 560.0 - 560.0 ` in million Year ended March 31, 2017 475.0 50.0 525.0 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018  The following table sets forth, for the periods indicated, the details of movement of amounts yet to be paid for CSR related activities. Particulars Opening balance Provided during the year Paid during the year Closing balance At March 31, 2018 1,363.7 1,703.8 (1,987.5) 1,080.0 ` in million At March 31, 2017 815.7 1,823.6 (1,275.6) 1,363.7 52. Disclosure of customer complaints The following table sets forth, for the periods indicated, the movement of the outstanding number of complaints. Complaints relating to the Bank’s customers on the Bank’s ATMs No. of complaints pending at the beginning of the year No. of complaints received during the year No. of complaints redressed during the year No. of complaints pending at the end of the year 1. The above does not include complaints redressed within one working day. Complaints relating to the Bank’s customers on other banks’ ATMs No. of complaints pending at the beginning of the year No. of complaints received during the year No. of complaints redressed during the year No. of complaints pending at the end of the year 1. The above does not include complaints redressed within one working day. Complaints relating to other than ATM transactions No. of complaints pending at the beginning of the year No. of complaints received during the year No. of complaints redressed during the year No. of complaints pending at the end of the year 1. The above does not include complaints redressed within one working day. Total complaints No. of complaints pending at the beginning of the year No. of complaints received during the year No. of complaints redressed during the year No. of complaints pending at the end of the year 1. The above does not include complaints redressed within one working day. Year ended March 31, 2018 29 2,356 2,310 75 Year ended March 31, 2017 107 4,687 4,765 29 Year ended March 31, 2018 1,763 124,361 122,180 3,944 Year ended March 31, 2017 1,602 106,709 106,548 1,763 Year ended March 31, 2018 2,480 110,626 110,916 2,190 Year ended March 31, 2017 1,691 106,077 105,288 2,480 Year ended March 31, 2018 4,272 237,343 235,406 6,209 Year ended March 31, 2017 3,400 217,473 216,601 4,272 227 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.) The following table sets forth, for the periods indicated, the details of awards during the year. Particulars No. of unimplemented awards at the beginning of the year No. of awards passed by the Banking Ombudsmen during the year No. of awards implemented during the year No. of unimplemented awards at the end of the year Year ended March 31, 2018 - - - - Year ended March 31, 2017 - - - - 53. Drawdown from reserves The Bank has not drawn any amount from reserves during the year ended March 31, 2018 (year ended March 31, 2017: Nil). 54. Investor Education and Protection Fund The unclaimed dividend amount due to be transferred to the Investor Education and Protection Fund during the year ended March 31, 2018 has been transferred without any delay. 55. Comparative figures Figures of the previous year have been re-grouped to conform to the current year presentation. Signatures to Schedules 1 to 18 As per our report of even date. For and on behalf of the Board of Directors For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Chanda Kochhar Director DIN-00043268 Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Chief Accountant Ajay Mittal 228 Financial Statements of ICICI Bank LimitedScheduleSforming part of the Accounts (Contd.)AnnuAl report 2017-2018 Consolidated FinanCial statements independent auditors’ report To the Members of ICICI Bank Limited Report on the Audit of the Consolidated Financial Statements We have audited the accompanying consolidated financial statements of ICICI Bank Limited (hereinafter referred to as the ‘Bank’ or the ‘Holding Company’) and its subsidiaries (the Holding Company and its subsidiaries together referred to as the ‘Group’) and its associates, which comprise the Consolidated Balance Sheet as at 31 March 2018, the Consolidated Profit and Loss Account and the Consolidated Cash Flow Statement, for the year then ended, including a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the ‘consolidated financial statements’). Management's Responsibility for the Consolidated Financial Statements The Holding Company's Board of Directors is responsible for the preparation of these consolidated financial statements in terms of the requirements of the Companies Act, 2013 (the ‘Act’) that give a true and fair view of the consolidated state of affairs, consolidated profit / loss and consolidated cash flows of the Group including its associates, in accordance with the accounting principles generally accepted in India, including the Accounting Standards prescribed under Section 133 of the Act, provisions of Section 29 of the Banking Regulation Act, 1949, and the circulars, guidelines and directions issued by Reserve Bank of India (‘RBI’) from time to time. The respective Board of Directors of the companies and the trustees of the trusts included in the Group and of its associates are responsible for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and of its associates and for preventing and detecting frauds and other irregularities; the selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, and the implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial statements by the Directors of the Holding Company, as aforesaid. In preparing the consolidated financial statements, the respective Board of Directors of the companies and the trustees of the trusts included in the Group and of its associates, are responsible for assessing the ability of the Group and of its associates to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so. Auditor's Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. While conducting the audit, we have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder. We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Holding Company's preparation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. 230 annual report 2017-2018independent auditors’ report We are also responsible to conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and its associates’ ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in the auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify the opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future events or conditions may cause the Group and its associates to cease to continue as a going concern. We believe that the audit evidence obtained by us and the audit evidence obtained by the other auditors in terms of their reports referred to in sub-paragraphs 1 to 3 of the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements. Opinion In our opinion and to the best of our information and according to the explanations given to us, and based on the consideration of reports of other auditors on separate financial statements and on the other financial information of the subsidiaries and associates, the aforesaid consolidated financial statements give the information required by the Act, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the consolidated state of affairs of the Group and its associates as at 31 March 2018, their consolidated profit and their consolidated cash flows for the year ended on that date. Other Matters 1. We did not audit the financial statements of nine branches of Bank included in the consolidated financial statements, whose annual financial statements reflect total assets of ` 1,352,287 million as at 31 March 2018 as well as the total revenue of ` 53,427 million for the year ended 31 March 2018. These financial statements have been audited by other auditors, duly qualified to act as auditors in the country of incorporation of the said branches, whose reports have been furnished to us, and our opinion in so far as it relates to such branches is based solely on the reports of the other auditors. 2. We did not audit the financial statements of nine subsidiaries, whose financial statements reflect total assets of ` 883,803 million and net assets of ` 122,290 million as at 31 March 2018, total revenues of ` 50,761 million and net cash inflow amounting to ` 25,784 million for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group’s share of net profit of ` 509 million for the year ended 31 March 2018, as considered in the consolidated financial statements, in respect of one associate whose financial statements have not been audited by us. These financial statements have been audited by other auditors whose reports have been furnished to us by management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries and associates and our report in terms of sub-section (3) of Section 143 of the Act, insofar as it relates to the aforesaid subsidiaries and associates, is based solely on the reports of the other auditors. Certain of these subsidiaries are located outside India whose financial statements and other financial information have been prepared in accordance with accounting principles generally accepted in their respective countries and which have been audited by other auditors under generally accepted auditing standards applicable in their respective countries. Our opinion in so far as it relates to the balances and affairs of such subsidiaries located outside India is based on the report of other auditors. 3. We have jointly audited with other auditor, the financial statements of one subsidiary whose financial statements reflect total assets of ` 1,418,213 million and net assets of ` 68,845 million as at 31 March 2018, total revenues of ` 325,992 million and net cash outflow amounting to ` 8,866 million for the year ended 31 March 2018. For the purpose of the consolidated financial statements, we have relied upon the work of the other auditor, to the extent of work performed by them and our report in terms of sub-section (3) of Section 143 of the Act, insofar as it relates to this subsidiary, is based solely on the report of the other auditor, to the extent of work performed by them. 231 independent auditors’ report 4. The consolidated financial statements also include the Group's share of net profit of ` 6 million for the year ended 31 March 2018, as considered in the consolidated financial statements, in respect of five associates, whose financial statements / financial information have not been audited by us. These financial statements / financial information are unaudited and have been furnished to us by management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these associates, and our report in terms of sub-section (3) of Section 143 of the Act in so far as it relates to the aforesaid associates, is based solely on such unaudited financial statements / financial information. In our opinion and according to the information and explanations given to us by management, these financial statements / financial information are not material to the Group. 5. The auditors of ICICI Prudential Life Insurance Company Limited have reported, ‘The actuarial valuation of liabilities for life policies in force and for policies in respect of which premium has been discontinued but liability exists as at 31 March 2018 is the responsibility of the Company’s Appointed Actuary (the “Appointed Actuary”). The actuarial valuation of these liabilities for life policies in force and for policies in respect of which premium has been discontinued but liability exists as at 31 March 2018 has been duly certified by the Appointed Actuary and in her opinion, the assumptions for such valuation are in accordance with the guidelines and norms issued by the IRDAI and the Institute of Actuaries of India in concurrence with the Authority. We have relied upon the Appointed Actuary’s certificate in this regard for forming our opinion on the valuation of liabilities for life policies in force and for policies in respect of which premium has been discontinued but liability exists, as contained in the standalone financial statements of the Company’. 6. The auditors of ICICI Lombard General Insurance Company Limited have reported, ‘The actuarial valuation of liabilities in respect of Incurred But Not Reported (the "IBNR"), Incurred But Not Enough Reported (the "IBNER") and Premium Deficiency Reserve (the "PDR") is the responsibility of the Company's Appointed Actuary (the "Appointed Actuary"). The actuarial valuation of these liabilities, that are estimated using statistical methods as at 31 March 2018 has been duly certified by the Appointed Actuary and in his opinion, the assumptions considered by him for such valuation are in accordance with the guidelines and norms issued by the IRDAI and the Institute of Actuaries of India in concurrence with the IRDAI. We have relied upon the Appointed Actuary's certificate in this regard for forming our opinion on the valuation of liabilities for outstanding claims reserves and the PDR contained in the financial statements of the Company’. Our opinion above on the consolidated financial statements, and our report on Other Legal and Regulatory Requirements below, is not modified in respect of the above matters with respect to our reliance on the work done and the reports of the other auditors and the financial statements / financial information certified by management. Report on Other Legal and Regulatory Requirements As required by Section 143 (3) of the Act, based on our audit and on the consideration of report of the other auditors on separate financial statements and the other financial information of subsidiaries and associates, as noted in the ‘Other Matters’ paragraph, we report, to the extent applicable, that: (a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements; (b) In our opinion, proper books of account as required by law relating to the presentation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books and reports of the other auditors; (c) The consolidated Balance Sheet, the consolidated Profit and Loss Account and the consolidated Cash Flow Statement dealt with by this report are in agreement with the relevant books of account maintained for purpose of preparation of the consolidated financial statements; (d) In our opinion, the aforesaid consolidated financial statements comply with the Accounting Standards specified under Section 133 of the Act, to the extent they are not inconsistent with the accounting policies prescribed by RBI; 232 annual report 2017-2018independent auditors’ report (e) On the basis of the written representations received from the directors of the Holding Company as on 31 March 2018 taken on record by the Board of Directors of the Holding Company and the reports of the statutory auditors of its subsidiary companies and associate companies incorporated in India, none of the directors of the Group companies and its associate companies incorporated in India is disqualified as on 31 March 2018 from being appointed as a director in terms of Section 164 (2) of the Act; (f) With respect to the adequacy of the internal financial controls with reference to the financial statements of the Holding Company, its subsidiary companies and associate companies incorporated in India and the operating effectiveness of such controls, refer to our separate Report in ‘Annexure A’; and (g) With respect to the other matters to be included in the Auditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditors on the separate financial statements as also the other financial information of the subsidiaries and associates, as noted in the ‘Other Matters’ paragraph: (i) The consolidated financial statements disclose the impact of pending litigations on the consolidated financial position of the Group and its associates. Refer Note 7 to the consolidated financial statements; (ii) Provision has been made in the consolidated financial statements, as required under the applicable law or accounting standards, for material foreseeable losses, on long-term contracts including derivative contracts - Refer Note 7 to the consolidated financial statements in respect of such items as it relates to the Group and its associates; (iii) There has been no delay in transferring amounts to the Investor Education and Protection Fund by the Holding Company and its subsidiary companies and associate companies incorporated in India during the year ended 31 March 2018; and (iv) The disclosures in the consolidated financial statements regarding holdings as well as dealings in Specified Bank Notes during the period from 8 November 2016 to 30 December 2016 have not been made since they do not pertain to the financial year ended 31 March 2018. However, amounts as appearing in the audited consolidated financial statements for the year ended 31 March 2017 have been disclosed. Mumbai 7 May 2018 For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W–100022 Venkataramanan Vishwanath Partner Membership No: 113156 233 anneXure a to the Independent Auditors’ Report of even date on the Consolidated Financial Statements of ICICI Bank Limited Report on the Internal Financial Controls under clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 In conjunction with our report of the consolidated financial statements of ICICI Bank Limited its subsidiary companies and its associate companies (collectively referred to as ‘the Group’) as of and for the year ended 31 March 2018, we have audited the internal financial controls over financial reporting of ICICI Bank Limited (hereinafter referred to as the ‘Holding Company’), its subsidiary companies and associate companies which are companies incorporated in India, as of that date. Management’s responsibility for internal financial controls The respective Board of Directors of the Holding Company, its subsidiary companies and its associates companies, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Group considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the ‘Guidance Note’) issued by the Institute of Chartered Accountants of India (the ‘ICAI’). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013 (the ‘Act’). Auditor’s responsibility Our responsibility is to express an opinion on the Group’s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note issued by the ICAI and the Standards on Auditing (the ‘Standards’), issued by the ICAI and deemed to be prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls, both issued by the ICAI. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects. Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit opinion on the Group’s internal financial controls system over financial reporting. Meaning of internal financial controls over financial reporting A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. 234 annual report 2017-2018anneXure a to the Independent Auditors’ Report of even date on the Consolidated Financial Statements of ICICI Bank Limited Inherent limitations of internal financial controls over financial reporting Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Opinion In our opinion, the Holding Company, its subsidiary companies and its associate companies, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31 March 2018, based on the internal control over financial reporting criteria established by the Group considering the essential components of internal control stated in the Guidance Note issued by the ICAI. Other matters The auditors of ICICI Prudential Life Insurance Company Limited have reported, ‘The actuarial valuation of liabilities for life policies in force and policies where premium is discontinued but liability exists as at 31 March 2018 has been certified by the Appointed Actuary as per the IRDA Financial Statements Regulations, and has been relied upon by us, as mentioned in para “Other Matter” of our audit report on the standalone financial statements for the year ended 31 March 2018. Accordingly, our opinion on the internal financial controls over financial reporting does not include reporting on the operating effectiveness of the management’s internal controls over the valuation and accuracy of the aforesaid actuarial valuation’. The auditors of ICICI Lombard General Insurance Company Limited have reported, ‘The actuarial valuation of liabilities in respect of Incurred But Not Reported (the "IBNR"), Incurred But Not Enough Reported (the "IBNER") and Premium Deficiency Reserve (the "PDR") is the responsibility of the Company's Appointed Actuary (the "Appointed Actuary"). The actuarial valuation of these liabilities, that are estimated using statistical methods as at 31 March 2018 has been duly certified by the Appointed Actuary and in his opinion, the assumptions considered by him for such valuation are in accordance with the guidelines and norms issued by the IRDAI and the Institute of Actuaries of India in concurrence with the IRDAI. The said actuarial valuations of liabilities for outstanding claims reserves and the PDR have been relied upon by us as mentioned in Other Matters paragraph in our Audit Report on the financial statements for the year ended 31 March 2018. Accordingly, our opinion on the internal financial controls over financial reporting does not include reporting on the adequacy and operating effectiveness of the internal financial controls over the valuation and accuracy of the aforesaid actuarial liabilities’. Our aforesaid report under Section 143 (3) (i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting insofar as it relates to nine subsidiaries companies, one subsidiary company which is jointly audited with another auditor and an associate company, which are companies incorporated in India, is based on the corresponding reports of the auditors of such companies incorporated in India. Our opinion on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Act is not modified in respect of the above matters with respect to our reliance on the work done and the reports of other auditors. Mumbai 7 May 2018 For B S R & Co. LLP Chartered Accountants Firm's Registration No: 101248W/W–100022 Venkataramanan Vishwanath Partner Membership No: 113156 235 Consolidated Financial Statements of ICICI Bank Limited Consolidated BalanCe sheet at March 31, 2018 Schedule At 31.03.2018 CAPITAL AND LIABILITIES Capital Employees stock options outstanding Reserves and surplus Minority interest 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 TOTAL ASSETS 1 2 2A 3 4 5 6 7 8 9 10 11 ` in ‘000s At 31.03.2017 11,651,071 62,562 1,034,606,322 48,653,128 5,125,872,643 1,882,867,563 1,154,974,441 598,558,799 9,857,246,529 12,858,100 55,699 1,093,383,172 60,081,860 5,857,961,125 2,294,018,266 1,314,884,251 609,567,929 11,242,810,402 332,726,026 557,265,307 3,722,076,772 5,668,542,198 94,650,053 867,550,046 11,242,810,402 318,912,598 485,996,088 3,043,732,910 5,153,173,140 93,379,618 762,052,175 9,857,246,529 Contingent liabilities Bills for collection Significant accounting policies and notes to accounts The Schedules referred to above form an integral part of the Consolidated Balance Sheet. 17 &18 12 18,910,358,283 287,054,059 13,078,415,868 227,555,510 As per our Report of even date. For and on behalf of the Board of Directors For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Chanda Kochhar Director DIN-00043268 Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Chief Accountant Ajay Mittal 236 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited Consolidated proFit and loss aCCount for the year ended March 31, 2018 I. INCOME Interest earned Other income TOTAL INCOME II. EXPENDITURE Interest expended Operating expenses Provisions and contingencies (refer note 18.7) TOTAL EXPENDITURE III. PROFIT/(LOSS) Net profit for the year Less: Minority interest Net profit after minority interest 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 Special Reserve Transfer to/(from) Revenue and other reserves Dividend paid during the year Corporate dividend tax paid during the year Balance carried over to balance sheet TOTAL Significant accounting policies and notes to accounts Earnings per share1 (refer note 18.1) Basic (`) Diluted (`) Face value per share (`) Schedule Year ended 31.03.2018 ` in ‘000s Year ended 31.03.2017 13 14 15 16 621,623,505 568,067,510 1,189,691,015 609,399,802 524,576,505 1,133,976,307 342,620,468 557,556,292 198,518,808 1,098,695,568 348,358,328 481,699,705 190,514,979 1,020,573,012 90,995,447 13,873,582 77,121,865 215,045,471 292,167,336 113,403,295 11,519,450 101,883,845 198,210,764 300,094,609 16,944,000 10,541 25,654,600 - 6,206,000 6,454,526 14,574,649 2,331,407 219,991,613 292,167,336 24,503,000 9,824 52,933,000 - 4,867,000 446,499 9,456 2,280,359 215,045,471 300,094,609 12.02 11.89 2.00 15.91 15.84 2.00 17 & 18 The Schedules referred to above form an integral part of the Consolidated Profit and Loss Account. 1. Pursuant to the issue of bonus shares by the Bank during the year ended March 31, 2018, earnings per share has been restated for the year ended March 31, 2017. As per our Report of even date. For and on behalf of the Board of Directors For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Chanda Kochhar Director DIN-00043268 Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Chief Accountant Ajay Mittal 237 Consolidated Financial Statements of ICICI Bank Limited Consolidated Cash Flow statement for the year ended March 31, 2018 Cash flow from/(used in) operating activities Profit before taxes Adjustments for: Depreciation and amortisation Net (appreciation)/depreciation on investments1 Provision in respect of non-performing and other assets General provision for standard assets Provision for contingencies & others (Profit)/loss on sale of fixed assets Employees stock options grants Adjustments for: (Increase)/decrease in investments (Increase)/decrease in advances Increase/(decrease) in deposits (Increase)/decrease in other assets Increase/(decrease) in other liabilities and provisions Schedule Year ended 31.03.2018 ` in ‘000s Year ended 31.03.2017 95,911,046 126,574,260 10,390,761 (21,343,283) 147,516,047 2,960,374 9,763,944 (29,027) 131,128 245,300,990 (147,368,884) (687,502,223) 732,088,482 (80,169,309) 175,987,900 (6,964,034) (44,507,633) 193,829,323 (10,421,438) 265,828 (495,578,927) (505,734,537) 10,444,420 (57,426,431) 157,937,006 (3,733,753) 2,257,433 14,230 180,903 236,248,068 (66,071,502) (411,803,233) 615,098,725 (81,035,546) 292,951,343 349,139,787 (59,032,520) 526,355,335 (13,167,144) 156,340 (3,046,583) (16,057,387) (i) (ii) (iii) (A) (B) Refund/(payment) of direct taxes Net cash flow from/(used in) operating activities (i)+(ii)+(iii) Cash flow from/(used in) investing activities Purchase of fixed assets Proceeds from sale of fixed assets (Purchase)/sale of held to maturity securities Net cash flow from/(used in) investing activities Cash flow from/(used in) financing activities Proceeds from issue of share capital (including ESOPs) Proceeds from long-term borrowings Repayment of long-term borrowings Net proceeds/(repayment) of short-term borrowings Dividend and dividend tax paid Net cash flow from/(used in) financing activities Effect of exchange fluctuation on translation reserve Net increase/(decrease) in cash and cash equivalents (A) + (B) + (C) + (D) Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year 1. 1,772,579 403,761,367 (508,077,502) (217,920,893) (34,230,910) (354,695,359) (1,053,605) 154,548,984 650,359,702 804,908,686 For the year ended March 31, 2018, includes gain on sale of a part of equity investment in the subsidiaries, ICICI Lombard General Insurance Company Limited and ICICI Securities Limited, through initial public offers (IPO) (year ended March 31, 2017: gain on sale of a part of equity investment in a subsidiary, ICICI Prudential Life Insurance Company Limited, through IPO). 3,939,495 430,554,398 (404,339,556) 383,766,528 (17,161,116) 396,759,749 228,112 85,082,647 804,908,686 889,991,333 (C) (D) 2. Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short notice. As per our Report of even date. For and on behalf of the Board of Directors For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Chanda Kochhar Director DIN-00043268 Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 238 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Chief Accountant Ajay Mittal annual report 2017-2018Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet SCHEDULE 1 - CAPITAL Authorised capital 10,000,000,000 equity shares of ` 2 each (March 31, 2017: 6,375,000,000 equity shares of ` 2 each)1 15,000,000 shares of ` 100 each (March 31, 2017: 15,000,000 shares of ` 100 each)2 350 preference shares of ` 10 million each (March 31, 2017: 350 preference shares of ` 10 million each)3 Equity share capital Issued, subscribed and paid-up capital 5,824,476,135 equity shares of ` 2 each (March 31, 2017: 5,814,768,430 equity shares) Add: 603,514,6414 equity shares of ` 2 each (March 31, 2017: 9,707,705 equity shares) issued during the year At 31.03.2018 ` in ‘000s At 31.03.2017 20,000,000 12,750,000 1,500,000 1,500,000 3,500,000 3,500,000 11,648,952 11,629,537 1,207,029 19,415 12,855,981 2,119 11,648,952 2,119 12,858,100 11,651,071 Add: 266,089 equity shares of ` 10 each forfeited (March 31, 2017: 266,089 equity shares) TOTAL CAPITAL 1. Pursuant to the approval of shareholders, the Bank has increased its authorised share capital during the year ended March 31, 2018. 2. 3. 4. 5. 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 dated March 30, 2010, the issued and paid-up preference shares are grouped under Schedule 4- 'Borrowings'. Represents 582,984,544 equity shares issued as bonus shares pursuant to approval by the shareholders of the Bank through postal ballot on June 12, 2017 and 20,530,097 equity shares (year ended March 31, 2017: 9,707,705 equity shares) issued pursuant to exercise of employee stock options during the year ended March 31, 2018. Each equity share of the Bank with face value of ` 10 was sub-divided into five equity shares with face value of ` 2 each on December 5, 2014. SCHEDULE 2 - RESERVES AND SURPLUS I. Statutory reserve Opening balance Additions during the year 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 At 31.03.2018 212,024,519 16,944,000 - 228,968,519 88,181,700 6,206,000 - 94,387,700 323,932,017 4,036,426 (1,165,969) 326,802,474 ` in ‘000s At 31.03.2017 187,521,519 24,503,000 - 212,024,519 83,314,700 4,867,000 - 88,181,700 321,993,492 1,938,525 - 323,932,017 239 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) IV. Investment reserve account Opening balance Additions during the year Deductions during the year Closing balance V. Unrealised investment reserve3 Opening balance Additions during the year Deductions during the year Closing balance VI. Capital reserve Opening balance Additions during the year4 Deductions during the year Closing balance5 VII. Foreign currency translation reserve Opening balance Additions during the year Deductions during the year Closing balance VIII. Revaluation reserve (refer note 18.16) Opening balance Additions during the year6 Deductions during the year7 Closing balance IX. Reserve fund Opening balance Additions during the year8 Deductions during the year Closing balance X. Revenue and other reserves Opening balance Additions during the year Deductions during the year Closing balance9,10,11 XI. Balance in profit and loss account12 TOTAL RESERVES AND SURPLUS 1. At 31.03.2018 ` in ‘000s At 31.03.2017 - - - - - - - - 160,445 36,647 (9,160) 187,932 (4,444) 164,889 - 160,445 102,851,016 25,654,600 - 128,505,616 49,918,016 52,933,000 - 102,851,016 19,123,004 241,842 (13,730) 19,351,116 30,651,113 263,895 (638,616) 30,276,392 55,858 10,541 - 66,399 20,176,609 - (1,053,605) 19,123,004 28,174,747 2,989,949 (513,583) 30,651,113 46,034 9,824 - 55,858 42,581,179 8,533,984 (1,015,799) 50,099,364 214,737,660 1,093,383,172 40,057,014 3,967,610 (1,443,445) 42,581,179 215,045,471 1,034,606,322 Includes ` 3,905.3 million (March 31, 2017: ` 1,753.2 million) on exercise of employee stock options. Represents amount utilised on account of issuance of bonus shares during the year ended March 31, 2018. Represents unrealised profit/(loss) pertaining to the investments of venture capital funds. Includes appropriations made by the Bank for profit on sale of investments in held-to-maturity category, net of taxes and transfer to Statutory Reserve and profit on sale of land and buildings, net of taxes and transfer to Statutory Reserve. Includes capital reserve on consolidation amounting to ` 79.1 million (March 31, 2017: ` 79.1 million). Represents gain on revaluation of premises carried out by the Bank and ICICI Home Finance Company Limited. Represents amount transferred by the Bank from Revaluation Reserve to General Reserve on account of incremental depreciation charge on revaluation amounting to ` 572.4 million (year ended March 31, 2017: ` 494.9 million) and revaluation surplus on assets sold amounting to ` 66.2 million (year ended March 31, 2017: ` 18.7 million) for the year ended March 31, 2018. Includes appropriations made to Reserve Fund in accordance with regulations applicable to Sri Lanka branch. Includes unrealised profit/(loss), net of tax, of ` (530.3) million (March 31, 2017: ` (401.5) million) pertaining to the investments in the available-for-sale category of ICICI Bank UK PLC. Includes restricted reserve of ` 4.4 million (March 31, 2017: ` 4.5 million) primarily relating to lapsed contracts of the life insurance subsidiary. Includes debenture redemption reserve amounting to ` 58.1 million (March 31, 2017: Nil) of ICICI Lombard General Insurance Company Limited. Includes deduction amounting to ` 5,254.0 million as provision by the Bank for frauds on non-retail accounts, which will be reversed and recognised through profit and loss account in the subsequent quarters of the next financial year as permitted by RBI. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 240 annual report 2017-2018Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) SCHEDULE 2A - MINORITY INTEREST Opening minority interest Subsequent increase/(decrease) during the year CLOSINg MINORITY INTEREST SCHEDULE 3 - DEPOSITS I. Demand deposits A. From banks From others i) ii) II. Savings bank deposits III. Term deposits i) ii) From banks From others TOTAL DEPOSITS B. I. Deposits of branches in India II. Deposits of branches/subsidiaries outside India TOTAL DEPOSITS SCHEDULE 4 - BORROWINgS I. Reserve Bank of India Borrowings in India i) ii) Other banks iii) Other institutions and agencies a) Government of India b) Financial institutions iv) Borrowings in the form of a) Deposits b) Commercial paper c) Bonds and debentures (excluding subordinated debt) v) Application money-bonds vi) Capital instruments a) Innovative Perpetual Debt Instruments (IPDI) (qualifying as additional Tier 1 capital) At 31.03.2018 48,653,128 11,428,732 60,081,860 At 31.03.2018 ` in ‘000s At 31.03.2017 33,556,448 15,096,680 48,653,128 ` in ‘000s At 31.03.2017 65,794,398 847,859,874 2,092,910,102 52,732,148 715,167,490 1,790,098,258 115,526,501 2,735,870,250 5,857,961,125 5,552,574,768 305,386,357 5,857,961,125 97,676,104 2,470,198,643 5,125,872,643 4,826,135,485 299,737,158 5,125,872,643 At 31.03.2018 ` in ‘000s At 31.03.2017 141,737,000 82,624,079 18,069,000 56,390,754 - 298,463,118 - 150,138,907 2,313,944 12,901,469 252,991,640 - 2,909,950 12,071,154 228,456,559 - 94,800,000 39,430,000 b) Hybrid debt capital instruments issued as bonds/debentures 84,035,112 84,982,344 (qualifying as Tier 2 capital) c) Redeemable Non-Cumulative Preference Shares (RNCPS) 3,500,000 3,500,000 (350 RNCPS of ` 10.0 million each issued to preference share holders of erstwhile ICICI Limited on amalgamation, redeemable at par on April 20, 2018) d) Unsecured redeemable debentures/bonds (subordinated debt included in Tier 2 capital) TOTAL BORROWINgS IN INDIA 143,330,107 166,448,635 1,116,696,469 762,397,303 241 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) II. Borrowings outside India i) Capital instruments a) Hybrid debt capital instruments issued as bonds/debentures (qualifying as Tier 2 capital) b) Unsecured redeemable debentures/bonds (subordinated debt included in Tier 2 capital) At 31.03.2018 ` in ‘000s At 31.03.2017 - 60,071,450 9,761,898 9,716,800 TOTAL BORROWINgS OUTSIDE INDIA TOTAL BORROWINgS ii) Bonds and notes iii) Other borrowings 442,010,859 608,671,151 1,120,470,260 1,882,867,563 Secured borrowings in I and II above amount to ` 167,214.3 million (March 31, 2017: ` 166,827.0 million) other than the borrowings under collateralised borrowing and lending obligation, market repurchase transactions with banks and financial institutions and transactions under liquidity adjustment facility and marginal standing facility. 437,325,520 730,234,379 1,177,321,797 2,294,018,266 1. At 31.03.2018 ` in ‘000s At 31.03.2017 SCHEDULE 5 - OTHER LIABILITIES AND PROVISIONS Bills payable1 I. Inter-office adjustments (net) II. III. Interest accrued IV. Sundry creditors V. General provision for standard assets VI. Others (including provisions)1,2,3 TOTAL OTHER LIABILITIES AND PROVISIONS 1. 83,080,574 1,759,072 35,011,965 230,150,438 25,518,660 223,038,090 598,558,799 Balances in travel and prepaid card accounts amounting to ` 10,910.4 million have been re-classified from line item 'VI. Others (including provisions)' to line item 'I. Bills payable' for the year ended March 31, 2017 by the Bank, in accordance with RBI guidelines. 73,070,858 976,360 35,896,541 279,328,231 28,572,331 191,723,608 609,567,929 2. 3. Includes specific provision for standard loans of the Bank amounting to ` 7,967.1 million (March 31, 2017: ` 21,023.8 million). Includes corporate dividend tax payable amounting to ` 381.8 million (March 31, 2017: ` 788.9 million). 242 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) SCHEDULE 6 - CASH AND BALANCES WITH RESERVE BANK OF INDIA I. II. Balances with Reserve Bank of India in current accounts TOTAL CASH AND BALANCES WITH RESERVE BANK OF INDIA Cash in hand (including foreign currency notes) 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) In current accounts ii) In other deposit accounts iii) Money at call and short notice TOTAL TOTAL BALANCES WITH BANKS AND MONEY AT CALL AND SHORT NOTICE At 31.03.2018 ` in ‘000s At 31.03.2017 82,118,828 250,607,198 332,726,026 73,825,506 245,087,092 318,912,598 At 31.03.2018 ` in ‘000s At 31.03.2017 3,592,062 23,227,230 4,465,023 16,102,847 190,613,750 5,783,189 223,216,231 200,772,076 43,495,469 89,781,531 334,049,076 557,265,307 285,000,000 8,730,636 314,298,506 104,677,741 17,843,526 49,176,315 171,697,582 485,996,088 243 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) SCHEDULE 8 - INVESTMENTS I. Investments in India [net of provisions] i) Government securities 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 and other related investments) TOTAL INVESTMENTS IN INDIA II. Investments outside India [net of provisions] i) Government securities ii) Others (equity shares, bonds and certificate of deposits) TOTAL INVESTMENTS OUTSIDE INDIA TOTAL INVESTMENTS At 31.03.2018 ` in ‘000s At 31.03.2017 1,803,209,154 - 127,550,060 339,631,755 975,019,684 1,401,496,218 - 111,508,062 258,576,027 878,783,451 372,350,812 285,060,731 3,617,761,465 2,935,424,489 55,945,624 48,369,683 104,315,307 3,722,076,772 54,360,645 53,947,776 108,308,421 3,043,732,910 3,631,283,280 13,521,815 3,617,761,465 2,944,393,594 8,969,105 2,935,424,489 A. B. Investments in India Gross value of investments2 Less: Aggregate of provision/depreciation/(appreciation) Net investments Investments outside India Gross value of investments Less: Aggregate of provision/depreciation/(appreciation) Net investments TOTAL INVESTMENTS 1. 110,262,601 1,954,180 108,308,421 3,043,732,910 Includes cost of investment in associates amounting to ` 4,981.0 million (March 31, 2017: ` 3,759.2 million) and goodwill on consolidation of associates amounting to ` 58.1 million (March 31, 2017: ` 54.7 million). 111,536,033 7,220,726 104,315,307 3,722,076,772 2. Includes net appreciation amounting to ` 100,750.7 million (March 31, 2017: ` 109,657.3 million) on investments held to cover linked liabilities of life insurance business. 244 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) Bills purchased and discounted1 SCHEDULE 9 - ADVANCES [NET OF PROVISIONS] A. i) ii) Cash credits, overdrafts and loans repayable on demand iii) Term loans TOTAL ADVANCES Secured by tangible assets (includes advances against book debts) B. i) 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 i) Due from banks ii) Due from others a) Bills purchased and discounted b) Syndicated and term loans c) Others TOTAL ADVANCES OUTSIDE INDIA TOTAL ADVANCES 1. Net of bills re-discounted amounting to Nil (March 31, 2017: Nil). At 31.03.2018 ` in ‘000s At 31.03.2017 298,198,152 1,312,537,092 4,057,806,954 5,668,542,198 216,853,688 1,027,910,024 3,908,409,428 5,153,173,140 4,224,797,621 83,969,085 1,359,775,492 5,668,542,198 3,998,058,632 94,769,402 1,060,345,106 5,153,173,140 929,701,682 197,704,530 777,335 3,449,858,940 4,578,042,487 1,065,527,064 129,991,400 3,448,842 2,778,374,653 3,977,341,959 19,294,596 5,705,535 103,993,215 626,140,089 341,071,811 1,090,499,711 5,668,542,198 69,699,735 735,318,062 365,107,849 1,175,831,181 5,153,173,140 245 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) SCHEDULE 10 - FIXED ASSETS I. Premises gross block At cost at March 31 of preceding year Additions during the year1 Deductions during the year Closing balance Less: Depreciation to date2 Net block3 II. Other fixed assets (including furniture and fixtures) gross block At cost at March 31 of preceding year Additions during the year Deductions during the year Closing balance Less: Depreciation to date4 Net block III. Assets given on lease At 31.03.2018 ` in ‘000s At 31.03.2017 88,093,455 3,498,313 (2,045,555) 89,546,213 (16,523,586) 73,022,627 80,650,323 8,049,900 (606,768) 88,093,455 (14,749,865) 73,343,590 63,839,400 8,946,032 (1,771,367) 71,014,065 (51,801,248) 19,212,817 59,567,170 7,487,340 (3,215,110) 63,839,400 (46,217,995) 17,621,405 gross block At cost at March 31 of preceding year Additions during the year Deductions during the year Closing balance Less: Depreciation to date, accumulated lease adjustment and provisions5 Net block 17,299,544 - (394,916) 16,904,628 (14,490,005) 2,414,623 93,379,618 Includes revaluation gain amounting to ` 263.9 million on account of revaluation carried out by the Bank and ICICI Home Finance Company Limited (March 31, 2017: ` 2,989.9 million). 16,904,628 - (189,999) 16,714,629 (14,300,020) 2,414,609 94,650,053 TOTAL FIXED ASSETS 1. Includes depreciation charge amounting to ` 2,003.5 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 1,937.7 million), including depreciation charge of ` 576.8 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 494.9 million) on account of revaluation. Includes assets of ` 37.4 million of the Bank (March 31, 2017: ` 72.0 million) which are held for sale. Includes depreciation charge amounting to ` 7,217.9 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 7,178.6 million). The depreciation charge/lease adjustment/provisions is an insignificant amount for the year ended March 31, 2018 (year ended March 31, 2017: insignificant amount). 2. 3. 4. 5. 246 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Balance Sheet (Contd.) 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 V. Non-banking assets acquired in satisfaction of claims1,2,3 VI. Advance for capital assets VII. Deposits VIII. Deferred tax asset (net) (refer note 18.10) IX. Deposits in Rural Infrastructure and Development Fund X. Others4,5 TOTAL OTHER ASSETS At 31.03.2018 - 89,296,089 66,655,117 130,676 19,748,594 1,892,601 18,025,278 78,182,968 269,249,912 324,368,811 867,550,046 ` in ‘000s At 31.03.2017 - 72,634,680 62,954,769 29,003 25,527,485 1,973,768 13,826,899 56,128,036 241,126,021 287,851,514 762,052,175 1. During the year ended March 31, 2018, the Bank acquired assets amounting to ` 952.6 million (year ended March 31, 2017: ` 16,252.2 million) in satisfaction of claims under debt-asset swap transactions with certain borrowers. Assets amounting to ` 279.1 million were sold during the year ended March 31, 2018 (year ended March 31, 2017: ` 500.3 million). 2. During the year ended March 31, 2018, the Bank converted certain non-banking assets into banking assets amounting to ` 345.6 million (year ended March 31, 2017: ` 288.5 million). 3. 4. Represents balance net of provision held by the Bank amounting to ` 13,184.2 million (March 31, 2017: ` 7,401.2 million). Includes receivable amounting to ` 3,988.7 million pertaining to a non-performing loan sold during the year ended March 31, 2018, which was received by the Bank on April 2, 2018. 5. Includes goodwill on consolidation amounting to ` 1,117.5 million (March 31, 2017: ` 1,126.2 million). Claims against the Group not acknowledged as debts Liability for partly paid investments SCHEDULE 12 - CONTINgENT LIABILITIES I. II. III. Liability on account of outstanding forward exchange contracts1 IV. Guarantees given on behalf of constituents a) In India b) Outside India V. Acceptances, endorsements and other obligations VI. Currency swaps1 VII. Interest rate swaps, currency options and interest rate futures1 VIII. Other items for which the Group is contingently liable TOTAL CONTINgENT LIABILITIES 1. Represents notional amount. At 31.03.2018 ` in ‘000s At 31.03.2017 72,343,905 12,455 4,461,284,115 52,682,642 912,455 4,410,995,113 746,315,695 207,158,854 409,964,977 417,771,418 12,456,227,130 139,279,734 18,910,358,283 723,437,252 210,871,211 478,522,536 411,068,964 6,746,703,570 43,222,125 13,078,415,868 247 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Profit and Loss Account Year ended 31.03.2018 SCHEDULE 13 - INTEREST EARNED Interest/discount on advances/bills I. Income on investments II. Interest on balances with Reserve Bank of India and other inter-bank funds III. IV. Others1,2 TOTAL INTEREST EARNED 1. 432,528,240 161,256,201 8,104,078 19,734,986 621,623,505 Includes interest on income tax refunds amounting to ` 2,802.2 million (March 31, 2017: ` 4,544.1 million). 2. Includes interest and amortisation of premium on non-trading interest rate swaps and foreign currency swaps. ` in ‘000s Year ended 31.03.2017 420,803,718 154,560,724 6,230,029 27,805,331 609,399,802 Year ended 31.03.2018 ` in ‘000s Year ended 31.03.2017 Commission, exchange and brokerage SCHEDULE 14 - OTHER INCOME I. II. Profit/(loss) on sale of investments (net)1 III. Profit/(loss) on revaluation of investments (net) IV. Profit/(loss) on sale of land, buildings and other assets (net)2 V. Profit/(loss) on exchange/derivative transactions (net) VI. Premium and other operating income from insurance business VII. Miscellaneous income (including lease income)3 TOTAL OTHER INCOME 1. 96,343,758 103,025,387 (3,809,897) (14,230) 15,150,619 312,027,717 1,853,151 524,576,505 For the year ended March 31, 2018, includes gain on sale of a part of equity investment in the subsidiaries, ICICI Lombard General Insurance Company Limited and ICICI Securities Limited, through initial public offers (IPO) (year ended March 31, 2017: gain on sale of a part of equity investment in a subsidiary, ICICI Prudential Life Insurance Company Limited, through IPO). Refer note 18.14 - Sale of equity shareholding in subsidiaries. 112,628,543 72,499,841 (4,429,497) 29,027 15,856,263 369,369,032 2,114,301 568,067,510 2. 3. Includes profit/(loss) on sale of assets given on lease. Includes share of profit/(loss) from associates of ` 515.2 million (March 31, 2017: ` (41.9) million). Interest on deposits Interest on Reserve Bank of India/inter-bank borrowings SCHEDULE 15 - INTEREST EXPENDED I. II. III. Others (including interest on borrowings of erstwhile ICICI Limited) TOTAL INTEREST EXPENDED Year ended 31.03.2018 237,396,889 15,506,754 89,716,825 342,620,468 ` in ‘000s Year ended 31.03.2017 232,626,495 15,194,760 100,537,073 348,358,328 248 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Profit and Loss Account (Contd.) SCHEDULE 16 - OPERATINg EXPENSES I. Payments to and provisions for employees II. Rent, taxes and lighting1 III. Printing and stationery IV. Advertisement and publicity V. Depreciation on property VI. Depreciation (including lease equalisation) on leased assets VII. Directors' fees, allowances and expenses VIII. Auditors' fees and expenses IX. Law charges X. Postages, courier, 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 business2 XVI. Other expenditure TOTAL OPERATINg EXPENSES 1. Includes lease expense of ` 10,990.8 million (March 31, 2017: ` 9,810.1 million). Year ended 31.03.2018 83,335,270 13,090,545 2,077,493 12,479,424 9,221,415 12 90,476 258,748 1,604,643 5,207,606 17,203,371 5,031,155 17,714,553 65,636,309 270,737,611 53,867,661 557,556,292 ` in ‘000s Year ended 31.03.2017 78,932,552 14,051,579 2,009,142 9,109,658 9,116,381 12 95,468 251,492 1,535,687 4,603,585 13,404,090 3,901,930 13,549,279 57,922,567 219,059,330 54,156,953 481,699,705 2. Includes commission expenses and reserves for actuarial liabilities (including the investible portion of the premium on the unit- linked policies). 249 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts SCHEDULE 17 SIgNIFICANT ACCOUNTINg POLICIES Overview ICICI Bank Limited, 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. ICICI Bank Limited (the Bank), incorporated in Vadodara, India is a publicly held 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, through subsidiaries and other consolidating entities, more than 50.00% of the voting rights or where it exercises control, over the composition of board of directors/governing body, are fully consolidated on a line-by-line basis in accordance with the provisions of AS 21 on ‘Consolidated Financial Statements’. Investments in entities where the Bank 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 the significant influence/control is intended to be temporary or entities which operate under severe long-term restrictions that impair their ability to transfer funds to parent/investing entity. 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 of India (IRDAI), National Housing Bank (NHB) from time to time and the Accounting Standards notified under Section 133 of the Companies Act, 2013 read together with Rule 7 of the Companies (Accounts) Rules, 2014, as applicable to relevant companies and practices generally prevalent in the banking industry in India. In the case of the foreign subsidiaries, Generally Accepted Accounting Principles as applicable to the respective 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 in the respective accounting policy. The preparation of consolidated financial statements requires management to make estimates and assumptions that 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. 250 annual report 2017-2018Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) The consolidated financial statements include the results of the following entities in addition to the Bank. Sr. no. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Name of the entity ICICI Bank UK PLC ICICI Bank Canada ICICI Securities Limited ICICI Securities Holdings Inc.1 ICICI Securities Inc.1 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 Limited2 ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Trust Limited ICICI Strategic Investments Fund India India India India India Country of incorporation United Kingdom Canada India Nature of relationship Subsidiary Subsidiary Subsidiary USA USA India India India India India Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Mauritius India Subsidiary Subsidiary Subsidiary Nature of business Banking Ownership interest 100.00% 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 Life insurance 100.00% 79.22% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 54.88% Subsidiary General insurance 55.92% Subsidiary Asset management 51.00% 18. I-Process Services (India) Private Limited3 India 19. NIIT Institute of Finance Banking and India Associate Insurance Training Limited3 20. ICICI Merchant Services Private Limited3 India Associate Subsidiary Consolidated as per AS 21 Associate 50.80% 100.00% 19.00% 18.79% 19.01% Trusteeship services Unregistered venture capital fund Services related to back end operations Education and training in banking, finance and insurance Merchant acquiring and servicing Infrastructure finance Venture capital fund Venture capital fund 21. 22. 23. 1. 2. 3. India Infradebt Limited3 India Advantage Fund-III3 India Advantage Fund-IV3 ICICI Securities Holding Inc. is a wholly owned subsidiary of ICICI Securities Limited. ICICI Securities Inc. is a wholly owned subsidiary of ICICI Securities Holding Inc. Associate Associate Associate 38.09% 24.10% 47.14% India India India ICICI Prudential Pension Funds Management Company Limited is a wholly owned subsidiary of ICICI Prudential Life Insurance Company Limited. 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’. 251 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Comm Trade Services Limited has not been consolidated under AS 21, since the investment is temporary in nature. Falcon Tyres Limited, in which the Bank holds 26.39% equity shares has not been accounted as per equity method under AS 23, since the investment is temporary in nature. 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 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, offshore banking units, foreign subsidiaries) 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) relevant to the balance sheet date and the resulting gains/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 relevant closing exchange rates notified by FEDAI at the balance sheet date and the resulting gains/ 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. Pursuant to RBI guideline, the Bank does not recognise the cumulative/proportionate amount of such exchange differences as income or expenses, which relate to repatriation of accumulated retained earnings from overseas operations. The premium or discount arising on inception of forward exchange contracts in domestic operations 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 based on 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 based on 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 currency are disclosed at the closing exchange rates notified by FEDAI relevant to the balance sheet date. 2. Revenue recognition a) 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/other applicable guidelines. Further, interest income was recognised upon realisation under the Strategic Debt Restructuring (SDR) or prudential norms on change in ownership of borrowing entities (change in management outside SDR) or scheme for sustainable structuring of stressed assets (S4A) schemes, from the date of invocation till the end of stand-still period/implementation date. With effect from February 12, 2018, RBI has withdrawn these schemes and interest income, for cases where the SDR, change in management outside SDR or S4A schemes were not implemented at that date, has been recognised as per the income recognition and asset classification norms of RBI. b) Income from finance 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. c) Income on discounted instruments is recognised over the tenure of the instrument. d) Dividend income is accounted on an accrual basis when the right to receive the dividend is established. e) 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. 252 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) f) Project appraisal/structuring fee is accounted for on the completion of the agreed service. g) Arranger fee is accounted for as income when a significant portion of the arrangement/syndication is completed. h) Commission received on guarantees issued is amortised on a straight-line basis over the period of the guarantee. i) j) Fund management and portfolio management fees are recognised on an accrual basis. The annual/renewal fee on credit cards and debit cards are amortised on a straight line basis over one year. k) All other fees are accounted for as and when they become due. 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. m) Fees paid/received for priority sector lending certificates (PSLC) is amortised on straight- line basis over the period of the certificate. n) Income from securities 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. o) Life insurance premium for non-linked policies is recognised as income when due from policyholders. For unit linked business, premium is recognised when the associated units are created. Premium on lapsed policies is recognised as income when such policies are reinstated. Top-up premiums paid by unit linked policyholders’ are considered as single premium and recognised as income when the associated units are created. Income from unit linked policies, which includes fund management charges, policy administration charges, mortality charges and other charges, if any, are recovered from the linked funds in accordance with the terms and conditions of the policy and are recognised when due. p) q) r) s) In the case of general insurance business, premium is recorded for the policy period at the commencement of risk and for instalment cases, it is recorded on instalment due dates. Premium earned is recognised as income over the period of the risk or the contract period based on 1/365 method, whichever is appropriate, on a gross basis, net of applicable 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 re-insurance ceded is recognised as income in the period of ceding the risk. Profit commission under re-insurance treaties, wherever applicable, is recognised as income in the period of final determination of profits and combined with commission on reinsurance ceded. In case of life insurance business, reinsurance premium ceded is accounted in accordance with the terms of the relevant treaty with the reinsurer. Profit commission on reinsurance ceded is netted off against premium ceded on reinsurance. 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 they are cancelled. In the case of general insurance business, premium deficiency is recognised when the sum of expected claim costs and related expenses and maintenance costs exceed the reserve for unexpired risks and is computed at a segmental revenue account level. The expected claim cost is calculated and duly certified by the Appointed Actuary. 253 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) 3. Stock based compensation The following entities within the group have granted stock options to their employees: • • • ICICI Bank Limited ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited The Employees Stock Option Scheme (the Scheme) of the Bank provides for grant of options on the Bank’s equity shares 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. 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, except the overseas banking subsidiaries, 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 and amortised over the vesting period. The fair market price is the latest closing price, immediately prior to the grant date, which is generally the date of the meeting of the Board Governance, Remuneration & Nomination Committee or other relevant committee in which the options are granted, on the stock exchange on which the shares of the Bank, ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance Company 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 binomial tree model. 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 Accounting Standard 22 - Accounting for Taxes on Income respectively. Deferred tax adjustments comprise changes in the deferred tax assets or liabilities during the year. Deferred tax assets and liabilities are recognised by considering the impact of timing differences between taxable income and accounting income for the current year, 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 upon the management’s judgement as to whether their realisation is considered as reasonably certain. However, in case of domestic companies, where there is unabsorbed depreciation or carried forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. In the consolidated financial statements, deferred tax assets and liabilities are computed at an individual entity level and aggregated for consolidated reporting. Minimum Alternate Tax (MAT) credit is recognised as an asset to the extent there is convincing evidence that the Group will pay normal income tax during specified period, i.e., the period for which MAT credit is allowed to be carried forward as per prevailing provisions of the Income Tax Act 1961. In accordance with the recommendation contained in the guidance note issued by ICAI, MAT credit is to be recognised as an asset in the year in which it becomes eligible for set off against normal income tax. The Group reviews MAT credit entitlements at each balance sheet date and writes down the carrying amount to the extent there is no longer convincing evidence to the effect that the Group will pay normal income tax during the specified period. 254 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) 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 based on management estimates or 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. Salvaged stock is recognised at estimated net realisable value based on independent valuer’s report. 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/ actuarial valuation. These estimates are progressively 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. In the case of life insurance business, benefits paid comprise policy benefits and claim settlement costs, if any. Death and rider claims are accounted for on receipt of intimation. Survival and maturity benefits are accounted when due. Withdrawals and surrenders under non linked policies are accounted on the receipt of intimation. Reinsurance claims receivable are accounted for in the period in which the claim is intimated. 6. Liability for life policies in force In the case of life insurance business, the liabilities for life policies in force are calculated in accordance with accepted actuarial practice, requirements of Insurance Act, 1938 (amended by Insurance Laws (Amendment) Act, 2015) and regulations notified by the Insurance Regulatory and Development Authority of India and Actuarial Practice Standards of the Institute of Actuaries of India. 7. Reserve for unexpired risk Reserve for unexpired risk is recognised net of re-insurance ceded and represents premium written that is attributable to, and is to be allocated to succeeding accounting periods. For fire, marine, cargo and miscellaneous business it is calculated on a daily pro-rata basis, except in the case of marine hull business which is computed at 100.00% of net premium written on all unexpired policies at balance sheet date. 8. 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, morbidity, 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. The greater of liability calculated using discounted cash flows and unearned premium reserves is held for the unexpired portion of the risk for the non-unit liabilities of linked business and attached riders. 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. An unexpired risk reserve and a reserve in respect of claims incurred but not reported are created, for one year renewable group term insurance. The interest rates used for valuing the liabilities are in the range of 4.66% to 6.13% per annum (previous year – 3.49% to 6.20% per annum). 255 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Mortality rates used are based on the published “Indian Assured Lives Mortality (2006 – 2008) Ult.” 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 but with an allowance for any expected worsening. Per policy renewal expenses for regular premium policies are assumed to inflate at 4.38% (previous year – 4.55%). 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. Employee benefits Gratuity The Group pays gratuity, a defined benefit plan, 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. The Group makes contribution to trusts which administer the funds on their own account or through insurance companies. The actuarial gains or losses arising during the year are recognised in the profit and loss account. Actuarial valuation of the gratuity liability is determined by an actuary appointed by the Group. Actuarial valuation of gratuity liability is determined based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit method. Superannuation Fund and National Pension Scheme The Bank contributes 15.0% of the total annual basic salary of certain employees to superannuation funds, a defined contribution plan, managed and administered by insurance companies. Further, the Bank contributes 10.0% of the total basic salary of certain employees to National Pension Scheme (NPS), a defined contribution plan, which is managed and administered by pension fund management companies. The Bank also gives an option to its employees allowing them to receive the amount in lieu of such contributions along with their monthly salary during their employment. The amounts so contributed/paid by the Bank to the superannuation fund and NPS or to employees during the year are recognised in the profit and loss account. 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 defined benefit plan covering eligible employees of erstwhile Bank of Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan. The Bank makes contribution to a trust which administers the funds on its own account or through insurance companies. The plan provides for pension payment including dearness relief 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. Actuarial valuation of the pension liability is determined by an actuary appointed by the Bank. Actuarial valuation of pension liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit method. The actuarial gains or losses arising during the year are recognised in the profit and loss account. 256 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Employees covered by the pension plan are not eligible for employer’s contribution under the provident fund plan. Provident fund The Group is statutorily required to maintain a provident fund, a defined benefit plan, as a part of retirement benefits to its employees. Each employee contributes a certain percentage of his or her basic salary and the Group contributes an equal amount for eligible employees. The Group makes contribution as required by The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 to Employees’ Pension Scheme administered by the Regional Provident Fund Commissioner and the balance contributions are transferred to funds administered by trustees. The funds are invested according to the rules prescribed by the Government of India. Actuarial valuation for the interest rate guarantee on the provident fund balances is determined by an actuary appointed by the Group. The actuarial gains or losses arising during the year are recognised in the profit and loss account. The overseas branches of the Bank and its eligible employees contribute a certain percentage of their salary towards respective government schemes as per local regulatory guidelines. The contribution made by the overseas branches is recognised in profit and loss account at the time of contribution. Compensated absences The Group provides for compensated absences 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 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 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. The Bank estimates the probability of redemption of customer loyalty reward points using an actuarial method by employing an independent actuary and accordingly makes provision for these reward points. Actuarial valuation is determined based on certain assumptions regarding mortality rate, discount rate, cancellation rate and redemption rate. 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. 257 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) 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 any, in any category are accounted for as per the RBI guidelines. Under each classification, the investments are further categorised as (a) government securities, (b) other approved securities, (c) shares, (d) bonds and debentures and (e) others. b) c) ‘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 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 closing quotes on the recognised stock exchanges or prices declared by Primary Dealers Association of India (PDAI) jointly with Fixed Income Money Market and Derivatives Association (FIMMDA)/Financial Benchmark India Private Limited (FBIL), 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, including Pass Through Certificates, 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. The Sovereign foreign securities and non-INR India linked bonds are valued on the basis of prices published by the Sovereign regulator or counterparty quotes. 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. Depreciation/appreciation on securities, other than those acquired by way of conversion of outstanding loans, is aggregated for each category. Net appreciation in each category under each investment classification, if any, being unrealised, is ignored, while net depreciation is provided for. The depreciation on securities acquired by way of conversion of outstanding loan is fully provided for. Non-performing investments are identified based on the RBI guidelines. Depreciation on equity shares acquired and held by the Bank under SDR, S4A and change in management outside SDR schemes is provided over a period of four calendar quarters from the date of conversion of debt into equity in accordance with RBI guidelines. With effect from February 12, 2018, the depreciation is provided over a period of four quarters for the schemes which have been implemented prior to that date as per extant RBI guidelines. d) Treasury bills, commercial papers and certificate of deposits being discounted instruments, are valued at carrying cost. e) The units of mutual funds are valued at the latest repurchase price/net asset value declared by the mutual fund. f) Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged to the profit and loss account. Cost of investments is computed based on the First-In-First-Out (FIFO) method. 258 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) g) Profit/loss on sale of investments in the ‘Held to Maturity’ category is recognised in the profit and loss account and profit is thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital Reserve. Profit/loss on sale of investments in ‘Available for Sale’ and ‘Held for Trading’ categories is recognised in the profit and loss account. h) Market repurchase, reverse repurchase and transactions with RBI under Liquidity Adjustment Facility (LAF) are accounted for as borrowing and lending transactions in accordance with the extant RBI guidelines. i) 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. j) At the end of each reporting period, security receipts issued by the 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 the 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 net asset value obtained from the asset reconstruction company from time to time, for valuation of such investments at each reporting period end. The security receipts which are outstanding and not redeemed as at the end of the resolution period are treated as loss assets and are fully provided for. k) The Bank follows trade date method of accounting for purchase and sale of investments, except for government of India and state government securities where settlement date method of accounting is followed in accordance with RBI guidelines. l) The Bank undertakes short sale transactions in dated central government securities in accordance with RBI guidelines. The short positions are categorised under HFT category and are marked-to-market. The mark- to-market loss is charged to profit and loss account and gain, if any, is ignored as per RBI guidelines. ii) The Bank’s consolidating venture capital fund carries 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. iii) The Bank’s primary dealership and securities broking subsidiaries classify the securities held with the intention of holding for short-term and trading as stock-in-trade which are valued at lower of cost or market value. The securities classified by primary dealership subsidiary as held-to-maturity, as permitted by RBI, are carried at amortised cost. 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 their acquisition cost or at amortised cost, if acquired at a premium over the face value. Any premium over the face value of the securities acquired is amortised over the remaining period to maturity on a constant yield basis. However, a provision for diminution in value is made to recognise any other than temporary decline in the value of such long-term investments. v) The Bank’s overseas banking subsidiaries account for unrealised gain/loss, net of tax, on investment in ‘Available for Sale’ category directly in their reserves. Further unrealised gain/loss on investment in ‘Held for Trading’ category is accounted directly in the profit and loss account. Investments in ‘Held to Maturity’ category are carried at amortised cost. 259 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) vi) In the case of life and general insurance businesses, investments are made in accordance with the Insurance Act, 1938 (amended by the Insurance Laws (Amendment) Act, 2015), the IRDA (Investment) Regulations, 2016, and various other circulars/notifications issued by the IRDAI in this context from time to time. 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 amortisation of premium or accretion of discount over the period of maturity/holding on a constant yield basis. b. Listed equity shares are stated at fair value being the last quoted closing price on the National Stock Exchange (NSE) (or BSE, in case the investments are not listed on NSE). c. Mutual fund units are valued based on the previous day’s net asset value. 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’ and ‘Liabilities on policies in force’ in the balance sheet for Shareholders’ fund and Policyholders’ fund respectively 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 constant yield basis over the holding/maturity period. b. Listed equities and convertible preference shares at the balance sheet date are stated at fair value, being the last quoted closing price on the NSE and in case these are not listed on NSE, then based on the last quoted closing price on the BSE. c. Mutual fund investments (other than venture capital fund) are stated at fair value, being the closing net asset value at balance sheet date. d. Investments other than mentioned above are valued at cost. Unrealised gains/losses arising due to changes in the fair value of listed equity shares, convertible preference shares and mutual fund units are taken to ’Revenue and other reserves’ in the balance sheet for general insurance business. Insurance subsidiaries assess at each balance sheet date whether there is any indication that any investment 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. The total proportion of investments for which subsidiaries have applied accounting policies different from the Bank as mentioned above, is approximately 21.92% of the total investments at March 31, 2018. 14. Provisions/write-offs on loans and other credit facilities i) Loans and other credit facilities of the Bank are accounted for in accordance with the extant RBI guidelines as given below: a) The Bank classifies its loans and investments, including at overseas branches and overdues arising from crystallised derivative contracts, into performing and NPAs in accordance with RBI guidelines. Loans and advances held at the overseas branches that are identified as impaired as per host country regulations for reasons other than record of recovery, but which are standard as per the extant RBI guidelines, are classified as NPAs to the extent of amount outstanding in the host country. Further, NPAs are classified into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. 260 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) In the case of corporate loans and advances, 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 loans and advances booked in overseas branches, which are standard as per the extant RBI guidelines but are classified as NPAs based on host country guidelines, provisions are made as per the host country regulations. For loans and advances booked in overseas branches, which are NPAs as per the extant RBI guidelines and as per host country guidelines, provisions are made at the higher of the provisions required under RBI regulations and host country regulations. Provisions on homogeneous retail loans and advances, subject to minimum provisioning requirements of RBI, are assessed on the basis of the ageing of the loans in the non-performing category. In respect of non-retail loans reported as fraud to RBI and classified in doubtful category, the entire amount, without considering the value of security, is provided for over a period of four quarters starting from the quarter in which fraud has been detected. In respect of non-retail loans where there has been delay in reporting the fraud to the RBI or which are classified as loss accounts, the entire amount is provided immediately. In case of fraud in retail accounts, the entire amount is provided immediately. In respect of borrowers classified as non-cooperative borrowers or willful defaulters, the Bank makes accelerated provisions as per extant RBI guidelines. The Bank holds specific provisions against non-performing loans and advances, and against certain performing loans and advances in accordance with RBI directions, including RBI direction for provision on accounts referred to the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code, 2016. The assessment of incremental specific provisions is made after taking into consideration the existing specific provision held. The specific provisions on retail loans and advances held by the Bank are higher than the minimum regulatory requirements. b) Provision due to diminution in the fair value of restructured/rescheduled loans and advances is made in accordance with the applicable RBI guidelines. In respect of non-performing loans and advances 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 later, falls due, subject to satisfactory performance of the account during the period. Prior to February 12, 2018, standard restructured loans were upgraded to the standard category when satisfactory payment performance was evidenced during the specified period and after the loan reverted to the normal level of standard asset provisions/risk weights. With effect from February 12, 2018, non-performing and restructured loans are upgraded to standard only after satisfaction of certain payment and rating threshold criteria specified under RBI guidelines on Resolution of Stressed Assets – Revised Framework. 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) The Bank maintains general provision on performing loans and advances in accordance with the RBI guidelines, including provisions on loans to borrowers having unhedged foreign currency exposure, provisions on loans to specific borrowers in specific stressed sector and provision on exposures to step-down subsidiaries of Indian companies. For performing loans and advances in overseas branches, the general provision is made at higher of host country regulations requirement and RBI requirement. e) In addition to the provisions required to be held according to the asset classification status, provisions are held for individual country exposures including indirect country risk (other than for home country exposure). The countries are categorised into seven risk categories namely insignificant, low, moderately low, moderate, moderately high, high and very high, and provisioning is made on exposures exceeding 180 days on a graded scale ranging from 0.25% to 25%. 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. The indirect exposure is reckoned at 50% of the exposure. 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. f) The Bank makes floating provision as per the Board approved policy, which is in addition to the specific and general provisions made by the Bank. The floating provision is utilised, with the approval of Board 261 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) and RBI, in case of contingencies which do not arise in the normal course of business and are exceptional and non-recurring in nature and for making specific provision for impaired loans as per the requirement of extant RBI guidelines or any regulatory guidance/instructions. The floating provision is netted-off from advances. ii) iii) 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. In the case of the Bank’s overseas banking subsidiaries, loans are stated net of allowance for credit losses. Loans are classified as impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition on the loan (a loss event) and that loss event (or events) has an impact on the estimated future cash flows of the loans that can be reliably estimated. An allowance for impairment losses is maintained at a level that management considers adequate to absorb identified credit related losses as well as losses that have occurred but have not yet been identified. The total proportion of loans for which subsidiaries have applied accounting policies different from the Bank as mentioned above, is approximately 9.68% of the total loans at March 31, 2018. 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. With effect from May 7, 2012, the RBI guidelines require the profit/premium arising from securitisation to be amortised over the life of the transaction based on the method prescribed in the guidelines. In accordance with RBI guidelines, in case of non-performing/special mention account-2 loans sold to securitisation company (SC)/reconstruction company (RC), the Bank reverses the excess provision in profit and loss account in the year in which amounts are received. Any shortfall of sale value over the net book value on sale of such assets is recognised by the Bank in the year in which the loan is sold. The Canadian subsidiary has entered into securitisation arrangements in respect of its originated and purchased mortgages. ICICI Bank Canada either retains substantially all the risk and rewards or retains control over these mortgages, hence these arrangements do not qualify for de-recognition accounting under their local accounting standards. It continues to recognise the mortgages securitised as “Loans and Advances” and the amounts received through securitisation are recognised as “Other borrowings”. 16. Property, Plant and Equipment Property, Plant and Equipment (PPE), other than premises of the Bank and its housing finance subsidiary are carried at cost less accumulated depreciation and impairment, if any. In case of the Bank and its housing finance subsidiary, premises are carried at revalued amount, being fair value at the date of revaluation 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 PPE on a straight-line basis. The useful life of the groups of PPE for domestic group companies is based on past experience and expectation of usage, which for some categories of PPE, is different from the useful life as prescribed in Schedule II to the Companies Act, 2013. Assets purchased/sold during the year are depreciated on a pro-rata basis for the actual number of days the asset has been capitalised. 262 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) In case of the Bank, items individually costing up to ` 5,000/- are depreciated fully over a period of 12 months from the date of purchase. Further, profit on sale of premises by the Bank is appropriated to capital reserve, net of transfer to Statutory Reserve and taxes, in accordance with RBI guidelines. In case of revalued/impaired assets, depreciation is provided over the remaining useful life of the assets with reference to revised asset values. In case of premises, which are carried at revalued amounts, the depreciation on the excess of revalued amount over historical cost is transferred from Revaluation Reserve to General Reserve annually. Non-banking assets Non-banking assets (NBAs) acquired in satisfaction of claims are carried at lower of net book value and net realisable value. Further, the Bank creates provision on non-banking assets as per specific RBI directions. 17. Accounting for derivative contracts The Group enters into derivative contracts such as interest rate and currency options, interest rate and currency futures, 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 liabilities and accounted pursuant to the principles of hedge accounting. Hedge swaps are accounted for on an accrual basis and are not marked to market unless their underlying transaction is marked to market, except in the case of the Bank’s overseas banking subsidiaries. In overseas subsidiaries, in case of fair value hedge, 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 and in case of cash flow hedges, changes in the fair value of effective portion of the cash flow hedge are taken to ‘Revenue and other reserves’ and ineffective portion, if any, are 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 or loss 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 The immovable fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An asset is treated as impaired when its carrying amount exceeds its recoverable amount. The impairment is recognised by debiting the profit and loss account and is measured as the amount by which the carrying amount of the impaired assets exceeds their recoverable value. The Bank and its housing finance subsidiary follows revaluation model of accounting for its premises and the recoverable amount of the revalued assets is considered to be close to its revalued amount. Accordingly, separate assessment for impairment of premises is not required. 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 on straight line basis. 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 issued by the group outstanding during the year, except where the results are anti-dilutive. 263 Consolidated Financial Statements of ICICI Bank Limited sChedules 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. 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 weighted average number of 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 attributable to equity share holders Basic earnings per share (`) Diluted Weighted average no. of equity shares outstanding Net profit attributable to equity share holders Diluted earnings per share (`)2 Nominal value per share (`) ` in million, except per share data Year ended March 31, 2017 Year ended March 31, 2018 6,417,180,759 77,121.8 12.02 6,401,835,901 101,883.8 15.91 6,482,375,300 77,098.8 11.89 2.00 6,428,315,579 101,837.1 15.84 2.00 1. Pursuant to the issue of bonus shares by the Bank during the year ended March 31, 2018, number of shares and per share information has been restated for the year ended March 31, 2017. 2. The dilutive impact is due to options granted to employees by the Group. 2. Related party transactions The Group has transactions with its related parties comprising associates/other related entities and key management personnel and relatives of key management personnel. I. Related parties Associates/other related entities ICICI Merchant Services Private Limited, India Advantage Fund-III, India Advantage Fund-IV, India Infradebt Limited, I-Process Services (India) Private Limited, NIIT Institute of Finance Banking and Insurance Training Limited, Comm Trade Services Limited and ICICI Foundation for Inclusive Growth. Akzo Nobel India Limited and FINO PayTech Limited ceased to be related parties effective from April 30, 2016 and January 5, 2017 respectively. Key management personnel Ms. Chanda Kochhar, Mr. N. S. Kannan, Ms. Vishakha Mulye, Mr. Vijay Chandok1, Mr. Anup Bagchi2, Mr. K. Ramkumar3 and Mr. Rajiv Sabharwal4. 1. 2. 3. 4. 264 Identified as related party effective from July 28, 2016. Identified as related party effective from February 1, 2017. Ceased to be related party effective close of business hours on April 30, 2016. Ceased to be related party effective close of business hours on January 31, 2017. annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Relatives of key management personnel Mr. Deepak Kochhar, Mr. Arjun Kochhar, Ms. Aarti Kaji, Mr. Mahesh Advani, Ms. Rangarajan Kumudalakshmi, Ms. Aditi Kannan, Ms. Sudha Narayanan, Mr. Raghunathan Narayanan, Mr. Rangarajan Narayanan, Mr. Vivek Mulye, Ms. Vriddhi Mulye, Dr. Gauresh Palekar, Ms. Shalaka Gadekar, Ms. Manisha Palekar, Ms. Poonam Chandok1, Ms. Saluni Chandok1, Ms. Simran Chandok1, Mr. C. V. Kumar1, Ms. Shad Kumar1, Ms. Sanjana Gulati1, Ms. Mitul Bagchi2, Mr. Aditya Bagchi2, Mr. Shishir Bagchi2, Mr. Arun Bagchi2, Mr. K. Jayakumar3, Ms. J. Krishnaswamy3, Ms. Sangeeta Sabharwal4, Mr. Kartik Sabharwal4, Mr. Arnav Sabharwal4 and Dr. Sanjiv Sabharwal4. 1. 2. 3. 4. Identified as related party effective from July 28, 2016. Identified as related party effective from February 1, 2017. Ceased to be related party effective close of business hours on April 30, 2016. Ceased to be related party effective close of business hours on January 31, 2017. II. Transactions with related parties The following table sets forth, for the periods indicated, the significant transactions between the Group and its related parties. Particulars Interest income Associates/others Key management personnel Relatives of key management personnel Total Fee, commission and other income Associates/others Key management personnel Relatives of key management personnel Total Commission income on guarantees issued Associates/others Key management personnel Relatives of key management personnel Total Insurance premium received Associates/others Key management personnel Relatives of key management personnel Total Income on custodial services Associates/others Key management personnel Relatives of key management personnel Total gain/(loss) on forex and derivative transactions (net)2 Associates/others Key management personnel Relatives of key management personnel Total Dividend income Associates/others Total Year ended March 31, 2018 ` in million Year ended March 31, 2017 212.6 9.0 0.1 221.7 25.1 0.5 0.01 25.6 0.1 - - 0.1 34.0 2.6 4.6 41.2 - - - - (0.0)1 - - (0.0)1 63.8 63.8 188.8 10.7 0.2 199.7 26.0 2.4 0.01 28.4 0.01 - - 0.01 52.8 4.0 3.1 59.9 1.1 - - 1.1 - - - - - - 265 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars Reimbursement of expenses to the group Associates/others Key management personnel Relatives of key management personnel Total Recovery of lease of premises, common corporate and facilities expenses Associates/others Key management personnel Relatives of key management personnel Total Recovery of secondment of employees Associates/others Total Interest expense Associates/others Key management personnel Relatives of key management personnel Total Remuneration to wholetime directors3 Key management personnel Total Reimbursement of expenses to related parties Associates/others Key management personnel Relatives of key management personnel Total Insurance claims paid Associates/others Key management personnel Relatives of key management personnel Total Brokerage, fee and other expenses Associates/others Key management personnel Relatives of key management personnel Total Donation given Associates/others Total Dividend paid Associates/others Key management personnel Relatives of key management personnel Total Investments in the securities issued by related parties Associates/others Total Year ended March 31, 2018 ` in million Year ended March 31, 2017 3.3 - - 3.3 69.2 - - 69.2 8.7 8.7 5.4 10.2 3.1 18.7 232.9 232.9 0.1 - - 0.1 0.1 - 0.4 0.5 7,030.4 - - 7,030.4 1,182.2 1,182.2 - 8.5 0.01 8.5 - - - - 96.5 - - 96.5 8.0 8.0 15.6 6.7 2.9 25.2 223.5 223.5 0.2 - - 0.2 5.6 - - 5.6 6,248.2 - - 6,248.2 975.9 975.9 - 18.1 0.01 18.1 12,907.0 12,907.0 9,759.5 9,759.5 266 annual report 2017-2018Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars Redemption/buyback of securities Associates/others Total Year ended March 31, 2018 ` in million Year ended March 31, 2017 647.2 647.2 267.7 267.7 1. 2. Insignificant amount. 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. 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. 3. Excludes the perquisite value on account of employee stock options exercised. III. Material transactions with related parties The following table sets forth, for the periods indicated, the material transactions between the Group and its related parties. 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. Particulars ` in million Year ended March 31, 2018 Year ended March 31, 2017 ICICI Foundation for Inclusive Growth India Infradebt Limited ICICI Merchant Services Private Limited Interest income 1. 2. Fee, commission and other income India Infradebt Limited 1. 2. ICICI Merchant Services Private Limited Commission income on guarantees issued 1. NIIT Institute of Finance Banking and Insurance Training Limited Insurance premium received 1. 2. FINO PayTech Limited2 Income on custodial services India Advantage Fund-III 1. 2. India Advantage Fund-IV gain/(loss) on forex and derivative transactions (net)3 1. 2. Dividend income 1. Reimbursement of expenses to the group 1. Recovery of lease of premises, common corporate and facilities expenses 1. 2. FINO PayTech Limited2 Recovery of secondment of employees 1. Interest expense 1. 2. ICICI Merchant Services Private Limited India Infradebt Limited ICICI Foundation for Inclusive Growth India Infradebt Limited I-Process Services (India) Private Limited ICICI Foundation for Inclusive Growth India Infradebt Limited India Infradebt Limited 212.6 - 23.4 1.6 0.1 30.0 N.A. - - (0.0)1 (0.0)1 63.8 3.3 63.6 N.A. 8.7 2.4 1.7 153.9 34.9 22.2 3.7 0.01 30.2 16.7 0.6 0.5 - - - - 58.3 31.9 8.0 2.5 11.1 267 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars ` in million Year ended March 31, 2018 Year ended March 31, 2017 I-Process Services (India) Private Limited 3. Ms. Chanda Kochhar Remuneration to wholetime directors4 1. Ms. Chanda Kochhar 2. Mr. N. S. Kannan 3. Ms. Vishakha Mulye 4. Mr. Vijay Chandok5 5. Mr. Anup Bagchi6 6. Mr. K. Ramkumar7 7. Mr. Rajiv Sabharwal8 Reimbursement of expenses to related parties 1. NIIT Institute of Finance Banking and Insurance Training Limited Insurance claims paid 1. 2. FINO PayTech Limited2 3. Akzo Nobel India Limited7 4. Mr. Deepak Kochhar Brokerage, fee and other expenses 1. 2. Donation given 1. Dividend paid 1. Ms. Chanda Kochhar 2. Mr. N. S. Kannan 3. Ms. Vishakha Mulye 4. Mr. Vijay Chandok5 5. Mr. Anup Bagchi6 6. Mr. Rajiv Sabharwal8 Investments in the securities issued by related parties 1. Redemption/buyback of securities India Advantage Fund-IV 1. India Advantage Fund-III 2. I-Process Services (India) Private Limited ICICI Merchant Services Private Limited ICICI Foundation for Inclusive Growth India Infradebt Limited 9.5 63.3 45.1 43.1 44.1 37.3 N.A. N.A. 0.1 0.1 N.A. N.A. 0.4 4,600.8 2,415.9 1,182.2 5.7 1.1 1.7 0.01 0.01 N.A. 5.3 58.7 40.7 36.7 26.1 8.5 11.1 41.7 0.2 0.1 4.3 1.2 - 3,646.6 2,432.1 975.9 11.7 2.4 2.6 - - 1.4 12,907.0 9,759.5 386.4 260.8 168.1 99.6 Insignificant amount. Ceased to be related party effective from January 5, 2017. 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. 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. Excludes the perquisite value on account of employee stock options exercised. Identified as related party effective from July 28, 2016. Identified as related party effective from February 1, 2017. Ceased to be related party effective close of business hours on April 30, 2016. Ceased to be related party effective close of business hours on January 31, 2017. 1. 2. 3. 4. 5. 6. 7. 8. 268 annual report 2017-2018Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) IV. Related party outstanding balances The following table sets forth, for the periods indicated, the outstanding balances payable to/receivable from related parties. Items Deposits with the group Associates/others Key management personnel Relatives of key management personnel Total Payables Associates/others Key management personnel Relatives of key management personnel Total Investments by the group Associates/others Key management personnel Relatives of key management personnel Total Investments of related parties in the group Associates/others Key management personnel Relatives of key management personnel Total Advances Associates/others Key management personnel Relatives of key management personnel Total Receivables Associates/others Key management personnel Relatives of key management personnel Total guarantees issued by the group Associates/others Key management personnel Relatives of key management personnel Total 1. Insignificant amount. At March 31, 2018 ` in million At March 31, 2017 1,069.6 146.1 120.8 1,336.5 761.0 0.01 0.01 761.0 6,939.3 - - 6,939.3 - 10.7 0.01 10.7 - 161.1 0.7 161.8 85.7 - - 85.7 1.1 - - 1.1 3,749.2 145.2 56.2 3,950.6 731.4 0.01 0.01 731.4 7,112.8 - - 7,112.8 - 8.7 0.01 8.7 - 204.0 0.9 204.9 61.0 - - 61.0 7.7 - - 7.7 2. At March 31, 2018, 38,444,750 (March 31, 2017: 34,321,540, after adjusting for bonus shares issued by the Bank during the year ended March 31, 2018) employee stock options for key management personnel were outstanding. 3. During the year ended March 31, 2018, 408,119 (March 31, 2017: 1,115,730), after adjusting for bonus shares issued by the Bank during the year ended March 31, 2018, employee stock options with total exercise price of ` 60.0 million (March 31, 2017: ` 170.9 million) were exercised by the key management personnel. 269 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) V. Related party maximum balances The following table sets forth, for the periods indicated, the maximum balance payable to/receivable from related parties. Items Deposits with the group Key management personnel Relatives of key management personnel Payables1 Key management personnel Relatives of key management personnel Investments of related parties in the group Key management personnel Relatives of key management personnel Advances Key management personnel Relatives of key management personnel Year ended March 31, 2018 ` in million Year ended March 31, 2017 198.2 550.5 0.1 0.1 10.7 0.02 203.6 3.1 293.7 62.3 0.1 0.02 9.1 0.02 206.7 8.6 1. Maximum balance is determined based on comparison of the total outstanding balances at each quarter end during the financial year. 2. Insignificant amount. 3. 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 10% of the aggregate number of the issued equity shares of the Bank on the date(s) of the grant of options in line with SEBI Regulations. Under the stock option scheme, eligible employees are entitled to apply for equity shares. In April 2016, exercise period was modified from 10 years from the date of grant or five years from the date of vesting, whichever is later, to 10 years from the date of vesting of options. In June 2017, exercise period was further modified to not exceed 10 years from the date of vesting of options as may be determined by the Board Governance, Remuneration & Nomination Committee to be applicable for future grants. Options granted after March 2014 vest in a graded manner over a three-year period with 30%, 30% and 40% of the grant vesting in each year, commencing from the end of 12 months from the date of grant other than certain options granted in April 2014 which vested to the extent of 50% on April 30, 2017 and the balance vested on April 30, 2018 and option granted in September 2015 which would vest to the extent of 50% on April 30, 2018 and balance 50% would vest on April 30, 2019. However, for the options granted in September 2015, if the participant’s employment terminates due to retirement (including pursuant to any early/voluntary retirement scheme), all the unvested options would lapse. Options granted in January 2018 would vest at the end of four years from the date of grant. Options granted prior to March 2014 vested 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 vested 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 September 2011 vested in a graded manner over a five-years period with 15%, 20%, 20% and 45% of grant vesting each year, commencing from the end of 24 months from the date of the grant. Pursuant to the issuance of bonus shares approved by the shareholders on June 12, 2017, stock options were also adjusted with increase of one option for every 10 outstanding options and the exercise prices of options were proportionately adjusted. Accordingly the option and exercise price numbers are re-stated. 270 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) The exercise price of the Bank’s options, except mentioned below, is the last closing price on the stock exchange, which recorded highest trading volume preceding the date of grant of options. In February 2011, the Bank granted 16,692,500 options to eligible employees and whole-time Directors of the Bank and certain of its subsidiaries at an exercise price of ` 175.82. This exercise price was average closing price on stock exchange during the six months ended October 28, 2010. Of these options granted, 50% vested on April 30, 2014 and the balance 50% vested on April 30, 2015. Based on intrinsic value of options, no compensation cost was recognised during the year ended March 31, 2018 (year ended March 31, 2017: Nil). If the Bank had used the fair value of options based on binomial tree model, compensation cost in the year ended March 31, 2018 would have been higher by ` 3,526.6 million (year ended March 31, 2017: ` 5,107.5 million) including additional cost of ` 74.3 million (March 31, 2017: ` 1,393.1 million) due to change in exercise period and proforma profit after tax would have been ` 64,247.6 million (year ended March 31, 2017: ` 92,903.4 million). On a proforma basis, the Bank’s basic and diluted earnings per share would have been ` 10.01 (year ended March 31, 2017: ` 14.51) and ` 9.91 (March 31, 2017: ` 14.45) respectively for the year ended March 31, 2018. The following table sets forth, for the periods indicated, the key assumptions used to estimate the fair value of options granted. Particulars Risk-free interest rate Expected life Expected volatility Expected dividend yield Year ended Year ended March 31, 2017 March 31, 2018 7.43% to 7.77% 7.06% to 7.59% 3.90 to 6.90 years 3.89 to 5.89 years 31.71% to 32.92% 32.03% to 33.31% 2.04% to 2.15% 0.73% to 1.81% The weighted average fair value of options granted during the year ended March 31, 2018 was ` 86.43 (year ended March 31, 2017: ` 76.72). Risk free interest rates over the expected term of the option are based on the government securities yield in effect at the time of the grant. The expected term of an option is estimated based on the vesting term as well as expected exercise behavior of the employees who receive the option. Expected term of option is estimated based on the historical stock option exercise pattern of the Bank. Expected volatility during the estimated expected term of the option is based on historical volatility determined based on observed market prices of the Bank’s publicly traded equity shares. Expected dividends during the estimated expected term of the option are based on recent dividend activity. The following table sets forth, for the periods indicated, the summary of the status of the Bank’s stock option plan. 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 1. Adjusted for bonus issuance. ` except number of options Stock options outstanding Year ended March 31, 2018 Year ended March 31, 2017 Number of options1 226,715,682 35,137,770 5,114,1742 21,067,028 235,672,250 136,428,736 Weighted average exercise price 217.12 251.05 248.30 187.00 224.19 208.44 Number of options 210,787,022 36,716,130 10,108,994 10,678,476 226,715,682 120,512,112 Weighted average exercise price 214.87 222.09 242.30 166.00 217.12 195.06 2. Adjusted on account of fractional entitlement payout due to issuance of bonus shares. 271 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) The following table sets forth, the summary of stock options outstanding at March 31, 2018. Range of exercise price (` per share) Number of shares arising out of options 60-99 100-199 200-299 300-399 1,849,150 47,665,539 185,857,561 300,000 Weighted average exercise price (` per share) 79.12 165.43 240.57 309.50 Weighted average remaining contractual life (Number of years) 4.91 4.85 9.43 13.79 The following table sets forth, the summary of stock options outstanding at March 31, 2017. Range of exercise price (` per share) Number of shares arising out of options 60-99 100-199 200-299 300-399 2,355,045 59,262,913 165,097,724 - Weighted average exercise price (` per share) 79.08 164.74 237.89 - Weighted average remaining contractual life (Number of years) 5.93 5.65 9.98 - The options were exercised regularly throughout the period and weighted average share price as per National Stock Exchange price volume data during the year ended March 31, 2018 was ` 296.94 (year ended March 31, 2017: ` 234.38) ICICI Life: ICICI Prudential Life Insurance Company has formulated ESOS for their employees. There is no compensation cost for the year ended March 31, 2018 based on the intrinsic value of options. If the entity had used the fair value approach for accounting of options, there would have been any incremental compensation cost of ` 39.7 million for the year ended March 31, 2018 (for the year ended March 31, 2017: Nil). 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. 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 ` except number of options Stock options outstanding Year ended March 31, 2018 Year ended March 31, 2017 Number of shares 2,398,838 656,300 82,650 151,600 2,820,888 2,193,488 Weighted average exercise price 352.49 468.60 410.92 261.08 382.70 358.13 Number of shares 5,999,175 - 578,575 3,021,762 2,398,838 2,398,838 Weighted average exercise price 233.72 - 396.80 108.33 352.49 352.49 272 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) The following table sets forth, summary of stock options outstanding of ICICI Prudential Life Insurance Company at March 31, 2018. Range of exercise price (` per share) 100-299 300-400 400-500 Number of shares arising out of options (number of shares) 340,113 1,853,375 627,400 Weighted average exercise price (` per share) 130.00 400.00 468.60 Weighted average remaining contractual life (Number of years) 2.1 0.1 11.4 The following table sets forth, summary of stock options outstanding of ICICI Prudential Life Insurance Company at March 31, 2017. Range of exercise price (` per share) 100-299 300-400 Number of shares arising out of options (number of shares) 422,113 1,976,725 Weighted average exercise price (` per share) 130.00 400.00 Weighted average remaining contractual life (Number of years) 3.1 1.1 ICICI general: ICICI Lombard General Insurance Company has formulated ESOS for their employees. There is no compensation cost for the year ended March 31, 2018 based on the intrinsic value of options. If the entity had used the fair value approach for accounting of options, there would not have been any incremental compensation cost for the year ended March 31, 2018 (for the year ended March 31, 2017: Nil). 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. 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 ` except number of options Stock options outstanding Year ended March 31, 2018 Year ended March 31, 2017 Number of shares 3,180,324 - 21,250 2,663,934 495,140 495,140 Weighted average exercise price 125.83 - 113.06 130.13 103.28 103.28 Number of shares 7,004,248 - 78,000 3,745,924 3,180,324 3,180,324 Weighted average exercise price 113.71 - 193.85 101.75 125.83 125.83 The following table sets forth, summary of stock options outstanding of ICICI Lombard General Insurance Company at March 31, 2018. Range of exercise price (` per share) 35-99 100-200 Number of shares arising out of options (number of shares) 147,140 348,000 Weighted average exercise price (` per share) 80.89 112.74 Weighted average remaining contractual life (number of years) 1.34 2.31 273 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) The following table sets forth, summary of stock options outstanding of ICICI Lombard General Insurance Company at March 31, 2017. Range of exercise price (` per share) 35-99 100-200 Number of shares arising out of options (number of shares) 1,034,824 2,145,500 Weighted average exercise price (` per share) 60.42 157.38 Weighted average remaining contractual life (number of years) 2.78 2.41 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, 2018 would have been higher by ` 3,417.2 million (March 31, 2017: ` 4,926.5 million) including additional cost of ` 74.3 million (March 31, 2017: ` 1,369.2 million) due to change in exercise period and the proforma consolidated profit after tax would have been ` 73,704.6 million (March 31, 2017: ` 96,957.3 million). On a proforma basis, the Group’s basic earnings per share would have been ` 11.49 (March 31, 2017: ` 15.15) and diluted earnings per share would have been ` 11.37 (March 31, 2017: ` 15.08). 4. Fixed assets The following table sets forth, for the periods indicated, the movement in software acquired by the Group, as included in fixed assets. Particulars At cost at March 31 of preceding year Additions during the year Deductions during the year Depreciation to date Net block 5. Assets on lease 5.1 Assets taken under operating lease At March 31, 2018 20,348.6 4,062.4 (104.8) (18,678.7) 5,627.5 ` in million At March 31, 2017 17,803.2 2,628.2 (82.8) (15,941.1) 4,407.5 The following table sets forth, for the periods indicated, the details of future rentals payable on operating leases. Particulars Not later than one year Later than one year and not later than five years Later than five years Total At March 31, 2018 510.1 1,628.9 664.1 2,803.1 ` in million At March 31, 2017 455.2 1,385.9 353.7 2,194.8 The terms of renewal are those normally prevalent in similar agreements and there are no undue restrictions in the agreements. 5.2 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 Sub total Less: collective provision Total 274 At March 31, 2018 ` in million At March 31, 2017 1,136.8 77.5 1,214.3 (3.0) 1,211.3 - - - - - annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars 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 Less: collective provision Total Maturity profile of present value of lease rentals At March 31, 2018 ` in million At March 31, 2017 281.8 788.7 143.8 1,214.3 (3.0) 1,211.3 - - - - - - The following table sets forth, for the periods indicated, the details of maturity profile of present value of finance lease receipts. Particulars Maturity profile of future present value of finance lease receipts - Not later than one year - Later than one year and not later than five years -Later than five years Total Less: collective provision Total At March 31, 2018 ` in million At March 31, 2017 256.4 740.2 140.2 1,136.8 (3.0) 1,133.8 - - - - - - 6. Preference shares At March 31, 2018, certain government securities amounting to ` 3,338.9 million (March 31, 2017: ` 3,219.7 million) were earmarked against redemption of preference shares issued by the Bank. The preference shares have been subsequently redeemed after approval from RBI on April 20, 2018, as per the original terms of the issue. 7. Provisions and contingencies The following table sets forth, for the periods indicated, the break-up of provisions and contingencies included in the profit and loss account. Particulars Provision for depreciation of investments Provision towards non-performing and other assets1 Provision towards income tax - Current2 - Deferred Other provisions and contingencies3 Total provisions and contingencies Year ended March 31, 2018 19,489.3 147,516.1 ` in million Year ended March 31, 2017 9,364.2 157,453.2 40,782.1 (21,992.9) 12,724.2 198,518.8 31,375.6 (6,685.4) (992.6) 190,515.0 1. During the year ended March 31, 2017, the Bank has fully utilised an amount of ` 36,000.0 million from collective contingency and related reserve. 2. During the year ended March 31, 2018, the Bank has recognised Minimum Alternate Tax (MAT) credit as an asset amounting to ` 2,178.0 million, as the normal income tax liability related to the year ended March 31, 2017 was less than the MAT computed as per section 115JB of the Income tax Act, 1961. The MAT asset has been fully utilised against the normal income tax liability for the year ended March 31, 2018. 3. Includes general provision towards standard assets made amounting to ` 2,960.4 million (March 31, 2017: reversal of provision by ` 3,733.8 million). 275 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) The Group has assessed its obligations arising in the normal course of business, including pending litigations, proceedings pending with tax authorities and other contracts including derivative and long term contracts. In accordance with the provisions of Accounting Standard - 29 on ‘Provisions, Contingent Liabilities and Contingent Assets’, the Group recognises a provision for material foreseeable losses when it 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. 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 as contingent liabilities in the financial statements. The Group does not expect the outcome of these proceedings to have a materially adverse effect on its financial results. For insurance contracts booked in its life insurance subsidiary, reliance has been placed on the Appointed Actuary for actuarial valuation of “liabilities for policies in force”. The Appointed Actuary has confirmed that the assumptions used in valuation of liabilities for policies in force are in accordance with the guidelines and norms issued by the IRDAI and the Institute of Actuaries of India in concurrence with the IRDAI. 8. Staff retirement benefits Pension The following tables set forth, for the periods indicated, movement of the present value of the defined benefit obligation, fair value of plan assets and other details for pension benefits. Particulars Opening obligations Service cost Interest cost Actuarial (gain)/loss Liabilities extinguished on settlement 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 Benefits paid Closing plan assets, at fair value Fair value of plan assets at the end of the year Present value of 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) Cost1 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 Actual return on plan assets Expected employer’s contribution next year 276 Year ended March 31, 2018 16,686.9 275.0 1,113.1 (1,162.8) (1,399.0) (122.1) 15,391.1 16,888.1 1,433.4 (449.6) (1,554.5) 108.4 (122.1) 16,303.7 16,303.7 (15,391.1) ` in million Year ended March 31, 2017 14,191.6 253.7 1,116.5 2,436.0 (1,182.5) (128.4) 16,686.9 13,191.6 1,143.2 589.5 (1,313.9) 3,406.1 (128.4) 16,888.1 16,888.1 (16,686.9) (310.1) 602.5 275.0 1,113.1 (1,433.4) (713.2) 155.5 241.8 (361.2) 983.8 3,000.0 (68.4) 132.8 253.7 1,116.5 (1,143.2) 1,846.5 131.4 68.4 2,273.3 1,732.7 3,000.0 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars Investment details of plan assets Insurer Managed Funds Government of India securities Corporate Bonds Equity securities in listed companies Others Assumptions Discount rate Salary escalation rate: On Basic Pay On Dearness Relief Estimated rate of return on plan assets Year ended March 31, 2018 ` in million Year ended March 31, 2017 0.88% 48.98% 43.48% 6.00% 0.66% 7.45% 1.50% 7.00% 8.00% 0.80% 47.80% 39.38% 6.02% 6.00% 6.75% 1.50% 7.00% 8.00% 1. Included in line item ‘Payments to and provision for employees’ of Schedule 16- Operating expenses. Estimated rate of return on plan assets is based on the expected average long-term rate of return on investments of the Fund during the estimated term of the obligations. 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 Gratuity Year ended March 31, 2018 16,303.7 (15,391.1) (310.1) Year ended March 31, 2017 16,888.1 (16,686.9) (68.4) Year ended March 31, 2016 13,191.6 (14,191.6) - Year ended March 31, 2015 10,103.4 (12,999.9) - ` in million Year ended March 31, 2014 9,018.8 (10,209.9) - 602.5 (449.6) 290.1 132.8 589.5 (80.0) (1,000.0) (4.1) 1,503.4 (2,896.5) 104.7 1,271.2 (1,191.1) (29.1) 2,549.6 The following table sets forth, for the periods indicated, movement of the present value of the defined benefit obligation, fair value of plan assets and other details for gratuity benefits of the Group. Particulars Opening obligations Add: Adjustment for exchange fluctuation on opening obligation Adjusted opening obligations Service cost Interest cost Actuarial (gain)/loss Past service cost Obligations transferred from/to other companies Benefits paid Obligations at the end of the year Year ended March 31, 2018 11,172.6 0.4 11,173.0 1,178.2 775.8 (316.3) 16.1 33.4 (1,013.6) 11,846.6 ` in million Year ended March 31, 2017 9,389.8 (2.7) 9,387.1 954.6 745.5 1,016.1 - 17.4 (948.1) 11,172.6 277 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars Opening plan assets, at fair value Expected return on plan assets Actuarial gain/(loss) Contributions Assets transferred from/to other companies 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 year1 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 Actual return on plan assets Expected employer’s contribution next year Investment details of plan assets Insurer managed funds Government of India securities Corporate bonds Special Deposit schemes Equity Others Assumptions Discount rate Salary escalation rate Estimated rate of return on plan assets Year ended March 31, 2018 10,443.4 830.2 (124.7) 803.4 33.4 (1,013.6) 10,972.1 10,972.1 (11,846.6) - ` in million Year ended March 31, 2017 8,361.6 632.3 542.2 1,838.0 17.4 (948.1) 10,443.4 10,443.4 (11,172.6) - - (874.5) 1,178.2 775.8 (830.2) (191.6) 16.1 - 0.4 - 948.7 705.5 1,838.0 18.15% 22.50% 39.86% 2.66% 12.85% 3.98% - (729.2) 954.6 745.5 (632.3) 473.9 - - (2.7) - 1,539.0 1,174.2 1,838.0 18.03% 16.15% 42.56% 2.79% 12.23% 8.24% 7.30%-7.85% 7.00%-10.00% 7.50%-8.00% 6.75%-7.55% 7.00%-10.00% 7.50%-8.00% 1. Included in line item ‘Payments to and provision for employees’ of Schedule 16- Operating expenses. Estimated rate of return on plan assets is based on the expected average long-term rate of return on investments of the Fund during the estimated term of the obligations. 278 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) 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, 2018 10,972.1 (11,846.6) - Year ended March 31, 2017 10,443.4 (11,172.6) - Year ended March 31, 2016 8,361.6 (9,389.8) - Year ended March 31, 2015 7,862.7 (8,470.2) - ` in million Year ended March 31, 2014 6,744.3 (7,252.6) (0.1) (874.5) (124.7) (729.2) 542.2 (1,028.2) (398.1) (607.5) 699.4 (508.4) (8.4) 261.8 269.8 171.4 70.6 308.7 The estimates of future salary increases, considered in actuarial valuation, take into consideration inflation, seniority, promotion and other relevant factors. Provident Fund (PF) As there is no liability towards interest rate guarantee on exempt provident fund on the basis of actuarial valuation, the Group has not made any provision for the year ended March 31, 2018 (year ended March 31, 2017: Nil). The following tables set forth, for the periods indicated, movement of the present value of the defined benefit obligation, fair value of plan assets and other details for provident fund of the Group. Particulars Opening obligations Service cost Interest cost Actuarial (gain)/loss Employees contribution Obligations transferred from/to other companies Benefits paid Obligations at end of the year Opening plan assets Expected return on plan assets Actuarial gain / (loss) Employer contributions Employees contributions Assets transfer from/to other companies Benefits paid Closing plan assets Plan assets at the end of the year Present value of the defined benefit obligations at the end of the year Asset/(liability) Cost for the year1 Year ended March 31, 2018 26,198.8 1,380.7 1,757.2 501.7 2,619.1 354.5 (3,224.1) 29,587.9 26,198.8 2,274.0 (15.1) 1,380.7 2,619.1 354.5 (3,224.1) 29,587.9 29,587.9 (29,587.9) - ` in million Year ended March 31, 2017 23,209.5 1,225.8 1,800.7 310.6 2,379.6 141.0 (2,868.4) 26,198.8 23,209.5 2,119.6 (8.3) 1,225.8 2,379.6 141.0 (2,868.4) 26,198.8 26,198.8 (26,198.8) - 279 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars Service cost Interest cost Expected return on plan assets Actuarial (gain)/loss Net cost Actual return on plan assets Expected employer’s contribution next year Investment details of plan assets Government of India securities Corporate Bonds Special deposit scheme Others Assumptions Discount rate Expected rate of return on assets Discount rate for the remaining term to maturity of investments Average historic yield on the investment Guaranteed rate of return Year ended March 31, 2018 1,380.7 1,757.2 (2,274.0) 516.8 1,380.7 2,258.8 1,479.1 ` in million Year ended March 31, 2017 1,225.8 1,800.7 (2,119.6) 318.9 1,225.8 2,111.3 1,313.0 47.65% 45.17% 1.84% 5.34% 43.93% 49.50% 2.08% 4.49% 7.35%-7.60% 8.18%-8.95% 7.55%-8.05% 8.28%-8.95% 8.55%-8.65% 6.75%-7.45% 7.90%-9.09% 7.00%-7.20% 8.20%-8.99% 8.65% 1. Included in line item ‘Payments to and provision for employees’ of Schedule 16- Operating expenses. Experience adjustment Particulars Plan assets Defined benefit obligations Amount not recognised as an asset (limit in para 59(b) AS 15 on ‘employee benefits’) Surplus/(deficit) Experience adjustment on plan assets Experience adjustment on plan liabilities Year ended March 31, 2018 29,587.9 (29,587.9) Year ended March 31, 2017 26,198.8 (26,198.8) Year ended March 31, 2016 23,209.5 (23,209.5) ` in million Year ended March 31, 2015 20,683.7 (20,683.7) - - (15.1) 501.6 - - (8.3) 310.5 - - 27.1 252.5 - - 347.0 325.7 The Group has contributed ` 2,663.0 million to provident fund including Government of India managed employees provident fund for the year ended March 31, 2018 (year ended March 31, 2017: ` 2,432.9 million), which includes compulsory contribution made towards employee pension scheme under Employees Provident Fund and Miscellaneous Provisions Act, 1952. Superannuation Fund The Group has contributed ` 219.8 million for the year ended March 31, 2018 (year ended March 31, 2017: ` 209.7 million) to Superannuation Fund for employees who had opted for the scheme. National Pension Scheme (NPS) The Group has contributed ` 114.0 million for the year ended March 31, 2018 (March 31, 2017: ` 95.8 million) to NPS for employees who had opted for the scheme. 280 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Compensated absence The following table sets forth, for the periods indicated, cost for compensated absence. Particulars Cost1 Assumptions Discount rate Salary escalation rate Year ended March 31, 2018 799.9 ` in million Year ended March 31, 2017 864.9 7.30%-7.85% 7.00%-10.00% 6.75%-7.55% 7.00%-10.00% 1. Included in line item ‘Payments to and provision for employees’ of schedule- 16 Operating expenses. 9. Provision for income tax The provision for income tax (including deferred tax) for the year ended March 31, 2018 amounted to ` 18,789.2 million (March 31, 2017: ` 24,690.2 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 primarily at arm’s length so that the above legislation does not have material impact on the financial statements. 10. Deferred tax At March 31, 2018, the Group has recorded net deferred tax asset of ` 78,183.0 million (March 31, 2017: ` 56,128.0 million), which have 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. Particulars Deferred tax assets Provision for bad and doubtful debts Foreign currency translation reserve1 Others Total deferred tax assets Deferred tax liabilities Special reserve deduction Mark-to-market gains1 Depreciation on fixed assets Interest on refund of taxes1 Others Total deferred tax liabilities Total net deferred tax assets/(liabilities) At March 31, 2018 ` in million At March 31, 2017 103,939.1 861.2 9,863.4 114,663.7 29,671.7 346.5 5,084.3 1,077.1 301.1 36,480.7 78,183.0 79,581.1 5,721.3 6,231.6 91,534.0 27,811.3 354.0 5,354.0 1,559.6 327.1 35,406.0 56,128.0 1. These items are considered in accordance with the requirements of Income Computation and Disclosure Standards (ICDS). 281 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) As per ICDS and subsequent circular issued by Central Board of Direct Taxes, during the year ended March 31, 2017, the Bank had recognised tax expense and deferred tax asset on closing balance of Foreign Currency Translation Reserve (FCTR) at March 31, 2017. Delhi High Court struck down certain part of ICDS in November 2017. Further, pursuant to amendments in Income Tax Act, 1961 through Finance Act, 2018, the movement during the year in FCTR has become taxable effective from April 1, 2016. Accordingly, tax expense of ` 4,159.0 million and equal amount of deferred tax asset on the opening balance of FCTR at April 1, 2016 recognised earlier under ICDS has been reversed. 11. Information about business and geographical segments A. Business Segments The business segments of the Group have been presented as follows: i. 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 Basel Committee on Banking Supervision document “International Convergence of Capital Measurement and Capital Standards: A Revised Framework”. This segment also includes income from credit cards, debit cards, third party product distribution and the associated costs. ii. Wholesale banking includes all advances to trusts, partnership firms, companies and statutory bodies, by the Bank which are not included under Retail banking. iii. Treasury includes the entire investment and derivative portfolio of the Bank and ICICI Strategic Investments Fund. iv. Other banking includes 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 and ICICI Bank Canada. v. Life insurance represents results of ICICI Prudential Life Insurance Company Limited. vi. general insurance represents results of ICICI Lombard General Insurance Company Limited. vii. Others includes ICICI Home Finance Company Limited, ICICI Venture Funds Management 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 and ICICI Prudential Pension Funds Management Company Limited. Income, expenses, assets and liabilities are either specifically identified with individual segments or are allocated to segments on a systematic basis. All liabilities of the Bank 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 transfer pricing mechanism of the Bank is periodically reviewed. The segment results are determined based on the transfer pricing mechanism prevailing for the respective reporting periods. The results of reported segments for the year ended March 31, 2018 are not comparable with that of reported segments for the year ended March 31, 2017 to the extent new entities have been consolidated and entities that have been discontinued from consolidation. 282 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) l a t o T n o i l l i m n i ` - r e t n I t n e m g e s s t n e m t s u d a j s r e h t O l a r e n e g e f i L r e h t O y r u s a e r T e l a s e l o h W l i a t e R e c n a r u s n i e c n a r u s n i g n i k n a b g n i k n a b g n i k n a b s s e n i s u b l s r a u c i t r a P . r S . o n - 2 . 9 8 7 , 8 1 6 . 4 8 7 , 9 0 1 4 . 5 9 9 , 0 9 0 . 1 9 6 , 9 8 1 , 1 ) 6 . 4 3 6 , 0 4 6 ( 7 . 9 4 2 , 9 5 6 . 4 8 7 , 9 0 1 ) 8 . 7 6 1 , 2 1 ( 8 . 0 4 0 , 1 2 7 . 4 4 2 , 5 9 3 . 2 6 9 , 1 1 3 . 1 9 1 , 7 1 4 . 5 0 7 , 5 4 . 1 5 4 , 7 7 ) 0 . 3 1 8 , 2 8 ( 2 . 4 1 4 , 1 7 3 . 5 3 2 , 5 2 3 7 . 4 3 1 , 1 3 5 . 5 9 8 , 5 1 5 3 . 0 4 9 , 0 0 3 4 . 5 2 6 , 2 0 5 3 . 2 7 9 , 7 9 0 , 1 1 ) 3 . 8 5 7 , 4 5 1 ( 1 . 4 2 8 , 3 1 3 6 . 2 3 6 , 4 9 2 1 . 9 2 1 , 5 1 4 , 1 1 . 5 0 8 , 0 8 6 1 . 2 4 2 , 4 0 3 , 3 2 . 2 1 7 , 7 5 6 , 2 4 . 5 8 3 , 6 8 5 , 2 1 . 8 3 8 , 4 4 1 4 . 0 1 8 , 2 4 2 , 1 1 - 4 . 0 1 8 , 2 4 2 , 1 1 4 . 1 2 2 , 9 4 . 0 8 1 , 2 1 - ) 5 . 6 1 ( 3 . 1 6 4 0 . 6 6 3 1 . 8 7 4 5 . 6 4 5 8 . 6 3 4 6 . 0 3 4 , 2 6 . 9 8 5 . 3 2 1 3 . 4 2 7 . 7 1 8 . 2 0 3 , 1 8 . 1 8 0 , 1 7 . 3 9 3 , 7 6 . 5 6 6 , 6 4 . 0 1 8 , 2 4 2 , 1 1 3 ) 3 . 8 5 7 , 4 5 1 ( 3 7 . 3 9 2 , 6 1 3 3 3 . 6 0 4 , 7 9 2 3 7 . 8 3 2 , 7 1 4 , 1 3 3 . 8 7 8 , 1 1 6 3 6 . 5 4 0 , 7 4 9 , 2 4 . 2 8 6 , 2 7 6 , 1 7 . 3 2 0 , 5 3 1 , 4 t e n ( / ) t e n ( s e s n e p x e x a t e m o c n I ) 3 ( – ) 2 ( t i f o r p g n i t a r e p O s e s n e p x e d e t a c o l l a n U s t l u s e r t n e m g e S e u n e v e R ) t i d e r c x a t d e r r e f e d ) 5 ( – ) 4 ( 1 t i f o r p t e N n o i t a m r o f n i r e h t O s t e s s a t n e m g e S ) 8 ( + ) 7 ( s t e s s a l a t o T 2 s t e s s a d e t a c o l l a n U s e i t i l i b a i l d e t a c o l l a n U s e i t i l i b a i l t n e m g e S ) 1 1 ( + ) 0 1 ( s e i t i l i b a i l l a t o T e r u t i d n e p x e l a t i p a C i n o i t a c e r p e D . ) t e n ( s t e s s a x a t d e r r e f e d d n a ) t e n ( e c r u o s t a d e t c u d e d x a t / e c n a v d a n i i d a p x a t s e d u l c n I l . s r e d o h e r a h s y t i r o n m i f o t i f o r p t e n f o e r a h s s e d u l c n I l . s u p r u s d n a s e v r e s e r d n a l a t i p a c e r a h s s e d u l c n I 1 2 3 4 5 6 7 8 9 0 1 1 1 2 1 3 1 4 1 . 1 . 2 . 3 283 . 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t r o f s t l u s e r t n e m g e s s s e n i s u b e h t , h t r o f s t e s l e b a t g n w o i l l o f e h T Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) l a t o T n o i l l i m n i ` - r e t n I t n e m g e s s t n e m t s u d a j s r e h t O l a r e n e G e f i L e c n a r u s n i e c n a r u s n i r e h t O g n i k n a b s s e n i s u b y r u s a e r T g n i k n a b l e a s e o h W l l i a t e R g n i k n a b l s r a u c i t r a P . r S . o n - 2 . 0 9 6 , 4 2 5 . 3 9 0 , 8 3 1 3 . 3 0 4 , 3 1 1 3 . 6 7 9 , 3 3 1 , 1 ) 6 . 8 2 8 , 7 1 6 ( 1 . 2 1 3 , 5 5 5 . 3 9 0 , 8 3 1 ) 5 . 8 6 9 , 3 1 ( 3 . 4 6 7 , 1 2 0 . 1 0 1 , 9 3 . 9 3 3 , 4 8 6 . 8 4 8 , 7 1 7 . 1 2 0 , 3 5 . 4 1 8 , 0 2 1 ) 1 . 1 4 3 , 4 7 ( 0 . 3 5 8 , 3 5 5 . 6 2 5 , 0 7 2 8 . 0 0 4 , 8 3 7 . 8 0 9 , 2 4 5 7 . 5 0 4 , 6 0 3 8 . 1 1 9 , 3 5 4 7 . 3 6 1 , 8 3 7 , 9 ) 1 . 7 7 3 , 2 3 1 ( 7 . 5 9 1 , 4 5 2 9 . 9 0 6 , 0 3 2 1 . 7 7 3 , 4 4 2 , 1 1 . 6 4 2 , 3 4 6 8 . 8 0 5 , 8 4 7 , 2 8 . 2 5 6 , 2 1 6 , 2 4 . 0 5 9 , 6 3 1 , 2 8 . 2 8 0 , 9 1 1 5 . 6 4 2 , 7 5 8 , 9 - 4 . 6 1 1 , 9 3 . 7 4 5 , 2 1 5 . 6 4 2 , 7 5 8 , 9 - ) 4 . 6 1 ( 3 . 3 3 3 5 . 1 4 3 5 . 9 2 6 6 . 7 4 5 3 . 8 7 5 1 . 4 2 3 , 4 5 . 7 7 0 . 5 4 1 4 . 9 1 6 . 5 1 2 . 6 1 6 6 . 8 0 1 , 1 3 . 7 4 5 , 6 2 . 6 9 3 , 6 5 . 6 4 2 , 7 5 8 , 9 3 ) 1 . 7 7 3 , 2 3 1 ( 3 9 . 0 4 8 , 5 5 2 3 8 . 8 0 5 , 3 3 2 3 2 . 5 2 4 , 7 4 2 , 1 3 2 . 8 0 3 , 8 6 5 3 2 . 3 6 2 , 1 1 5 , 2 4 . 1 9 1 , 5 9 4 , 1 9 . 5 8 0 , 8 7 6 , 3 t e n ( / ) t e n ( s e s n e p x e x a t e m o c n I ) 3 ( – ) 2 ( t i f o r p g n i t a r e p O s e s n e p x e d e t a c o l l a n U s t l u s e r t n e m g e S e u n e v e R ) t i d e r c x a t d e r r e f e d ) 5 ( – ) 4 ( 1 t i f o r p t e N n o i t a m r o f n i r e h t O s t e s s a t n e m g e S ) 8 ( + ) 7 ( s t e s s a l a t o T 2 s t e s s a d e t a c o l l a n U s e i t i l i b a i l d e t a c o l l a n U s e i t i l i b a i l t n e m g e S ) 1 1 ( + ) 0 1 ( s e i t i l i b a i l l a t o T e r u t i d n e p x e l a t i p a C i n o i t a c e r p e D . ) t e n ( s t e s s a x a t d e r r e f e d d n a ) t e n ( e c r u o s t a d e t c u d e d x a t / e c n a v d a n i i d a p x a t s e d u l c n I l . s r e d o h e r a h s y t i r o n m i f o t i f o r p t e n f o e r a h s s e d u l c n I l . s u p r u s d n a s e v r e s e r d n a l a t i p a c e r a h s s e d u l c n I 1 2 3 4 5 6 7 8 9 0 1 1 1 2 1 3 1 4 1 . 1 . 2 . 3 . 7 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t r o f s t l u s e r t n e m g e s s s e n i s u b e h t , h t r o f s t e s l e b a t g n w o i l l o f e h T 284 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited 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 units 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 Domestic operations Foreign operations Total Assets Domestic operations Foreign operations Total Year ended March 31, 2018 1,133,473.4 56,217.6 1,189,691.0 At March 31, 2018 9,632,242.3 1,465,730.0 11,097,972.3 ` in million Year ended March 31, 2017 1,059,385.7 74,590.6 1,133,976.3 ` in million At March 31, 2017 8,299,937.4 1,438,226.3 9,738,163.7 Note: Segment assets do not include tax paid in advance/tax deducted at source (net) and deferred tax assets (net). The following table sets forth, for the periods indicated, capital expenditure and depreciation thereon for the geographical segments. Capital expenditure incurred during the Depreciation provided during the ` in million Year ended March 31, 2018 11,954.1 226.3 12,180.4 Year ended March 31, 2017 12,437.2 110.1 12,547.3 Year ended March 31, 2018 9,072.2 149.2 9,221.4 Year ended March 31, 2017 8,958.2 158.2 9,116.4 Domestic operations Foreign operations Total 12. Penalties/fines imposed by banking regulatory bodies The penalty imposed by RBI and other banking regulatory bodies during the year ended March 31, 2018 was ` 627.2 million (year ended March 31, 2017: Nil). As mentioned by RBI in its press release dated March 29, 2018, RBI has through an order dated March 26, 2018, imposed a monetary penalty of ` 589.0 million on the Bank for non-compliance with directions/guidelines issued by RBI. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1) (c) read with Section 46(4)(i) of the Banking Regulation Act, 1949. During the year ended March 31, 2018, an overseas regulator imposed a composition sum of ` 38.2 million for non-adherence of rules under AML regulations at one of the Bank’s overseas branches, resulting from regulatory inspection conducted in 2013 and subsequently, pursuant to consultant’s review of records, relating to the period of May 2012 to April 2014. 285 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) In February 2015, penalty was imposed on several banks, including the Bank, by the Financial Intelligence Unit - India for failure in reporting of attempted suspicious transactions, with respect to the incidents concerning the media sting operation in September 2013. A penalty of ` 1.4 million was levied on the Bank, which the Bank had paid and filed an appeal against the penalty with the Appellate Tribunal. In June 2017, the Appellate Tribunal ruled that the penalty was not sustainable and asked the appellant banks to be careful and report such matters in future. 13. Additional information to consolidated accounts Additional information to consolidated accounts at March 31, 2018 (Pursuant to Schedule III of the Companies Act, 2013) Name of the entity Parent ICICI Bank Limited Subsidiaries Indian ICICI Securities Primary Dealership Limited ICICI Securities Limited ICICI Home Finance Company Limited ICICI Trusteeship Services Limited ICICI Investment Management Company Limited ICICI Venture Funds Management Company Limited ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Trust Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Pension Funds Management Company Limited Foreign ICICI Bank UK PLC ICICI Bank Canada ICICI International Limited ICICI Securities Holdings Inc. ICICI Securities Inc. Other consolidated entities Indian ICICI Strategic Investments Fund Foreign NIL Minority interests Associates Indian Net assets1 Share in profit or loss % of total net assets Amount % of total net profit Amount ` in million 95.1% 1,051,589.4 87.9% 67,774.2 0.9% 0.7% 1.5% 0.0%2 0.0%2 0.2% 6.2% 4.8% 0.0%2 0.7% 0.0%2 3.0% 2.5% 0.0%2 0.0%2 0.0%2 9,742.6 8,250.9 16,133.2 6.5 109.6 2,179.8 68,852.6 52,750.4 14.6 8,233.3 263.3 33,027.6 27,670.1 92.8 127.2 181.2 1.4% 7.2% 0.8% 0.0%2 0.0%2 0.1% 1,116.3 5,533.6 642.5 0.6 0.7 111.8 21.0% 16,198.3 8,617.8 11.2% 0.0%2 1.9 6,255.5 8.1% (0.0%)2 (6.6) (2.1%) 2.9% 0.0%2 0.0%2 0.1% (1,646.7) 2,222.6 4.6 0.1 43.6 0.0%2 231.3 0.0%2 13.3 - (5.4%) - (60,081.9) - (18.0%) - (13,873.6) I-Process Services (India) Private Limited NIIT Institute of Finance Banking and Insurance Training Limited ICICI Merchant Services Private Limited - - - - - - - 0.0%2 - - 2.9 - 286 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Name of the entity India Infradebt Limited India Advantage Fund III India Advantage Fund IV Foreign NIL Joint Ventures NIL Inter-company adjustments Total net assets/net profit 1. 2. Total assets minus total liabilities. Insignificant. ` in million Net assets1 Share in profit or loss % of total net assets - - - Amount % of total net profit 0.6% 0.0%2 (0.0%)2 - - - Amount 432.5 10.9 (7.9) - - - - - - (113,077.5) (10.2%) 100.0% 1,106,297.0 - - (16,327.0) (21.2%) 100.0% 77,121.9 Additional information to consolidated accounts at March 31, 2017 (Pursuant to Schedule III of the Companies Act, 2013) Name of the entity Parent ICICI Bank Limited Subsidiaries Indian ICICI Securities Primary Dealership Limited ICICI Securities Limited ICICI Home Finance Company Limited ICICI Trusteeship Services Limited ICICI Investment Management Company Limited ICICI Venture Funds Management Company Limited ICICI Prudential Life Insurance Company Limited ICICI Lombard General Insurance Company Limited ICICI Prudential Trust Limited ICICI Prudential Asset Management Company Limited ICICI Prudential Pension Funds Management Company Limited Foreign ICICI Bank UK PLC ICICI Bank Canada ICICI International Limited ICICI Securities Holdings Inc. ICICI Securities Inc. Other consolidated entities Indian ICICI Strategic Investments Fund Foreign NIL Minority interests Net assets1 Share in profit or loss % of total net assets Amount % of total net profit Amount ` in million 95.5% 999,510.7 96.2% 98,010.9 9,435.2 0.9% 0.5% 4,850.5 1.5% 16,071.7 0.0%2 5.9 0.0%2 108.9 2,068.3 0.2% 6.1% 64,080.4 4.2% 44,025.4 0.0%2 13.0 7,331.7 0.7% 0.0%2 269.9 4.0% 3.3% 1.8% 0.0%2 (0.0%)2 0.1% 4,116.0 3,376.1 1,832.6 0.6 (6.6) 92.7 16.5% 16,822.3 7,018.8 0.5 4,804.7 (5.7) 6.9% 0.0%2 4.7% (0.0%)2 3.3% 34,580.0 2.9% 30,459.7 0.0%2 87.7 0.0%2 127.0 0.0%2 135.9 (1.1%) (1.7%) (0.0%)2 (0.0%)2 0.0%2 (1,078.8) (1,686.4) (4.2) (0.0) 10.2 0.0%2 227.2 0.1% 95.5 - (4.6%) - (48,653.1) - (11.3%) - (11,519.4) 287 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Name of the entity Associates Indian Fino Pay Tech Limited I-Process Services (India) Private Limited NIIT Institute of Finance Banking and Insurance Training Limited ICICI Merchant Services Private Limited India Infradebt Limited India Advantage Fund III India Advantage Fund IV Foreign NIL Joint Ventures NIL Inter-company adjustments Total net assets/net profit 1. 2. Total assets minus total liabilities. Insignificant Net assets1 Share in profit or loss % of total net assets Amount % of total net profit Amount ` in million - - - - - - - - - - - - - - - - (0.0%)2 (0.0%)2 (0.0%)2 - 0.1% (0.1%) (0.1%) (14.9) (5.0) (4.2) - 149.1 (91.0) (75.8) - - - - (11.2%) (118,416.0) 100.0% 1,046,320.0 - - (19.4%) (19,954.2) 100.0% 101,883.8 14. Sale of equity shareholding in subsidiaries During the year ended March 31, 2018, the Bank sold approximately 7.00% of its shareholding in ICICI Lombard General Insurance Company Limited in the initial public offer (IPO) for a total consideration of ` 20,994.3 million and made a gain (net of IPO related expenses) of ` 17,113.2 million on this sale. Further, the Bank sold approximately 20.78% of its shareholding in ICICI Securities Limited in the IPO for a total consideration of ` 34,801.2 million and made a gain (net of IPO related expenses) of ` 32,081.6 million on this sale. During the year ended March 31, 2017, the Bank sold approximately 12.63% of its shareholding in ICICI Prudential Life Insurance Company Limited in the IPO for a total consideration of ` 60,567.9 million and made a gain (net of IPO related expenses) of ` 51,298.8 million on this sale. 15. Divergence in asset classification and provisioning for NPAs In terms of the RBI circular no. DBR.BP.BC.No.63/21.04.018/2016-17 dated April 18, 2017, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI’s annual supervisory process in their notes to accounts to the financial statements, wherever either (a) the additional provisioning requirements assessed by RBI exceed 15.0% of the published net profits after tax for the reference period or (b) the additional Gross NPAs identified by RBI exceed 15.0% of the published incremental Gross NPAs for the reference period, or both. Based on the condition mentioned in RBI circular, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI’s supervisory process for the year ended March 31, 2017. The following table sets forth for the period indicated, details of divergence in the asset classification and provisioning as per RBI’s supervisory process for the year ended March 31, 2016. Particulars Gross NPAs as reported by the Bank Gross NPAs as assessed by RBI1 Divergence in gross NPAs (2)-(1) Sr. No. 1. 2. 3. 288 ` in million At March 31, 2016 262,212.5 313,258.6 51,046.1 annual report 2017-2018 Consolidated Financial Statements of ICICI Bank Limited sChedules forming part of the Consolidated Accounts (Contd.) Particulars Sr. No. 4. 5. 6. 7. 8. 9. 10. Reported net profit after tax of the Bank for the year ended March 31, 2016 11. Adjusted (notional) net profit after tax of the Bank for the year ended March 31, Net NPAs as reported by the Bank Net NPAs as assessed by RBI Divergence in net NPAs (5)-(4) Provisions for NPAs as reported by the Bank Provisions for NPAs as assessed by RBI1 Divergence in provisioning (8)-(7) 2016 after taking into account the divergence in provisioning1 ` in million At March 31, 2016 129,630.8 169,968.9 40,338.1 132,581.7 143,289.7 10,708.0 97,262.9 90,260.7 1. Excludes investment in shares of ` 1,071.9 million with an additional provision requirement of ` 168.0 million and an impact of ` 109.9 million on net profit after tax for the year ended March 31, 2016. The impact of changes in classification and provisioning arising out of the RBI’s annual supervisory process for the year ended March 31, 2016 has been fully given effect to in the audited financial statements for the year ended March 31, 2017. 16. Revaluation of fixed assets The Bank and its housing finance subsidiary follow the revaluation model for their premises (land and buildings) as per AS 10 – ‘Property, Plant and Equipment’. The Bank had initially revalued its premises at March 31, 2016 and its housing finance subsidiary revalued its premises at March 31, 2017. In accordance with the policy, annual revaluation was carried out during the year ended March 31, 2018 through external valuers, using methodologies such as direct comparison method and income generation method and the incremental amount has been taken to revaluation reserve. The revalued amount at March 31, 2018 was ` 57,416.0 million (March 31, 2017: ` 57,940.4 million) as compared to the historical cost less accumulated depreciation of ` 27,144.0 million (March 31, 2017: ` 27,291.5 million). The revaluation reserve is not available for distribution of dividend. 17. Proposed dividend on equity and preference shares The Board of Directors at its meeting held on May 7, 2018 has recommended a dividend of ` 1.50 per equity share for the year ended March 31, 2018 (year ended March 31, 2017: ` 2.50 per equity share). The declaration and payment of dividend is subject to requisite approvals. The Board at its meeting held on April 2, 2018 recommended an interim dividend of ` 100.00 per preference share for the year ended March 31, 2018. The interim dividend will be placed for ratification by the shareholders as final dividend. The Board of Directors had recommended a dividend of ` 100.00 per preference share for the year ended March 31, 2017. According to the revised AS 4 - ‘Contingencies and events occurring after the balance sheet date’ as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, the Bank has not accounted for proposed dividend (including tax) as a liability for the year ended March 31, 2018. 18. Dividend distribution tax Dividend received from Indian subsidiaries, on which dividend distribution tax has been paid by them and dividend received from overseas subsidiaries, on which tax has been paid under section 115BBD of the Income Tax Act, 1961, have been reduced from dividend to be distributed by the Bank for the purpose of computation of dividend distribution tax as per section 115-O of the Income Tax Act, 1961. 289 Consolidated Financial Statements of ICICI Bank Limited 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 on 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 As per our report of even date. For and on behalf of the Board of Directors For B S R & Co. LLP Chartered Accountants ICAI Firm Registration no.: 101248W/W-100022 M. K. Sharma Chairman DIN-00327684 Uday Madhav Chitale Chanda Kochhar Director DIN-00043268 Managing Director & CEO DIN-00043617 Venkataramanan Vishwanath Partner Membership no.: 113156 N. S. Kannan Executive Director DIN-00066009 Vishakha Mulye Executive Director DIN-00203578 Vijay Chandok Executive Director DIN-01545262 Anup Bagchi Executive Director DIN-00105962 Place: Mumbai Date: May 7, 2018 P. Sanker Senior General Manager (Legal) & Company Secretary Rakesh Jha Chief Financial Officer Chief Accountant Ajay Mittal 290 annual report 2017-2018 statement pursuant to seCtion 129 oF Companies aCt, 2013 s d n u F n o i s n e P 1 d e t i m L i y n a p m o C l i r p A 9 0 0 2 , 2 2 d e t i m L i t s u g u A 5 0 0 2 , 6 2 t n e m e g a n a M y n a p m o C n o i l l i m n i ` s e i r a i d i s b u S : ” A “ t r a P I S E R U T N E V T N O J D N A S E N A P M O C E T A C O S S A I I , I I S E R A D S B U S I I F O S T N E M E T A T S L A C N A N I F E H T F O S E R U T A E F T N E I L A S g N N A T N O C T N E M E T A T S I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I I C C I I l a i t n e d u r P l a i t n e d u r P l a i t n e d u r P k n a B K U k n a B l a n o i t a n r e t n I d r a b m o L l a i t n e d u r P e r u t n e V t n e m t s e v n I i p h s e e t s u r T e m o H s e i t i r u c e S s e i t i r u c e S s e i t i r u c e S s e i t i r u c e S t n e m e g a n a M d e t i m L i e c n a r u s n I e c n a r u s n I t n e m e g a n a M y n a p m o C d e t i m L i t e s s A t s u r T 4 , 3 a d a n a C 2 C L P 2 d e t i m L i l a r e n e G e f i L s d n u F t n e m e g a n a M s e c v r e S i e c n a n F i 1 . c n I i s g n d o H l d e t i m L i y n a p m o C 1 . c n I d e t i m L i y r a m i r P d e t i m L i i p h s r e a e D l d e t i m L i d e t i m L i d e t i m L i y n a p m o C y n a p m o C y n a p m o C d e t i m L i t s u g u A r e b o t c O t s u g u A y r a u r b e F l y u J 5 0 0 2 , 6 2 3 0 0 2 , 3 1 3 0 0 2 , 9 1 8 9 9 1 , 7 2 1 0 0 2 , 1 r e b o t c O 0 0 0 2 , 1 h c r a M 8 9 9 1 , 5 2 h c r a M 0 0 0 2 , 9 9 9 9 1 , 1 9 9 9 1 , 1 0 0 0 2 , 3 1 0 0 0 2 , 2 1 5 9 9 1 , 9 3 9 9 1 , 5 1 r e b m e t p e S r e b m e v o N e n u J e n u J h c r a M r e b m e t p e S 8 . 1 4 . 6 8 1 , 8 1 2 . 5 6 . 2 9 6 , 9 2 . 6 7 5 , 8 0 . 2 2 7 . 0 0 0 , 6 2 1 7 . 7 8 6 , 0 7 2 4 . 7 7 6 l i N 4 . 0 3 . 9 6 5 , 9 8 . 0 5 2 l i N 0 . 8 6 5 , 8 1 3 . 8 2 1 , 1 1 0 . 0 9 2 5 . 6 7 1 ) 7 . 6 2 ( 8 . 6 5 0 , 8 8 . 9 1 . 3 7 2 1 . 9 6 6 , 1 1 8 . 5 3 4 , 3 0 . 1 6 . 3 1 9 . 4 1 3 . 0 8 . 4 4 4 , 4 9 . 7 4 6 , 5 1 . 4 3 9 . 0 1 2 , 8 4 5 . 9 8 4 , 4 5 1 . 0 7 1 , 2 6 . 9 6 . 4 2 0 , 9 2 7 . 9 7 3 , 7 2 7 . 8 5 5 . 9 3 5 , 4 0 . 5 5 3 , 4 1 0 . 0 1 0 . 0 0 1 6 . 7 7 7 , 0 8 2 3 . 4 3 1 , 0 2 2 9 . 8 2 . 6 4 7 , 4 4 2 3 . 8 6 3 , 9 4 3 , 1 0 . 5 3 1 , 1 3 . 0 0 . 7 4 2 , 4 1 3 9 . 1 6 1 , 3 5 2 7 . 1 0 1 6 . 6 9 4 , 7 9 2 8 . 2 1 2 , 8 1 4 , 1 1 . 5 1 3 , 3 9 . 9 0 1 5 . 0 0 . 6 6 . 6 1 . 0 5 . 7 8 9 , 0 1 7 . 1 7 5 2 . 8 2 7 7 . 0 1 6 , 1 4 . 3 6 5 , 1 7 . 5 4 1 , 5 ) 5 . 0 9 3 ( ) 0 . 1 0 6 ( 2 . 0 4 6 , 6 0 . 9 7 1 , 8 3 . 7 6 2 , 2 0 1 7 . 0 0 3 3 . 7 2 1 8 . 9 0 7 , 8 2 7 . 9 1 4 , 2 7 1 s t e s s a l a t o T 1 . 4 3 1 , 6 8 5 . 9 1 1 1 . 0 9 . 8 5 4 , 0 2 3 . 7 7 6 , 2 6 1 s e i t i l i b a i l l a t o T i g n d u c x e ( l 5 . 2 4 2 8 . 0 5 5 , 6 3 . 1 1 8 . 5 4 5 , 4 2 0 . 9 5 4 , 2 5 # 7 . 6 2 9 , 1 8 1 1 . 1 0 4 , 5 8 3 , 1 5 . 6 8 8 , 1 6 . 5 6 8 . 3 5 . 0 1 6 , 2 l i N 5 . 4 9 2 . 8 1 5 3 . 7 5 4 , 4 5 1 s t n e m t s e v n I d n a l a t i p a c ) s e v r e s e r l s r a u c i t r a P n e h w e c n i s i y r a d i s b u s e t a d e h T d e r i u q c a s a w e r a h s p u - d a P i & s e v r e s e R l s u p r u S 5 l a t i p a c n i t n e m t s e v n i i 6 ) s e i r a d i s b u s m o r f e m o c n i ) s n o i t a r e p o ) s s o l ( / t i f o r P r e v o n r u T s s o r G ( n o i t a x a t e r o f e b i g n d u c n i ( l ) 6 . 6 ( 1 . 1 9 4 , 9 5 . 2 6 . 2 5 7 , 2 ) 6 . 1 8 9 , 1 ( 6 . 4 3 . 2 6 9 , 1 1 6 . 5 9 1 , 7 1 0 . 9 6 1 ) 0 . 0 ( ) 6 . 6 ( l i N 6 . 5 3 2 , 3 5 . 5 5 2 , 6 9 . 3 5 3 , 5 6 . 0 9 . 1 2 . 0 2 . 2 5 7 ) 5 . 6 1 3 ( l i N 5 . 4 4 3 , 3 3 . 7 9 9 2 . 7 5 4 . 0 0 0 , 2 ) 1 . 5 6 6 , 1 ( 6 . 4 8 . 7 1 6 , 8 3 . 8 9 1 , 6 1 8 . 1 1 1 l i N l i N l i N 4 . 8 1 8 0 . 1 2 9 , 1 1 l i N 0 . 1 3 . 0 7 . 0 l i N 8 . 0 2 . 0 6 . 0 l i N 4 . 9 1 1 , 1 6 . 4 4 ) 1 . 0 ( 2 . 4 0 5 , 8 5 . 1 3 7 , 1 9 . 6 7 4 0 . 1 ) 2 . 0 ( 6 . 0 7 9 , 2 2 . 5 1 6 r o f n o i s i v o r P 5 . 2 4 6 6 . 3 4 8 . 5 9 5 l i N 1 . 0 l i N 6 . 3 3 5 , 5 3 . 6 1 1 , 1 5 . 2 3 1 , 2 1 . 9 0 8 n o i t a x a t r e t f a ) s s o l ( / t i f o r P n o i t a x a t d n e d v D i i i g n d u c n i ( l e t a r o p r o c 7 ) x a t d n e d v d i i % 0 0 . 0 0 1 % 0 0 . 1 5 % 0 8 . 0 5 % 0 0 . 0 0 1 % 0 0 . 0 0 1 % 0 0 . 0 0 1 % 2 9 . 5 5 % 8 8 . 4 5 % 0 0 . 0 0 1 % 0 0 . 0 0 1 % 0 0 . 0 0 1 % 0 0 . 0 0 1 % 0 0 . 0 0 1 % 0 0 . 0 0 1 % 2 2 . 9 7 % 0 0 . 0 0 1 f o % i l g n d o h e r a h s . 0 5 7 1 . 5 6 ` = D S U 1 f o 8 1 0 2 , 1 3 h c r a M t a e t a r g n i s o l c e h t t a s e e p u R n a d n i I o t n i d e t a l s n a r t n e e b s a h d e t i m L i l a n o i t a n r e t n I I C C I I d n a C L P K U k n a B I C C I I f o n o i t a m r o f n i l a i c n a n i f . 0 5 6 9 . 0 5 ` = D A C 1 f o 7 1 0 2 , 1 3 r e b m e c e D t a e t a r g n i s o l c e h t t a s e e p u R n a d n i I o t n i d e t a l s n a r t n e e b s a h a d a n a C k n a B I C C I I f o n o i t a m r o f n i l a i c n a n i f . r a e y l a i c n a n i f r i e h t g n e b i , 7 1 0 2 , 1 3 r e b m e c e D o t 7 1 0 2 , 1 y r a u n a J d o i r e p e h t r o f s i a d a n a C k n a B I C C I I f o n o i t a m r o f n i l a i c n a n i f e h T e h T e h T e n o N : r a e y e h t g n i r u d d o s l r o d e t a d u q i i l n e e b e v a h h c i h w s e i r a d i s b u s i f o s e m a N e n o N : s n o i t a r e p o e c n e m m o c o t t e y e r a h c i h w s e i r a d i s b u s i f o s e m a N . y e n o m n o i t a c i l p p a e r a h s e d u l c n i t o n s e o d l a t i p a c e r a h s p u - d a P i . r a e y e h t g n i r u d d a p s e r a h s i y t i u q e n o d n e d i v i d s t n e s e r p e R . e d a r t n i k c o t s l s a d e h s e i t i r u c e s e d u l c n i s t n e m t s e v n I . d e t i m L i y n a p m o C e c n a r u s n I e f i L l a i t n e d u r P I C C I I i f o y r a d i s b u s d e n w o y l l o h w a s i d e t i m L i y n a p m o C t n e m e g a n a M s d n u F n o i s n e P l a i t n e d u r P I C C I I . c n I i l s g n d o H s e i t i r u c e S I C C I I i f o y r a d i s b u s d e n w o y l l o h w a s i . c n I s e i t i r u c e S I C C I I . d e t i m L i s e i t i r u c e S I C C I I i f o y r a d i s b u s d e n w o y l l o h w a s i . c n I l i s g n d o H s e i t i r u c e S I C C I I . 1 . 2 . 3 . 4 . 5 . 6 . 7 . 8 . 9 291 n o i l l i m 1 . 0 n a h t s s e l t n u o m a # : s e t o N statement pursuant to seCtion 129 oF Companies aCt, 2013 4 1 0 2 2 1 0 2 p u o r g I C C I d e t i i m L g n n a r T i i 5 1 0 2 , 1 3 h c r a M 8 1 0 2 , 1 3 h c r a M 7 1 0 2 , 1 3 h c r a M 7 1 0 2 , 1 3 h c r a M 7 1 0 2 , 1 3 h c r a M e t a d t e e h s l e c n a a b d e t i d u a t s e t a L , 4 r e b m e c e D , 7 2 r e b m e v o N 9 0 0 2 , 1 3 r e b m e c e D 6 0 0 2 , 7 t s u g u A 5 0 0 2 , 4 r e b o t c O r o d e t a c o s s a i s a w e r u t n e V i t n o J i r o e t a c o s s A e h t h c h w n o e t a D i d e t i m L i d e t i m L i e t a v i r P s e c v r e S i g n i k n a B e c n a n F i i ) a d n I ( i s e c v r e S d e t i m L i e c n a r u s n I d n a d e t i m L i e t a v i r P n o i l l i m n i ` s e r y T n o c a F l t b e d a r f n I i a d n I t n a h c r e M I C C I I f o e t u t i t s n I T I I N s s e c o r P - I s e r u t n e v t n o i i j / s e n a p m o c i e t a c o s s a f o e m a N s e r u t n e v t n o i j d n a s e i n a p m o c e t a i c o s s A : ” B “ t r a P 292 l i N % 9 3 . 6 2 . A N . 4 e t o N 5 e t o N . A N . . A N . 0 . 9 8 5 , 3 % 9 0 . 8 3 4 e t o N . A N . 5 . 5 8 5 , 3 4 . 9 0 5 4 . 5 1 8 1 . 0 0 4 % 1 0 . 9 1 3 e t o N . A N . 6 . 2 1 6 l i N 4 . 5 1 1 7 . 4 2 % 9 7 . 8 1 3 e t o N . A N . 6 . 1 2 2 . 3 9 . 3 1 7 7 1 , 5 4 4 , 0 2 0 8 1 , 9 4 0 , 0 2 2 0 0 0 , 2 8 5 , 5 7 0 0 0 , 0 0 9 , 1 l i N 0 8 8 , 9 % 0 0 . 9 1 3 e t o N . A N . ) 4 . 4 1 ( l i N ) 2 . 3 ( l e c n a a b d e t i d u a t s e t a l i r e p s a g n d o h e r a h s o t l l e b a t u b i r t t a h t r o w t e N t e e h s 2 s e r u t n e v t n o i i j / s e n a p m o c i e t a c o s s a n i t n e m t s e v n i f o t n u o m A e r u t n e v t n o i j i / e t a c o s s a e h t f o n o i t a d i l o s n o c - n o n f o n o s a e R e c n e u l f n i t n a c i f i n g i s f o n o i t p i r c s e D ) % i l ( g n d o h f o t n e t x E 8 1 0 2 , 1 3 h c r a M d e d n e r a e y e h t r o f ) s s o l ( / t i f o r P n o i t a d i l o s n o c n i d e r e d i s n o c t o N n o i t a d i l o s n o c n i d e r e d i s n o C I y b d l e h s e r u t n e v i t n o j / s e i n a p m o c e t a i c o s s a f o s e r a h S d e r i u q c a s e r a h s y t i u q e f o r e b m u N 8 1 0 2 , 1 3 h c r a M t a 1 2 3 4 5 6 7 i i i , s t n e m e t a t S l a i c n a n F i d e t a d i l o s n o C n i s e t a i c o s s A n i s t n e m t s e v n I r o f g n i t n u o c c A - 3 2 ) S A ( d r a d n a t S g n i t n u o c c A f o l s e p i c n i r p e h t n o d e s a b d e r a p e r p n e e b s a h t n e m e t a t s e v o b a e h T d e n i f e d s a e c n e u l f n i t n a c i f i n g i s y n a e v a h t o n s e o d p u o r G I C C I I e r e h w s e n a p m o c i e h t e d u l c n i t o n s e o d e r o f e r e h t d n a , ) I A C I ( i a d n I f o s t n a t n u o c c A d e r e t r a h C f o e t u t i t s n I e h t y b d e u s s i i . s e n a p m o c e s o h t n i l a t i p a c e r a h s l a t o t f o % 0 0 . 0 2 n a h t l e r o m s d o h p u o r g e h t h g u o h t l a , 3 2 S A r e d n u . y n a p m o c e e t s e v n i e h t f o s r o t c e r i d f o d r a o B e h t n o n o i t a t n e s e r p e r d n a r e w o p g n i t o v s t i h g u o r h t e c n e u l f n i t n a c i f i n g i s e v a h o t d e m e e d s i p u o r G I C C I I , I A C I y b d e u s s i , 3 2 S A f o s m r e t n I l . e u a v g n i y r r a c s t n e s e r p e R . y n a p m o c e e t s e v n i e h t n i r e w o p g n i t o v e h t f o % 0 0 . 0 2 n a h t i e r o m g n e b g n d o h s t i l i o t e u d e c n e u l f n i t n a c i f i n g i s e v a h o t d e m e e d s i p u o r G I C C I I , I A C I y b d e u s s i , 3 2 S A f o s m r e t n I . e r u t a n n i y r a r o p m e t s i d e t i m L i s e r y T n o c l a F n i t n e m t s e v n i e h T r o t c e r i D e v i t u c e x E 2 6 9 5 0 1 0 0 - N D I i h c g a B p u n A r o t c e r i D e v i t u c e x E k o d n a h C y a j i V 2 6 2 5 4 5 1 0 - N D I r o t c e r i D e v i t u c e x E e y l u M a h k a h s i V 8 7 5 3 0 2 0 0 - N D I r o t c e r i D e v i t u c e x E 9 0 0 6 6 0 0 0 - N D I n a n n a K . S . N l a t t i M y a j A a h J h s e k a R r e k n a S . P O E C & r o t c e r i D g n g a n a M i 7 1 6 3 4 0 0 0 - N D I 8 6 2 3 4 0 0 0 - N D I r o t c e r i D r a h h c o K a d n a h C e l a t i h C v a h d a M y a d U a m r a h S . K . M 4 8 6 7 2 3 0 0 - N D I n a m r i a h C s r o t c e r i D f o d r a o B e h t f o f l a h e b n o d n a r o F e n o N : r a e y e h t g n i r u d d o s l r o d e t a d u q i i l n e e b e v a h h c h w s e r u t n e v i t n o i j r o s e t a c o s s a i f o s e m a N e n o N : s n o i t a r e p o e c n e m m o c o t t e y e r a h c i h w s e r u t n e v t n o i j r o s e t a i c o s s a f o s e m a N 1 2 3 4 5 6 7 t n a t n u o c c A i f e h C r e c i f f O l i a c n a n F i i f e h C r e g a n a M l a r e n e G i r o n e S y r a t e r c e S y n a p m o C & ) l a g e L ( 8 1 0 2 , 7 y a M : e t a D i a b m u M : e c a P l : s e t o N annual report 2017-2018 BASEL PILLAR 3 DISCLOSURES at March 31, 2018 Pillar 3 disclosures at March 31, 2018 as per Basel III guidelines of RBI have been disclosed separately on the Bank’s website under ‘Regulatory Disclosures Section’ on the home page. The link to this section is http://www.icicibank.com/ regulatory-disclosure.page. The section contains the following disclosures: • Qualitative and quantitative disclosures at March 31, 2018 • • • • Scope of application Capital adequacy Credit risk Securitisation exposures • Market risk • Operational risk • • • • Interest rate risk in the banking book (IRRBB) Liquidity risk Counterparty credit risk Risk management framework of non-banking group companies • Disclosure requirements for remuneration • • Equities – Disclosure for banking book positions Leverage ratio • • Composition of capital Composition of capital - reconciliation requirements • Main features of regulatory capital instruments • Full terms and conditions of regulatory capital instruments 293 GLOSSARY OF TERMS Average advances Average assets Average cost of funds Average deposits Average equity Average total assets Average yield Business Business per employee Book value per share Capital (for CRAR) Capital to risk weighted assets ratio (CRAR) Earnings per share High quality liquid assets Interest income to working funds Interest spread Liquidity coverage ratio Net interest income Net interest margin Operating profit Operating profit to working funds Provision coverage ratio Return on assets Return on average assets Return on average equity Risk weighted assets (RWAs) Working funds 294 Average of advances as reported in form A to RBI For the purpose of performance analysis, represents averages of daily balances, except averages of foreign branches which are fortnightly averages for the period till September 2014. From October 2014, averages of foreign branches are also averages of daily balances Cost of interest bearing liabilities Average of deposits as reported in form A to RBI Quarterly average of equity share capital and reserves For the purpose of business ratio, represents averages of total assets as reported in form X to RBI Yield on interest earning assets Total of average deposits plus average advances as reported in form A to RBI Average deposits plus average advances divided by number of employees Share capital plus reserves divided by outstanding number of equity shares Capital includes share capital, reserves and surplus (revaluation reserve and foreign currency translation reserve are considered at discounted amount), capital instruments and general provisions as per the RBI Basel III guidelines Capital (for CRAR) divided by Risk Weighted Assets (RWAs) Net profit after tax divided by weighted average number of equity shares outstanding during the year Stock of liquid assets which can be readily sold at little or no loss of value or used as collateral to obtain funds Interest income divided by working funds Average yield less average cost of funds Stock of unencumbered high quality liquid assets divided by total net cash outflows estimated for the next 30 calendar days Total interest earned less total interest paid Total interest earned less total interest paid divided by average interest earning assets Net profit after tax divided by number of employees Quarterly average of number of employees. The number of employees includes sales executives, employees on fixed term contracts and interns Profit before provisions and contingencies Operating profit divided by working funds Provision for non-performing advances divided by gross non-performing advances Net profit after tax divided by average total assets Net profit after tax divided by average assets Net profit after tax divided by average equity RWAs are computed by assigning risk weights as per the RBI Basel III guidelines to various on-balance sheet exposures, off-balance sheet exposures and undrawn exposures Average of total assets as reported in form X to RBI Net profit per employee Non-interest income to working funds Non-interest income divided by working funds Number of employees annual report 2017-2018NOTES NOTES Most Awarded Bank 2018 BEST USE OF DIGITAL AND CHANNELS TECHNOLOGY BEST IT RISK AND CYBER SECURITY INITIATIVES BEST TECHNOLOGY BANK OF THE YEAR (Runner-up) MOST INNOVATIVE PROJECT USING INFORMATION TECHNOLOGY BEST PAYMENTS INITIATIVE BEST USE OF ANALYTICS FOR BUSINESS OUTCOME (Runner-up) Awarded By Banking Technology Awards 2018 ICICI BANK LIMITED ICICI Bank Towers, Bandra-Kurla Complex, Mumbai 400 051 www.icicibank.com facebook.com/icicibank twitter.com/icicibank youtube.com/icicibank linkedin.com/company/icici-bank instagram.com/icicibank i s n o i t a c n u m m o C m s i r P t t a y W - s t n a t l u s n o C n g i s e D 

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