ICICI Bank 2003 Annual Report Download - page 106

F42
schedules
forming part of the Consolidated Accounts Continued
6. Provision/Write-offs on loans and other credit facilities
a) In addition to the general provision of 0.25% made on standard assets in accordance with the RBI guidelines the
Bank maintains general provisions to cover potential credit losses which are inherent in any loan portfolio but not
identified. For standard assets, additional general provisions are determined having regard to overall portfolio
quality, asset growth, economic conditions and other risk factors.
b) The Bank has incorporated the assets taken over from ICICI in its books at carrying values as appearing in the
books of ICICI with a provision made based on the fair valuation exercise carried out by an independent firm.
To the extent future provisions are required on the assets taken over from ICICI, the provision created on fair
valuation of the assets at the time of the amalgamation is used.
Amounts recovered against other 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.
c) All credit exposures are classified as per the RBI guidelines, into performing and non-performing assets. Further,
non-performing assets are classified into sub-standard, doubtful and loss assets for provisioning based on the
criteria stipulated by the RBI. Provisions are generally made on substandard and doubtful assets at rates equal
to or higher than those prescribed by the RBI. The secured portion of the substandard and doubtful assets is
provided at 50% over a three-year period instead of five and a half years as prescribed by the RBI. Loss assets
and unsecured portion of doubtful assets are fully provided/written off. 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.
d) For restructured/rescheduled assets, provision is made in accordance with the guidelines issued by the RBI, which
requires the present value of the interest sacrifice be provided at the time of restructuring.
e) In the case of other than restructured loan accounts classified as NPAs, the account is reclassified as “Standard”
account if arrears of interest and principal are paid by the borrower.
In respect of loan accounts subject to restructuring, asset category is upgraded to standard account if the
borrower demonstrates, over a minimum of one year, the ability to repay the loan in accordance with the
contractual terms.
f) In addition to the provisions required to be held according to the asset classification status, provisions are held
for country exposure (other than for home country). The countries are categorised into seven risk categories
namely Insignificant, low, moderate, high, very high, restricted and off-credit and provisioning made on a graded
scale ranging from 0.25% to 100%. For exposures with contractual maturity of less than 180 days, 25% of the
normal requirement is held.
7. Fixed assets and depreciation
ICICI Bank Limited
a) Premises and other fixed assets are carried at cost less accumulated depreciation charged over the estimated
useful life of a fixed asset on a “straight line” basis. The rates of depreciation for fixed assets are:
Asset Depreciation Rate
Premises owned by the Bank 1.63%
Improvements to leasehold premises 1.63% or over the lease period,
whichever is higher
ATMs 12.50%
Plant and Machinery like Air conditioners, Xerox machines, etc. 10%
Furniture and Fixtures 15%
Motor vehicles 20%
Computers 33.33%
Others (including Software and system development expenses) 25%
b) Depreciation on leased assets is made on a straight-line basis at the higher of the rates determined with reference
to the primary period of lease and the rates specified in Schedule XIV to the Companies Act, 1956.
c) Assets purchased and sold during the year are depreciated on the basis of actual number of days the asset has
been put to use.
d) Items costing less than Rs.5,000 are fully depreciated in the year of purchase.