ICICI Bank 2003 Annual Report Download - page 79

F15
forming part of the Accounts Continued
schedules
4. Fixed assets and depreciation
a) Premises and other fixed assets are carried at cost less accumulated depreciation. Depreciation is charged over
the estimated useful life of a fixed asset on a “straight line” basis. The rates of depreciation for fixed assets are :
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.
5. Foreign Currency transactions
a) Revenues and expenditure are translated at the exchange rates prevailing on the date of the transaction. Monetary
assets and liabilities are translated at closing exchange rates notified by the Foreign Exchange Dealers’ Association
of India (“FEDAI”) at the balance sheet date and the resulting profits/losses are included in the Profit and Loss
Account.
b) Outstanding forward exchange contracts are stated at contracted rates and are revalued at the exchange rates
notified by FEDAI for specified maturities and at interpolated rates for contracts of in-between maturities. The
resultant gains or losses are recognised in the Profit and Loss Account.
c) Contingent Liabilities on account of guarantees, endorsements and other obligations are stated at the exchange
rates notified by FEDAI at the Balance Sheet date.
6. Accounting for Derivative Contracts
The Bank enters into derivative contracts such as foreign currency options, interest rate and currency swaps and cross
currency interest rate swaps to hedge on-balance sheet assets and liabilities or for trading purposes. The swap
contracts entered to hedge on-balance 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 are correlated
with the movement of underlying assets and accounted pursuant to the principles of hedge accounting.
Interest income/expense is accrued on Interest Rate Swaps (IRS) and currency swaps designated as hedges and
booked in the Profit and Loss Account. Trading IRS, trading currency swaps and foreign currency options, outstanding
at the Balance Sheet date is marked to market and the resulting loss if any, is recorded in the Profit and Loss Account.
7. Employee Stock Option Scheme (“ESOS”)
The Bank has formulated an Employees Stock Option Scheme. The Scheme provides that employees are granted an
option to acquire equity shares of the Bank that vests in graded manner. The options may be exercised within a
specified period. Since the exercise price of the option is the closing market price as on the date of grant, there is
no compensation cost.
8. Staff benefits
For employees covered under group gratuity scheme and group superannuation scheme of LIC, gratuity and
superannuation charge to Profit and Loss Account is on the basis of premium charged by LIC. Provision for gratuity
and pension for other employees and leave encashment liability is determined as per actuarial valuation. Defined
contributions for Provident Fund are charged to the Profit and Loss Account based on contributions made in terms
of the scheme.
9. Income Taxes
Income tax expense is the aggregate amount of current tax and deferred tax charge. Taxes on income are accrued
in the same period as the revenue and expenses to which they relate. Current period taxes are determined in
accordance with the Income Tax Act, 1961. Deferred tax adjustments comprise of changes in the deferred tax assets
or liabilities during the year.