ICICI Bank 2005 Annual Report Download - page 111

F51
any and excludes interest paid on purchases. Investments maturing within twelve months from the balance sheet
date and investments made with the specific intention to dispose off within twelve months from the balance sheet
date are classified as short-term investments. Investments other than short term are classified as long-term
investments.
All debt securities are considered as 'held to maturity' and accordingly stated at historical cost, subject to amortisation
of premium or accretion of discount in the revenue account or the profit and loss account over the period of
maturity/holding on a straight line basis.
Listed equity shares as at the balance sheet date are stated at fair value being the last quoted closing price on the
National Stock Exchange or The Stock Exchange, Mumbai. Mutual fund units as at the balance sheet date are valued
at the previous day's net asset values. Equity shares awaiting listing are stated at historical cost subject to provision
for diminution, if any, in the value of such investment determined separately for each individual investment. The
unrealised gain / loss arising on account of such valuation is taken to "Fair Value change account" and carried forward
in the balance sheet. Investment in real estate is valued at historical cost, subject to provision for impairment, if any.
Revaluation of investment in real estate is done at least once in every three years.
Government securities issued by Government of India are valued at prices obtained from Credit Rating Information
Services of India Ltd. ('CRISIL'). Government securities issued by various State Governments of India are valued at
historical cost, subject to amortisation of premium or accretion of discount in the revenue account of linked funds
over the period of maturity/holding on a straight-line basis. Debt securities other than Government securities are
valued on the basis of CRISIL Bond Valuer.
3. Provisions/ Write-offs on loans and other credit facilities
ICICI Bank Limited
a) All credit exposures are classified as per RBI guidelines, into performing and non-performing assets. Further,
non-performing assets are classified into sub-standard, doubtful and loss assets based on the criteria stipulated
by RBI. Provisions are made on sub-standard and doubtful assets at rates equal to or higher than those prescribed
by RBI. Loss assets and unsecured portion of doubtful assets are provided/written off as per the extant RBI
guidelines. 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 accordance with RBI guidelines on graded higher provisioning norms for the secured portion of doubtful
assets, the Bank makes a 100% provision on the secured portion of assets classified as doubtful for more than
three years. Further, as permitted by the said guidelines, assets classified as doubtful for more than three years
at March 31, 2004 are fully provided for in a graded manner over three years (i.e. 60% by March 31, 2005, 75%
by March 31, 2006 and 100% by March 31, 2007).
b) For restructured/rescheduled assets, provision is made in accordance with the guidelines issued by RBI, which
requires the present value of the interest sacrifice be provided at the time of restructuring.
c) 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 fully paid by the borrower.
In respect of non-performing loan accounts subjected to restructuring, asset category is upgraded to standard
if the borrower demonstrates, over a minimum period of one year, the ability to repay the loan in accordance
with the contractual terms.
d) The Bank has incorporated the assets taken over from erstwhile ICICI Limited ("ICICI") in its books at carrying
values as appearing in the books of ICICI with a provision made based on a fair valuation exercise carried out by
an independent firm. To the extent provisions are required in respect of the assets taken over from ICICI, the
provision created on fair valuation of the assets at the time of the amalgamation is used.
e) 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.
f) In addition to the specific provision on NPAs, the Bank maintains a general provision on performing loans. The
general provision adequately covers the requirements of the RBI guidelines.
g) In addition to the provisions required to be held according to the asset classification status, provisions are held
for individual 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 exposures exceeding 90 days on a graded scale ranging from 0.25% to 100%. For exposures with contractual
maturity of less than 90 days, 25% of the normal provision requirement is held. If the country exposure (net) of
the Bank in respect of each country does not exceed 1% of the total funded assets, no provision will be
maintained on such country exposure.
schedules
forming part of the Consolidated Accounts (Contd.)