ICICI Bank 2005 Annual Report Download - page 112

F52
Other entities
In case of ICICI Securities Limited, the policy of provisioning against non performing loans and advances has been
decided by the management considering prudential norms prescribed by the RBI for Non Banking Financial Companies
except that amounts recovered subsequent to the balance sheet date have not been considered for provisioning. As
per the policy adopted, the provision against sub standard assets are fixed on a conservative basis, taking into
account management's perception of the higher risk associated with the business of the company. Certain non-
performing loans and advances are considered as loss assets and full provision has been made against such assets.
In case of ICICI Home Finance Company Limited, loans and other credit facilities are classified as per the NHB
guidelines into performing and non-performing assets. Further non-performing assets classified into sub standard,
doubtful and loss assets based on criteria stipulated by NHB. Additional provision is made against specific non
performing assets over and above what is stated above, if in the opinion of the management, increased provisions
are necessary. The company 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.
In case of ICICI Bank Canada, loans are stated net of an allowance for credit losses. Loans are classified as impaired
when there is no longer reasonable assurance of the timely collection of the full amount of principal or interest. An
allowance for credit losses is maintained at a level that management considers adequate to absorb identified credit
related losses as well as losses that have been incurred but not yet identifiable.
4. Transfer and servicing of financial assets
The Bank transfers commercial and consumer loans through securitisation transactions. The transferred loans are
de-recognised and gains / losses are recorded only if the Bank surrenders the right to benefits specified in the loan
contract. Recourse and servicing obligations are reduced from proceeds of the sale. Retained beneficial interests in
the loans is measured by allocating the carrying value of the loans between the assets sold and the retained
interest, based on the relative fair value at the date of the securitisation.
5. Fixed assets and depreciation
ICICI Bank Limited
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,
which are not lower than the rates prescribed in schedule XIV of the Companies Act, 1956, are as follows:
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%
EDC Terminals ......................................................................................................... 16.67%
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/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 depreciated fully over a period of 12 months from the date of purchase.
Other entities
a) In case of ICICI Venture Funds Management Company Limited, depreciation on assets, other than leased
assets, is charged on written down value method in accordance with the provisions of Schedule XIV of the
Companies Act, 1956.
b) In case of ICICI Securities Limited, ICICI Brokerage Services Limited,and ICICI Securities Holdings Inc.,
depreciation on assets, other than improvements to leased property and Membership rights of the stock
exchange, Mumbai, is charged on written down value method at the rates which are greater than or equal to the
provisions of Schedule XIV of the Companies Act, 1956. Membership rights of stock exchanges is treated as an
asset and the value paid to acquire such rights is amortized over a period of 10 years.
schedules
forming part of the Consolidated Accounts (Contd.)