ICICI Bank 2005 Annual Report Download - page 40

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38
Business Overview
CREDIT RATINGS
ICICI Bank’s credit ratings by various credit rating agencies are given below:
RISK MANAGEMENT
Risk is an integral part of the banking business and we aim at the delivery of superior shareholder value by
achieving an appropriate trade-off between risk and returns. We are exposed to various risks, including
credit risk, market risk and operational risk. Our risk management strategy 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 risk management function is supported by a comprehensive range of
quantitative and modeling tools developed by a dedicated risk analytics team.
We have two dedicated groups, the Risk Management Group (RMG) and the Compliance & Audit Group
(CAG) which are responsible for assessment, management and mitigation of risk in ICICI Bank. These
groups form part of the Corporate Centre, are completely independent of all business operations and are
accountable to the Risk and Audit Committees of the Board of Directors. RMG is further organised into
Credit Risk Management Group, Market Risk Management Group, Retail Risk Management Group and Risk
Analytics Group. CAG is further organised into the Compliance & Anti-Money Laundering Group and the
Internal Audit Group.
Credit Risk
Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. We measure,
monitor and manage credit risk for each corporate borrower and also at the portfolio level. We have
standardised credit approval processes, which include a well-established procedure of comprehensive
credit appraisal and rating. We have developed internal credit rating methodologies for rating obligors as
well as for products/ facilities. The rating factors in quantitative, qualitative issues and credit enhancement
features specific to the transaction. The rating serves as a key input in the approval as well as post-approval
credit processes. Credit rating, as a concept, has been well internalised within the Bank. The rating for
every corporate borrower is reviewed at least annually and for higher risk credits and large exposures on a
more regular basis. Industry knowledge is constantly updated through field visits, interactions with clients,
regulatory bodies and industry experts.
In our retail credit operations, all products, policies and authorisations are approved by the Board or a
Board Committee. Credit approval authority lies only with our credit officers who are distinct from the sales
teams. Our credit officers evaluate credit proposals on the basis of the approved product policy and risk
assessment criteria. Credit scoring models are used in the case of certain products like credit cards,
External agencies such as field investigation agencies and credit processing agencies are used to facilitate
a comprehensive due diligence process including visits to offices and homes in the case of loans to
individual borrowers. Before disbursements are made, the credit officer conducts a centralised check on
the delinquencies database and review of the borrower’s profile. We continuously refine our retail credit
parameters based on portfolio analytics.
Rating
Moody’s Investor Service (Moody’s)
Standard & Poor’s (S&P)
Credit Analysis & Research Limited (CARE)
Investment Information and Credit Rating Agency (ICRA)
Agency
Baa3
BB+
CARE AAA
AAA
Dickenson Tel: 022-2625 2282