ICICI Bank 2006 Annual Report Download - page 115

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12. Cash and cash equivalents
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short
notice.
13. Investments
Investments of the Bank are accounted for in accordance with the extant RBI guidelines on investment classification and
valuation as given below:
a) All investments are categorised into ‘Held to Maturity‘, ’Available for Sale’ and ‘Held for Trading‘ categories.
Reclassifications, if any, in any category are accounted for as per the RBI guidelines.
Under each category, the investments are further classified under (a) government securities (b) other approved securities
(c) shares (d) bonds and debentures (e) subsidiaries and joint ventures and (f) others.
b) ‘Held to Maturity’ securities are carried at their acquisition cost or at amortised cost, if acquired at a premium over the
face value. A provision is made for other than temporary diminution.
c) ‘Available for Sale’ and ‘Held for Trading’ securities are valued periodically as per RBI guidelines. The market/fair value
for the purpose of periodical valuation of quoted investments included in the ‘Available for Sale’ and ‘Held for Trading’
categories is the market price of the scrip as available from the trades/quotes on the stock exchanges, price list of RBI
or prices declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives
Association (“FIMMDA”).
The market/fair value of unquoted statutory liquidity ratio (SLR) securities included in the ‘Available for Sale’ and ‘Held
for Trading’ categories is as per the rates published by FIMMDA. The valuation of non-SLR securities, other than those
quoted on the stock exchanges, wherever linked to the Yield-to-Maturity (“YTM”) rates, is with a mark-up (reflecting
associated credit risk) over the YTM rates for government securities published by FIMMDA.
Unquoted equity shares are valued at the book value, if the latest balance sheet is available or at Re. 1.
Securities are valued scrip-wise and depreciation/appreciation aggregated for each category. Net appreciation, if any,
in each basket, being unrealised, is ignored, while net depreciation is provided for.
d) Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged to
the profit and loss account.
e) Profit on sale of investments in the ‘Held to Maturity’ category is credited to the profit and loss account and is thereafter
appropriated (net of applicable taxes and statutory reserve requirements) to capital reserve.
f) At the end of each reporting period, security receipts issued by the asset reconstruction company are valued in
accordance with the guidelines prescribed by RBI. Accordingly, as the security receipts issued by the asset reconstruction
company are limited to the actual realisation of the financial assets assigned to the instruments in the concerned
scheme, the Bank considers the Net Asset Value (“NAV”), obtained from the asset reconstruction company, for valuation
of such investments at each reporting period end.
The Company’s venture capital funds carry their investments at fair values, with unrealised gains and temporary losses on
investments recognised as components of investors’ equity and accounted for in unrealised investment reserve account
included in the investment fluctuation reserve. The realised gains and losses on investments and units in mutual funds and
unrealised gains or losses on restatement of units in mutual funds are accounted for in the profit and loss account. The cost
of investments sold is determined on weighted average basis and the cost of units in mutual funds sold is determined on
first-in, first-out basis for the purpose of calculating gains or losses on sale. Provisions are made in respect of accrued
income considered doubtful. Such provisions as well as any subsequent recoveries are recorded through the profit and loss
account. Subscriptions to/purchase of investments are accounted at the cost of acquisition inclusive of brokerage, commission
and stamp duty. Bonus shares and right entitlements are recorded when such benefits are known. Quoted investments are
valued on the valuation date at the closing market price. Quoted investments that are not traded on the valuation date but
are traded during the two months prior to the valuation date are valued at the latest known closing price. An appropriate
discount is applied where the asset management company considers it necessary to reflect restrictions on disposal. Quoted
investments not traded during the two months’ prior to the valuation date are treated as unquoted. Unquoted investments
are valued at their estimated fair values by applying appropriate valuation methods. Where there is a decline, other than
temporary in the carrying amounts of investments, the resultant reduction in the carrying amount is charged to the profit
and loss account during the period in which such decline is identified.
schedules
forming part of the Consolidated Accounts (Contd.)