ICICI Bank 2006 Annual Report Download - page 117

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In case of the housing finance subsidiary, loans and other credit facilities are classified as per the NHB guidelines into
performing and non-performing assets. Further, NPAs are classified into sub-standard, doubtful and loss assets based on
criteria stipulated by NHB.
In the case of the Canadian subsidiary, loans are stated net of 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 are not yet identifiable.
15. Transfer and servicing of financial assets
The Company transfers commercial and consumer loans through securitisation transactions. The transferred loans are de-
recognised and gains / losses are recorded only if the Company surrenders the rights to benefits specified in the loan
contract. Recourse and servicing obligations are reduced from proceeds of the sale. Retained beneficial interests in the
loans are 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.
During the year, RBI has issued specific guidelines on securitisation of standard assets. Accordingly, with effect from
February 1, 2006, the Bank accounts for any loss arising on securitisation in the profit & loss account immediately at the
time of securitisation. Profit / premium, if any, arising on account of securitisation is amortised over the life of the securities
issued or to be issued by the Special Purpose Vehicle (SPV).
16. Fixed assets and depreciation
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, except for those relating to venture capital, investment banking and asset
management subsidiaries where depreciation is charged on a written down value 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 given below:
Asset Depreciation rate
Premises owned by the Bank ......................................................................................................................................... 1.63%
ATMs ............................................................................................................................................................................. 12.50%
Plant and machinery like air conditioners, xerox machines, etc. ................................................................................. 10.00%
Furniture and fixtures .................................................................................................................................................... 15.00%
Motor vehicles .............................................................................................................................................................. 20.00%
Computers .................................................................................................................................................................... 33.33%
EDC terminals ............................................................................................................................................................... 16.67%
Others (including software and system development expenses) ............................................................................... 25.00%
Cost comprises the purchase price and any cost attributable to bring the asset to working condition for its intended use.
Depreciation on leased assets and improvement to leasehold premises 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 of the Companies
Act, 1956.
Assets purchased/sold during the year are depreciated on the basis of actual number of days the asset has been put to use.
Items costing less than Rs. 5,000 are depreciated fully over a period of 12 months from the date of purchase.
In case of the venture capital subsidiary depreciation on assets, other than leased assets, is charged on written down value
method at the rates and in the manner prescribed under Schedule XIV to the Companies Act, 1956.
In case of investment banking subsidiary, 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. A membership right of the stock exchange is treated
as an asset and the value paid to acquire such rights is amortised over a period of 10 years.
schedules
forming part of the Consolidated Accounts (Contd.)