ICICI Bank 2006 Annual Report Download - page 123

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F64
schedules
forming part of the Consolidated Accounts (Contd.)
The ex-gratia payments under ERO and termination benefits and leave encashment in excess of the provision made (net of
tax benefits), aggregating to Rs. 1,910.0 million is being amortised over a period of five years commencing August 1, 2003
(the date of retirement of employees exercising the option being July 31, 2003).
On account of the above ERO scheme, an amount of Rs. 384.0 million (March 31, 2005: Rs. 384.0 million) has been charged
to revenue being the proportionate amount amortised for the year ended March 31, 2006.
7. Preference shares
The Bank had issued preference shares with a face value of Rs. 3,500.0 million during the year ended March 31,1998 under
the scheme of business combination of ITC Classic Finance Limited with erstwhile ICICI Limited. These preference shares
bear a dividend yield of 0.001% and is redeemable at face value after 20 years. Certain government securities amounting to
Rs. 2,001.1 million (March 31, 2005: Rs.1,952.3 million) have been earmarked against redemption of these preference
shares.
Banks in India are generally not allowed to issue preference shares. However, the Company has been currently exempted
from this restriction.
8. Transfer to Investment Fluctuation Reserve
An amount of Rs. 2,143.4 million, being the excess balance in Investment Fluctuation Reserve (IFR) account over the
regulatory requirement was transferred to general reserve account during the year ended March 31, 2005. RBI has
subsequently instructed that this amount should be retained in IFR account itself. Accordingly, the said amount was transferred
back to IFR account from the general reserve account in the first quarter of the year ended March 31, 2006, making IFR
account balance Rs. 7,303.4 million.
RBI required banks to create IFR aggregating to 5% of their investments in fixed income securities (in AFS and Trading
Book) over a five-year period starting from March 31, 2002. Accordingly a further amount of Rs. 5,900.0 million was transferred
to IFR during the year ended March 31, 2006, making the IFR account balance Rs. 13,203.4 million. RBI has vide its circular
DBOD.No.BP.BC.38/21.04.141/2005-06 dated October 10, 2005 permitted banks that have maintained capital of at least 9%
of the risk weighted assets for both credit risk and market risk for both held for trading and available for sale categories of
investments as on March 31, 2006, to transfer the balance in the IFR ‘below the line’ in the profit and loss appropriation
account to statutory reserve, general reserve or balance of profit & loss account.
Pursuant to the above, the entire IFR account balance of Rs. 13,203.4 million has been transferred from IFR to revenue and
other reserves.
9. Deferred tax
As on March 31, 2006, the Company has recorded net deferred tax asset of Rs. 2,467.9 million (March 31, 2005: Rs. 702.2
million).
The analysis of deferred tax assets and liabilities into major items is given below:
Rupees in million
Particulars As on As on
March 31, 2006 March 31, 2005
Deferred tax asset
Provision for bad and doubtful debts ........................................................ 6,553.8 7,285.5
Capital loss ................................................................................................ 950.0 —
Others ........................................................................................................ 1,426.0 1,076.6
8,929.8 8,362.1
Less : Deferred tax liability
Depreciation on fixed assets ........................................................ 6,709.7 7,561.1
Others............................................................................................ —221.6
6,709.7 7,782.7
Add: Deferred tax asset pertaining to foreign
branches /subsidiaries .................................................................. 247.8 122.8
Total net Deferred Tax Asset/(Liability) ...................................................... 2,467.9 702.2