ICICI Bank 2007 Annual Report Download - page 129

F59
schedules
Separate gratuity funds for employees inducted from erstwhile ICICI and erstwhile Bank of Madura are managed by ICICI
Prudential Life Insurance Company Limited. Actuarial valuation of the gratuity liability is determined by an actuary appointed
by ICICI Prudential Life Insurance Company Limited. The investments of the funds are made according to rules prescribed
by the Government of India. The gratuity fund for employees of ICICI Bank, other than employees inducted from erstwhile
ICICI and erstwhile Bank of Madura, is administered by the Life Insurance Corporation of India and ICICI Prudential Life
Insurance Company Limited. In accordance with the gratuity fund’s rules, actuarial valuation of gratuity liability is calculated
based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit
credit method.
As per the transition provision of AS 15 (Revised) on “Accounting for retirement benefits in financial statements of employer”,
the difference in the liability on account of gratuity benefits created by the Bank at March 31, 2006 due to the revised
standard have been included in Schedule 2 (“Reserves and Surplus”).
Superannuation Fund
ICICI Bank contributes 15.0% of the total annual salary of each employee to a superannuation fund for ICICI Bank employees.
ICICI Bank’s employees get an option on retirement or resignation to receive one-third of the total balance and a monthly
pension based on the remaining two-third balance. In the event of death of an employee, his or her beneficiary receives the
remaining accumulated two-third balance. ICICI Bank also gives cash option to its employees, allowing them to receive the
amount contributed by ICICI Bank in their monthly salary during their employment. Upto March 31, 2005, the superannuation
fund was administered solely by the Life Insurance Corporation of India. Subsequent to March 31, 2005, the fund is being
administered by both Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited. Employees
had the option to retain the existing balance with Life Insurance Corporation of India or seek a transfer to ICICI Prudential
Life Insurance Company Limited.
Pension
The Bank provides for pension, a deferred retirement plan covering certain employees. The plan provides for a pension
payment on a monthly basis to these employees on their retirement based on the respective employee’s salary and years
of employment with the Bank. Employees covered by the pension plan are not eligible for benefits under the provident
fund plan, a defined contribution plan.
As per the transition provision of AS 15 (Revised) on “Accounting for retirement benefits in financial statements of employer”,
the difference in the liability on account of pension benefits created by the Bank at March 31, 2006 due to the revised
standard have been included in Schedule 2 (“Reserves and Surplus”).
Provident Fund
ICICI Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees. There
are separate provident funds for employees inducted from erstwhile Bank of Madura (other than those employees who
have opted for pensions), and for other employees of ICICI Bank. These funds are managed by in-house trustees. Each
employee contributes 12.0% of his or her basic salary (10.0% for clerks and sub-staff of erstwhile Bank of Madura) and
ICICI Bank contributes an equal amount of the funds. The investments of the funds are made according to rules prescribed
by the Government of India.
Leave encashment
The Bank provides for leave encashment benefit, which is a defined benefit scheme, based on actuarial valuation as at the
balance sheet date conducted by an independent actuary.
In respect of other entities within the group, retirement benefits in the form of provident fund and other defined contribution
schemes, the contribution payable by the entity for the year is charged to the profit and loss account for that year. In respect
of gratuity benefit and other benefit schemes, where the entity makes payments for retirement benefits out of its own
funds, provisions are made in the profit and loss account based on actuarial valuation.
As per the transition provision of AS 15 (Revised) on “Accounting for retirement benefits in financial statements of employer”,
the difference in the liability on account of leave encashment benefits created by the Bank at March 31, 2006 due to the
revised standard have been included in Schedule 2 (“Reserves and Surplus”).
11. Provisions, contingent liabilities and contingent assets
The Company estimates the probability of any loss that might be incurred on outcome of contingencies on the basis of
information available upto the date on which the consolidated financial statements are prepared. A provision is recognised
when an enterprise has a present obligation as a result of a past event and it is probable that an outflow of resources will
be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based
on management estimate required to settle the obligation at the balance sheet date, supplemented by experience of similar
transactions. These are reviewed at each balance sheet date and adjusted to reflect the current estimates. In cases where
the available information indicates that the loss on the contingency is reasonably possible but the amount of loss cannot be
reasonably estimated, a disclosure is made in the consolidated financial statements. In case of remote possibility neither
provision nor disclosure is made in the consolidated financial statements. The Company does not account for contingent
assets, if any.
forming part of the Consolidated Accounts (Contd.)