ICICI Bank 2008 Annual Report Download - page 139

F65
10. Staff retirement benefits
Gratuity
ICICI Bank pays gratuity to employees who retire or resign after a minimum period of five years of continuous service and in
case of employees at overseas locations as per the rules in force in the respective countries. ICICI Bank makes contributions
to four separate gratuity funds, for employees inducted from erstwhile ICICI Limited (erstwhile ICICI), employees inducted
from erstwhile Bank of Madura, employees inducted from erstwhile The Sangli Bank Limited (erstwhile Sangli Bank)
and employees of ICICI Bank other than employees inducted from erstwhile ICICI, erstwhile Bank of Madura and erstwhile
Sangli Bank.
Separate gratuity funds for employees inducted from erstwhile ICICI, erstwhile Bank of Madura and erstwhile Sangli
Bank are managed by ICICI Prudential Life Insurance Company Limited. The gratuity fund for employees of ICICI Bank,
other than employees inducted from erstwhile ICICI, erstwhile Bank of Madura and erstwhile Sangli Bank is administered
by Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited.
Actuarial valuation of the gratuity liability for all the above funds is determined by an actuary appointed by the Bank. 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.
Superannuation Fund
ICICI Bank contributes 15.0% of the total annual basic salary of each employee to a superannuation fund for ICICI Bank
employees. The employee gets an option on retirement or resignation to commute one-third of the total credit balance
in his/her account and receive a monthly pension based on the remaining balance. In the event of death of an employee,
his or her beneficiary receives the remaining accumulated 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 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 of erstwhile Bank of Madura and
certain employees of erstwhile Sangli Bank Limited. 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.
For erstwhile Bank of Madura and erstwhile Sangli Bank employees in service, separate pension funds are managed in-house
and the liability is totally funded as per the valuation arrived by the actuary. The pension payments to retired employees of
erstwhile Bank of Madura and erstwhile Sangli Bank are being administered by ICICI Prudential Life Insurance Company
Limited, for whom the Bank has purchased master annuity policies. Employees covered by the pension plan are not eligible
for benefits under the provident fund plan, a defined contribution plan.
Provident Fund
ICICI Bank is statutorily required to maintain a provident fund as a part of retirement benefits to its employees. There are
separate provident funds for employees inducted from erstwhile Bank of Madura and erstwhile Sangli Bank (other than
those employees who have opted for pension), and for other employees of ICICI Bank. In-house trustees manage these
funds. Each employee contributes 12.0% of his or her basic salary (10.0% for certain staff of erstwhile Bank of Madura and
erstwhile Sangli Bank) and ICICI Bank contributes an equal amount to the funds. The funds are invested 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 retirement benefits in the form of provident fund and other defined contribution schemes of other entities
within the group, 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.
11. Provisions, contingent liabilities and contingent assets
The Group 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 to this effect is made in the consolidated financial statements. In case of remote
possibility neither provision nor disclosure is made in the consolidated financial statements. The Group does not account
for contingent assets, if any.
forming part of the Consolidated Accounts (Contd.)
schedules
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