ICICI Bank 2008 Annual Report Download - page 88

F14
In accordance with the RBI guidelines, with effect from February 1, 2006, the Bank accounts for any loss arising from
securitisation immediately at the time of sale and the profit/premium arising from securitisation is amortised over the life
of the securities issued or to be issued by the special purpose vehicle to which the assets are sold. In the case of loans
sold to an asset reconstruction company the gain, if any, is ignored.
5. Fixed assets and depreciation
Premises and other fixed assets are carried at cost less accumulated depreciation. Cost includes freight, duties, taxes and
incidental expenses related to the acquisition and installation of the asset. Depreciation is charged over the estimated
useful life of a fixed asset on a straight-line 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%
Improvements to leasehold premises 1.63% or over the lease period,
whichever is higher
ATMs 12.50%
Plant and machinery like air conditioners, photo-copying machines, etc. 10.00%
Computers 33.33%
Card acceptance devices 12.50%
Furniture and fixtures 15.00%
Motor vehicles 20.00%
Others (including Software and system development expenses) 25.00%
a) Depreciation on leased assets and leasehold improvements is recognised on a straight-line basis using rates determined
with reference to the primary period of lease or rates specified in Schedule XIV to the Companies Act, 1956, whichever
is higher.
b) Assets purchased/sold during the year are depreciated on a pro-rata basis for the actual number of days the asset has
been put to use.
c) Items costing upto Rs. 5,000 are depreciated fully over a period of 12 months from the date of purchase.
6. Transactions involving foreign exchange
Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing
on the date of the transaction. Income and expenditure items of integral foreign operations (representative offices) are
translated at weekly average closing rates, and income and expenditure of non-integral foreign operations (foreign branches
and offshore banking units) are translated at quarterly average closing rates.
Monetary foreign currency assets and liabilities of domestic and integral foreign operations are translated at closing exchange
rates notified by Foreign Exchange Dealers’ Association of India at the balance sheet date and the resulting profits/losses
are included in the profit and loss account.
Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated
at closing exchange rates notified by Foreign Exchange Dealers’ Association of India at the balance sheet date and the
resulting profits/losses from exchange differences are accumulated in the foreign currency translation reserve until the
disposal of the net investment in the non-integral foreign operations.
The premium or discount arising on inception of forward exchange contracts that are entered into to establish the amount
of reporting currency required or available at the settlement date of a transaction is amortised over the life of the contract.
All other outstanding forward exchange contracts are revalued at the exchange rates notified by Foreign Exchange Dealers’
Association of India for specified maturities and at interpolated rates for contracts of interim maturities. The resultant gains
or losses are recognised in the profit and loss account.
Contingent liabilities on account of guarantees, endorsements and other obligations denominated in foreign currencies are
disclosed at the closing exchange rates notified by Foreign Exchange Dealers’ Association of India at the balance sheet date.
7. Accounting for derivative contracts
The Bank enters into derivative contracts such as foreign currency options, interest rate and currency swaps, credit default
swaps and cross currency interest rate swaps.
The swap contracts entered to hedge on-balance sheet assets and liabilities are structured such that they bear an opposite
and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments is correlated
with the movement of underlying assets and accounted pursuant to the principles of hedge accounting. Hedged swaps
are accounted for on an accrual basis.
Foreign currency and rupee derivative contracts entered into for trading purposes are marked to market and the resulting
gain or loss (net of provisions, if any) is accounted for in the profit and loss account.
schedules
forming part of the Accounts (Contd.)
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