ICICI Bank 2009 Annual Report Download - page 138

F64
Under each classification, the investments are further classified as (a) government securities, (b) other approved
securities, (c) shares, (d) bonds and debentures and (e) others.
b) ‘Held to Maturity’ securities are carried at their acquisition cost or at amortised cost, if acquired at a premium over
the face value. Any premium over the face value of the fixed rate and floating rate securities acquired is amortised
over the remaining period to maturity on a constant yield basis and straight line basis respectively.
c) ‘Available for Sale’ and ‘Held for Trading’ securities are valued periodically as per RBI guidelines. Any premium
over the face value of the investments in government securities, classified as ‘Available for Sale’, is amortised
over the remaining period to maturity on constant yield basis. Quoted investments are valued based on the trades/
quotes on the recognised stock exchanges, subsidiary general ledger account transactions, price list of RBI or
prices declared by Primary Dealers Association of India jointly with Fixed Income Money Market and Derivatives
Association, periodically.
The market/fair value of unquoted government securities which are in the nature of “SLR” securities included
in the ‘Available for Sale’ and ‘Held for Trading’ categories is as per the rates published by Fixed Income Money
Market and Derivatives Association. The valuation of other unquoted fixed income securities wherever linked to
the Yield-to-Maturity (“YTM”) rates, is computed with a mark-up (reflecting associated credit risk) over the YTM
rates for government securities published by Fixed Income Money Market and Derivatives Association.
Unquoted equity shares are valued at the break-up value, if the latest balance sheet is available or at Re. 1 as per
RBI guidelines.
Securities are valued scrip-wise and depreciation/appreciation aggregated for each category. Net appreciation in
each category, if any, being unrealised, is ignored, while net depreciation is provided for.
d) Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged
to the profit and loss account.
e) Profit on sale of investments in the ‘Held to Maturity’ category is credited to the profit and loss account and is
thereafter appropriated (net of applicable taxes and statutory reserve requirements) to capital reserve. Profit on sale
of investments in ‘Available for sale’ and ‘Held for Trading’ categories is credited to profit and loss account.
f) Repurchase and reverse repurchase transactions are accounted for in accordance with the extant RBI guidelines.
g) Broken period interest on debt instruments is treated as a revenue item.
h) At the end of each reporting period, security receipts issued by the asset reconstruction company are valued in
accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly,
in cases where the cash flows from security receipts issued by the asset reconstruction company are limited
to the actual realisation of the financial assets assigned to the instruments in the concerned scheme, the Bank
reckons the Net Asset Value (“NAV”), obtained from the asset reconstruction company from time to time, for
valuation of such investments at each reporting year/period end.
i. The Bank follows trade date method for accounting of its investments.
ii. The Bank’s consolidating venture capital funds carry investments at fair values, with unrealised gains and temporary
losses on investments recognised as components of investors’ equity and accounted for in the unrealised investment
reserve account. The realised gains and losses on investments and units in mutual funds and unrealised gains or losses
on revaluation of units in mutual funds are accounted for in the profit and loss account. Provisions are made in respect
of accrued income considered doubtful. Such provisions as well as any subsequent recoveries are recorded through
the profit and loss account. Subscription to/purchase of investments are accounted at the cost of acquisition inclusive
of brokerage, commission and stamp duty. Bonus shares and right entitlements are recorded when such benefits are
known. Quoted investments are valued on the valuation date at the closing market price. Quoted investments that are
not traded on the valuation date but are traded during the two months prior to the valuation date are valued at the latest
known closing price. An appropriate discount is applied where the asset management company considers it necessary
to reflect restrictions on disposal. Quoted investments not traded during the two months prior to the valuation date are
treated as unquoted. Unquoted investments are valued at their estimated fair values by applying appropriate valuation
methods. Where there is a decline, other than temporary in the carrying amounts of investments, the resultant reduction
in the carrying amount is charged to the profit and loss account during the period in which such decline is identified.
iii. The Bank’s primary dealership and investment banking subsidiaries classify their investments as short-term and trading
or as long-term investments. The securities held with the intention of holding for short-term and trading are classified
as stock-in-trade and are valued at lower of cost arrived at on weighted average basis, or market value. The securities
acquired with the intention of holding till maturity or for a longer period are classified as long-term investments and are
carried at cost arrived at on weighted average basis. Appropriate provision is made for other than temporary diminution
in the value of investments. Commission earned in respect of securities acquired upon devolvement is reduced from
the cost of acquisition.
iv. The Bank’s housing finance subsidiary classifies its investments as current investments and long-term investments.
Investments that are readily realisable and intended to be held for not more than a year are classified as current
investments, which are carried at the lower of cost or the market value. All other investments are classified as long-
term investments, which are carried at cost. However, a provision for diminution in value is made to recognise any
other than temporary decline in the value of investments. Costs such as brokerage, commission etc. paid at the time
of acquisition of investments are included in the investment cost.
forming part of the Consolidated Accounts (Contd.)
schedules