ICICI Bank 2009 Annual Report Download - page 139

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v. The Bank’s United Kingdom and Canadian banking subsidiaries account for unrealised gain/loss, net of tax, on investment
in ‘Available for Sale’ category directly in their reserves. Further, in the case of the Bank’s United Kingdom and Canadian
banking subsidiaries, unrealised gain/loss on investment in ‘Held for Trading’ category is accounted directly in the profit
and loss account.
vi. In case of life and general insurance businesses, investments are made in accordance with the Insurance Act, 1938, the IRDA
(Investment) Regulations, 2000, and various other circulars/notifications issued by the IRDA in this context from time to time.
In case of life insurance business, investments are stated at fair value being the last quoted closing price on the
National Stock Exchange (‘NSE’) (In case of securities not listed on NSE, the last quoted closing price on the Bombay
Stock Exchange (‘BSE’) is used). Mutual fund units as at the balance sheet date are valued at the previous day’s net
asset values. Equity shares awaiting listing are stated at historical cost subject to provision for diminution, if any, in
the value of such investment determined separately for each individual investment.
Unrealised gains/losses arising due to changes in the fair value of listed equity shares and mutual fund units are taken
to “Fair Value Change Account” and carried forward in the balance sheet.
In case of general insurance business, all debt securities including government securities and non convertible preference
shares are considered as ‘held to maturity’ and accordingly stated at historical cost subject to amortization of premium
or accretion of discount on a straight line basis over the holding/maturity period.
Listed equities and convertible preference shares as at the balance sheet date are stated at fair value, being the lowest
of last quoted closing price on the National Stock Exchange (‘NSE’) or Bombay Stock Exchange Limited (‘BSE’).
Investments other than mentioned above are valued at cost.
The general insurance subsidiary assesses at each balance sheet date whether there is any indication that any investment
in equity or units of mutual fund may be impaired. If any such indication exists, the carrying value of such investment
is reduced to its recoverable amount and the impairment loss is recognised in the revenue(s)/profit and loss account.
If at the balance sheet date there is any indication that a previously assessed impairment loss no longer exists, then
such loss is reversed and the investment is restated to that extent.
The total proportion of investments for which subsidiaries have applied accounting policies different from the Bank as
mentioned above, approximate 21.07% of the total investments as on March 31, 2009.
14. Provisions/write-offs on loans and other credit facilities
a) All credit exposures, including overdues arising from crystallised derivative contracts, are classified as per RBI guidelines,
into performing and non-performing assets (“NPAs”). Further, NPAs are classified into sub-standard, doubtful and loss
assets based on the criteria stipulated by RBI.
In the case of corporate loans, provisions are made for sub-standard and doubtful assets at rates prescribed by RBI.
Loss assets and the unsecured portion of doubtful assets are provided/written off as per the extant RBI guidelines.
Provisions on homogeneous retail loans, subject to minimum provisioning requirements of RBI, are assessed at a
portfolio level on the basis of days past due. The Bank holds specific provisions against non-performing loans and
general provision against performing loans. The assessment of incremental specific provisions is made after taking
into consideration existing specific provision. The specific provisions on retail loans held by the Bank are higher
than the minimum regulatory requirements.
b) Provision on assets restructured/rescheduled is made in accordance with the applicable RBI guidelines on restructuring
of advances by Banks.
In respect of non-performing loan accounts subjected to restructuring, the account is upgraded to standard only after
the specified period i.e. a period of one year after the date when first payment of interest or of principal, whichever is
earlier, falls due, subject to satisfactory performance of the account during the period.
c) Amounts recovered against debts written off in earlier years and provisions no longer considered necessary in the
context of the current status of the borrower are recognised in the profit and loss account.
d) In addition to the specific provision on NPAs, the Bank maintains a general provision on performing loans. The general
provision covers the requirements of the RBI guidelines.
e) In addition to the provisions required to be held according to the asset classification status, provisions are held for individual
country exposures (other than for home country exposure). The countries are categorised into seven risk categories namely
insignificant, low, moderate, high, very high, restricted and off-credit and provisioning is made on exposures exceeding
180 days on a graded scale ranging from 0.25% to 100%. For exposures with contractual maturity of less than 180 days,
25% of the above provision is required to be held. If the country exposure (net) of the Bank in respect of each country
does not exceed 1% of the total funded assets, no provision is required on such country exposure.
f) In the case of the Bank’s primary dealership subsidiary, the policy of provisioning against NPAs is as per the prudential norms
prescribed by the RBI for non-banking financial companies. As per the policy adopted, the provisions against sub-standard
assets are determined, taking into account management’s perception of the higher risk associated with the business of
the company. Certain NPAs are considered as loss assets and full provision has been made against such assets.
g) In the case of the Bank’s housing finance subsidiary, loans and other credit facilities are classified as per the National
Housing Bank guidelines into performing and non-performing assets. Further, NPA’s are classified into sub-standard,
doubtful and loss assets based on criteria stipulated by National Housing Bank. Additional provisions are made against
specific non-performing assets over and above what is stated above, if in the opinion of the management, increased
provisions are necessary.
forming part of the Consolidated Accounts (Contd.)
schedules