ICICI Bank 2009 Annual Report Download - page 148

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6. Early retirement option (“ERO”)
The Bank had implemented an Early Retirement Option Scheme 2003 for its employees in July 2003. All employees who had
completed 40 years of age and seven years of service with the Bank (including period of service with entities amalgamated
with the Bank) were eligible for the ERO.
The ex-gratia payments under ERO, terminations benefits and leave encashment in excess of the provision made (net of
tax benefits), aggregating to Rs. 1,910.0 million has been amortised over a period of five years commencing August 1, 2003
(the date of retirement of employees exercising the Option being July 31, 2003).
On account of the above ERO scheme, an amount of Rs. 118.0 million (March 31, 2008: Rs. 384.0 million) has been charged
to revenue being the balance of proportionate amount fully amortised during the year ended March 31, 2009.
7. Preference shares
Certain government securities amounting to Rs. 2,356.6 million (March 31, 2008: Rs. 2,331.8 million) have been earmarked against
redemption of preference share capital, which falls due for redemption on April 20, 2018, as per the original issue terms.
8. Staff retirement benefits
Reconciliation of opening and closing balance of the present value of the defined benefit obligation for pension and gratuity
benefits of the Group is given below.
Rupees in million
Particulars Pension
Year ended March 31, 2009 Year ended March 31, 2008
Defined benefit obligation liability
Opening obligations ..................................................................... 1,678.1 1,029.4
Add: Addition due to amalgamation ............................................ —1,807.4
Service cost .................................................................................. 62.5 54.0
Interest cost ................................................................................. 146.6 230.7
Actuarial (gain)/loss ...................................................................... 484.8 (172.3)
Liabilities extinguished on settlement ......................................... (364.2) (1,071.0)
Benefits paid ................................................................................ (75.6) (200.1)
Obligations at the end of the year ............................................ 1,932.2 1,678.1
Plan assets at fair value
Opening plan assets at fair value .............................................. 1,490.1 988.5
Add: Addition due to amalgamation ............................................ —584.8
Expected return on plan assets ................................................... 117.4 115.8
Actuarial gain/(loss) ...................................................................... 144.8 (118.0)
Assets distributed on settlement ................................................ (395.8) (1,145.2)
Contributions ................................................................................ 864.4 1,264.3
Benefits paid ................................................................................ (75.6) (200.1)
Closing plan assets at fair value ................................................ 2,145.3 1,490.1
Fair value of plan assets at the end of the year ........................... 2,145.3 1,490.1
Present value of the defined benefit obligations at the end of the year 1,932.2 1,678.1
Amount not recognised as an asset (limit in para 59(b) of
Accounting Standard (AS) 15 – “Employee Benefits”) ................ 51.2 —
Asset/(liability) ........................................................................... 161.9 (188.0)
Cost for the year
Service cost .................................................................................. 62.5 54.0
Interest cost ................................................................................. 146.6 230.7
Expected return on plan assets ................................................... (117.4) (115.8)
Actuarial (gain)/loss ...................................................................... 340.0 (54.3)
Curtailments & settlements (gain)/loss ........................................ 31.6 74.2
Effect of the limit in para 59(b) of
Accounting Standard (AS) 15 – “Employee Benefits” ................. 51.2 —
Net cost ....................................................................................... 514.5 188.8
Investment details of plan assets
Majority of the plan assets are invested in Government securities and corporate bonds.
Assumptions
Interest rate .................................................................................. 6.85% 8.57%
Salary escalation rate ................................................................... 7.00% 7.00%
Estimated rate of return on plan assets ...................................... 8.00% 8.00%
forming part of the Consolidated Accounts (Contd.)
schedules