ICICI Bank 2009 Annual Report Download - page 159

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F85
a. Capital deficiencies
Majority owned financial entities that are not consolidated for capital adequacy purposes and for which the
investment in equity and other instruments eligible for regulatory capital status is deducted from capital, meet
their respective regulatory capital requirements at all times. There is no deficiency in capital in any of the
subsidiaries of the Bank as on March 31, 2009. ICICI Bank maintains an active oversight on all its subsidiaries
through their respective Boards and regular updates to the Board of the Bank. On a periodic basis the capital
adequacy position of subsidiaries (banking, non-banking & insurance subsidiaries), as per the applicable
regulations, is reported to their respective Boards as well as to the Board of the Bank.
b. Bank’s interest in insurance entities
The book value of the Bank’s total interest in its insurance subsidiaries, which is deducted from capital for
capital adequacy under Basel II is detailed in the table below.
Rupees in billion
Name of the entity Country of
incorporation Ownership
interest Book value of
investment
ICICI Prudential Life Insurance Company Limited India 73.93% 35.90
ICICI Lombard General Insurance Company Limited India 73.80% 10.96
The quantitative impact on regulatory capital of using risk weighted investments method versus using the
deduction method is set out in the following table:
Rupees in billion
Method Quantitative impact
Deduction method 46.86
Capital at 9% based on risk weighted assets 4.22
2. CAPITAL STRUCTURE
a. Summary information on main terms and conditions/features of capital instruments
As per the RBI capital adequacy norms, ICICI Bank’s regulatory capital is classified into Tier-1 capital and Tier-2
capital.
Tier-1 capital includes paid-up equity capital, statutory reserves, other disclosed free reserves, capital reserves
and innovative perpetual debt instruments (Tier-1 bonds) eligible for inclusion in Tier-1 capital that comply
with requirement specified by RBI.
Tier-2 capital includes revaluation reserves (if any), general provision and loss reserve, upper Tier-2 instruments
(upper Tier-2 bonds) and subordinate debt instruments (lower Tier-2 bonds) eligible for inclusion in Tier-2
capital.
ICICI Bank and its subsidiaries have issued debt instruments that form a part of Tier-1 and Tier-2 capital.
The terms and conditions that are applicable for these instruments comply with the stipulated regulatory
requirements and where required an independent legal opinion has been obtained for inclusion of these
instruments in capital.
Tier-1 bonds are non-cumulative and perpetual in nature with a call option after 10 years. Interest on Tier-1
bonds is payable either annually or semi-annually. These Tier-1 bonds have a step-up clause on interest
payment ranging up to 100 bps.
The upper Tier-2 bonds are cumulative and have an original maturity of 15 years with call option after 10 years.
The interest on upper Tier-2 bonds is payable either annually or semi-annually. Some of the upper Tier-2 debt
instruments have a step-up clause on interest payment ranging up to 100 bps.
The lower Tier-2 bonds (subordinated debt) are cumulative and have an original maturity between 5 to 15
years. The interest on lower Tier-2 capital instruments is payable quarterly, semi-annually or annually.
BASEL II – Pillar 3 Disclosures (Consolidated)