ICICI Bank 2010 Annual Report Download - page 147

F67
schedules
forming part of the Consolidated Accounts (Contd.)
Separate gratuity funds for employees inducted from erstwhile ICICI, erstwhile Bank of Madura and erstwhile Sangli Bank
are managed by ICICI Prudential Life Insurance Company Limited. The gratuity fund for employees of ICICI Bank, other
than employees inducted from erstwhile ICICI, erstwhile Bank of Madura and erstwhile Sangli Bank is administered by Life
Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited.
Actuarial valuation of the gratuity liability for all the above funds is determined by an actuary appointed by the Bank. In
accordance with the gratuity fund’s rules, actuarial valuation of gratuity liability is calculated based on certain assumptions
regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit method.
Superannuation fund
ICICI Bank contributes 15% of the total annual basic salary of each employee to a superannuation fund for ICICI Bank
employees. The employee gets an option on retirement or resignation to commute one-third of the total credit balance in
his/her account and receive a monthly pension based on the remaining balance. In the event of death of an employee, his
or her beneficiary receives the remaining accumulated balance. ICICI Bank also gives cash option to its employees, allowing
them to receive the amount contributed by ICICI Bank in their monthly salary during their employment.
Upto March 31, 2005, the superannuation fund was administered solely by Life Insurance Corporation of India. Subsequent
to March 31, 2005, both Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited are
administering separate funds. Employees had the option to retain the existing balance with Life Insurance Corporation of
India or seek a transfer to ICICI Prudential Life Insurance Company Limited.
Pension
The Bank provides for pension, a deferred retirement plan covering certain employees of erstwhile Bank of Madura and
certain employees of erstwhile Sangli Bank. The plan provides for a pension payment on a monthly basis to these employees
on their retirement based on the respective employee’s salary and years of employment with the Bank. For erstwhile Bank
of Madura and erstwhile Sangli Bank employees in service, separate pension funds are managed in-house and the liability
is funded as per actuarial valuation. The pension payments to retired employees of erstwhile Bank of Madura and erstwhile
Sangli Bank are being administered by ICICI Prudential Life Insurance Company Limited, for whom the Bank has purchased
master annuity policies. Employees covered by the pension plan are not eligible for benefits under the provident fund
plan.
Provident fund
ICICI Bank is statutorily required to maintain a provident fund as a part of retirement benefits to its employees. There
are separate provident funds for employees inducted from erstwhile Bank of Madura and Sangli Bank (other than those
employees who have opted for pension), and for other employees of ICICI Bank. In-house trustees manage these funds.
Each employee contributes 12.0% of his or her basic salary (10.0% for certain staff of erstwhile Sangli Bank and Bank of
Madura) and ICICI Bank contributes an equal amount to the funds. The funds are invested according to rules prescribed by
the Government of India.
Leave encashment
The Bank provides for leave encashment benefit, which is a defined benefit scheme, based on actuarial valuation conducted
by an independent actuary.
11. Provisions, contingent liabilities and contingent assets
The Group estimates the probability of any loss that might be incurred on outcome of contingencies on the basis of
information available upto the date on which the consolidated financial statements are prepared. A provision is recognised
when an enterprise has a present obligation as a result of a past event and it is probable that an outflow of resources will
be required to settle the obligation, in respect of which a reliable estimate can be made. Provisions are determined based
on management estimate required to settle the obligation at the balance sheet date, supplemented by experience of similar
transactions. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. In
cases where the available information indicates that the loss on the contingency is reasonably possible but the amount of
loss cannot be reasonably estimated, a disclosure to this effect is made in the consolidated financial statements. In case
of remote possibility neither provision nor disclosure is made in the consolidated financial statements. The Group does not
account for or disclose contingent assets, if any.
12. Cash and cash equivalents
Cash and cash equivalents include cash in hand, balances with RBI, balances with other banks and money at call and short
notice.
13. Investments
i. Investments of the Bank are accounted for in accordance with the extant RBI guidelines on investment classification
and valuation as given below.
a) All investments are classified into ‘Held to Maturity’, ‘Available for Sale’ and ‘Held for Trading’. Re-classifications,
if any, in any category are accounted for as per the RBI guidelines.
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 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.