ICICI Bank 2010 Annual Report Download - page 175

F95
BASEL II – PILLAR 3 DISCLOSURES (CONSOLIDATED)
e. Other Reviews by Credit Committee
Apart from sanctioning proposals, the Credit Committee carries out reviews of the credit quality of the portfolio
at regular intervals. The Committee also reviews specific cases that need special attention, details of credit
sanctions, compliance with regulatory guidelines on credit risk management system, irregularity reports and
movement in non-performing loans. Further, the Committee reviews developments in industrial sectors and
specific strategies of the Bank with respect to the exposure to those industries.
f. Reporting against prudential exposure norms
Status of actual position against prudential exposure limits set by the Board/stipulated by RBI is reported
periodically to respective committees.
Measurement of risks for capital adequacy purposes
Under Pillar 1 of the extant RBI guidelines on Basel II, the Bank currently follows the standardised approach for
credit and market risk and basic indicator approach for operational risk.
5. CREDIT RISK
The Bank is exposed to credit risk in its lending operations. Credit risk is the risk of loss that may occur from the
failure of any counterparty to abide by the terms and conditions of any financial contract with the Bank, principally
the failure to make required payments as per the terms and conditions of the contracts.
Policies and processes
All credit risk related aspects are governed by Credit and Recovery Policy (Credit Policy). Credit Policy outlines the
type of products that can be offered, customer categories, target customer profile, credit approval process and
limits. The Credit Policy is approved by the Board of Directors.
The delegation structure for approval of credit limits is approved by the Board of Directors. All credit proposals other
than retail products, program lending and certain other specified products are rated internally by the Risk Management
Group prior to approval by the appropriate forum.
Credit facilities with respect to retail products are provided as per approved product policies. All products and
policies require the approval of the Committee of Executive Directors.
z Within the retail operations, there is segregation of the sourcing, verification, approval and disbursement of
retail credit exposures to achieve independence.
z Program lending involves a cluster based approach wherein a lending program is implemented for a
homogeneous group of individuals/business entities which comply with certain laid down parameterised
norms. The approving authority as per the Board approved authorisation lays down these parameters.
z For certain products including dealer funding, builder finance and facilities fully collateralised by cash and
cash equivalents, the delegation structure approved by the Board of Directors may permit exemption from
the stipulation pertaining to internal rating. Credit approval limits with respect to such products are laid out
in the delegation structure approved by the Board of Directors.
A risk based asset review framework has been put in place wherein the frequency of asset review would be higher
for cases with higher outstanding and/or lower credit rating.
Structure and organisation
The Credit Risk Management Group (CRMG) within GRMG is responsible for rating of the credit portfolio, tracking
trends in various industries and periodic reporting of portfolio-level changes. CRMG is segregated into sub-groups
for corporate, small enterprises and rural micro-banking and agri-business group and retail businesses.
The overseas banking subsidiaries of the Bank have also established similar structures to ensure adequate risk
management, factoring in the risks particular to the respective businesses and the regulatory and statutory guidelines.
The risk heads of all overseas banking subsidiaries have a reporting relationship to the Head - GRMG, in addition
to reporting to the Chief Executive Officer of the respective subsidiaries.
Credit risk assessment process
There is a structured and standardised credit approval process including a comprehensive credit risk assessment
process, which encompasses analysis of relevant quantitative and qualitative information to ascertain credit rating
of the borrower.
at March 31, 2010