ICICI Bank 2010 Annual Report Download - page 94

F14
forming part of the Accounts (Contd.)
schedules
4. Transfer and servicing of assets
The Bank transfers commercial and consumer loans through securitisation transactions. The transferred loans are
de-recognised and gains/losses are accounted for only if the Bank surrenders the rights to benefits specified in the underlying
securitised loan contract. Recourse and servicing obligations are accounted for net of provisions.
In accordance with the RBI guidelines for securitisation of standard assets, with effect from February 1, 2006, the Bank
accounts for any loss arising from securitisation immediately at the time of sale and the profit/premium arising from
securitisation is amortised over the life of the securities issued or to be issued by the special purpose vehicle to which the
assets are sold. In the case of loans sold to an asset reconstruction company, the excess provision, if any, is not reversed
but is utilised to meet the shortfall/loss on account of sale of other financial assets to asset reconstruction company.
5. Fixed assets and depreciation
Premises and other fixed assets are carried at cost less accumulated depreciation. Cost includes freight, duties, taxes and
incidental expenses related to the acquisition and installation of the asset. Depreciation is charged over the estimated
useful life of a fixed asset on a straight-line basis. The rates of depreciation for fixed assets, which are not lower than the
rates prescribed in Schedule XIV of the Companies Act, 1956, are given below:
Asset Depreciation Rate
Premises owned by the Bank 1.63%
Improvements to leasehold premises 1.63% or over the lease period,
whichever is higher
ATMs 12.50%
Plant and machinery like air conditioners, photo-copying machines, etc. 10.00%
Computers 33.33%
Furniture and fixtures 15.00%
Motor vehicles 20.00%
Others (including Software and system development expenses) 25.00%
a) Depreciation on leased assets and leasehold improvements is recognised on a straight-line basis using rates determined
with reference to the primary period of lease or rates specified in Schedule XIV to the Companies Act, 1956, whichever
is higher.
b) Assets purchased/sold during the year are depreciated on a pro-rata basis for the actual number of days the asset has
been put to use.
c) Items costing upto Rs. 5,000/- are depreciated fully over a period of 12 months from the date of purchase.
d) In case of revalued/impaired assets, depreciation is provided over the remaining useful life of the assets with reference
to revised assets values.
6. Transactions involving foreign exchange
Foreign currency income and expenditure items of domestic operations are translated at the exchange rates prevailing
on the date of the transaction. Income and expenditure items of integral foreign operations (representative offices) are
translated at weekly average closing rates, and income and expenditure of non-integral foreign operations (foreign branches
and offshore banking units) are translated at quarterly average closing rates.
Monetary foreign currency assets and liabilities of domestic and integral foreign operations are translated at closing exchange
rates notified by Foreign Exchange Dealers’ Association of India (FEDAI) at the balance sheet date and the resulting profits/
losses are included in the profit and loss account.
Both monetary and non-monetary foreign currency assets and liabilities of non-integral foreign operations are translated
at closing exchange rates notified by FEDAI at the balance sheet date and the resulting profits/losses from exchange
differences are accumulated in the foreign currency translation reserve until the disposal of the net investment in the
non-integral foreign operations.
The premium or discount arising on inception of forward exchange contracts that are entered into to establish the amount of
reporting currency required or available at the settlement date of a transaction is amortised over the life of the contract. All
other outstanding forward exchange contracts are revalued at the exchange rates notified by FEDAI for specified maturities
and at interpolated rates for contracts of interim maturities. The contracts of longer maturities where exchange rates are
not notified by FEDAI, are revalued at the forward exchange rates implied by the swap curves for respective currencies.
The resultant gains or losses are recognised in the profit and loss account.
Contingent liabilities on account of guarantees, endorsements and other obligations denominated in foreign currencies are
disclosed at the closing exchange rates notified by FEDAI at the balance sheet date.