ICICI Bank 2012 Annual Report Download - page 144

F66
SIGNIFICANT ACCOUNTING POLICIES
1. Transactions involving foreign exchange
The consolidated financial statements of the Group are reported in Indian rupees (`), the national currency of India.
Foreign currency income and expenditure items are translated as follows:
xFor domestic operations, at the exchange rates prevailing on the date of the transaction with the resultant gain or
loss accounted for in the profit and loss account.
xFor integral foreign operations, at weekly average closing rates with the resultant gain or loss accounted for in
the profit and loss account. An integral foreign operation is a subsidiary, associate, joint venture or branch of the
reporting enterprise, the activities of which are based or conducted in a country other than the country of the
reporting enterprise but are an integral part of the reporting enterprise.
xFor non-integral foreign operations, at the quarterly average closing rates with the resultant gains or losses
accounted for as foreign currency translation reserve.
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 in domestic operations that are entered
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 based on 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, based on 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 currency
are disclosed at the closing exchange rates notified by FEDAI at the balance sheet date.
2. Revenue recognition
xInterest income is recognised in the profit and loss account as it accrues except in the case of non-performing
assets (NPAs) where it is recognised upon realisation, as per the income recognition and asset classification norms
of RBI/NHB.
xIncome from leases is calculated by applying the interest rate implicit in the lease to the net investment outstanding
on the lease over the primary lease period. Finance leases entered into prior to April 1, 2001 have been accounted
for as per the Guidance Note on accounting for leases issued by ICAI. The finance leases entered post April 1, 2001
have been accounted for as per AS 19 on ‘leases’ issued by ICAI.
xIncome on discounted instruments is recognised over the tenure of the instrument on a constant yield basis.
xDividend income is accounted on an accrual basis when the right to receive the dividend is established.
xLoan processing fee is accounted for upfront when it becomes due except in the case of foreign banking subsidiaries,
where it is amortised over the period of the loan.
xProject appraisal/structuring fee is accounted for on the completion of the agreed service.
xArranger fee is accounted for as income when a significant portion of the arrangement/syndication is completed.
xCommission received on guarantees issued is amortised on a straight-line basis over the period of the guarantee.
xAll other fees are accounted for as and when they become due.
xNet income arising from sell-down/securitisation of loan assets prior to February 1, 2006 has been recognised
upfront as interest income. With effect from February 1, 2006, net income arising from securitisation of loan assets
is amortised over the life of securities issued or to be issued by the special purpose vehicle/special purpose entity
to which assets are sold. Net income arising from sale of loan assets through direct assignment with recourse
obligation is amortised over the life of underlying assets sold and net income from sale of loan assets through direct
assignment, without any recourse obligation, is recognised at the time of sale. Net loss arising on account of the
sell-down/securitisation and direct assignment of loan assets is recognised at the time of sale.
xThe Bank deals in bullion business on a consignment basis. The difference between price recovered from customers
and cost of bullion is accounted for at the time of sale to the customers. The Bank also deals in bullion on a
borrowing and lending basis and the interest paid/received is accounted on accrual basis.
forming part of the Consolidated Accounts (Contd.)
schedules