ICICI Bank 2012 Annual Report Download - page 147

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9. Acquisition costs for insurance business
Acquisition costs are those costs that vary with and are primarily related to the acquisition of insurance contracts and
are expensed in the period in which they are incurred.
10. Staff retirement benefits
Gratuity
The Group pays gratuity to employees who retire or resign after a minimum prescribed period of continuous service and
in the case of employees at the overseas locations as per the rules in force in the respective countries. ICICI Bank makes
contributions to five separate gratuity funds, for employees inducted from erstwhile ICICI Limited (erstwhile ICICI), employees
inducted from erstwhile Bank of Madura Limited (erstwhile Bank of Madura), employees inducted from erstwhile The Sangli
Bank Limited (erstwhile Sangli Bank), employees inducted from erstwhile The Bank of Rajasthan Limited (erstwhile Bank of
Rajasthan) and employees of ICICI Bank other than those inducted from erstwhile ICICI, erstwhile Bank of Madura, erstwhile
Sangli Bank and erstwhile Bank of Rajasthan.
Separate gratuity funds for employees inducted from erstwhile ICICI, erstwhile Bank of Madura, erstwhile Sangli Bank
and erstwhile Bank of Rajasthan 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, erstwhile Sangli Bank and erstwhile Bank of Rajasthan is administered by Life Insurance Corporation of India
(LIC) and ICICI Prudential Life Insurance Company Limited.
Actuarial valuation of the gratuity liability for all the above funds is determined by an appointed actuary. Actuarial
valuation of gratuity liability is determined 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 15.0% of the total annual basic salary of certain employees 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 an 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 have the option to decide on an annual basis, the insurance
company for management of that year’s contribution towards superannuation fund.
ICICI Prudential Life Insurance Company, ICICI Prudential Asset Management Company and ICICI Venture Funds
Management Company have accrued for superannuation liability based on a percentage of basic salary payable to
eligible employees for the period of service.
Pension
The Bank provides for pension, a deferred retirement plan covering certain employees of erstwhile Bank of Madura,
erstwhile Sangli Bank and erstwhile Bank of Rajasthan. The plan provides for pension payment including dearness relief
on a monthly basis to these employees on their retirement based on the respective employee’s years of service with
the Bank and applicable salary. For erstwhile Bank of Madura, erstwhile Sangli Bank and erstwhile Bank of Rajasthan
employees in service, separate pension funds are managed by the trust and the liability is funded as per actuarial
valuation. The Bank purchases annuities from LIC and ICICI Prudential Life Insurance Company Limited as part of master
policies for payment of pension to retired employees of erstwhile Bank of Madura, erstwhile Sangli Bank and erstwhile
Bank of Rajasthan.
Actuarial valuation of the pension liability for all the above funds is determined by an actuary appointed by the Bank.
Actuarial valuation of pension liability is calculated based on certain assumptions regarding rate of interest, salary
growth, mortality and staff attrition as per the projected unit credit method.
Employees covered by the pension plan are not eligible for employer’s contribution under the provident fund plan.
Provident fund
The Group 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, erstwhile Sangli Bank, erstwhile Bank
of Rajasthan and for other employees of ICICI Bank. In-house trustees manage these funds. Each employee contributes
a specified portion of the basic salary and the Group contributes an equal amount. The funds are invested according to
the rules prescribed by the Government of India.
Actuarial valuation for the interest rate guarantee on the provident fund balances is determined by an actuary.
forming part of the Consolidated Accounts (Contd.)
schedules