ICICI Bank 2013 Annual Report Download - page 127

F49
40. Small and micro enterprises
Under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 which came into force from October
2, 2006, certain disclosures are required to be made relating to enterprises covered under the Act. During the year ended
March 31, 2013, the amount paid after the due date to vendors registered under the MSMED Act, 2006 was ` 6.0 million
(March 31, 2012: ` 7.1 million). An amount of ` 0.2 million (March 31, 2012: ` 0.1 million) has been charged to profit &
loss account towards accrual of interest on these delayed payments.
41. Penalties/fines imposed by RBI and other banking regulatory bodies
The penalty imposed by RBI and other banking regulatory bodies during the year ended March 31, 2013 was ` 3.1 million
(March 31, 2012: ` 1.5 million).
During the the year ended March 31, 2013, RBI imposed a penalty of ` 66,000 through letter dated May 2, 2012, with
regard to bouncing of two Subsidiary General Ledger deals of the clients of ` 60.0 million and ` 6.0 million on March 28,
2012. On October 9, 2012, a penalty of ` 3.0 million was levied by RBI for non compliance with Know Your Customer
(KYC) directions issued by RBI. The Bank has paid these penalties to RBI.
42. Disclosure on Remuneration
Compensation policy and practices
(A) Qualitative disclosures
a) Information relating to the composition and mandate of the Remuneration Committee
The Board Governance, Remuneration & Nomination Committee (BGRNC) comprises three independent
Directors. The functions of the Committee include recommendation of appointments of Directors to the Board,
evaluation of the performance of the Managing Director & CEO (MD & CEO) and other wholetime Directors (WTDs)
on predetermined parameters, recommendation to the Board of the remuneration (including performance
bonus and perquisites) to WTDs, approval of the policy for and quantum of bonus payable to the members of
the staff, framing of guidelines for the Employees Stock Option Scheme (ESOS) and recommendation of grant
of the Bank’s stock options to employees and WTDs of the Bank and its subsidiary companies.
b) Information relating to design and structure of remuneration processes and the key features and objectives
of remuneration policy
The Bank has under the guidance of the Board and the BGRNC, followed compensation practices intended to
drive meritocracy within the framework of prudent risk management. This approach has been incorporated in
the Compensation Policy approved by the Board on January 31, 2012, pursuant to the guidelines issued by RBI.
The key elements of the Bank’s compensation practices are:
  • Effective governance of compensation: the BGRNC has oversight over compensation. The Committee
defines Key Performance Indicators (KPIs) for wholetime Directors and equivalent positions and the
organisational performance norms for bonus based on the financial and strategic plan approved by the
Board. The KPIs include both quantitative and qualitative aspects. The BGRNC assesses organisational
performance as well as the individual performance for wholetime Directors and equivalent positions.
Based on its assessment, it makes recommendations to the Board regarding compensation for wholetime
Directors and equivalent positions and bonus for employees.
  • Alignment of compensation philosophy with prudent risk taking: the Bank seeks to achieve a prudent
mix of fixed and variable pay, with a higher proportion of variable pay at senior levels and no guaranteed
bonuses. Compensation is sought to be aligned to both financial and non-financial indicators of performance
including aspects like risk management and customer service. In addition, the Bank has an employee stock
option scheme aimed at aligning compensation to long term performance through stock option grants that
vest over a period of time. Compensation of staff in financial and risk control functions is independent of
the business areas they oversee and depends on their performance assessment.
c) Description of the ways in which current and future risks are taken into account in the remuneration
processes including the nature and type of the key measures used to take account of these risks.
The Board approves the risk framework for the Bank and the business activities of the Bank are undertaken
within this framework to achieve the financial plan. The risk framework includes the Bank’s risk appetite,
limits framework and policies and procedures governing various types of risk. KPIs of wholetime Directors
& equivalent positions, as well as employees, incorporate relevant risk management related aspects. For
example, in addition to performance targets in areas such as growth and profits, performance indicators
forming part of the Accounts (Contd.)
schedules