ICICI Bank 2013 Annual Report Download - page 182

F104
In respect of retail loans, all exposures are approved under operating notes or programs approved by the COED.
This involves a cluster-based approach for a particular product or for homogeneous group of individuals/business
entities that comply with certain laid down parameterised norms. The norms vary across product segments/
customer profile, but typically include factors such as the borrower’s income, the loan-to-value ratio and
demographic parameters. The individual credit proposals are evaluated and approved by executives on the basis
of the product policies.
Credit risk monitoring process
For effective monitoring of credit facilities, a post-approval authorisation structure has been laid down. For
corporate, small enterprises and rural and agriculture linked banking business, Credit Middle Office Group verifies
adherence to the terms of the approval prior to commitment and disbursement of credit facilities.
The Bank has established centralised operations to manage operational risk in the various back office processes
of the Bank’s retail loan business except for a few operations, which are decentralised to improve turnaround
time for customers. The fraud prevention and control group manages fraud-related risks through fraud prevention
and through recovery of fraud losses. The fraud control group evaluates various external agencies involved in
the retail finance operations, including direct marketing associates, external verification associates and collection
agencies.
The Bank has a collections unit structured along various product lines and geographical locations, to manage
delinquency levels. The collections unit operates under the guidelines of a standardised recovery process.
The segregation of responsibilities and oversight by groups external to the business groups ensure adequate
checks and balances.
Reporting and measurement
Credit exposure for the Bank is measured and monitored using a centralised exposure management system. The
analysis of the composition of the portfolio is presented to the Risk Committee on a periodic basis.
The Bank complies with the norms on exposure stipulated by RBI for both single borrower as well as borrower
group at the consolidated level. Limits have been set as a percentage of the Bank’s consolidated capital funds and
are regularly monitored. The utilisation against specified limits is reported to the COED and Credit Committee on
a periodic basis.
Credit concentration risk
Credit concentration risk arises mainly on account of concentration of exposures under various categories
including industry, products, geography, sensitive sectors, underlying collateral nature and single/group borrower
exposures.
Limits have been stipulated on single borrower, borrower group, industry and longer tenure exposure to a
borrower group. Exposure to top 10 borrowers and borrower groups, exposure to capital market segment and
unsecured exposures for the ICICI Group (consolidated) are reported to the senior management committees on a
quarterly basis. Limits on countries and bank counterparties have also been stipulated.
Definition and classification of non-performing assets (NPAs)
The Bank classifies its advances (loans and credit substitutes in the nature of an advance) into performing and
non-performing loans in accordance with the extant RBI guidelines.
An NPA is defined as a loan or an advance where:
i) interest and/or installment of principal remain overdue for more than 90 days in respect of a term loan. Any
amount due to the bank under any credit facility is ‘overdue’ if it is not paid on the due date fixed by the Bank;
ii) if the interest due and charged during a quarter is not serviced fully within 90 days from the end of the quarter;
iii) the account remains ‘out of order’ in respect of an overdraft/cash credit facility. An account is treated as ‘out
of order’ if:
a. the outstanding balance remains continuously in excess of the sanctioned limit/drawing power for 90
days; or
b. where the outstanding balance in the principal operating account is less than the sanctioned limit/drawing
power, but there are no credits continuously for 90 days as on the date of the balance sheet; or
BASEL II – PILLAR 3 DISCLOSURES (CONSOLIDATED)
at March 31, 2013