ICICI Bank 2014 Annual Report Download - page 163

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market price. Quoted investments that are not traded on the valuation date but are traded during the two months
prior to the valuation date are valued at the latest known closing price. An appropriate discount is applied where
the asset management company considers it necessary to reflect restrictions on disposal. Quoted investments
not traded during the two months prior to the valuation date are treated as unquoted. Unquoted investments are
valued at their estimated fair values by applying appropriate valuation methods. Where there is a decline, other
than temporary in the carrying amounts of investments, the resultant reduction in the carrying amount is charged
to the profit and loss account during the period in which such decline is identified.
iii) The Bank’s primary dealership and securities broking subsidiaries classifies the securities held with the intention of
holding for short-term and trading as stock-in-trade and are valued at lower of cost or market value. The securities
acquired with the intention of holding till maturity or for a longer period are classified as investments and are
carried at cost. Appropriate provision is made for other than temporary diminution in the value of investments.
Commission earned in respect of securities acquired upon devolvement is reduced from the cost of acquisition.
iv) The Bank’s housing finance subsidiary classifies its investments as current investments and long-term investments.
Investments that are readily realisable and intended to be held for not more than a year are classified as current
investments, which are carried at the lower of cost and net realisable value. All other investments are classified as
long-term investments, which are carried at their acquisition cost or at amortised cost, if acquired at a premium
over the face value. Any premium over the face value of the securities acquired is amortised over the remaining
period to maturity on a constant yield basis. However, a provision for diminution in value is made to recognise any
other than temporary decline in the value of such long-term investments.
v)
The Bank’s overseas banking subsidiaries account for unrealised gain/loss, net of tax, on investment in ‘Available for Sale’
category directly in their reserves. Further, unrealised gain/loss on investment in ‘Held for Trading’ category is accounted
directly in the profit and loss account. Investments in ‘Held to Maturity’ category are carried at amortised cost.
vi) In the case of life and general insurance businesses, investments are made in accordance with the Insurance Act,
1938, the IRDA (Investment) Regulations, 2000, and various other circulars/notifications issued by the IRDA in this
context from time to time.
In the case of life insurance business, valuation of investments (other than linked business) is done on the following basis:
a. All debt securities and redeemable preference shares are considered as ‘Held to Maturity’ and accordingly
stated at historical cost, subject to amortisation of premium or accretion of discount over the period of maturity/
holding on a straight line basis.
b. Listed equity shares are stated at fair value being the last quoted closing price on the National Stock Exchange
(NSE) (or BSE, in case the investments are not listed on NSE).
c.
Mutual fund units at the balance sheet date are valued at the latest available net asset values of the respective fund.
Unrealised gains/losses arising due to changes in the fair value of listed equity shares and mutual fund units are
taken to ’Revenue and other reserves’ and ‘Liabilities on policies in force’ in the balance sheet for Shareholders’
fund and Policyholders’ fund respectively for life insurance business.
In the case of general insurance business, valuation of investments is done on the following basis:
a. All debt securities including government securities and non-convertible preference shares are considered
as ‘Held to Maturity’ and accordingly stated at amortised cost determined after amortisation of premium or
accretion of discount on a straight line basis over the holding/maturity period.
b. Listed equities and convertible preference shares at the balance sheet date are stated at fair value, being the
last quoted closing price on the NSE and in case these are not listed on NSE, then based on the last quoted
closing price on the BSE.
c. Mutual fund investments (other than venture capital fund) are stated at fair value, being the closing net asset
value at balance sheet date.
d. Investments other than mentioned above are valued at cost.
Unrealised gains/losses arising due to changes in the fair value of listed equity shares and mutual fund units are
taken to ’Revenue and other reserves’ in the balance sheet for general insurance business.
Insurance subsidiaries assess at each balance sheet date whether there is any indication that any investment in
equity or units of mutual fund may be impaired. If any such indication exists, the carrying value of such investment is
reduced to its recoverable amount and the impairment loss is recognised in the revenue(s)/profit and loss account.
The total proportion of investments for which subsidiaries have applied accounting policies different from the Bank as
mentioned above, is approximately 16.16% of the total investments at March 31, 2014.
14. Provisions/write-offs on loans and other credit facilities
i)
Loans and other credit facilities of the Bank are accounted for in accordance with the extant RBI guidelines as given below:
a) The Bank classifies its loans and investments, including at overseas branches, and overdues arising from
crystallised derivative contracts, into performing and NPAs in accordance with RBI guidelines. Loans and
forming part of the Consolidated Accounts (Contd.)
schedules