ICICI Bank 2014 Annual Report Download - page 164

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advances held at the overseas branches that are identified as impaired as per host country regulations for
reasons other than record of recovery, but which are standard as per the extant RBI guidelines, are classified as
NPAs to the extent of amount outstanding in the host country. Further, NPAs are classified into sub-standard,
doubtful and loss assets based on the criteria stipulated by RBI.
In the case of corporate loans and advances, provisions are made for sub-standard and doubtful assets at rates
prescribed by RBI. Loss assets and the unsecured portion of doubtful assets are provided/written-off as per the
extant RBI guidelines. For loans and advances booked in overseas branches, which are standard as per the extant
RBI guidelines but are classified as NPAs based on host country guidelines, provisions are made as per the host
country regulations. For loans and advances booked in overseas branches, which are NPAs as per the extant RBI
guidelines and as per host country guidelines, provisions are made at the higher of the provisions required under
RBI regulations and host country regulations. Provisions on homogeneous retail loans and advances, subject to
minimum provisioning requirements of RBI, are assessed at a borrower level, on the basis of the ageing of the
loans in the non-performing category.
The Bank holds specific provisions against non-performing loans and advances, general provision against
performing loans and advances and floating provision taken over from erstwhile Bank of Rajasthan upon
amalgamation. The assessment of incremental specific provisions is made after taking into consideration the
existing specific provision held. The specific provisions on retail loans and advances held by the Bank are higher
than the minimum regulatory requirements.
b) Provision on loans and advances restructured/rescheduled is made in accordance with the applicable RBI
guidelines on restructuring of loans and advances by Banks.
In respect of non-performing loans and advances accounts subjected to restructuring, the account is upgraded
to standard only after the specified period i.e. a period of one year after the date when first payment of interest
or of principal, whichever is later, falls due, subject to satisfactory performance of the account during the period.
A standard restructured loan is upgraded to the standard category when satisfactory payment performance is
evidenced during the specified period and after the loan reverts to the normal level of standard asset provisions/
risk weights.
c) Amounts recovered against debts written-off in earlier years and provisions no longer considered necessary in
the context of the current status of the borrower are recognised in the profit and loss account.
d) In addition to the specific provision on NPAs, the Bank maintains a general provision on performing loans and
advances at rates prescribed by RBI. For performing loans and advances in overseas branches, the general
provision is made at higher of host country regulations requirement and RBI requirement.
e) In addition to the provisions required to be held according to the asset classification status, provisions are
held for individual country exposures including indirect country risk (other than for home country exposure).
The countries are categorised into seven risk categories namely insignificant, low, moderately low, moderate,
moderately high, high and very high, and provisioning is made on exposures exceeding 180 days on a graded
scale ranging from 0.25% to 25%. For exposures with contractual maturity of less than 180 days, provision is
required to be held at 25% of the rates applicable to exposures exceeding 180 days. The indirect exposures will
be reckoned at 50% of the exposure. If the country exposure (net) of the Bank in respect of each country does
not exceed 1% of the total funded assets, no provision is required on such country exposure.
ii) In the case of the Bank’s housing finance subsidiary, loans and other credit facilities are classified as per the NHB
guidelines into performing and non-performing assets. Further, NPAs are classified into sub-standard, doubtful and
loss assets based on criteria stipulated by NHB. Additional provisions are made against specific non-performing assets
over and above what is stated above, if in the opinion of the management, increased provisions are necessary.
iii) In the case of the Bank’s overseas banking subsidiaries, loans are stated net of allowance for credit losses. Loans
are classified as impaired and impairment losses are incurred only if there is objective evidence of impairment as
a result of one or more events that occurred after the initial recognition on the loan (a loss event) and that loss
event (or events) has an impact on the estimated future cash flows of the loans that can be reliably estimated. An
allowance for impairment losses is maintained at a level that management considers adequate to absorb identified
credit related losses as well as losses that have occurred but have not yet been identified.
The total proportion of loans for which subsidiaries have applied accounting policies different from the Bank as
mentioned above, is approximately 11.14% of the total loans at March 31, 2014.
15. Transfer and servicing of assets
The Bank transfers commercial and consumer loans through securitisation transactions. The transferred loans are
de-recognised and gains/losses are accounted for only if the Bank surrenders the rights to benefits specified in the
underlying securitised loan contract. Recourse and servicing obligations are accounted for net of provisions.
In accordance with the RBI guidelines for securitisation of standard assets, with effect from February 1, 2006, the Bank
accounts for any loss arising from securitisation immediately at the time of sale and the profit/premium arising from
forming part of the Consolidated Accounts (Contd.)forming part of the Consolidated Accounts (Contd.)
schedules