ICICI Bank 2014 Annual Report Download - page 165

F77
securitisation is amortised over the life of the securities issued or to be issued by the special purpose vehicle to which
the assets are sold. In the case of loans sold to an asset reconstruction company, the excess provision is not reversed
but is utilised to meet the shortfall/loss on account of sale of other financial assets to securitisation company (SC)/
reconstruction company (RC).
In accordance with the RBI guidelines dated May 7, 2012 for securitisation of standard assets, with effect from May 7,
2012, the Bank accounts for any loss arising from securitisation immediately at the time of sale and the profit/premium
arising from securitisation is amortised over the life of the transaction based on the method prescribed by RBI guidelines.
The Canadian subsidiary has entered into securitisation arrangements in respect of its originated and purchased mortgages.
ICICI Bank Canada either retains substantially all the risk and rewards or retains control over these mortgages, hence
these arrangements do not qualify for de-recognition accounting under their local accounting standards. It continues
to recognise the mortgages securitised as “Loans and Advances” and the amounts received through securitisation are
recognised as “Other borrowings”.
16. Fixed assets and depreciation
Premises and other fixed assets are carried at cost less accumulated depreciation and impairment, if any. Cost includes
freight, duties, taxes and incidental expenses related to the acquisition and installation of the asset. Depreciation is
charged over the estimated useful life of a fixed asset on a straight-line basis. The rates of depreciation for fixed assets
for domestic group companies are not lower than the rates prescribed in Schedule XIV of the Companies Act, 1956.
Depreciation on leased assets and leasehold improvements is recognised on a straight-line basis using rates determined with
reference to the primary period of lease or rates specified in Schedule XIV of the Companies Act, 1956, whichever is higher.
Assets purchased/sold during the period are depreciated on a pro-rata basis for the actual number of days the asset has
been put to use.
In case of the Bank, items costing up to ` 5,000/- are depreciated fully over a period of 12 months from the date of purchase.
In case of revalued/impaired assets, depreciation is provided over the remaining useful life of the assets with reference
to revised assets values.
17. Accounting for derivative contracts
The Group enters into derivative contracts such as foreign currency options, interest rate and currency swaps, credit
default swaps and cross currency interest rate swaps.
The swap contracts entered to hedge on-balance sheet assets and liabilities are structured such that they bear an
opposite and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments
is correlated with the movement of underlying assets and liabilities and accounted pursuant to the principles of hedge
accounting. Hedged swaps are accounted for on an accrual basis except in the case of the Bank’s United Kingdom and
Canadian banking subsidiaries, where the hedging transactions and the hedged items (for the risks being hedged) are
measured at fair value with changes recognised in the profit and loss account.
Foreign currency and rupee derivative contracts entered into for trading purposes are marked to market and the resulting
gain or loss, (net of provisions, if any) is accounted for in the profit and loss account. Pursuant to RBI guidelines, any
receivables under derivative contracts which remain overdue for more than 90 days and mark-to-market gains on other
derivative contracts with the same counter-parties are reversed through the profit and loss account.
18. Impairment of assets
Fixed assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset with future net discounted cash flows expected to be generated by the asset. If
such assets are considered to be impaired, the impairment is recognised by debiting the profit and loss account and is
measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.
19. Lease transactions
Lease payments for assets taken on operating lease are recognised as an expense in the profit and loss account over the lease
term on straight line basis.
20. Earnings per share
Basic and diluted earnings per share are computed in accordance with Accounting Standard 20 – Earnings per share.
Basic Earnings Per Share is calculated by dividing the net profit or loss after tax for the year attributable to equity
shareholders by the weighted average number of equity shares outstanding during the year.
Diluted earnings per share reflect the potential dilution that could occur if contracts to issue equity shares were exercised
or converted during the year. Diluted earnings per equity share is computed using the weighted average number of
equity shares and dilutive potential equity shares issued by the group outstanding during the year, except where the
results are anti-dilutive.
forming part of the Consolidated Accounts (Contd.)
schedules