ICICI Bank 2016 Annual Report Download - page 139

Annual Report 2015-2016 137
Schedules
forming part of the Accounts (Contd.)
Financial Statements of ICICI Bank Limited
6. Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged
to the prot and loss account. Cost of investments is computed based on the First-In-First-Out (FIFO) method.
7. Equity investments in subsidiaries/joint ventures are categorised as ‘Held to Maturity’ in accordance with
RBI guidelines. The Bank assesses these investments for any permanent diminution in value and appropriate
provisions are made.
8. Prot/loss on sale of investments in the ‘Held to Maturity’ category is recognised in the prot and loss account
and prot is thereafter appropriated (net of applicable taxes and statutory reserve requirements) to Capital
Reserve. Prot/loss on sale of investments in ‘Available for Sale’ and ‘Held for Trading’ categories is recognised
in the prot and loss account.
9. Market repurchase and reverse repurchase transactions are accounted for as borrowing and lending transactions
respectively in accordance with the extant RBI guidelines. The transactions with RBI under Liquidity Adjustment
Facility (LAF) are accounted for as borrowing and lending transactions.
10. Broken period interest (the amount of interest from the previous interest payment date till the date of purchase/
sale of instruments) on debt instruments is treated as a revenue item.
11. At the end of each reporting period, security receipts issued by the asset reconstruction companies are valued in
accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly,
in cases where the cash ows from security receipts issued by the asset reconstruction companies are limited
to the actual realisation of the nancial assets assigned to the instruments in the concerned scheme, the Bank
reckons the net asset value obtained from the asset reconstruction company from time to time, for valuation of
such investments at each reporting period end. The security receipts which are outstanding and not redeemed
as at the end of the resolution period are treated as loss assets and are fully provided for.
12. The Bank follows trade date method of accounting for purchase and sale of investments, except for government
of India and state government securities where settlement date method of accounting is followed in accordance
with RBI guidelines.
13. The Bank undertakes short sale transactions in dated central government securities in accordance with RBI
guidelines. The short positions are categorised under HFT category and are marked to market. The mark-to-
market loss is charged to prot and loss account and gain, if any, is ignored as per RBI guidelines.
3. Provision/write-offs on loans and other credit facilities
The Bank classies 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 advances held at the
overseas branches that are identied 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 classied as NPAs to the extent of amount
outstanding in the host country. Further, NPAs are classied 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 classied 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. In respect of loans classied as fraud, the entire amount, without considering the
value of security, is provided for over a period of four quarters starting from the quarter in which fraud has been
detected. In accounts where there has been delay in reporting the fraud to the RBI, the entire amount is provided
immediately. In respect of borrowers classied as non-cooperative borrowers, willful defaulters and NPAs covered
under distressed assets framework of RBI, the Bank makes accelerated provisions as per extant RBI guidelines.