ICICI Bank 2016 Annual Report Download - page 222

Annual Report 2015-2016220
Schedules
forming part of the Consolidated Accounts (Contd.)
Consolidated Financial Statements
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 reect
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 prot and loss account during the period in which
such decline is identied.
iii) The Bank’s primary dealership and securities broking subsidiaries classify the securities held with the intention
of holding for short-term and trading as stock-in-trade which are valued at lower of cost or market value. The
securities classied by primary dealership subsidiary as held-to-maturity, as permitted by RBI, are carried at
amortised cost. Appropriate provision is made for other than temporary diminution in the value of investments.
Commission earned in respect of securities acquired upon development is reduced from the cost of acquisition.
iv) The Bank’s housing nance subsidiary classies 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 classied
as current investments, which are carried at the lower of cost and net realisable value. All other investments are
classied 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 prot 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 (amended by the Insurance Laws (Amendment) Act, 2015), the IRDA (Investment) Regulations, 2000, and
various other circulars/notications issued by the IRDAI 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 constant yield 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 are valued based on the previous day’s net asset value.
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 constant yield 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.