Mar 31, 2019
The Directors have pleasure in presenting the Twenty-Fifth Annual Report of ICICI Bank Limited (ICICI Bank/the Bank) along with the audited financial statements for the year ended March 31, 2019.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2019 is summarised in the following table:
Rs. in billion, except percentages |
Fiscal 2018 |
Fiscal 2019 |
% change |
Net interest income and other income |
404.45 |
415.27 |
2.7% |
Operating expenses |
157.04 |
180.89 |
15.2% |
Core operating profit |
189.39 |
220.72 |
16.5% |
Treasury income |
58.02 |
13.66 |
(76.5)% |
Operating profit |
247.41 |
234.38 |
(5.3)% |
Provisions & contingencies (excluding tax) |
173.07 |
196.61 |
13.6% |
Profit before tax |
74.34 |
37.77 |
(49.2)% |
Profit after tax |
67.77 |
33.63 |
(50.4)% |
Rs. in billion, except percentages |
Fiscal 2018 |
Fiscal 2019 |
% change |
Consolidated profit before tax and minority interest |
109.78 |
74.08 |
(32.5)% |
Consolidated profit after tax and minority interest |
77.12 |
42.54 |
(44.8)% |
APPROPRIATIONS
The profit after tax of the Bank for fiscal 2019 is Rs. 33.63 billion after provisions and contingencies of Rs. 196.61 billion, provision for taxes of Rs. 4.14 billion and all expenses. The accumulated profit is Rs. 218.58 billion, taking into account the balance of Rs. 179.70 billion brought forward from the previous year and credit of Rs. 5.25 billion in balance in profit and loss account towards reversal of provision for frauds on non-retail accounts created in earlier years through accumulated profits. Your Bank has a consistent dividend payment history. Your Bankâs dividend policy is based on the profitability and key financial metrics, capital position and requirements and the regulations pertaining to the payment of dividend. In line with the above, your Directors have recommended a dividend of Rs. 1.00 per equity share for the year ended March 31, 2019 and have appropriated the disposable profit as follows:
Rs. in billion |
Fiscal 2018 |
Fiscal 2019 |
To Statutory Reserve, making in all Rs. 237.38 billion |
16.94 |
8.41 |
To Special Reserve created and maintained in terms of Section 36(1) (viii) of the Income Tax Act, 1961, making in all Rs. 95.04 billion |
6.00 |
5.25 |
To Capital Reserve, making in all Rs. 128.54 billion1 |
25.66 |
0.28 |
To Capital Redemption Reserve, making in all Rs. 3.50 billion2 (amount appropriated from surplus profit available for previous years) |
- |
3.50 |
To Investment Fluctuation Reserve, making in all Rs. 12.69 billion3 |
- |
12.69 |
To Revenue and other reserves, making in all Rs. 40.28 billion4 |
7.01 |
0.01 |
Dividend paid during the year |
||
- On equity shares, during fiscal 2019 @ Rs. 1.50 per share of face value Rs. 2.00 each (during fiscal 2018 @ Rs. 2.50 per share) |
14.57 |
9.65 |
- On preference shares2, during fiscal 2019 @ 100.00 per preference shares (?) (during fiscal 2018 @ Rs. 100.00 per share) |
35,000 |
35,000 |
- Corporate dividend tax |
0.09 |
- |
Leaving balance to be carried forward to the next year |
179.70 |
178.79 |
1 Fiscal 2018 includes transfer of Rs. 24.90 billion on account of sale of part of equity investment in the Bankâs insurance subsidiary.
2 Redeemable Non-Cumulative Preference Shares (350 RNCPS) of Rs. 10.0 million each were redeemed at par on April 20, 2018. Accordingly, an equivalent amount was transferred to Capital Redemption Reserve from surplus profit available for previous years.
3 Represents an amount transferred to Investment Fluctuation Reserve (IFR) from disposable profit. As per the RBI guidelines, from the year ended March 31, 2019, an amount not less than the lower of net profit on sale of available-for-sale (AFS) and held-to-maturity (HFT) category investments during the year or net profit for the year less mandatory appropriations is required to be transferred to IFR, until the amount of IFR is at least 2% of the HFT and AFS portfolio.
4 Includes transfer of Rs. 7.6 million to Reserve Fund for fiscal 2019 (f 10.6 million for fiscal 2018) in accordance with regulations applicable to the Sri Lanka branch.
The Bank prepares its financial statements in accordance with the applicable accounting standards, RBI guidelines and other applicable laws/regulations. RBI, under its risk-based supervision exercise, carries out the risk assessment of the Bank on an annual basis. This assessment is initiated subsequent to the finalisation, completion of audit and publication of audited financial statements for a financial year and typically occurs a few months after the financial year-end. As a part of this assessment, RBI separately reviews asset classification and provisioning of credit facilities given by the Bank to its borrowers. The divergences, if any, in classification or provisioning arising out of the supervisory process are given effect to in the financial statements in subsequent periods after conclusion of the exercise.
In terms of the RBI circular no. //DBR.BPBC.No. 32/21.04.018/ 2018-19 dated April 1, 2019, banks are required to disclose the divergences in asset classification and provisioning consequent to RBIâs annual supervisory process in their notes to accounts to the financial statements, wherever either (a) the additional provisioning requirements assessed by RBI exceed 10% of the reported net profits before provisions and contingencies or (b) the additional gross non-performing assets (NPAs) identified by RBI exceed 15% of the published incremental gross NPAs for the reference period, or both. Based on the condition mentioned in RBI circular, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBIâs supervisory process for fiscal 2018.
SHARE CAPITAL
During the year under review, the Bank allotted 18,248,877 equity shares of Rs. 2.00 each pursuant to exercise of stock options under the Employee Stock Option Scheme. For details refer to Schedule 1 of the financial statements.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Pursuant to Section 186(11) of the Companies Act, 2013, the provisions of Section 186 of the Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the financial statements as per the applicable provisions of the Banking Regulation Act, 1949.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
There is no change in the subsidiaries of the Bank during fiscal 2019. The definition of the subsidiary company and associate company under the Companies Act, 2013 was changed during fiscal 2019. One of the criterion for identification of a subsidiary company or an associate company was changed from percentage holding in total share capital of the investee company to percentage voting power in the investee company. Pursuant to the changes in the definition of subsidiary company and associate company, Shree Renuka Sugars Limited and National Investment and Infrastructure Fund Limited ceased to be associate companies of the Bank. Further, Arteria Technologies Private Limited became an associate company of the Bank during fiscal 2019. The particulars of subsidiary and associate companies as on March 31, 2019 have been included in Form MGT-9 which is annexed to this Report.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES AND THEIR CONTRIBUTION TO THE OVERALL PERFORMANCE OF THE COMPANY
The performance of subsidiaries and associates and their contribution to the overall performance of the Bank as on March 31, 2019 is given in âConsolidated Financial Statements of ICICI Bank Limited - Schedule 18 - Note 13 -Additional information to consolidated accountsâ of this Annual Report. A summary of key financials of the Bankâs subsidiaries is also given in âStatement Pursuant to Section 129 of Companies Act, 2013â of this Annual Report.
The highlights of the performance of key subsidiaries are given as a part of Managementâs Discussion & Analysis under the section âConsolidated financials as per Indian GAAPâ.
The Bank will make available separate audited financial statements of the subsidiaries to any Member upon request. These documents/details will be available on the Bankâs website at https://www.icicibank.com/aboutus/annual.html and will also be available for inspection by any Member or trustee of the holder of any debentures of the Bank at its Registered Office and Corporate Office. As required by Accounting Standard 21 (AS-21) issued by the Institute of Chartered Accountants of India, the Bankâs consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other consolidating entities.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status or future operations of the Bank.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE BANK
There are no material changes and commitments, affecting the financial position of the Bank which have occurred between the end of the financial year of the Bank to which the financial statements relate and the date of this Report.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
Changes in the composition of the Board of Directors and other Key Managerial Personnel
Since the date of the last Directorsâ Report, the Board approved the appointments of Hari L. Mundra, Rama Bijapurkar, B. Sriram and Subramanian Madhavan as additional Directors for a period of five years from the date of their appointment. All the above four Directors hold office upto the date of the forthcoming Annual General Meeting (AGM) and are eligible for appointment. Their appointments are being proposed in the Notice of the forthcoming AGM through item nos. 6, 7, 8 and 9.
The Members at the last AGM held on September 12, 2018 approved the appointments of Radhakrishnan Nair and M. D. Mallya as independent Directors.
Further, the Members at the last AGM held on September 12, 2018 approved the appointment of Sandeep Bakhshi as a Wholetime Director and Chief Operating Officer. The Board at its Meeting held on October 4, 2018 appointed Sandeep Bakhshi as Managing Director & Chief Executive Officer for a period of five years until October 3, 2023, subject to regulatory approvals. Reserve Bank of India (RBI) has vide its letter dated October 15, 2018, approved the appointment for a period of three years effective October 15, 2018. Approval of the Members is being sought for Sandeep Bakhshiâs appointment as Managing Director and Chief Executive Officer for five years in the Notice of the forthcoming AGM through item no.10.
The Board of Directors at its Meeting held on October 4, 2018 accepted the request of Chanda Kochhar to seek early retirement from the Bank with immediate effect. However, the Board at its meeting held on January 30, 2019 reconsidered her separation from the Bank and regarded the same as âTermination for Causeâ, having effect from the close of business hours of the Board Meeting i.e. January 30, 2019 after considering the Enquiry Report of Honâble Mr. Justice (Retd.) B.N. Srikrishna.
Lok Ranjan, Joint Secretary, Department of Financial Services, Ministry of Finance was nominated by Government of India as a Government Nominee Director on the Board of the Bank in place of Amit Agrawal, with effect from April 5, 2018.
Lalit Kumar Chandel, Economic Adviser, Department of Financial Services, Ministry of Finance has been nominated by Government of India as a Government Nominee Director on the Board of the Bank in place of Lok Ranjan, with effect from December 4, 2018.
The Board of Directors on May 6, 2019 approved the appointment of Sandeep Batra as an Additional Director and Wholetime Director (designated as Executive Director) for a period of five years effective May 7, 2019 or the date of approval of his appointment by RBI, whichever is later. The said appointment is also subject to the approval of Members. Approval of the Members is being sought for Sandeep Batraâs appointment for five years in the Notice of the forthcoming Annual General Meeting through item nos. 11 and 12.
Vijay Chandok ceased to be a Director of the Bank at the end of day on May 6, 2019 and assumes office as Managing Director & CEO of ICICI Securities Limited with effect from May 7, 2019.
Pursuant to completion of maximum permissible tenure of eight years as per the provisions of the Banking Regulation Act, 1949, Tushaar Shah, independent Director, ceased to be a Director on the Board of the Bank effective close of business hours on May 2, 2018. Pursuant to the internal movement, N. S. Kannan ceased to be a Director of the Bank effective close of business hours on June 18, 2018. M. K. Sharma ceased to be a non-executive Director and part-time Chairman of the Bank effective close of business hours on June 30, 2018 consequent to the completion of his tenure of three years as approved by the RBI. M. D. Mallya, Independent Director, tendered his resignation due to health reasons and ceased to be a Director effective October 4, 2018 and the same was accepted by the Board. Pursuant to completion of their primary tenure under the Companies Act, 2013, Dileep Choksi and V. K. Sharma, independent Directors ceased to be Directors on the Board of the Bank effective April 1, 2019.
The Board acknowledges the valuable contribution and guidance provided by the above Directors.
The Board of Directors at its Meeting held on July 27, 2018 appointed Ranganath Athreya as the Company Secretary and Compliance Officer of the Bank effective July 28, 2018. The Board in the same Meeting noted the cessation of P Sanker, as the Company Secretary and Compliance Officer of the Bank effective close of business hours on July 27, 2018.
Declaration of Independence
All independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013 as amended (the Act) and Regulation 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (SEBI Listing Regulations) which have been relied on by the Bank and were placed at the Board Meeting held on May 6, 2019. In the opinion of the Board, the independent Directors fulfil the conditions specified in the Act and the SEBI Listing Regulations and are independent of the Management.
Retirement by rotation
In terms of Section 152 of the Companies Act, 2013, Anup Bagchi would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Anup Bagchi has offered himself for re-appointment.
AUDITORS
Statutory Auditors
At the Annual General Meeting (AGM) held on September 12, 2018, the Members approved the appointment of M/s Walker Chandiok & Co LLP, Chartered Accountants, as statutory auditors to hold office from the conclusion of the Twenty-Fourth AGM till the conclusion of the Twenty-Fifth AGM. As per the Reserve Bank of India (RBI) guidelines, the statutory auditors of the banking companies are allowed to continue for a period of four years, subject to fulfilling the prescribed eligibility norms. Accordingly, M/s Walker Chandiok & Co LLP, Chartered Accountants, would be eligible for re-appointment at the conclusion of the forthcoming AGM. As recommended by the Audit Committee, the Board has proposed the re-appointment of M/s Walker Chandiok & Co LLP, Chartered Accountants, as statutory auditors for the year ending March 31, 2020 (fiscal 2020). M/s Walker Chandiok & Co LLP, Chartered Accountants, will hold office from the conclusion of the forthcoming AGM till the conclusion of the Twenty-Sixth AGM, subject to the approval of Members of the Bank, RBI and other regulatory approvals as may be necessary or required. The re-appointment of the statutory auditors is proposed to the Members in the Notice of the forthcoming AGM through item no. 4.
There are no qualifications, reservation or adverse remarks made by the statutory auditors in the audit report.
Secretarial Auditors
The Board appointed M/s. Parikh Parekh & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Bank for fiscal 2019. The Secretarial Audit Report is annexed herewith as Annexure A. There are no qualifications, reservation or adverse remark or disclaimer made by the auditor in the report save and except disclaimer made by them in discharge of their professional obligation.
Maintenance of Cost Records
Being a Banking Company, the Bank is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Companies Act, 2013.
Reporting of Frauds by Auditors
During the year under review, there were no instances of fraud reported by the statutory auditors, branch auditors and secretarial auditor under Section 143(12) of the Companies Act, 2013 to the Audit Committee or the Board of Directors.
PERSONNEL
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Companies Act, 2013, the annual report and the financial statements are being sent to the Members excluding the aforesaid Annexure. The Annexure is available for inspection at the Registered office of the Bank. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary of the Bank.
INTERNAL CONTROL AND ITS ADEQUACY
The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.
DISCLOSURE UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999
The Bank has obtained a certificate from its statutory auditors that it is in compliance with the Foreign Exchange Management Act, 1999 provisions with respect to investments made in its consolidated subsidiaries and associates during fiscal 2019.
RELATED PARTY TRANSACTIONS
The Bank undertakes various transactions with related parties in the ordinary course of business. The Bank has a Board approved policy on Related Party Transactions, which has been disclosed on the website of the Bank at (https://www.icicibank.com/aboutus/ other-policies.page?#toptitle). The Bank also has a Board approved Group Armâs Length Policy which requires transactions with the group companies to be at armâs length. The transactions between the Bank and its related parties, during the year ended March 31, 2019, were in the ordinary course of business and based on the principles of armâs length. The details of material related party transactions at an aggregate level for the year ended March 31, 2019 are given in Annexure B.
ANNUAL RETURN
The extract of Annual Return in Form No. MGT 9 is annexed herewith as Annexure C. The Annual Return in Form No. MGT 7 will be hosted on the website of the Bank at https://www.icicibank.com/aboutus/annual.html.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 will be hosted on the website of the Bank at https://www.icicibank.com/aboutus/annual.html. Any Member interested in obtaining a physical copy of the same may write to the Company Secretary of the Bank.
INTEGRATED REPORTING
The Bank has sought to adopt the principles of the International Integrated Reporting Framework as developed by the International Integrated Reporting Council (IIRC) in its Annual Report for fiscal 2019. For accessing the Integrated Report, please refer to the Annual Report 2018-2019 hosted on the website of the Bank at https://www.icicibank.com/aboutus/annual.html.
RISK MANAGEMENT FRAMEWORK
The Bankâs risk management framework is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted to facilitate focussed oversight of various risks, as follows:
- The Risk Committee of the Board reviews risk management policies of the Bank pertaining to credit, market, liquidity, operational and outsourcing risks and business continuity management. The Committee also reviews the Risk Appetite and Enterprise Risk Management frameworks, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing. The stress testing framework includes a range of Bank-specific, market (systemic) and combined scenarios. The ICAAP exercise covers the domestic and overseas operations of the Bank, banking subsidiaries and non-banking subsidiaries. The Committee reviews migration to the advanced approaches under Basel II and implementation of Basel III, risk return profile of the Bank and the activities of the Asset Liability Management Committee. The Committee reviews the level and direction of major risks pertaining to credit, market, liquidity, operational, technology, compliance, group, management and capital at risk as a part of the risk dashboard. In addition, the Committee has oversight on risks of subsidiaries covered under the Group Risk Management Framework. The Risk Committee also reviews the Liquidity Contingency Plan for the Bank and the various thresholds set out in the Plan.
- The Credit Committee of the Board, apart from sanctioning credit proposals based on the Bankâs credit approval authorisation framework, reviews developments in key industrial sectors and the Bankâs exposure to these sectors as well as to large borrower accounts and borrower groups. The Credit Committee also reviews major credit portfolios, non-performing loans, accounts under watch, overdues and incremental sanctions.
- The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function, oversees the financial reporting process and also monitors compliance with inspection and audit reports of RBI, other regulators and statutory auditors.
- The Asset Liability Management Committee provides guidance for management of liquidity of the overall Bank and management of interest rate risk in the banking book within the broad parameters laid down by the Board of Directors/Risk Committee.
Summaries of reviews conducted by these Committees are reported to the Board on a regular basis.
Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework. Independent groups and subgroups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/subgroups.
The Bank has dedicated groups, namely, the Risk Management Group, Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention & Reputation Risk Management Group, with a mandate to identify, assess and monitor all of the Bankâs principal risks in accordance with well-defined policies and procedures. The Risk Management Group is further organised into the Credit Risk Management Group, Market Risk Management Group, Operational Risk Management Group and Information Security Group. The Chief Risk Officer (CRO) reports to the Risk Committee constituted by the Board which reviews risk management policies of the Bank. The CRO, for administrative purpose reports to President. The above mentioned groups are independent of all business operations and coordinate with representatives of the business units to implement the Bankâs risk management policies and methodologies. The Internal Audit and Compliance groups are responsible to the Audit Committee of the Board.
INFORMATION REQUIRED UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
The Bank has a policy against sexual harassment and a formal process for dealing with complaints of harassment or discrimination. The said policy is in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. The Bank has complied with provisions relating to the constitution of Internal Complaints Committee under the said Act.
Pursuant to the amendment to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details pertaining to number of complaints during the year has been provided below:
a) number of complaints filed during the financial year: 59
b) number of complaints disposed off during the financial year: 59
c) number of complaints pending1 at end of the financial year: Nil
1 Complaints that are open beyond the applicable turnaround time (90 days). All complaints received during FY2019 have been closed within the applicable turnaround time.
The Bank is in compliance with requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub-regulation (2) of Regulation 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Bank has also complied with the discretionary requirements such as maintaining a separate office for the Chairman at the Bankâs expense, ensuring financial statements with unmodified audit opinion, separation of posts of Chairman and Chief Executive Officer and reporting of internal auditor directly to the Audit Committee.
ANALYSIS OF CUSTOMER COMPLAINTS
a) Customer complaints in fiscal 2019
No. of complaints pending at the beginning of the year |
6,209 |
No. of complaints received during the year |
264,726 |
No. of complaints redressed during the year |
262,259 |
No. of complaints pending at the end of the year |
8,676 |
Note: The above does not include complaint redressed within 1 working day.
b) Awards passed by the Banking Ombudsman in fiscal 2019
No. of unimplemented awards at the beginning of the year |
Nil |
No. of awards passed by the Banking Ombudsman during the year |
Nil |
No. of awards implemented during the year |
Nil |
No. of unimplemented awards at the end of the year |
Nil |
COMPLIANCE CERTIFICATE OF THE AUDITORS
ICICI Bank has annexed to this Report, a certificate obtained from the statutory auditors, M/s Walker Chandiok & Co LLP, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
EMPLOYEE STOCK OPTION SCHEME
The Bank has an Employee Stock Option Scheme (ESOS/Scheme) which was instituted in fiscal 2000 to enable the employees and wholetime Directors of ICICI Bank and its subsidiaries to participate in future growth and financial success of the Bank. The ESOS aims at achieving the twin objectives of (i) aligning employee interest to that of the shareholders; and (ii) retention of talent. Through employee stock option grants, the Bank seeks to foster a culture of long-term sustainable value creation. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (the SEBI Regulations). Pursuant to the SEBI Regulations, options are granted by the Board Governance, Remuneration & Nomination Committee (BGRNC) and noted by the Board.
The Scheme was initially approved by the Members at their meeting held on February 21, 2000 and amended from time to time.
The Members at the Annual General Meeting held on September 12, 2018 approved the change in exercise period to not exceeding five years from date of vesting of options as may be determined by the BGRNC for each grant. The above definition of Exercise Period has been made applicable to all future grants effective May 2018.
The Bank has upto March 31, 2019 granted 499.24 million stock options from time to time aggregating to 7.74% of the issued equity capital of the Bank at March 31, 2019. As per the ESOS, as amended from time to time, the maximum number of options granted to any employee/Director in a year is limited to 0.05% of ICICI Bankâs issued equity shares at the time of the grant, and the aggregate of all such options is limited to 10% of ICICI Bankâs issued equity shares on the date of the grant (equivalent to 644.62 million shares of face value Rs. 2 each at March 31, 2019).
Particulars of options granted by ICICI Bank as on March 31, 2019 are given below:
Number of options outstanding at the beginning of the year |
235,672,250 |
Number of options granted during the year* |
31,112,400 |
Number of options forfeited/lapsed during the year |
18,979,999 |
Number of options vested during the year |
46,916,376 |
Number of options exercised during the year |
18,248,877 |
Number of shares arising as a result of exercise of options |
18,248,877 |
Money realised by exercise of options during the year (?) |
3,486,300,104 |
Number of options outstanding at the end of the year |
229,555,774 |
Number of options exercisable at the end of the year |
152,151,329 |
* Excludes options pertaining to Wholetime Directors pending for RBI approval.
The Bank follows the intrinsic value method to account for its stock-based employee compensation plans. The diluted earnings per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with Accounting Standard 20 (AS-20) was Rs. 5.17 in fiscal 2019 compared to basic EPS of Rs. 5.23. Based on the intrinsic value of options, no compensation cost was recognised during fiscal 2019. However, if the Bank had used the fair value of options based on the binomial tree model, compensation cost in fiscal 2019 would have been higher by Rs. 3.18 billion and proforma profit after tax would have been Rs. 30.45 billion. On a proforma basis, the Bankâs basic and diluted earnings per share would have been Rs. 4.73 and Rs. 4.68 respectively.
The key assumptions used to estimate the fair value of options granted during fiscal 2019 are given below:
Risk-free interest rate |
7.32% to 8.31% |
Expected life |
3.64 to 6.64 years |
Expected volatility |
30.79% to 32.22% |
Expected dividend yield |
0.43% to 0.80% |
The weighted average fair value of options granted during fiscal 2019 was Rs. 107.22 (Rs. 86.43 during fiscal 2018) and the weighted average exercise price of options granted during fiscal 2019 was Rs. 283.91 (Rs. 251.05 during fiscal 2018).
Risk free interest rates over the expected term of the option are based on the government securities yield in effect at the time of the grant. The expected term of an option is estimated based on the vesting term as well as expected exercise behavior of the employees who receive the option. Expected exercise behaviour is estimated based on the historical stock option exercise pattern of the Bank. Expected volatility during the estimated expected term of the option is based on historical volatility determined based on observed market prices of the Bankâs publicly traded equity shares. Expected dividends during the estimated expected term of the option are based on recent dividend activity.
The detailed disclosures as stipulated under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 will be hosted on the website of the Bank at https://www.icicibank.com/aboutus/other-policies.page.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Bank has undertaken various initiatives for energy conservation at its premises. A detailed write up is given in the chapter Natural Capital, in the Integrated Report section of the Annual Report for fiscal 2019 and under Principle 6 of Section E of the Business Responsibility Report which will be available on the website of the Bank at https://www.icicibank.com/aboutus/annual.page. The Bank has used information technology extensively in its operations; for details refer to the chapter Strategic Focus Areas for Business in the Integrated Report section of the Annual Report for fiscal 2019.
UPDATE ON RECENT DEVELOPMENTS AT THE BANK
Shareholders were provided an update under this section last year that the Audit Committee of the Bank under direction given by the Board of Directors had instituted an independent enquiry, headed by a former Supreme Court Judge, Honâble Mr. Justice B. N. Srikrishna (Retd.), to consider various allegations relating to the then MD & CEO, Ms. Chanda Kochhar. The final findings and actions taken by the Board were disclosed by the Bank to the stock exchanges vide press release dated January 30, 2019 and is now generally available information. Shareholders can access the said press release at (www.icicibank.com). Any shareholder who requires a printed copy of this press release may also write to the Registrar and Transfer Agents of the Bank.
GREEN INITIATIVE IN CORPORATE GOVERNANCE
In line with the continuing efforts towards âGreen Initiativeâ, the Bank has effected electronic delivery of Notice of Annual General Meeting and Annual Report to those Members whose e-mail ids were registered with the Depository Participants/3i Infotech/Bank. The Companies Act, 2013 and the underlying rules as well as Regulation 36 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, permit the dissemination of financial statements and annual report in electronic mode to the Members. Your Directors are thankful to the Members for actively participating in the Green Initiative and seek your continued support.
SECRETARIAL STANDARDS
Your Bank is in compliance with the Secretarial Standard on Meetings of the Board of Directors (SS-1) and Secretarial Standard on General Meetings (SS-2) for the financial year ended March 31, 2019.
DIRECTORSâ RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable accounting standards had been followed, along with proper explanation relating to material departures;
2. that they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;
3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;
4. t hat they have prepared the annual accounts on a going concern basis;
5. t hat they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and
6. that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and overseas regulators for their continued co-operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, rating agencies and stock exchanges for their support.
ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation to all the employees, whose outstanding professionalism, commitment and initiative has made the organisationâs growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support.
For and on behalf of the Board
Girish Chandra Chaturvedi
May 6, 2019 Chairman
Mar 31, 2018
DIRECTORS'' REPORT
The Directors have pleasure in presenting the Twenty-Fourth Annual Report of ICICI Bank Limited along with the audited financial statements for the year ended March 31, 2018.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2018 is summarized in the following table:
'' in billion, except percentages |
Fiscal 2017 |
Fiscal 2018 |
% change |
Net interest income and other income |
412.42 |
404.45 |
(1.9)% |
Operating expenses |
147.55 |
157.04 |
6.4% |
Provisions & contingencies1 |
152.08 |
173.07 |
13.8% |
Profit before tax |
112.79 |
74.34 |
(34.1)% |
Profit after tax |
98.01 |
67.77 |
(30.9)% |
1Excludes provision for taxes. |
|||
'' in billion, except percentages |
Fiscal 2017 |
Fiscal 2018 |
% change |
Consolidated profit before tax and minority interest |
138.09 |
109.78 |
(20.5)% |
Consolidated profit after tax and minority interest |
101.88 |
77.12 |
(24.3)% |
APPROPRIATIONS
The profit after tax of the Bank for fiscal 2018 is Rs, 67.77 billion after provisions and contingencies of Rs, 173.07 billion, provision for taxes of Rs, 6.57 billion and all expenses. The accumulated profit is Rs, 249.97 billion, taking into account the balance of Rs, 187.45 billion brought forward from the previous year and deducting Rs, 5.25 billion directly from balance in profit and loss account towards provision for frauds on non-retail accounts. Your Bank''s dividend policy is based on the profitability and key financial metrics of the Bank, the Bank''s capital position and requirements and the regulations pertaining to the same. Your Bank has a consistent dividend payment history. Given the financial performance for fiscal 2018 and in line with the Bank''s dividend policy and applicable regulations, your Directors are pleased to recommend a dividend of Rs, 1.50 per equity share for the year ended March 31, 2018 and have appropriated the disposable profit as follows:
Rs, billion |
Fiscal 2017 |
Fiscal 2018 |
To Statutory Reserve, making in all Rs, 228.97 billion |
24.50 |
16.94 |
To Special Reserve created and maintained in terms of Section 36(1 )(viii) of the Income Tax Act, 1961, making in all Rs, 89.79 billion |
4.50 |
6.00 |
To Capital Reserve, making in all Rs, 128.26 billion1 |
52.93 |
25.66 |
To Revenue and other reserves, making in all Rs, 39.59 billion2 |
0.01 |
7.01 |
Dividend paid during the year |
||
- On equity shares, during fiscal 2018 @ Rs, 2.50 per share of face value Rs, 2.00 each3,4 |
0.01 |
14.57 |
- On preference shares, during fiscal 2018 @ 100.00 per preference shares (?) |
35,000 |
|
- Corporate dividend tax4 |
(0.07) |
0.09 |
Leaving balance to be carried forward to the next year |
187.45 |
179.70 |
1. Includes transfer of Rs, 24.90 billion on account of sale of part of a equity investment in the Bank''s insurance subsidiary during fiscal 2018 f 42.61 billion for fiscal 2017).
2. Includes transfer of Rs, 10.6 million to Reserve Fund for fiscal 2018 ft 9.8 million for fiscal 2017) in accordance with regulations applicable to the Sri Lanka branch.
3. Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date.
4. The proposed dividend (including dividend distribution tax) is not accounted as a liability in accordance with the revised /4S 4 -''Contingencies and events occurring after the balance sheet date'' from fiscal 2017.
The Bank prepares its financial statements in accordance with the applicable accounting standards, Reserve Bank of India (RBI) guidelines and other applicable laws/regulations. RBI, under its risk-based supervision exercise, carries out the risk assessment of the Bank on an annual basis. This assessment is initiated subsequent to the finalization, completion of audit and publication of audited financial statements for a financial year and typically occurs a few months after the financial year-end. As a part of this assessment, RBI separately reviews asset classification and provisioning of credit facilities given by the Bank to its borrowers. The divergences, if any, in classification or provisioning arising out of the supervisory process are given effect to in the financial statements in subsequent periods after conclusion of the exercise.
In terms of the RBI circular no. DBR.BPBC.No.63/21.04.018/2016-17 dated April 18, 2017, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI''s annual supervisory process in their notes to accounts to the financial statements, wherever either (a) the additional provisioning requirements assessed by RBI exceed 15% of the published net profits after tax for the reference period or (b) the additional Gross NPAs identified by RBI exceed 15% of the published incremental Gross NPAs for the reference period, or both. Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI''s annual supervisory process for fiscal 2017.
redemption of preference shares
The Board of Directors at their Meeting held on April 2, 2018 considered and approved the redemption of 350, 0.001% Redeemable Non-Cumulative Preference Shares of Rs, 1,00,00,000/- each which was due on April 20, 2018. Pursuant to the RBI approval dated April 16, 2018, the above mentioned preference shares were redeemed on April 20, 2018. In line with the provisions of Section 61 and other applicable provisions of the Companies Act, 2013, approval of members is being sought in the Notice of the forthcoming Annual General Meeting (AGM) for re-classification of the authorized share capital of the Bank from Rs, 25,000,000,000 divided into 10,000,000,000 equity shares of Rs, 2 each, 15,000,000 shares of Rs, 100 each and 350 shares of Rs, 10,000,000 each to Rs, 25,000,000,000 comprising 12,500,000,000 equity shares of Rs, 2 each. No objection under Section 49C of the Banking Regulation Act, 1949 for the above alteration in the Memorandum of Association and Articles of Association of the Bank has been received from RBI vide DBR.PSBD No.11582/16.01.128/2017-18 dated June 25, 2018.
DIVIDEND DISTRIBUTION POUCY
In accordance with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure F. The Policy is hosted on the website of the Bank and can be viewed (https://www.icicibank.com/ managed-assets/docs/investor/policy-for-determining-material-subsidiaries/dividend-distribution-policy.pdf).
particulars of loans, guarantees or investments
Pursuant to Section 186(11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the financial statements as per the applicable provisions of Banking Regulation Act, 1949.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
The Bank, to protect its interests as a lender, converts loans or exercises pledge of shares from time to time and hence acquires holding in unrelated companies, which is required to be reported as associate under the Companies Act, 2013 if the holding exceeds 20.0% of the total share capital. Accordingly, during fiscal 2018, pursuant to conversion of loan, Shree Renuka Sugars Limited became an associate company of the Bank for the purpose of reporting under the Companies Act, 2013. Further, pursuant to the Bank''s investments in National Investment and Infrastructure Fund Limited (NIIFL), NIIFL became an associate company of the Bank during the year ended March 31, 2018. The particulars of subsidiary and associate companies as on March 31, 2018 have been included in Form MGT-9 which is annexed to this report as Annexure D. Escorts Motors Limited, which was considered as an associate under Section 2(6) of the Companies Act, 2013, ceased to be an associate of the Bank during fiscal 2018.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES AND THEIR CONTRIBUTION TO THE OVERALL PERFORMANCE OF THE COMPANY
The performance of subsidiaries and associates and their contribution to the overall performance of the Bank as on March 31, 2018 has been annexed to this report as Annexure A. A summary of key financials of the Bank''s subsidiaries is also included in this Annual Report.
The highlights of the performance of key subsidiaries are given as a part of Management''s Discussion & Analysis under the section "Consolidated financials as per Indian GAAP".
The Bank will make available separate audited financial statements of the subsidiaries to any Member upon request. These documents/details are available on the Bank''s website (www.icicibank.com) and will also be available for inspection by any Member or trustee of the holder of any debentures of the Bank at its Registered Office and Corporate Office. As required by Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the Bank''s consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other consolidating entities.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status or future operations of the Bank.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
The Board of the Bank at March 31, 2018 consisted of 12 Directors, out of which six were independent Directors, one was a Government Nominee Director and five were whole time Directors. The current composition of the Board consisted of 12 Directors, out of which seven are independent Directors, one is a Government Nominee Director and four are whole time Directors.
Changes in the composition of the Board of Directors and other Key Managerial Personnel
The Board of Directors at their Meetings held on January 12, 2018, January 17, 2018, May 2, 2018 and May 29, 2018 approved the appointments of Neelam Dhawan, Uday Chitale, Radhakrishnan Nair and M. D. Mallya, respectively as additional (independent) Directors for a period of five years subject to the approval of the Members. All the above four Directors hold office upto the date of the forthcoming AGM and are eligible for appointment. Their appointments are being proposed in the Notice of the forthcoming AGM.
Lok Ranjan, Joint Secretary, Department of Financial Services, Ministry of Finance has been nominated by Government of India as a Director on the Board of the Bank effective April 5, 2018 in place of Amit Agrawal.
Pursuant to completion of their maximum permissible tenure of eight years as per the provisions of the Banking Regulation Act, 1949, Homi Khusrokhan and V. Sridar, independent Directors ceased to be Directors on the Board of the Bank effective close of business hours on January 20, 2018 and Tushaar Shah, independent Director, ceased to be a Director on the Board of the Bank effective close of business hours on May 2, 2018. The Board acknowledges the valuable contribution and guidance provided by the above Directors.
Further, the Board at its Meeting held on June 18, 2018 recommended to the Board of Directors of ICICI Prudential Life Insurance Company Limited (ICICI Life/Company) to appoint N. S. Kannan as the Managing Director & Chief Executive Officer (CEO) of the Company subject to regulatory and other approvals. The Board of Directors of ICICI Life at its Meeting held on June 18, 2018 appointed N. S. Kannan, as Managing Director & Chief Executive Officer of the Company with effect from June 19, 2018, subject to approval of Insurance Regulatory Development Authority of India (IRDAI) and Members of the Company. Pursuant to the aforesaid movement, N. S. Kannan ceased to be the Executive Director of the Bank effective close of business hours on June 18, 2018. The Board acknowledges the valuable contribution and guidance provided by N. S. Kannan during his tenure as executive Director of the Bank.
The Board of Directors at its Meeting held on June 18, 2018 approved the appointment of Sandeep Bakhshi as a whole time Director and Chief Operating Officer (Designate) for a period of five years effective from June 19, 2018 or the date of receipt of approval from RBI, whichever is later. Application has been made to RBI for seeking necessary approval. The said appointment is subject to the approval of RBI and Members. Approval of the Members is being sought for Sandeep Bakhshi''s appointment for five years in the Notice of the forthcoming Annual General Meeting through item nos.13 and 14. The Appointment of Mr. Bakhshi as a Whole time Director to be designated as Chief Operating Officer is subject to the approval of RBI and would be effective from the date of RBI approval.
Further, the Board at its Meeting held on June 29, 2018 approved the appointment of Girish Chandra Chaturvedi as an Additional (Independent) Director effective July 1, 2018 for a period of three years subject to the approval of Members. The Board also approved the appointment of Girish Chandra Chaturvedi as non-executive part-time Chairman effective from July 1, 2018 or the date of receipt of RBI approval for such appointment whichever is later. RBI vide its letter no DBR. Appt.No.451/08.88.001/ 2018-19 dated July 17, 2018 has approved the appointment of Mr. Girish Chandra Chaturvedi as Non-executive (part time) Chairman of the Bank effective July 17, 2018 till June 30, 2021. Approval of the Members is being sought for Girish Chandra Chaturvedi''s appointment for five years in the Notice of the forthcoming Annual General Meeting through item nos.11 and 12.
The Board of Directors at its Meeting held July 27, 2018 appointed Ranganath Athreya as the Company Secretary and Compliance Officer of the Bank effective July 28, 2018. The Board in the same Meeting noted the cessation of Mr. P Sanker, as the Company Secretary and Compliance Officer of the Bank effective close of business hours on July 27, 2018. The Board acknowledges the valuable contribution provided by P Sanker during his tenure as the Company Secretary and Compliance Officer of the Bank.
Declaration of Independence
All independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013 and as amended by the Companies (Amendment) Act, 2017 and Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which have been relied on by the Bank and were placed at the Board Meetings held on April 2, 2018 and May 29, 2018. In the opinion of the Board, the independent Directors fulfill the necessary criteria for independence as stipulated under the statutes.
Retirement by rotation
In terms of Section 152 of the Companies Act, 2013, Vijay Chandok would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Vijay Chandok has offered himself for re-appointment.
AUDITORS
Statutory Auditors
M/s B S R & Co. LLP, Chartered Accountants will retire at the ensuing AGM. B S R & Co. LLP, Chartered Accountants were appointed as auditors by the Members at their Twentieth Annual General Meeting (AGM) held on June 30, 2014 to hold office till conclusion of the Twenty-Fourth AGM. Their appointment was last ratified by the Members at their Twenty Third Annual General Meeting held on June 30, 2017 where they were appointed as auditors to hold office from the conclusion of the Twenty Third AGM until the conclusion of the Twenty-Fourth AGM of the Bank. B S R & Co. LLP have been auditors of the Company for four consecutive years, which is the maximum term for statutory auditors of banking companies as per the guidelines issued by Reserve Bank of India (RBI). Hence they would be retiring at the conclusion of the forthcoming Annual General Meeting. The Audit Committee and the Board of Directors have placed on record their appreciation of the professional services rendered by B S R & Co. LLP during their association with the Company as its auditors. As recommended by the Audit Committee, the Board has proposed the appointment of M/s Walker Chandiok & Co LLP as statutory auditors for the year ending March 31, 2019 (fiscal 2019). Their appointment has been approved by RBI on May 17, 2018. The appointment of the auditors is proposed to the Members in the Notice of the current AGM through item no. 5. You are requested to consider their appointment.
There are no qualifications, reservation or adverse remarks made by the statutory auditors in the audit report.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank with the approval of its Board, appointed M/s. Parikh Parekh & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Bank for fiscal 2018. The Secretarial Audit Report is annexed herewith as Annexure B. There are no qualifications, reservation or adverse remark or disclaimer made by the auditor in the report save and except disclaimer made by them in discharge of their professional obligation.
The Secretarial Auditor has drawn reference to the following observation in the audit report:
In reference to show cause notice issued by RBI dated September 6, 2017 and supplementary show cause notice dated November 7, 2017 and as mentioned by RBI in its press release dated March 29, 2018, RBI has through an order dated March 26, 2018, imposed a monetary penalty of '' 589.0 million on ICICI Bank for non-compliance with directions/ guidelines issued by RBI. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949.
PERSONNEL
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Companies Act, 2013, the annual report and the accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank.
INTERNAL CONTROL AND ITS ADEQUACY
The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.
DISCLOSURE UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999
The Bank has obtained a certificate from its statutory auditors that it is in compliance with the Foreign Exchange Management Act, 1999 provisions with respect to investments made in its consolidated subsidiaries and associates during fiscal 2018.
RELATED PARTY TRANSACTIONS
The Bank undertakes various transactions with related parties in the ordinary course of business. The Bank has a Board approved policy on Related Party Transactions, which has been disclosed on the website of the Bank and can be viewed at https://www.icicibank.com/managed-assets/docs/personal/general-links/related-party-transactions-policy.pdf. The Bank also has a Board approved Group Arm''s Length Policy which requires transactions with the group companies to be at arm''s length. The transactions between the Bank and its related parties, during fiscal 2018, were in the ordinary course of business and based on the principles of arm''s length. The details of material related party transactions at an aggregate level for fiscal 2018 are given in Annexure C.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure D.
BUSINESS RESPONSIBILITY REPORTING
The Business Responsibility Report as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been hosted on the website of the Bank (https:// www.icicibank.com/aboutus/annual.html). Any Member interested in obtaining a physical copy of the same may write to the Company Secretary at the Registered Office of the Bank.
RISK MANAGEMENT FRAMEWORK
The Bank''s risk management framework is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted to facilitate focused oversight of various risks, as follows:
- The Risk Committee of the Board reviews risk management policies of the Bank pertaining to credit, market, liquidity, operational and outsourcing risks and business continuity management. The Committee also reviews the Risk Appetite and Enterprise Risk Management frameworks, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing. The stress testing framework includes a range of Bank-specific, market (systemic) and combined scenarios. The ICAAP exercise covers the domestic and overseas operations of the Bank, banking subsidiaries and non-banking subsidiaries. The Committee reviews migration to the advanced approaches under Basel II and implementation of Basel III, risk return profile of the Bank and the activities of the Asset Liability Management Committee. The Committee reviews the level and direction of major risks pertaining to credit, market, liquidity, operational, technology, compliance, group, management and capital at risk as a part of the risk dashboard. In addition, the Committee has oversight on risks of subsidiaries covered under the Group Risk Management Framework. The Risk Committee also reviews the Liquidity Contingency Plan for the Bank and the various thresholds set out in the Plan.
- The Credit Committee of the Board, apart from sanctioning credit proposals based on the Bank''s credit approval authorization framework, reviews developments in key industrial sectors and the Bank''s exposure to these sectors as well as to large borrower accounts and borrower groups. The Credit Committee also reviews major credit portfolios, non-performing loans, accounts under watch, overdoes and incremental sanctions.
- The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with inspection and audit reports of RBI, other regulators and statutory auditors.
- The Asset Liability Management Committee provides guidance for management of liquidity of the overall Bank and management of interest rate risk in the banking book within the broad parameters laid down by the Board of Directors/ Risk Committee.
Summaries of reviews conducted by these Committees are reported to the Board on a regular basis.
Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework. Independent groups and subgroups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/sub-groups.
The Bank has dedicated groups, namely, the Risk Management Group, Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention & Reputation Risk Management Group, with a mandate to identify, assess and monitor all of the Bank''s principal risks in accordance with well-defined policies and procedures. The Risk Management Group is further organized into the Credit Risk Management Group, Market Risk Management Group, Operational Risk Management Group and Information Security Group. The Bank has designated an official in the grade of Senior General Manager as Chief Risk Officer (CRO) who reports to the Risk Committee constituted by the Board which reviews risk management policies of the Bank. The CRO, for administrative purpose reports to an President. The above mentioned groups are independent of all business operations and coordinate with representatives of the business units to implement the Bank''s risk management policies and methodologies. The Internal Audit and Compliance groups are responsible to the Audit Committee of the Board.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL), ACT, 2013
Please refer Principle 3 under Section E of the Business Responsibility Report
The Bank is in compliance with requirements specified in Regulations 17 to 27 and clauses (b) to (i) of subregulation (2) of Regulation 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Bank has also complied with the discretionary requirements such as maintaining a separate office for the Chairman at the Bank''s expense, ensuring financial statements with unmodified audit opinion, separation of posts of Chairman and Chief Executive Officer and reporting of internal auditor directly to the Audit Committee.
ANALYSIS OF CUSTOMER COMPLAINTS
a) Customer complaints in fiscal 2018
No. of complaints pending at the beginning of the year |
4,272 |
No. of complaints received during the year |
237,343 |
No. of complaints redressed during the year |
235,406 |
No. of complaints pending at the end of the year |
6,209 |
Note: The above does not include complaint redressed within 1 working day.
b) Awards passed by the Banking Ombudsman in fiscal 2018
Number of unimplemented awards at the beginning of the year |
Nil |
Number of awards passed by the Banking Ombudsman during the year |
Nil |
Number of awards implemented during the year |
Nil |
Number of unimplemented awards at the end of the year |
Nil |
COMPLIANCE CERTIFICATE OF THE AUDITORS
I CICI Bank has annexed to this report, a certificate obtained from the statutory auditors, M/s B S R & Co. LLP, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
EMPLOYEE STOCK OPTION SCHEME
The Bank has an Employee Stock Option Scheme (ESOS/Scheme) which was instituted in fiscal 2000 to enable the employees and whole time Directors of ICICI Bank and its subsidiaries to participate in future growth and financial success of the Bank. The ESOS aims at achieving the twin objectives of (i) aligning employee interest to that of the shareholders; and (ii) retention of talent. Through employee stock option grants, the Bank seeks to foster a culture of long-term sustainable value creation. The Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the below disclosures are available at www.icicibank.com/aboutus/annual.page. Pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, options are granted by the Board Governance, Remuneration & Nomination Committee (BGRNC) and noted by the Board.
The Scheme was initially approved by the Members at their meeting held on February 21, 2000 and thereafter further amended through resolutions at the General Meeting held on September 20, 2004, June 25, 2012 and vide a postal ballot resolution passed on April 22, 2016. The scheme was further amended through a resolution at the Board Governance, Remuneration & Nomination Committee held on July 11, 2016 and vide a postal ballot resolution passed on June 12, 2017. The Bank has upto March 31, 2018 granted 487.11 million stock options from time to time aggregating to 7.58% of the issued equity capital of the Bank at March 31, 2018. As per the ESOS, as amended from time to time, the maximum number of options granted to any employee/Director in a year is limited to 0.05% of ICICI Bank''s issued equity shares at the time of the grant, and the aggregate of all such options is limited to 10% of ICICI Bank''s issued equity shares on the date of the grant (equivalent to 642.80 million shares of face value '' 2 each at March 31, 2018).
Options granted after April 1, 2014 vest in a graded manner over a three year period, with 30%, 30% and 40% of the grant vesting in each year, commencing from the end of 12 months from the date of the grant, other than the following:
- 275,000 options granted in April 2014, 50% vested on April 30, 2017 and balance 50% vested on April 30, 2018.
- Options granted in September 2015, 50% vested on April 30, 2018 and balance 50% would vest on April
30, 2019. The unvested options would lapse upon termination of employment due to retirement (including pursuant to early/voluntary retirement scheme).
- 300,000 options granted in January 2018, would vest to the extent of 100% at the end of four years from the date of grant.
Options granted prior to April 1, 2014 vested in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant, other than the following:
- Options granted in April 2009 vested in a graded manner over a five-year period with 20%, 20%, 30% and 30% of the grant vesting in each year, commencing from the end of 24 months from the date of the grant.
- The grant approved by the Board at its Meeting held on October 29, 2010 (for which RBI approval for grant to whole time Directors was received in January 2011), vested 50% on April 30, 2014 and the balance 50% vested on April 30, 2015.
- Options granted in September 2011 vested in a graded manner over a five-year period with 15%, 20%, 20% and 45% of the grant vesting in each year, commencing from end of 24 months from the date of grant.
The price for options granted (except for grants approved on October 29, 2010 where the grant price was the average closing price of the ICICI Bank stock on the stock exchange during the six months upto October 28, 2010) is equal to the closing price on the stock exchange which recorded the highest trading volume preceding the date of grant of options in line with the SEBI regulations.
The BGRNC at its Meeting held on May 3, 2017 approved a grant of approximately 36.3 million options (bonus adjusted) for fiscal 2017 to eligible employees and whole time Directors of ICICI Bank and its subsidiaries. Each option confers on the employee a right to apply for one equity share of face value of '' 2 of ICICI Bank at '' 250.55 being the grant price proportionately adjusted post issuance of bonus options in June 2017 based on the price of '' 275.60 calculated as per the SEBI Regulations which was closing price on the stock exchange which recorded the highest trading volume in ICICI Bank shares on May 2, 2017.
Particulars of options granted by ICICI Bank upto March 31, 2018 are given below:
Options granted till March 31, 2018 (excluding options forfeited/lapsed) |
487,109,621 |
Options forfeited/lapsed |
83,085,543 |
Options vested |
401,079,784 |
Options exercised |
251,437,371 |
Total number of options in force |
235,672,250 |
Number of shares allotted pursuant to exercise of options |
251,437,371 |
Extinguishment or modification of options |
Nil |
Amount realised by exercise of options (?) |
20,369,703,051 |
1. The numbers indicated include options granted till March 31, 2018 including those granted to whole time Directors (WTDs)as per RBI approvals. For the year ended March 31, 2018, approx. 35.5 million options were approved by BGRNC at its meeting held on May 7, 2018 (FY2017: 36.3 million options bonus adjusted) which includes options granted to WTDs subject to RBI approval.
2. For details on option movement during the year refer Financials-Schedule 18-Employee Stock Option Scheme. 37,507,933 options vested during FY2018 and '' 3,939,489,824 was realized by exercise of options during FY2018.
3. Pursuant to the issuance of bonus shares by the Bank in June 2017, stock options were also adjusted with increase of one option for every 10 outstanding options. Accordingly, all numbers reported above have been re-stated.
The following Key Managerial Personnel (other than whole time Directors) and Senior Management Personnel (SMP) were granted ESOPs up to maximum of 365,750 options, aggregating to 3,768,545 in FY2018. The numbers reported here are adjusted with increase of one option for every 10 outstanding options pursuant to the issuance of bonus shares by the Bank in June 2017.
Sr. No. |
Name |
Grade |
1 |
Madhivanan B |
Group Executive |
2 |
Prasanna Balachander |
Group Executive |
3 |
Rakesh Jha |
Group Executive (Chief Financial Officer) |
4 |
Sanjay Chougule |
Senior General Manager |
5 |
G Srinivas |
Senior General Manager |
6 |
T. K. Srirang |
Senior General Manager |
7 |
Anita Pai |
Senior General Manager |
8 |
Partha Dey |
Senior General Manager |
9 |
Sanker Parameswaran |
Senior General Manager (Company Secretary) |
10 |
Saurabh Singh |
Senior General Manager |
11 |
Supritha Shirish Shetty |
Senior General Manager |
12 |
Sujit Ganguli |
Senior General Manager |
13 |
Ajay Gupta |
Senior General Manager |
14 |
Murali Ramakrishnan |
Senior General Manager |
15 |
Amit Palta |
Senior General Manager |
16 |
Narayanan N R |
Senior General Manager |
17 |
Kumar Ashish |
Senior General Manager |
18 |
Loknath Mishra |
Senior General Manager |
19 |
Anuj Bhargava |
Senior General Manager |
20 |
Avijit Saha |
Senior General Manager |
21 |
Subir Saha |
Senior General Manager |
22 |
Anil Kaul |
Senior General Manager |
1. For the year-ended March 31, 2018 the numbers indicated are the options granted during the year FY2018.
No employee was granted options during any one year equal to or exceeding 0.05% of the issued equity shares of ICICI Bank at the time of the grant.
The diluted earnings per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with AS-20 was Rs, 10.46 in fiscal 2018 compared to basic EPS of Rs, 10.56. Based on the intrinsic value of options, no compensation cost was recognized during fiscal 2018. However, if the Bank had used the fair value of options based on the binomial tree model, compensation cost in fiscal 2018 would have been higher by Rs, 3.52 billion including additional cost of Rs, 0.07 billion due to change in exercise period and preformed profit after tax would have been Rs, 64.25 billion. On a preformed basis, the Bank''s basic and diluted earnings per share would have been Rs, 10.01 and Rs, 9.91 respectively.
The key assumptions used to estimate the fair value of options granted during fiscal 2018 are given below:
Risk-free interest rate |
7.06% to 7.59% |
Expected life |
3.90 to 6.90 years |
Expected volatility |
31.71% to 32.92% |
Expected dividend yield |
0.73% to 1.81% |
The weighted average fair value of options granted during fiscal 2018 was Rs, 86.43 f 76.72 during fiscal 2017).
The Bank has an ''Employees Stock Option Scheme - 2000'' (ESOS scheme) framed in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 (Regulations). The Scheme has been amended from time to time with the approval of the Members and as per the amendments last approved by the Members vide a Postal Ballot resolution passed on June 12, 2017 the Exercise Period was defined as the period commencing from the date of
vesting and which will expire on completion of such period not exceeding ten years from the date of vesting of Options as may be determined by the Board Governance, Remuneration & Nomination Committee ("BGNRC") for each grant.
The Board Governance Remuneration & Nomination Committee and Board at its meetings held on May 7, 2018 with the objective to further enhance employee efforts to execute the current strategy and align the compensation payout schedules for senior management to the time horizon of risks approved the amendment to the definition of Exercise Period as given below:
"The "Exercise Period" would commence from the date of vesting and will expire on completion of such period not exceeding five years from the date of vesting of Options as may be determined by the Board Governance Remuneration & Nomination Committee for each grant".
The amendment is intended to cover only future grants to be made and would come into effect only after approval by Members and will not cover grants already made. As per the Regulations, any variation to the terms of the Scheme requires the approval of Members by way of a special resolution. There are no other changes to the existing terms of the Scheme.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Bank has undertaken various initiatives for energy conservation at its premises, further details are given under Principle 6 of Section E of the Business Responsibility Report. The Bank has used information technology extensively in its operations, for more details please refer the section on Information Technology under Business Overview.
UPDATE ON RECENT DEVELOPMENTS AT THE BANK
The Audit Committee of the Bank under direction given by the Board of Directors has instituted an independent enquiry, headed by a former Supreme Court Judge, Hon''ble Mr. Justice B. N. Srikrishna (Retd.), to consider various allegations relating to the MD and CEO, Ms. Chanda Kochhar. The allegations have been levelled against Ms. Kochhar through media articles, a whistleblower complaint and complaints written by a private individual to senior government officials and regulators. The allegations include nepotism, quid pro quo and claims that Ms. Kochhar, by not disclosing conflicts of interest caused by certain transactions between certain borrowers of the Bank and entities controlled by Ms. Kochhar''s spouse, committed infractions under applicable regulations and the Bank''s Code of Conduct.
The independent enquiry is supported by an independent law firm and a forensic firm. The independent enquiry is under way.
In addition, SEBI issued a show-cause notice to Ms. Kochhar and to the Bank in May 2018 related to the allegations. The Bank is in the process of responding to the relevant allegations in the notice which pertain to the Bank. The Central Bureau of Investigation (CBI) also initiated a preliminary enquiry against various individuals and firms including unknown officers and/or officials of the Bank.
Ms. Kochhar is on a leave of absence while the independent enquiry takes place. In the interim, Mr. Sandeep Bakhshi has been appointed as Chief Operating Officer, subject to approval of the Reserve Bank of India (RBI), and reports directly to the Board of Directors during her absence.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
In line with the ''Green Initiative'' since the last five years, the Bank has effected electronic delivery of Notice of Annual General Meeting and Annual Report to those Members whose e-mail IDs were registered with the respective Depository Participants and downloaded from the depositories viz. National Securities Depository Limited/Central Depository Services (India) Limited. The Companies Act, 2013 and the underlying rules as well as Regulation 36 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, permit the dissemination of financial statements and annual report in electronic mode to the Members. Your Directors are thankful to the Members for actively participating in the Green Initiative and seek your continued support for implementation of the green initiative.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
2. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;
3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;
4. that they have prepared the annual accounts on a going concern basis;
5. t hat they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and
6. that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and overseas regulators for their continued co-operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, rating agencies and stock exchanges for their support.
ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation to all the employees, whose outstanding professionalism, commitment and initiative has made the organizationâs growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support.
For and on behalf of the Board
Girish Chandra Chaturvedi
July 27, 2018 Chairman
Mar 31, 2017
DIRECTORS'' REPORT
The Directors have pleasure in presenting the Twenty-Third Annual Report of ICICI Bank Limited along with the audited financial statements for the year ended March 31, 2017.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2017 is summarized in the following table:
Rs, in billion, except percentages |
Fiscal 2016 |
Fiscal 2017 |
% change |
Net interest income and other income |
365.46 |
412.42 |
12.8% |
Operating expenses |
126.83 |
147.55 |
16.3% |
Provisions & contingencies (including collective contingency and related reserve for fiscal 2016)1 |
116.67 |
152.08 |
30.4% |
Profit before tax |
121.96 |
112.79 |
(7.5)% |
Profit after tax |
97.26 |
98.01 |
0.8% |
1. Excludes provision for taxes.
Rs, in billion, except percentages |
Fiscal 2016 |
Fiscal 2017 |
% change |
Consolidated profit before tax and minority interest |
143.04 |
138.09 |
(3.5)% |
Consolidated profit after tax and minority interest |
101.80 |
101.88 |
0.1% |
Appropriations
The profit after tax of the Bank for fiscal 2017 is Rs, 98.01 billion after provisions and contingencies of Rs, 152.08 billion, provision for taxes of Rs, 14.78 billion and all expenses. The disposable profit is Rs, 269.33 billion, taking into account the balance of Rs, 171.32 billion brought forward from the previous year. Your Bank''s dividend policy is based on the profitability and key financial metrics of the Bank, the Bank''s capital position and requirements and the regulations pertaining to the same. Your Bank has a consistent dividend payment history. Given the financial performance for fiscal 2017 and in line with the Bank''s dividend policy, your Directors are pleased to recommend a dividend of Rs, 2.50 per equity share (pre-bonus issue) for the year ended March 31, 2017 and have appropriated the disposable profit as follows:
Rs, billion |
Fiscal 2016 |
Fiscal 2017 |
To Statutory Reserve, making in all Rs, 212.02 billion |
24.32 |
24.50 |
To Special Reserve created and maintained in terms of Section 36(1)(viii) of the Income Tax Act, 1961, making in all Rs, 83.79 billion |
13.50 |
4.50 |
To Capital Reserve, making in all Rs, 102.61 billion1 |
23.82 |
52.93 |
To/(from) Investment Reserve Account, making in all Nil |
- |
- |
To Revenue and other reserves, making in all Rs, 32.00 billion2 |
5.01 |
0.01 |
Dividend for the year (proposed) |
||
- On equity shares for fiscal 2016 @ Rs, 5.00 per share of face value Rs, 2.00 each34 |
29.11 |
(0.06) |
- On preference shares for fiscal 2016 @ Rs, 100.00 per preference share (?)3 |
35,000 |
- |
- Corporate dividend tax4 |
2.79 |
- |
Leaving balance to be carried forward to the next year |
171.32 |
187.45 |
In terms of the Reserve Bank of India circular no. DBR.BPBC.No.63/21.04.018/2016-17 dated April 18, 2017, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI''s annual supervisory process in their notes to accounts to the financial statements.
The Bank prepares its financial statements in accordance with the applicable accounting standards, RBI guidelines and other applicable laws/regulations. RBI, under its risk-based supervision exercise, carries out the risk assessment of the Bank on an annual basis. This assessment is initiated subsequent to the finalization, completion of audit and publication of audited financial statements for a financial year and typically occurs a few months after the financial year-end. As a part of this assessment, RBI separately reviews asset classification and provisioning of credit facilities given by the Bank to its borrowers. The divergences, if any, in classification or provisioning arising out of the supervisory process are given effect to in the financial statements in subsequent periods after conclusion of the exercise.
During the supervisory process for FY2016, which was conducted in FY2017, the incremental gross NPAs assessed by RBI amounted to Rs, 51.05 billion. The additional provisioning assessed by RBI was Rs, 10.71 billion, with a post-tax impact of Rs, 7.00 billion on the net profit after tax of the Bank. All these accounts have been classified as NPA by the Bank during FY2017. About 40% of the total amount was classified as NPA during the quarter ended June 30, 2016 as per the Bank''s application of relevant RBI guidelines, prior to the annual supervisory process of RBI. Out of the incremental gross NPAs amounting to Rs, 51.05 billion assessed by RBI, about 84% related to accounts internally rated below investment grade in the key sectors disclosed by the Bank, and about 7% was from the restructured asset portfolio.
Bonus Shares
The Board of Directors at its Meeting held on May 3, 2017 approved issue of bonus shares, in the proportion of 1:10, i.e. 1 (One) bonus equity share of Rs, 2 each for every 10 (Ten) fully paid-up equity shares held (including shares underlying ADS) as on the record date, subject to approval by the Members of the Bank. Subsequent to the bonus issue, the ratio of ADSs to equity shares will remain unaffected and each ADS after the bonus issue will continue to represent two equity share of par value of Rs, 2 per share. The bonus issue of equity shares would, inter alia, require appropriate adjustments with respect to all the stock options of the Bank under The Employee Stock Option Scheme 2000.
The Bank is seeking approval of shareholders through postal ballot notice dated May 5, 2017 for increase in the Authorized Share Capital, consequential alterations to the Memorandum and Articles of Association of the Bank and issuance of bonus shares. The postal ballot notice can be viewed on the Bank''s website at the we blink https://www.icicibank.com/ aboutus/notice.page.
DIVIDEND DISTRIBUTION POLICY
In accordance with the Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure F. The Policy is hosted on the website of the Bank and can be viewed (https://www.icicibank.com/ managed-assets/docs/investor/policy-for-determining-material-subsidiaries/dividend-distribution-policy.pdf).
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Pursuant to Section 186 (11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the Financial Statements as per the applicable provisions of Banking Regulation Act, 1949.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
Jhagadia Copper Limited and FINO Pay Tech Limited, which were considered as associates under Section 2(6) of the Companies Act, 2013, ceased to be associates of the Bank effective June 30, 2016 and January 5, 2017 respectively.
The particulars of subsidiary and associate companies as on March 31, 2017 have been included in Form MGT-9 which is annexed to this report as Annexure D.
HIGHLIGHTS OF PERFORMANCE OF SUBSIDARIES, ASSOCIATES AND JOINT VENTURE COMPANIES AND THEIR CONTRIBUTION TO THE OVERALL PERFORMANCE OF THE COMPANY
The performance of subsidiaries and associates and their contribution to the overall performance of the Bank as on March 31, 2017 has been annexed to this report as Annexure A. A summary of key financials of the Bank''s subsidiaries is also included in this Annual report.
The highlights of the performance of key subsidiaries are given as a part of Management''s Discussion & Analysis under section "Consolidated financials as per Indian GAAP".
The Bank will make available separate audited financial statements of the subsidiaries to any Member upon request. These documents/details are available on the Bank''s website (www.icicibank.com) and will also be available for inspection by any Member or trustee of the holder of any debentures of the Bank at its Registered Office and Corporate Office. As required by Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the Bank''s consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other consolidating entities.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS
There are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status or future operations of the Bank.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
The Board of the Bank at March 31, 2017 consisted of 13 Directors, out of which seven are independent Directors, one is a Government Nominee Director and five are whole time Directors.
Changes in the composition of the Board of Directors and other Key Managerial Personnel
The Board of Directors at their Meeting held on April 29, 2016 approved the appointment of Vijay Chandok as a whole time Director (designated as executive Director) for a period of five years effective from the date of receipt of RBI approval. The Members at their Meeting held on July 11, 2016 approved the appointment of Vijay Chandok for a period of five years effective the date of receipt of RBI approval. RBI approved the appointment of Vijay Chandok for a period of three years effective from July 28, 2016 up to July 27, 2019.
The Board of Directors at their Meeting held on October 14, 2016 approved the appointment of Anup Bagchi as a whole time Director (designated as executive Director) for a period of five years effective from February 1, 2017 or the date of receipt of approval from RBI, whichever is later. RBI approved the appointment of Anup Bagchi for a period of three years effective February 1, 2017 up to January 31, 2020. The said appointment is subject to the approval of Members. Approval of the Members is being sought for Anup Bagchi''s appointment for five years in the Notice of the forthcoming Annual General Meeting vide item no. 7 and 8.
Amit Agrawal, Joint Secretary, Department of Financial Services, Ministry of Finance has been nominated by Government of India as a Director on the Board of the Bank effective January 16, 2017 in place of Alok Tandon.
M. S. Ramachandran, independent Director ceased to be a Director on the Board of the Bank effective close of business hours on April 24, 2017 pursuant to completion of his maximum permissible tenure of eight years as per the provisions of the Banking Regulation Act, 1949. The Board placed on record its appreciation of the valuable contribution and guidance provided by Alok Tandon and M. S. Ramachandran to the Bank.
Rajiv Sabharwal, executive Director stepped down from his position as an executive Director effective close of business hours on January 31, 2017 consequent to his decision to pursue other opportunities. The Board placed on record its appreciation for Rajiv Sabharwal''s contribution to the growth of the Bank.
Declaration of Independence
All independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013 and Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 which have been relied on by the Bank and were placed at the Board Meeting held on April 6, 2017.
Retirement by rotation
In terms of Section 152 of the Companies Act, 2013, Vishakha Mulye would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Vishakha Mulye has offered herself for re-appointment.
AUDITORS
Statutory Auditors
At the AGM held on June 30, 2014, the Members approved the appointment of M/s B S R & Co. LLP, Chartered Accountants as statutory auditors for a period of four years commencing from the Twentieth AGM till the conclusion of the Twenty-Fourth AGM subject to the annual approval of RBI and ratification by the Members every year. As recommended by the Audit Committee, the Board has proposed the ratification of appointment of M/s B S R & Co. LLP, Chartered Accountants as statutory auditors for fiscal 2018. Their appointment for fiscal 2018 has been approved by RBI. The appointment is accordingly proposed in the Notice of the forthcoming AGM vide item no. 5 for ratification by Members.
There are no qualifications, reservation or adverse remarks made by the statutory auditors in the audit report.
Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank with the approval of its Board, appointed M/s. Parikh Parekh & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Bank for the financial year ended March 31, 2017. The Secretarial Audit Report is annexed herewith as Annexure B. There are no qualifications, reservation or adverse remark or disclaimer made by the auditor in the report save and except disclaimer made by them in discharge of their professional obligation.
PERSONNEL
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Companies Act, 2013, the Report and the Accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank.
INTERNAL CONTROL AND ITS ADEQUACY
The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.
DISCLOSURE UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999
The Bank has obtained a certificate from its statutory auditors that it is in compliance with the Foreign Exchange Management Act, 1999 provisions with respect to investments made in its consolidated subsidiaries and associates during fiscal 2017.
RELATED PARTY TRANSACTIONS
The Bank undertakes various transactions with related parties in the ordinary course of business. The Bank has a Board approved policy on Related Party Transactions, which has been disclosed on the website of the Bank and can be viewed at https://www.icicibank.com/managed-assets/docs/personal/general-links/related-party-transactions-policy.pdf. The Bank also has a Board approved Group Arm''s Length Policy which requires transactions with the group companies to be at arm''s length. The transactions between the Bank and its related parties, during the year ended March 31, 2017, were in the ordinary course of business and based on the principles of arm''s length. The details of material related party transactions at an aggregate level for year ended March 31, 2017 are given in Annexure C.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure D.
BUSINESS RESPONSIBILITY REPORTING
Business Responsibility Report as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been hosted on the website of the Bank (http://www.icicibank.com/aboutus/annual.html). Any Member interested in obtaining a physical copy of the same may write to the Company Secretary at the Registered Office of the Bank.
RISK MANAGEMENT FRAMEWORK
The Bank''s risk management framework is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted to facilitate focused oversight of various risks, as follows:
- The Risk Committee of the Board reviews risk management policies of the Bank pertaining to credit, market, liquidity, operational, outsourcing risks and business continuity management. The Committee also reviews the Risk Appetite & Enterprise Risk Management frameworks, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing. The stress testing framework includes a range of Bank-specific, market (systemic) and combined scenarios. The ICAAP exercise covers the domestic and overseas operations of the Bank, banking subsidiaries and material non-banking subsidiaries. The Committee reviews migration to the advanced approaches under Basel II and implementation of Basel III, risk return profile of the Bank, and the activities of the Asset Liability Management Committee. The Committee reviews the level and direction of major risks pertaining to credit, market, liquidity, operational, technology, compliance, group, management and capital at risk as part of risk dashboard. In addition, the Committee has oversight on risks of subsidiaries covered under the Group Risk Management Framework. The Risk Committee also reviews the Liquidity Contingency Plan for the Bank and the various thresholds set out in the Plan.
- The Credit Committee of the Board, apart from sanctioning credit proposals based on the Bank''s credit authorization framework, reviews developments in key industrial sectors and the Bank''s exposure to these sectors as well as to large borrower accounts and borrower groups. The Credit Committee also reviews the major credit portfolios, nonperforming loans, accounts under watch, overdoes and incremental sanctions.
- The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with inspection and audit reports of Reserve Bank of India, other regulators and statutory auditors.
- The Asset Liability Management Committee provides guidance for management of liquidity of the overall Bank and management of interest rate risk in the banking book within the broad parameters laid down by the Board of Directors/ Risk Committee.
Summaries of reviews conducted by these Committees are reported to the Board on a regular basis.
Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework. Independent groups and subgroups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/sub-groups.
The Bank has dedicated groups, namely, the Risk Management Group, Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention & Reputation Risk Management Group, with a mandate to identify, assess and monitor all of the Bank''s principal risks in accordance with well-defined policies and procedures. The Risk Management Group is further organized into the Credit Risk Management Group, Market Risk Management Group, Operational Risk Management Group and Information Security Group. These groups are completely independent of all business operations and coordinate with representatives of the business units to implement the Bank''s risk management policies and methodologies. The Internal Audit and Compliance groups are responsible to the Audit Committee of the Board.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL), ACT, 2013
Please refer Principle 3 under Section E of the Business Responsibility Report.
CORPORATE GOVERNANCE
The corporate governance framework at ICICI Bank is based on an effective independent Board, the separation of the Board''s supervisory role from the executive management and the constitution of Board Committees, which at March 31, 2017 comprised majority of independent Directors and most of the Committees were chaired by independent Directors, to oversee critical areas.
I. Philosophy of Corporate Governance
ICICI Bank''s corporate governance philosophy encompasses regulatory and legal requirements, which aims at a high level of business ethics, effective supervision and enhancement of value for all stakeholders. The corporate governance framework adopted by the Bank already encompasses significant portion of the recommendations contained in the ''Corporate Governance Voluntary Guidelines 2009'' issued by the Ministry of Corporate Affairs, Government of India.
Whistle Blower Policy
The Bank has formulated a Whistle Blower Policy. The policy comprehensively provides an opportunity for any employee/ Director of the Bank to raise any issue concerning breaches of law, accounting policies or any act resulting in financial or reputation loss and misuse of office or suspected or actual fraud. The policy provides for a mechanism to report such concerns to the Audit Committee through specified channels. The policy has been periodically communicated to the employees and also posted on the Bank''s intranet. The Whistle Blower Policy complies with the requirements of Vigil mechanism as stipulated under Section 177 of the Companies Act, 2013. The details of establishment of the Whistle Blower Policy/Vigil mechanism have been disclosed on the website of the Bank.
Code of Conduct as prescribed under Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015
In accordance with the requirements of the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, ICICI Bank has instituted a comprehensive code of conduct to regulate, monitor and report trading by its directors, employees and other connected persons.
Group Code of Business Conduct and Ethics
The Group Code of Business Conduct and Ethics for Directors and employees of the ICICI Group aims at ensuring consistent standards of conduct and ethical business practices across the constituents of the ICICI Group. This Code is reviewed on an annual basis and the latest Code is available on the website of the Bank (www.icicibank.com). Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a confirmation from the Managing Director & CEO regarding compliance with the Code by all the Directors and senior management forms part of the Annual Report.
Material Subsidiaries
In accordance with the requirements of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Policy for determining Material Subsidiaries and the same has been hosted on the website of the Bank (https://www.icicibank.com/managed-assets/docs/investor/policy-for-determining-material-subsidiaries/policy-for-determining-material-subsidiaries.pdf).
Familiarization Programme for independent Directors
Independent Directors are familiarized with their roles, rights and responsibilities in the Bank as well as with the nature of industry and business model of the Bank through induction programmes at the time of their appointment as Directors and through presentations on economy & industry overview, key regulatory developments, strategy and performance which are made to the Directors from time to time. The details of the familiarization programmes have been hosted on the website of the Bank and can be accessed on the link: (http://www.icicibank.com/managed-assets/docs/about-us/board-of-directors/familiarisation-programme-for-independent-directors.pdf).
CEO/CFO Certification
In terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the certification by the Managing Director & CEO and Chief Financial Officer on the financial statements and internal controls relating to financial reporting has been obtained.
Board of Directors
ICICI Bank has a broad-based Board of Directors, constituted in compliance with the Banking Regulation Act, 1949, the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in accordance with good corporate governance practices. The Board functions either as a full Board or through various committees constituted to oversee specific operational areas. The Board has constituted various committees, namely, Audit Committee, Board Governance, Remuneration & Nomination Committee, Corporate Social Responsibility Committee, Credit Committee, Customer Service Committee, Fraud Monitoring Committee, Information Technology Strategy Committee, Risk Committee, Stakeholders Relationship Committee and Review Committee for Identification of Wilful Defaulters/Non Co-operative Borrowers. At March 31, 2017, independent Directors constituted a majority of these Board Committees and all Committees except the Credit Committee and Review Committee for Identification of Willful Defaulters/Non Co-operative Borrowers were chaired by independent Directors.
There were nine Meetings of the Board during fiscal 2017 - on April 29, June 28, July 29, September 20, September 26, October 14, November 7 and November 21 in 2016, and January 31 in 2017.
At March 31, 2017, the Board of Directors consisted of 13 members. There were no inter-se relationships between any of the Directors. The names of the Directors, their attendance at Board Meetings during the year, attendance at the last Annual General Meeting (AGM) and the number of other directorships and board committee memberships held by them at March 31, 2017 are set out in the following table.
Name of Director |
Board Meetings attended during the year |
Attendance at last AGM (July 11, 2016) |
Number of other directorships |
Number of other committee3 memberships |
|
of Indian public limited companies1 |
of other companies2 |
||||
Independent Directors |
|||||
M. K. Sharma, Chairman |
|||||
(DIN: 00327684) |
9/9 |
Present |
4 |
6 |
4(2) |
Dileep Choksi* |
|||||
(DIN: 00016322) |
8/9 |
Present |
7 |
3 |
6(4) |
Homi Khusrokhan |
|||||
(DIN: 00005085) |
8/9 |
Present |
3 |
1 |
2(1) |
M. S. Ramachandran |
|||||
(DIN: 00943629) |
9/9 |
Present |
6 |
3 |
3(1) |
Board Meetings attended during the year |
Attendance at last AGM (July 11, 2016) |
Number of other directorships |
Number of other committee3 memberships |
||
Name of Director |
of Indian public limited companies1 |
of other companies2 |
|||
Tushaar Shah# (DIN: 03055738) |
6/9 |
Present |
|||
V K. Sharma (DIN: 02449088) |
4/9 |
Absent |
7 |
5 |
|
V. Sridar (DIN: 02241339) |
8/9 |
Present |
9 |
7(5) |
|
Government Nominee Director |
|||||
Alok Tandon (up to January 16, 2017) (DIN: 01841717) |
0/8 |
Absent |
N.A. |
N.A. |
N.A. |
Amit Agrawal (w.e.f. January 16, 2017) (DIN: 07117013) |
0/1 |
N.A. |
|||
Wholetime/Executive Directors |
|||||
Chanda Kochhar (DIN: 00043617) |
9/9 |
Present |
4 |
2 |
|
N. S. Kannan (DIN: 00066009) |
9/9 |
Present |
4 |
2 |
2 |
K. Ramkumar (up to close of business hours on April 29, 2016) (DIN: 00244711) |
1/1 |
N.A. |
N.A. |
N.A.'' |
N.A. |
Rajiv Sabharwal (up to close of business hours on January 31, 2017) (DIN: 00057333) |
8/9 |
Present |
N.A. |
N.A. |
N.A. |
Vishakha Mulye (DIN: 00203578) |
9/9 |
Present |
1 |
||
Vijay Chandok (w.e.f. July 28, 2016) (DIN: 01545262) |
7/7 |
N.A. |
2 |
2 |
1 |
Anup Bagchi (w.e.f. February 1, 2017) (DIN: 00105962) |
0/0 |
N.A. |
3 |
- |
2 |
* Participated in one Meeting through tele-conference.
# Participated in two Meetings through tele-conference.
1. Comprises public limited companies incorporated in India.
2. Comprises private limited companies incorporated in India, foreign companies, statutory bodies and insurance corporations but excludes Section 8 companies and not for profit foreign companies.
3. Comprises only Audit Committee and Stakeholders'' Relationship Committee of Indian public limited companies. Figures in parentheses indicate committee chairpersonships.
Upon completion of his tenure as a non-executive Director, M. S. Ramachandran ceased to be a Director on the Board of the Bank with effect from April 25, 2017.
In terms of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the number of Committees (Audit Committee and Stakeholders'' Relationship Committee) of public limited companies in which a Director is a member/chairman were within the limits provided under listing regulations, for all the Directors of the Bank. The number of directorships of each independent Director is also within the limits prescribed under listing regulations.
The terms of reference of the Board Committees as mentioned earlier, their composition and attendance of the respective Members at the various Committee Meetings held during fiscal 2017 are set out below:
II. Audit Committee Terms of Reference
The Audit Committee provides direction to the audit function and monitors the quality of internal and statutory audit. The responsibilities of the Audit Committee include examining the financial statements and auditors'' report and overseeing the financial reporting process to ensure fairness, sufficiency and credibility of financial statements, review of the quarterly and annual financial statements before submission to the Board, recommendation of appointment, terms of appointment, fixing remuneration and removal of central and branch statutory auditors and chief internal auditor, approval of payment to statutory auditors for other permitted services rendered by them, review and monitor with the management the auditor''s independence, performance and effectiveness of audit process, approval of transactions with related parties or any subsequent modifications, review of statement of significant related party transactions, review of functioning of Whistle Blower Policy, review of the adequacy of internal control systems and the internal audit function, review of compliance with inspection and audit reports and reports of statutory auditors, review of the findings of internal investigations, review of management letters/ letters on internal control weaknesses issued by statutory auditors, reviewing with the management the statement of uses/ application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for the purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency, monitoring the utilization of proceeds of a public or rights issue and making appropriate recommendations to the Board to take steps in this matter, discussion on the scope of audit with external auditors, examination of reasons for substantial defaults, if any, in payment to stakeholders, valuation of undertakings or assets, evaluation of risk management systems, scrutiny of inter-corporate loans and investments. The Audit Committee is also empowered to appoint/oversee the work of any registered public accounting firm, establish procedures for receipt and treatment of complaints received regarding accounting and auditing matters and engage independent counsel as also provide for appropriate funding for compensation to be paid to any firm/advisors. In addition, the Audit Committee also exercises oversight on the regulatory compliance function of the Bank. The Audit Committee is also empowered to approve the appointment of the CFO (i.e., the whole time Finance Director or any other person heading the finance function or discharging that function) after assessing the qualifications, experience and background, etc. of the candidate.
Composition
At March 31, 2017, the Audit Committee comprised of four independent Directors and was chaired by Homi Khusrokhan, an independent Director. There were nine Meetings of the Committee during the year.
The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
Homi Khusrokhan, Chairman |
8/9 |
Dileep Choksi, Alternate Chairman |
9/9 |
M. S. Ramachandran |
7/9 |
V. Sridar* |
8/9 |
* Participated in one Meeting through video - conference.
Upon completion of his tenure as a non-executive Director, M. S. Ramachandran ceased to be a Member of the Committee with effect from April 25, 2017.
III. Board Governance, Remuneration & Nomination Committee Terms of Reference
The functions of the Committee include recommending appointments of Directors to the Board, identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommending to the Board their appointment and removal, formulate a criteria for the evaluation of the performance of the Whole time/independent Directors and the Board and to extend or continue the term of appointment of independent Director on the basis of the report of performance evaluation of independent Directors, recommending to the Board a policy relating to the remuneration for the Directors, key managerial personnel and other employees, recommending to the Board the remuneration (including performance bonus and perquisites) to whole time Directors (WTDs), commission and fee payable to non-executive Directors subject to applicable regulations, approving the policy for and quantum of bonus payable to the members of the staff including senior management and key managerial personnel, formulating the criteria for determining qualifications, positive attributes and independence of a Director, framing policy on Board diversity, framing guidelines for the Employees Stock Option Scheme (ESOS) and decide on the grant of Bank''s stock options to employees and WTDs of the Bank and its subsidiary companies.
Composition
At March 31, 2017, the Board Governance, Remuneration & Nomination Committee comprised of three independent Directors and was chaired by Homi Khusrokhan, an independent Director. There were ten Meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
Homi Khusrokhan, Chairman |
8/10 |
M. K. Sharma |
9/10 |
M. S. Ramachandran |
10/10 |
Upon completion of his term as a non-executive Director M. S. Ramachandran ceased to be a Member of the Committee with effect from April 25, 2017. The Board at its Meeting held on April 6-7, 2017 reconstituted the Committee pursuant to which V. K. Sharma was appointed as a Member of the Committee with effect from April 6, 2017.
Policy/Criteria for Directors'' Appointment
The Bank with the approval of its Board Governance, Remuneration & Nomination Committee (Committee) has put in place a policy on Directors'' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director as well as a policy on Board diversity. The policy has been framed based on the broad principles as outlined hereinafter. The Committee would evaluate the composition of the Board and vacancies arising in the Board from time to time. The Committee while recommending candidature of a Director would consider the special knowledge or expertise possessed by the candidate as required under Banking Regulation Act, 1949. The Committee would assess the fit and proper credentials of the candidate and the companies/entities with which the candidate is associated either as a director or otherwise and as to whether such association is permissible under RBI guidelines and the internal norms adopted by the Bank. For the above assessment, the Committee would be guided by the guidelines issued by RBI in this regard.
The Committee will also evaluate the prospective candidate for the position of a Director from the perspective of the criteria for independence prescribed under Companies Act, 2013 as well as the Listing Regulations. For a non-executive Director to be classified as independent he/she must satisfy the criteria of independence as prescribed and sign a declaration of independence. The Committee will review the same and determine the independence of a Director.
The Committee based on the above assessments will make suitable recommendations on the appointment of Directors to the Board.
Remuneration policy
Reserve Bank of India (RBI) vide its circular DBOD No. BC. 72/29.67.001/2011-12 dated January 13, 2012 has issued guidelines on "Compensation of whole time Directors/Chief executive Officers/Risk takers and Control function staff etc." for implementation by private sector banks and foreign banks from the financial year 2012-13. The Bank adopted a Compensation Policy in January 2012 which is amended from time to time based on regulatory requirements. The Compensation Policy of the Bank as adopted in line with the RBI circular is in compliance with the requirements for the Remuneration Policy as prescribed under Companies Act, 2013. Further details with respect to the Compensation Policy are provided under the section titled "Compensation Policy and Practices".
The remuneration payable to non-executive/independent Directors is governed by the provisions of the Banking Regulation Act, 1949, RBI guidelines issued from time to time and the provisions of the Companies Act, 2013 and related rules to the extent it is not inconsistent with the provisions of the Banking Regulation Act, 1949/RBI guidelines. The remuneration for the non-executive/independent Directors (other than Government nominee) would be sitting fee for attending each Meeting
of the Committee/Board as approved by the Board from time to time within the limits as provided under Companies Act, 2013 and related rules. RBI vide its guidelines dated June 1, 2015 regarding Compensation of non-executive Directors (NEDs) (except part-time Chairman) of Private Sector Banks has permitted payment of profit related commission up to '' 1,000,000 per annum for non-executive Directors (other than non-executive (part-time) Chairman). The Members at their Meeting held on July 11, 2016 approved the payment of profit related commission up to '' 1,000,000 per annum to nonexecutive Directors (other than the non-executive (part-time) Chairman and the Government Nominee Director), for each year effective from the financial year ended March 31, 2016.
For the non-executive (part-time) Chairman, the remuneration, in addition to sitting fee includes such fixed payments on such periodicity as may be recommended by the Board and approved by the Members and RBI from time to time, maintaining a Chairman''s office at the Bank''s expense, bearing expenses for travel on official visits and participation in various forums (both in India and abroad) as Chairman of the Bank and bearing travel/halting/other expenses and allowances for attending to duties as Chairman of the Bank and any other modes of remuneration as may be permitted by RBI through any circulars/guidelines as may be issued from time to time.
All the non-executive/independent Directors would be entitled to reimbursement of expenses for attending Board/ Committee Meetings, official visits and participation in various forums on behalf of the Bank.
Performance evaluation of the Board, Committees and Directors
The Bank with the approval of its Board Governance, Remuneration & Nomination Committee has put in place an evaluation framework for evaluation of the Board, Directors and Chairperson. The Board also carries out an evaluation of the working of its Audit Committee, Board Governance, Remuneration & Nomination Committee, Corporate Social Responsibility Committee, Credit Committee, Customer Service Committee, Fraud Monitoring Committee, Information Technology Strategy Committee, Risk Committee, Stakeholders Relationship Committee and Review Committee for identification of wilful defaulters/non co-operative borrowers. The evaluation of the Committees is based on the assessment of the compliance with the terms of reference of the Committees.
The evaluations for the Directors, the Board and the Chairperson of the Board were undertaken through circulation of three questionnaires, one for the Directors, one for the Board and one for the Chairperson of the Board. The performance of the Board was assessed on select parameters related to roles, responsibilities and obligations of the Board and functioning of the Committees including assessing the quality, quantity and timeliness of flow of information between the company management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The evaluation criteria for the Directors was based on their participation, contribution and offering guidance to and understanding of the areas which were relevant to them in their capacity as members of the Board. The evaluation criteria for the Chairperson of the Board besides the general criteria adopted for assessment of all Directors, focused incrementally on leadership abilities, effective management of meetings and preservation of interest of stakeholders. The evaluation process for whole time Directors is further detailed under the section titled "Compensation Policy and Practices".
Details of Remuneration paid to whole time Directors
The Board Governance, Remuneration & Nomination Committee determines and recommends to the Board the amount of remuneration, including performance bonus and perquisites, payable to the whole time Directors.
The following table sets out the details of remuneration (including perquisites and retrial benefits) paid to whole time Directors for fiscal 2017:
Details of Remuneration (?) |
|||||||
Chanda Kochhar |
N. S. Kannan |
K. Ramkumar1 |
Rajiv Sabharwal4 |
Vishakha Mulye |
Vijay Chandok2 |
Anup Bagchi3 |
|
Basic |
26,670,840 |
17,619,600 |
5,778,471 |
14,683,000 |
17,619,600 |
15,930,000 |
6,637,500 |
Performance bonus for fiscal 20175 |
22,028,362 |
14,766,738 |
4,854,818 |
N.A. |
14,766,738 |
13,539,876 |
5,601,428 |
Allowances and perquisites6 |
24,387,366 |
15,331,842 |
26,199,599 |
17,178,774 |
14,352,803 |
15,072,215 |
5,698,078 |
Contribution to provident fund |
3,200,496 |
2,114,354 |
693,418 |
1,761,958 |
2,114,354 |
1,911,600 |
796,500 |
Contribution to superannuation fund |
0 |
2,642,940 |
753,712 |
0 |
2,642,940 |
2,389,500 |
995,625 |
Contribution to gratuity fund |
2,221,681 |
1,467,713 |
481,347 |
1,223,094 |
1,467,713 |
1,326,969 |
552,904 |
Stock options7 (Numbers) |
|||||||
Fiscal 20175 |
1,375,000 |
685,000 |
N.A. |
N.A. |
685,000 |
685,000 |
685,000 |
Fiscal 2016 |
1,375,000 |
685,000 |
685,000 |
685,000 |
685,000 |
495,000 |
N.A. |
Fiscal 2015 |
1,450,000 |
725,000 |
725,000 |
655,000 |
N.A. |
420,000 |
N.A. |
1. K. Ramkumar ceased to be a Director from the close of business hours on April 29, 2016 and has taken early retirement from the Bank. His last working date was July 29, 2016.
2. Vijay Chandok assumed office as executive Director with effect from July 28, 2016, post approval granted by RBI.
3. Anup Bagchi has joined the services of the Bank on November 1, 2016, and he assumed office as executive Director with effect from February 1, 2017.
4. Rajiv Sabharwal''s last working day with the Bank was January 31, 2017.
5. Options and performance bonus for fiscal 2017 are subject to Reserve Bank of India (RBI) approval.
6. Allowances and perquisites exclude stock options exercised during fiscal 2017 which does not constitute remuneration paid to the whole time Directors for fiscal 2017.
7. The above table excludes special grant of stock options approved by RBI in November 2015 aggregating to 2,100,000 for Chanda Kochhar; 1,000,000 each for N. S. Kannan, K. Ramkumar and Rajiv Sabharwal and 700,000 for Vijay Chandok.
Perquisites (evaluated as per Income-tax rules wherever applicable and otherwise at actual cost to the Bank) such as the benefit of the Bank''s furnished accommodation, gas, electricity, water and furnishings, club fees, group insurance, use of car and telephone at residence or reimbursement of expenses in lieu thereof, medical reimbursement, leave and leave travel concession, education benefits, provident fund, superannuation fund and gratuity, were provided in accordance with the scheme(s) and rule(s) applicable from time to time. In line with the staff loan policy applicable to specified grades of employees who fulfill prescribed eligibility criteria to avail loans for purchase of residential property, the whole time Directors are also eligible for housing loans subject to approval of RBI.
The Members have approved the minimum and maximum ranges for remuneration as well as supplementary allowance for the Whole time Directors. In terms of the said approvals, the monthly basic salary for Chanda Kochhar, Managing Director & CEO would be within the range of Rs, 1,350,000 - Rs, 2,600,000, N. S. Kannan, Vishakha Mulye, Vijay Chandok and Anup Bagchi, executive Directors would be within the range of Rs, 950,000 - Rs, 1,700,000. The monthly supplementary allowances for the Managing Director & CEO, would be within the range of Rs, 1,000,000 - Rs, 1,800,000, for N. S. Kannan, Vishakha Mulye, Vijay Chandok and Anup Bagchi, executive Directors would be within the range of Rs, 675,000 - Rs, 1,225,000. The Board would determine the actual remuneration/supplementary allowance payable within the above ranges from time to time subject to the approval of RBI.
Details of Remuneration paid to non-executive Directors
As provided under Article 132 of the Articles of Association of the Bank, the fees payable to a non-executive Director (other than to the nominee of Government of India) for attending a Meeting of the Board or Committee thereof are decided by the Board of Directors from time to time within the limits prescribed by the Companies Act, 2013 and the rules there under. The Board of Directors have approved the payment of Rs, 100,000 as sitting fee for each Meeting of the Board and Rs, 20,000 as sitting fee for each Meeting of the Committee attended.
The Board of Directors at its Meeting held on June 9, 2015 and subsequently Members through a postal ballot resolution dated April 22, 2016 approved a remuneration range of Rs, 3,000,000 - Rs, 5,000,000 per annum for M. K. Sharma, Chairman of the Board with the remuneration for each year to be determined by the Board within this range. The Board approved remuneration of Rs, 3,000,000 per annum effective July 1, 2015 to be paid to M. K. Sharma for the first year of his tenure. RBI while approving the appointment of M. K. Sharma for the period July 1, 2015 to June 30, 2018 also approved the above remuneration. The Board at its Meeting held on June 28, 2016 approved the revision in remuneration for M. K. Sharma to Rs, 3,500,000 per annum for the period July 1, 2016 to June 30, 2017. The same has been approved by RBI.
Information on the total sitting fees paid to each non-executive Director during fiscal 2017 for attending Meetings of the Board and its Committees is set out in the following table:
Name of Director |
Amount (?) |
M. K. Sharma |
1,220,000 |
Dileep Choksi |
1,180,000 |
Homi Khusrokhan |
2,060,000 |
M. S. Ramachandran (ceased w.e.f. April 25, 2017) |
2,000,000 |
Tushaar Shah |
620,000 |
V. K. Sharma |
460,000 |
V. Sridar |
1,480,000 |
Amit Agarwal1 |
- |
Total |
9,020,000 |
1. Being a Government Nominee Director, not entitled to receive sitting fees.
The details of shares and convertible instruments of the Bank, held by the non-executive Directors as at March 31, 2017 are set out in the following table:
Name of Director |
Instrument |
No. of shares held |
M. K. Sharma |
Equity |
50,000 |
Dileep Choksi |
Equity |
2,500 |
Homi Khusrokhan |
Equity |
3,5001 |
M. S. Ramachandran |
Equity |
1,300 |
Tushaar Shah |
- |
- |
V. K. Sharma |
- |
- |
V. Sridar |
- |
- |
Amit Agarwal |
- |
- |
1. Shares held jointly with relatives.
Remuneration disclosures as required under RBI guidelines
The RBI circular DBOD No. BC. 72/29.67.001/2011-12 on "Compensation of wholetime Directors/Chief Executive Officers/ Risk takers and Control function staff etc." requires the Bank to make following disclosures on remuneration on an annual basis in their Annual Report:
COMPENSATION POLICY AND PRACTICES
(A) Qualitative disclosures
a) Information relating to the bodies that oversee remuneration.
- Name, composition and mandate of the main body overseeing remuneration.
The Board Governance, Remuneration & Nomination Committee (BGRNC/ Committee) is the body which oversees the remuneration aspects. The functions of the Committee include recommending appointments of Directors to the Board, identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down and recommending to the Board their appointment and removal, formulate a criteria for the evaluation of the performance of the whole time/ independent Directors and the Board and to extend or continue the term of appointment of independent Director on the basis of the report of performance evaluation of independent Directors, recommending to the Board a policy relating to the remuneration for the Directors, Key Managerial Personnel and other employees, recommending to the Board the remuneration (including performance bonus and perquisites) to wholetime Directors (WTDs), commission and fee payable to non- executive Directors subject to applicable regulations, approving the policy for and quantum of bonus payable to members of the staff including senior management and key managerial personnel, formulating the criteria for determining qualifications, positive attributes and independence of a Director, framing policy on Board diversity, framing guidelines for the Employee Stock Option Scheme (ESOS) and decide on the grant of the Bank''s stock options to employees and WTDs of the Bank and its subsidiary companies.
- External consultants whose advice has been sought, the body by which they were commissioned, and in what areas of the remuneration process.
The Bank did not take advice from an external consultant on any area of remuneration during the year ended March 31, 2017.
- Scope of the Bank''s remuneration policy (eg. by regions, business lines), including the extent to which it is applicable to foreign subsidiaries and branches.
The Compensation Policy of the Bank, as last amended during FY2017 and approved by the BGRNC and the Board at its Meeting held on April 28, 2016, pursuant to the guidelines issued by RBI, covers all employees of the Bank, including those in overseas branches of the Bank. In addition to the Bank''s Compensation Policy guidelines, the overseas branches also adhere to relevant local regulations.
o Alignment of compensation philosophy with prudent risk taking:
The Bank seeks to achieve a prudent mix of fixed and variable pay, with a higher proportion of variable pay at senior levels and no guaranteed bonuses. Compensation is sought to be aligned to both financial and non-financial indicators of performance including aspects like risk management and customer service. In addition, the Bank has an employee stock option scheme aimed at aligning compensation to long term performance through stock option grants that vest over a period of time. Compensation to staff in financial and risk control functions is independent of the business areas they oversee and depends on their performance assessment.
- Whether the Remuneration Committee reviewed the firm''s remuneration policy during the past year, and if so, an overview of any changes that were made
During FY2017, the Bank''s Compensation Policy was reviewed by the BGRNC and the Board on April 28, 2016. The disclosures were reviewed pursuant to RBI circular on Disclosures in Financial Statements.
- Discussion of how the Bank ensures that risk and compliance employees are remunerated independently of the businesses they oversee.
The compensation of staff engaged in control functions like Risk and Compliance depends on their performance, which is based on achievement of the key results of their respective functions. Their goal sheets do not include any business targets.
c) Description of the ways in which current and future risks are taken into account in the remuneration processes.
- Overview of the key risks that the Bank takes into account when implementing remuneration measures.
The Board approves the risk framework for the Bank and the business activities of the Bank are undertaken within this framework to achieve the financial plan. The risk framework includes the Bank''s risk appetite, limits framework and policies and procedures governing various types of risk. KPIs of WTDs & equivalent positions, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as the desired funding profile and asset quality. The BGRNC takes into consideration all the above aspects while assessing organizational and individual performance and making compensation-related recommendations to the Board.
- Overview of the nature and type of key measures used to take account of these risks, including risk difficult to measure
The annual performance targets and performance evaluation incorporate both qualitative and quantitative aspects including asset quality, provisioning, increase in stable funding sources, refinement/improvement of the risk management framework, effective management of stakeholder relationships and mentoring key members of the top and senior management.
- Discussion of the ways in which these measures affect remuneration.
Every year, the financial plan/ targets are formulated in conjunction with a risk framework with limit structures for various areas of risk/ lines of business, within which the Bank operates to achieve the financial plan. To ensure effective alignment of compensation with prudent risk taking, the BGRNC takes into account adherence to the risk framework in conjunction with which the financial plan/ targets have been formulated. KPIs of WTDs & equivalent positions, as well as employees, incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as growth and profits, performance indicators include aspects such as the desired funding profile and asset quality. The BGRNC takes into consideration all the above aspects while assessing organizational and individual performance and making compensation-related recommendations to the Board.
d) Description of the ways in which the Bank seeks to link performance during a performance measurement period with levels of remuneration.
- Overview of main performance metrics for Bank, top level business lines and individuals.
The main performance metrics include profits, loan growth, deposit growth, risk metrics (such as quality of assets), compliance with regulatory norms, refinement of risk management processes and customer service. The specific metrics and weight ages for various metrics vary with the role and level of the individual.
- Discussion of how amounts of individual remuneration are linked to the Bank-wide and individual performance.
The BGRNC takes into consideration all the above aspects while assessing organizational and individual performance and making compensation-related recommendations to the Board regarding the level of performance bonus for employees and the performance assessment of WTDs and equivalent positions. The performance assessment of individual employees is undertaken based on achievements vis-a-vis their goal sheets, which incorporate the various aspects/ metrics described earlier.
- Discussion of the measures the Bank will in general implement to adjust remuneration in the event that performance metrics are weak, including the Bank''s criteria for determining ''weak'' performance metrics.
The Bank''s Compensation Policy outlines the measures the Bank will implement in the event of a reasonable evidence of deterioration in financial performance. Should such an event occur in the manner outlined in the policy, the BGRNC may decide to apply mauls on none, part or all of the unvested deferred variable compensation.
e) Description of the ways in which the Bank seeks to adjust remuneration to take account of the longer term performance.
- Discussion of the Bank''s policy on deferral and vesting of variable remuneration and, if the fraction of variable remuneration that is deferred differs across employees or groups of employees, a description of the factors that determine the fraction and their relative importance.
The quantum of bonus for an employee does not exceed a certain percentage (as stipulated in the compensation policy) of the total fixed pay in a year. Within this percentage, if the quantum of bonus exceeds a predefined threshold percentage of the total fixed pay, a part of the bonus is deferred and paid over a period. These thresholds for deferrals are same across employees.
- Discussion of the Bank''s policy and criteria for adjusting deferred remuneration before vesting and (if permitted by national law) after vesting through claw back arrangements.
The deferred portion of variable pay is subject to malus, under which the Bank would prevent vesting of all or part of the variable pay in the event of an enquiry determining gross negligence, breach of integrity or in the event of a reasonable evidence of deterioration in financial performance. In such cases, variable pay already paid out may also be subjected to claw back arrangements, as applicable.
f) Description of the different forms of variable remuneration that the Bank utilizes and the rationale for using these different forms.
- Overview of the forms of variable remuneration offered. A discussion of the use of different forms of variable remuneration and if the mix of different forms of variable remuneration differs across employees or group of employees, a description of the factors that determine the mix and their relative importance.
The Bank pays performance linked retention pay (PLRP) to its front-line staff and junior management and performance bonus to its middle and senior management. PLRP aims to reward front line and junior managers, mainly on the basis of skill maturity attained through experience and continuity in role which is a key differentiator for customer service. The Bank also pays variable pay to sales officers and relationship managers in wealth management roles while ensuring that such pay-outs are in accordance with applicable regulatory requirements.
The Bank ensures higher proportion of variable pay at senior levels and lower variable pay for front-line staff and junior management levels.
(B) Quantitative disclosures
The following table sets forth, for the period indicated, the details of quantitative disclosure for remuneration of whole time Directors (including MD & CEO) and equivalent positions.
Particulars |
At March 31, 2016 |
At March 31, 2017 |
Number of meetings held by the BGRNC during the financial year |
8 |
10 |
Remuneration paid to its members during the financial year ('' in millions) (sitting fees) |
0.5 |
0.5 |
Number of employees having received a variable remuneration award during the financial year |
Nil |
6 |
Number and total amount of sign-on awards made during the financial year |
Nil |
Nil |
Number and total amount of guaranteed bonuses awarded during the financial year |
Nil |
Nil |
Details of severance pay, in addition to accrued benefits |
Nil |
Nil |
Breakdown of amount of remuneration awards for the financial year (Rs,in million) |
||
Fixed1 |
201.7 |
231.5 |
Variable2 |
Nil |
75.6 |
Deferred |
- |
- |
Non-deferred |
- |
75.6 |
- Share-linked instruments |
4,610,0003 |
4,115,000 |
Total amount of deferred remuneration paid out in the financial year |
26.9 |
16.0 |
Total amount of outstanding deferred remuneration Cash ('' in millions) |
23.4 |
6.1 |
Shares (nos.) |
Nil |
Nil |
Shares-linked instruments4 |
16,725,000 |
13,406,500 |
- Other forms |
Nil |
Nil |
Total amount of outstanding deferred remuneration and retained remuneration exposed ex-post explicit and/or implicit adjustments |
23.4 |
6.1 |
Total amount of reductions during the year due to ex-post explicit adjustments |
Nil |
Nil |
Total amount of reductions during the year due to ex-post implicit adjustments |
Nil |
Nil |
1. Fixed pay includes basic salary, supplementary allowances, superannuation, contribution to provident fund and gratuity fund by the Bank. The amount contains part year payouts for a retired and a resigned WTD and a newly appointed WTD for fiscal 2017.
2. Variable Pay and Share-linked instruments for the year ended March 31, 2017 are subject to approval from RBI.
3. Excludes special grant of stock options approved by RBI in November 2015, aggregating to 5.8 million & grant of 1.0 million options for Vishakha Mulye.
4. The amount contains special grants, including grant to Vishakha Mulye.
Disclosures required with respect to Section 197(12) of the Companies Act, 2013
The ratio of the remuneration of each Director to the median employee''s remuneration and such other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, and as amended from time to time.
(i) The ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year;
Chanda Kochhar, Managing Director & CEO |
112:1 |
N. S. Kannan |
75:1 |
Vishakha Mulye |
75:1 |
Vijay Chandok* |
69:1 |
Anup Bagchi* |
69:1 |
*The ratios are annualized as remuneration in the capacity of a Director is effective from July 28, 2016 for Vijay Chandok and from February 1, 2017 for Anup Bagchi.
Note: K. Ramkumar and Rajiv Sabharwal ceased to be directors during the financial year and are hence not included in the above table.
(ii) The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year;
The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer and Company Secretary ranged between 12.0% and 15.0%.
(iii) The percentage increase in the median remuneration of employees in the financial year;
The percentage increase in the median remuneration of employees in the financial year was around 12.0%.
(iv) The number of permanent employees on the rolls of company;
The number of employees, as mentioned in the section on ''Management''s Discussion & Analysis'' is 82,841. Out of this, the employees on permanent rolls of the company is 81,129, including employees in overseas locations.
(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;
The average percentage increase made in the salaries of total employees other than the Key Managerial Personnel for fiscal 2017 was around 10.0%, while the average increase in the remuneration of the Key Managerial Personnel was in the range of 12.0% to 15.0%.
(vi) Affirmation that the remuneration is as per the remuneration policy of the company.
Yes
IV. Corporate Social Responsibility Committee Terms of Reference
The functions of the Committee include review of corporate social responsibility (CSR) initiatives undertaken by the ICICI Group and the ICICI Foundation for Inclusive Growth, formulation and recommendation to the Board of a CSR Policy indicating the activities to be undertaken by the Company and recommendation of the amount of expenditure to be incurred on such activities, reviewing and recommending the annual CSR plan to the Board, making recommendations to the Board with respect to the CSR initiatives, policies and practices of the ICICI Group, monitoring the CSR activities, implementation and compliance with the CSR Policy and reviewing and implementing, if required, any other matter related to CSR initiatives as recommended/suggested by RBI or any other body.
Composition
At March 31, 2017, the Corporate Social Responsibility Committee comprised three Directors including two independent Directors and the Managing Director & CEO and was chaired by M. S. Ramachandran, an independent Director. There were three Meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
M. S. Ramachandran, Chairman |
3/3 |
Tushaar Shah* |
1/3 |
Alok Tandon (up to January 16, 2017) |
0/3 |
Chanda Kochhar |
3/3 |
* Participated in one Meeting through video-conference.
Upon completion of his term as a non-executive Director M. S. Ramachandran ceased to be the Chairman and Member of the Committee with effect from April 25, 2017. The Board at its Meeting held on April 6-7, 2017 reconstituted the Committee pursuant to which Dileep Choksi and Amit Agrawal were inducted as Members of the Committee with effect from April 6, 2017 and Tushaar Shah was appointed as the Chairman of the Committee with effect from April 25, 2017.
Details about the policy developed and implemented by the company on corporate social responsibility initiatives taken during the year
The CSR policy has been hosted on the website of the Companyhttps://www.icicibank.com/managed-assets docs/about-us/ICICI-Bank-CSR-Policy.pdf.
The Annual Report on CSR activities is annexed herewith as Annexure E.
V. Credit Committee Terms of Reference
The functions of the Committee include review of developments in key industrial sectors, major credit portfolios and approval of credit proposals as per the authorisation approved by the Board.
Composition
At March 31, 2017, the Credit Committee comprised three Directors including two independent Directors and the Managing Director & CEO and was chaired by the Managing Director & CEO. There were 28 Meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
Chanda Kochhar, Chairperson |
28/28 |
Homi Khusrokhan |
26/28 |
M. S. Ramachandran* |
28/28 |
* Participated in one Meeting through video-conference.
Upon completion of his term as a non-executive Director M. S. Ramachandran ceased to be the Member of the Committee with effect from April 25, 2017. The Board at its Meeting held on April 6-7, 2017, re-constituted the Committee with effect from April 6, 2017 pursuant to which M. K. Sharma was inducted as a Member as well as appointed as the Chairman of the Committee.
VI. Customer Service Committee Terms of Reference
The functions of this Committee include review of customer service initiatives, overseeing the functioning of the Customer Service Council and evolving innovative measures for enhancing the quality of customer service and improvement in the overall satisfaction level of customers.
Composition
At March 31, 2017, the Customer Service Committee comprised three Directors including two independent Directors, and the Managing Director & CEO and was chaired by M. S. Ramachandran, an independent Director. There were six Meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
M. S. Ramachandran, Chairman |
6/6 |
V. Sridar* |
5/6 |
Alok Tandon (up to January 16, 2017) |
0/5 |
Chanda Kochhar |
5/6 |
*Participated in one Meeting through tele-conference.
Upon completion of his term as a non-executive Director, M. S. Ramachandran ceased to be the Chairman and Member of the Committee with effect from April 25, 2017. Alok Tandon ceased to be a member of the Committee consequent to the withdrawal of his nomination as a Government Nominee Director effective January 16, 2017. The Board at its meeting held on April 6-7, 2017, re-constituted the Committee pursuant to which Tushaar Shah and Anup Bagchi were appointed as the Members of the Committee with effect from April 6, 2017 and V. Sridar was appointed as the Chairman of the Committee with effect from April 25, 2017.
VII. Fraud Monitoring Committee Terms of Reference
The Committee monitors and reviews all the frauds involving an amount of '' 10.0 million and above with the objective of identifying the systemic lacunae, if any, that facilitated perpetration of the fraud and put in place measures to rectify the same. The functions of this Committee include identifying the reasons for delay in detection, if any, and reporting to top management of the Bank and RBI on the same. The progress of investigation and recovery position is also monitored by the Committee. The Committee also ensures that staff accountability is examined at all levels in all the cases of frauds and action, if required, is completed quickly without loss of time. The role of the Committee is also to review the efficacy of the remedial action taken to prevent recurrence of frauds, such as strengthening of internal controls and put in place other measures as may be considered relevant to strengthen preventive measures against frauds.
Composition
At March 31, 2017, the Fraud Monitoring Committee comprised five Directors including four independent Directors and the Managing Director & CEO and was chaired by V. Sridar, an independent Director. There were seven Meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
V. Sridar, Chairman# |
6/7 |
Dileep Choksi |
6/7 |
Homi Khusrokhan |
6/7 |
V. K. Sharma |
2/7 |
Chanda Kochhar |
6/7 |
Rajiv Sabharwal (up to close of business hours on January 31, 2017) |
3/7 |
# Participated in one Meeting through tele-conference and one through video- conference.
The Board at its meeting held on April 6-7, 2017, re-constituted the Committee and took note of the cessation of V. K. Sharma as a member of the committee owing to his increased commitment and approved the appointment of Anup Bagchi as a Member of the Committee with effect from April 6, 2017.
VIII. Information Technology Strategy Committee Terms of Reference
The functions of the Committee are to approve strategy for Information Technology (IT) and policy documents, ensure that IT strategy is aligned with business strategy, review IT risks, ensure proper balance of IT investments for sustaining the Bank''s growth, oversee the aggregate funding of IT at Bank-level, ascertain if the management has resources to ensure the proper management of IT risks and review contribution of IT to business.
Composition
At March 31, 2017, the IT Strategy Committee comprised three Directors including two independent Directors and the Managing Director & CEO and was chaired by Homi Khusrokhan, an independent Director. There were five Meetings of the Committee held during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
Homi Khusrokhan, Chairman |
5/5 |
V. Sridar* |
5/5 |
Chanda Kochhar |
5/5 |
*Participated in one Meeting through video-conference.
IX. Risk Committee Terms of Reference
The functions of the Committee are to review ICICI Bank''s risk management policies pertaining to credit, market, liquidity, operational, outsourcing, reputation risks, business continuity plan and disaster recovery plan. The functions of the Committee also include review of the Enterprise Risk Management (ERM) framework, risk appetite framework (RAF), stress testing framework, Internal Capital Adequacy Assessment Process (ICAAP) and framework for capital allocation; review of the status of Basel II and Basel III implementation, risk return profile of the Bank, risk dashboard covering various risks, outsourcing activities and the activities of the Asset Liability Management Committee. The Committee also has oversight on risks of subsidiaries covered under the Group Risk Management Framework.
Composition
At March 31, 2017, the Risk Committee comprised six Directors including five independent Directors, and the Managing Director & CEO and was chaired by M. K. Sharma, an independent Director. There were seven Meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
M. K. Sharma, Chairman |
7/7 |
Dileep Choksi |
4/7 |
Homi Khusrokhan |
6/7 |
V. K. Sharma |
1/7 |
V. Sridar* |
6/7 |
Alok Tandon (up to January 16, 2017) |
0/5 |
Chanda Kochhar |
7/7 |
*Participated in one Meeting through video-conference.
X. Stakeholders Relationship Committee Terms of Reference
The functions and powers of the Committee include approval and rejection of transfer or transmission of equity shares, preference shares, bonds, debentures and securities, issue of duplicate certificates, allotment of shares and securities issued from time to time, review redressal and resolution of grievances of shareholders, debenture holders and other security holders, delegation of authority for opening and operation of bank accounts for payment of interest, dividend and redemption of securities and the listing of securities on stock exchanges.
Composition
At March 31, 2017, the Stakeholders Relationship Committee comprised three Directors including two independent Directors and was chaired by Homi Khusrokhan, an independent Director. There were four Meetings of the Committee during the year. The details of the composition of the Committee and attendance at its Meetings are set out in the following table:
Name of Member |
Number of meetings attended |
Homi Khusrokhan, Chairman |
3/4 |
V. Sridar* |
4/4 |
N. S. Kannan |
4/4 |
*Participated in one Meeting through video-conference.
P Sanker, Senior General Manager (Legal) is the Company Secretary of the Bank and acts as the Compliance Officer of the Bank in accordance with the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. 103 shareholder complaints received in fiscal 2017 were processed. At March 31, 2017, no complaints were pending.
XI. Review Committee for Identification of Willful Defaulters/Non Co-operative Borrowers Terms of Reference
The function of the Committee is to review the order of the Committee for identification of willful defaulters/ non co-operative borrowers (a Committee comprising whole time Directors and senior executives of the Bank to examine the facts and record the fact of the borrower being a willful defaulter/non co-operative borrower) and confirm the same for the order to be considered final.
Composition
The Managing Director & CEO is the Chairperson of this Committee and any two independent Directors will comprise the remaining members. There was one Meeting of the Committee during the year and details of the same is set out in the following table:
Name of Member |
Number of meetings attended |
Chanda Kochhar, Chairperson |
1/1 |
Homi Khusrokhan |
1/1 |
M. S. Ramachandran |
1/1 |
XII. Other Committees
In addition to the above, the Board has from time to time constituted various committees, namely, Committee of Executive Directors, Executive Investment Committee, Asset Liability Management Committee, Committee for Identification of Willful Defaulters/non co-operative borrowers, Committee of Senior Management (comprising certain whole time Directors and executives) and Committee of Executives, Compliance Committee, Product & Process Approval Committee, Regional Committees for India and overseas operations, Outsourcing Committee, Operational Risk Management Committee and other Committees (all comprising executives). These committees are responsible for specific operational areas like asset liability management, approval/renewal of credit proposals, approval of products and processes and management of operational risk, under authorization/supervision of the Board and its Committees.
XIII. General Body Meetings
The details of General Body Meetings held in the last three years are given below:
General Body Meeting |
Day, Date |
Time Venue |
Twenty-Second AGM |
Monday, July 11, 2016 |
12:00 noon Sir Sayajirao Nagargruh, Vadodara |
Twenty-First AGM |
Monday, June 29, 2015 |
12:00 noon Mahanagar Seva Sadan, Near GEB |
Twentieth AGM |
Monday, June 30, 2014 |
Colony, Old Padra Road, Akota, 1:00 p.m. Vadodara 390 020 |
The details of the Special Resolutions passed in the Annual General Meetings held in the previous three years are given below: |
||
General Body Meeting |
Day, Date |
Resolution |
Annual General Meeting |
Monday, July 11, 2016 |
Private placement of securities under Section 42 of the Companies Act, 2013 |
Annual General Meeting |
Monday, June 29, 2015 |
Private placement of securities under Section 42 of the Companies Act, 2013 |
Annual General Meeting |
Monday, June 30, 2014 |
1. Amendment to Articles of Association of the Bank pursuant to The Banking Laws (Amendment) Act, 2012 2. Borrowing limits under Section 180(1)(c) of the Companies Act, 2013 3. Private placement of securities under Section 42 of the Companies Act, 2013 |
Postal Ballot
During FY2017 no postal ballot notice was issued. In line with the provisions of Section 110 of the Companies Act, 2013, the Bank vide its Postal Ballot Notice dated May 5, 2017 is seeking approval of the Members for the following Special Resolutions:
(i) Alteration of Articles of Association
(ii) Amendment to the Employee Stock Option Scheme
The Bank follows the procedure as prescribed under the Companies Act, 2013 read with Companies (Management and Administration), Rules, 2014, as amended from time to time and the Secretarial Standards. Members are provided the facility to cast their votes through electronic voting (e-voting) or through postal ballot. The Board of Directors of the Bank, appoints Scrutinizer(s) for conducting the postal ballot voting process. The Scrutinizer submits his report to the Chairman after the completion of the scrutiny of the postal ballots (including e-voting). Considering the combined results of the Postal Ballot via postal ballot forms and e-voting facility, the resolution is considered approved. The results are declared and communicated to the stock exchanges and displayed on the Bank''s website www.icicibank.com.
XIV. Disclosures
1. There are no materially significant transactions with related parties i.e., directors, management, subsidiaries, or relatives conflicting with the Bank''s interests. The Bank has no promoter.
2. No penalties or strictures have been imposed on the Bank by any of the stock exchanges, the Securities & Exchange Board of India (SEBI) or any other statutory authority, for any non-compliance on any matter relating to capital markets, during the last three years.
3. In terms of the Whistle Blower Policy of the Bank, no employee of the Bank has been denied access to the Audit Committee.
XV. Means of Communication
It is ICICI Bank''s belief that all stakeholders should have access to complete information regarding its position to enable them to accurately assess its future potential. ICICI Bank disseminates information on its operations and initiatives on a regular basis. ICICI Bank''s website (www.icicibank.com) serves as a key awareness facility for all its stakeholders, allowing them to access information at their convenience. It provides comprehensive information on ICICI Bank''s strategy, financial performance, operational performance and the latest press releases.
ICICI Bank''s investor relations personnel respond to specific queries and play a proactive role in disseminating information to both analysts and investors. In accordance with SEBI and Securities Exchange Commission (SEC) guidelines, all information which could have a material bearing on ICICI Bank''s share price is released through leading domestic and global wire agencies. The information is also disseminated to the National Stock Exchange of India Limited (NSE), the Bombay Stock Exchange Limited (BSE), New York Stock Exchange (NYSE), Securities Exchange Commission (SEC), Singapore Stock Exchange, Japan Securities Dealers Association and SIX Swiss Exchange Ltd from time to time.
The financial and other information and the various compliances as required/prescribed under the Listing Regulations are filed electronically with NSE/BSE through NSE Electronic Application Processing (NEAP) System and through BSE Listing Centre and are also available on their respective websites in addition to the Bank''s website. Additionally information is also disseminated to BSE/NSE where required by email or fax.
ICICI Bank''s quarterly financial results are published either in the Financial Express (Mumbai, Pune, Ahmedabad, New Delhi, Luck now, Chandigarh, Kolkata, Chennai, Bengaluru, Hyderabad and Kochi editions) or the Business Standard (Ahmedabad, Bengaluru, Bhubaneshwar, Chandigarh, Chennai, Hyderabad, Kochi, Kolkata, Lucknow, Mumbai, New Delhi and Pune editions), and Vadodara Samachar (Vadodara). The financial results, official news releases, analyst call transcripts and presentations are also available on the Bank''s website.
The Management''s Discussion & Analysis forms part of the Annual Report.
General Shareholder Information
Annual General Meeting |
Day, Date & Time |
Venue |
Twenty-Third AGM |
Friday, June 30, 2017 12:00 noon |
Professor Chandravadan Mehta Auditorium, General Education Centre, Opposite D.N. Hall Ground, The Maharaja Sayajirao University, Pratapgunj, Vadodara 390 002 |
Financial Year |
: April 1, 2016 to March 31, 2017 |
|
Book Closure |
: June 22, 2017 to June 24, 2017 |
|
Dividend Payment Date |
: July 1, 2017 |
1. FII segment of BSE.
2. Each ADS of ICICI Bank represents two underlying equity shares.
The Bonds issued in domestic market comprised of privately placed bonds and also bonds issued via public issues which are listed on BSE/NSE.
Share Transfer System
ICICI Bank''s investor services are handled by 3i Infotech Limited (3i Infotech). 3i Infotech is a SEBI registered Category I - Registrar to an Issue & Share Transfer (R&T) Agent. 3i Infotech is an information technology company and in addition to R&T services, provides a wide range of technology & technology-enabled products and services.
ICICI Bank''s equity shares are traded mainly in dematerialized form. During the year, 1,464,735 equity shares of face value '' 2/- each involving 3,031 certificates were dematerialized. At March 31, 2017, 99.50% of paid-up equity share capital (including equity shares represented by ADS constituting 25.30% of the paid-up equity share capital) are held in dematerialized form.
Physical share transfer requests are processed and the share certificates are returned normally within a period of seven days from the date of receipt, if the documents are correct, valid and complete in all respects.
The number of equity shares of ICICI Bank transferred during the last three years (excluding electronic transfer of shares in dematerialized form) is given below:
Fiscal 2015 |
Fiscal 2016 |
Fiscal 2017 |
||
Shares of face value '' 10 |
Shares of face value '' 2 |
Shares of face value '' 2 |
Shares of face value '' 2 |
|
Number of transfer deeds |
706 |
564 |
1,114 |
414 |
Number of shares transferred |
38,382 |
153,150 |
314,890 |
109,155 |
As required under Regulation 40(9) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a certificate is obtained every six months from a practicing Company Secretary that all transfers have been completed within the stipulated time. The certificates are filed with BSE and NSE.
In terms of SEBI circular no. D&CC/FITTC/CIR-16 dated December 31, 2002, as amended vide circular no. CIR/ MRD/DP/30/2010 dated September 6, 2010 an audit is conducted on a quarterly basis by a firm of Chartered Accountants, for the purpose of, inter alia, reconciliation of the total admitted equity share capital with the depositories and in the physical form with the total issued/paid up equity share capital of ICICI Bank. Certificates issued in this regard are placed before the Stakeholders Relationship Committee and filed with BSE and NSE, where the equity shares of ICICI Bank are listed.
Physical Share Disposal Scheme
With a view to mitigate the difficulties experienced by physical shareholders in disposing off their shares, ICICI Bank, in the interest of investors holding shares in physical form (up to 250 shares of face value of '' 2 each) has instituted a Physical Share Disposal Scheme. The scheme was started in November 2008 and continues to remain open. Interested shareholders may contact the R&T Agent, 3i Infotech Limited for further details.
Registrar and Transfer Agents
The Registrar and Transfer Agent of ICICI Bank is 3i Infotech Limited. Investor services related queries/requests/ complaints may be directed to R. C. D''souza at the address as under:
3i Infotech Limited
International Infotech Park
Tower 5, 3rd Floor
Vashi Railway Station Complex
Vashi, Navi Mumbai 400 703
Maharashtra, India
Tel No. : 91-22-7123 8021
Fax No. : 91-22-7123 8098
E-mail : [email protected]
Queries relating to the operational and financial performance of ICICI Bank may be addressed to:
Rakesh Jha/Anindya Banerjee/Sonal Bagaria
ICICI Bank Limited
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400 051
Tel No. : 91-22-2653 6124
Fax No. : 91-22-2653 1175
E-mail : [email protected]
Debenture Trustees
Pursuant to Regulation 53 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the names and contact details of the debenture trustees for the public issue bonds and privately placed bonds of the Bank are given below:
Bank of Maharashtra Axis Trustee Services Limited IDBI Trusteeship Services Limited
Legal Dept.Head Office, Axis House, Asian Building, Ground Floor,
Lokmangal, "1501", Bombay Dyeing Mill Compound, 17, R Kamani Marg,
Shivaji Nagar, Pandurang Budhkar Marg, Ballard Estate,
Pune - 411 005 Worli, Mumbai - 400 025 Mumbai 400 001
Tel. No: 91-020-2553 6256 Tel No: 91- 22- 62260050/54 Tel No: 91 -22 - 4080 7001
[email protected] [email protected] [email protected]
The details are available on the website of the Bank at the link
http://www.icicibank.com/Personal-Banking/investments/icici-bank-bonds/index.page.
Information on Shareholding
Shareholding pattern of ICICI Bank at March 31, 2017
Shareholder Category |
Shares |
% holding |
Deutsche Bank Trust Company Americas (Depositary for ADS holders) |
1,473,304,334 |
25.30 |
FIIs, NRIs, Foreign Banks, Foreign Companies, OCBs and Foreign Nationals |
2,066,832,356 |
35.48 |
Insurance Companies |
886,918,475 |
15.23 |
Bodies Corporate (including Government Companies) |
145,843,449 |
2.51 |
Banks & Financial Institutions |
5,913,981 |
0.10 |
Mutual Funds |
871,787,797 |
14.97 |
Individuals, HUF and Trusts |
339,786,970 |
5.83 |
NBFC Registered with RBI |
1,122,769 |
0.02 |
Provident Fund / Pension Fund |
32,812,592 |
0.56 |
Alternative Investment Fund |
153,412 |
0.00 |
Total |
5,824,476,135 |
100.00 |
Shareholders of ICICI Bank with more than one percent holding at March 31, 2017
Name of the Shareholder |
No. of shares |
% to total no. of shares |
Deutsche Bank Trust Company Americas (Depositary for ADS holders) |
1,473,304,334 |
25.30 |
Life Insurance Corporation of India |
608,927,224 |
10.45 |
Dodge and Cox International Stock Fund |
364,368,485 |
6.26 |
Government of Singapore |
63,125,358 |
1.08 |
Government Pension Fund Global |
59,371,058 |
1.02 |
Total |
2,569,096,459 |
44.11 |
Distribution of shareholding of ICICI Bank at March 31, 2017
Range - Shares |
No. of Folios |
% |
No. of Shares |
% |
Up to 1,000 |
478,953 |
51.02 |
21,024,666 |
0.36 |
1,001 - 5,000 |
329,141 |
35.06 |
88,889,355 |
1.53 |
5,001 - 10,000 |
77,377 |
8.24 |
56,232,091 |
0.96 |
10,001 - 50,000 |
45,941 |
4.89 |
89,096,647 |
1.53 |
50,001 & above |
7,414 |
0.79 |
5,569,233,376 |
95.62 |
Total |
938,826 |
100.00 |
5,824,476,135 |
100.00 |
Disclosure with respect to shares lying in suspense account
The Bank had 100,950 equity shares held by 508 shareholders lying in suspense account at the beginning of the fiscal 2017. The Bank has been transferring the shares lying unclaimed to the eligible shareholders as and when the request for the same has been received after proper verification. During the year, the Bank had received requests from 16 shareholders holding 2,815 shares for claiming these shares out of which 1,775 shares held by 10 shareholders were transferred from the suspense account. As on March 31, 2017, 99,175 shares held by 498 shareholders remained unclaimed in the suspense account.
The voting rights on the shares lying in suspense account are frozen till the rightful owner of such shares claims the shares.
Outstanding GDRs/ADSs/Warrants or any Convertible Debentures, conversion date and likely impact on equity
ICICI Bank has 736.65 million ADS (equivalent to 1,473.30 million equity shares) outstanding, which constituted 25.30% of ICICI Bank''s total equity capital at March 31, 2017. Currently, there are no convertible debentures outstanding.
Commodity price risk or foreign exchange risk and hedging activities
The foreign exchange risk position including bullion is managed within the '' 10.00 billion net overnight open position (NOOP) limit approved by the Board of Directors. The Bank does not undertake positions in commodities. The Bank primarily has floating rate linked assets. Wholesale liability raising takes place in US dollar or other currencies via bond issuances, bilateral loans, syndicated/club loans as well as refinance from Export Credit Agencies (ECA) which may be at a fixed rate or floating rate linked. In case of fixed rate fund raising in US dollars, the interest rate risk is hedged via interest rate swaps wherein the Bank moves to a floating rate index in order to match the asset profile. In case of fund raising in non US dollar currencies, the foreign exchange risk is hedged via foreign exchange swaps or currency interest rate swaps.
Plant Locations - Not applicable Address for Correspondence
P. Sanker
Senior General Manager (Legal) & Company Secretary or
Ranganath Athreya
General Manager & Joint Company Secretary
ICICI Bank Limited
ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400 051
Tel No. : 91-22-2653 8900
Fax No. : 91-22-2653 1230
E-mail : [email protected]
The Bank is in compliance with requirements specified in Regulations 17 to 27 and clauses (b) to (i) of sub regulation (2) of Regulation 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Bank has also complied with the discretionary requirements such as maintaining a separate office for the Chairman at the Bank''s expense, ensuring financial statements with unmodified audit opinion, separation of posts of Chairman and Chief Executive Officer and reporting of internal auditor directly to the Audit Committee.
ANALYSIS OF CUSTOMER COMPLAINTS
a) Customer complaints in fiscal 2017
No. of complaints pending at the beginning of the year |
3,400 |
No. of complaints received during the year |
217,473 |
No. of complaints redressed during the year |
216,601 |
No. of complaints pending at the end of the year |
4,272 |
Note: The above does not include complaint redressed within 1 working day.
b) Awards passed by the Banking Ombudsman in fiscal 2017
Number of unimplemented awards at the beginning of the year |
Nil |
Number of awards passed by the Banking Ombudsman during the year |
Nil |
Number of awards implemented during the year |
Nil |
Number of unimplemented awards at the end of the year |
Nil |
COMPLIANCE CERTIFICATE OF THE AUDITORS
ICICI Bank has annexed to this report, a certificate obtained from the statutory auditors, M/s B S R & Co. LLP, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
EMPLOYEE STOCK OPTION SCHEME
The Bank has an Employee Stock Option Scheme (ESOS/Scheme) which was instituted in fiscal 2000 to enable the employees and whole time Directors of ICICI Bank and its subsidiaries to participate in future growth and financial success of the Bank. The ESOS aims at achieving the twin objectives of (i) aligning employee interest to that of the shareholders; and
(ii) retention of talent. Through employee stock option grants, the Bank seeks to foster a culture of long-term sustainable value creation. The Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the below disclosures are available at www.icicibank.com/aboutus/annual.page. Pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, options are granted by the Board Governance, Remuneration & Nomination Committee (BGRNC/Committee) and noted by the Board.
The Scheme was initially approved by the Members at their meeting held on February 21, 2000 and thereafter further amended through resolutions at the General Meetings held on September 20, 2004 and June 25, 2012 and vide a postal ballot resolution passed on April 22, 2016. The Bank has up to May 3, 2017 granted 446.46 million stock options from time to time aggregating to 7.66% of the issued equity capital of the Bank at May 3, 2017. As per the ESOS, as amended from time to time, the maximum number of options granted to any employee/Director in a year is limited to 0.05% of ICICI Bank''s issued equity shares at the time of the grant, and the aggregate of all such options is limited to 10% of ICICI Bank''s issued equity shares on the date of the grant (equivalent to 582.56 million shares of face value '' 2 each at May 3, 2017).
Options granted after April 1, 2014 vest in a graded manner over a three year period, with 30%, 30% and 40% of the grant vesting in each year, commencing from the end of 12 months from the date of the grant, other than the following:
- 250,000 options granted in April 2014, 50% vested on April 30, 2017 and balance 50% would vest on April 30, 2018
- Options granted in September 2015 would vest in equal proportions on April 30, 2018 and April 30, 2019. The unvested options would lapse upon termination of employment due to retirement (including pursuant to early/voluntary retirement scheme)
Options granted prior to April 1, 2014 vested in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant, other than the following:
- Options granted in April 2009 vested in a graded manner over a five year period with 20%, 20%, 30% and 30% of the grant vesting in each year, commencing from the end of 24 months from the date of the grant
- The grant approved by the Board at its Meeting held on October 29, 2010 (for which RBI approval for grant to whole time Directors was received in January 2011), vested 50% on April 30, 2014 and the balance 50% vested on April 30, 2015
- Options granted in September 2011 vested in a graded manner over a five year period with 15%, 20%, 20% and 45% of the grant vesting in each year, commencing from end of 24 months from the date of grant
The price for options granted (except for grants approved on October 29, 2010 where the grant price was the average closing price of the ICICI Bank stock on the stock exchange during the six months up to October 28, 2010) is equal to the closing price on the stock exchange which recorded the highest trading volume preceding the date of grant of options in line with the SEBI regulations.
The BGRNC at its Meeting held on July 11, 2016 amended the scheme to state that in the event of an Participant''s employment terminating due to retirement, the Options shall vest by such period as stipulated in the Award Confirmation, subject to the Participant demonstrating compliance with the Code of Conduct including Undertaking of Continued Good Conduct with a proviso that at the sole discretion of the Committee, it may allow the whole of the options or part thereof to vest at one time or at various points of time.
Further the Committee at its meeting held on May 3, 2017 approved the amendment to the definition of Exercise Period as given below:
"Exercise Period means the period commencing from the date of vesting and will expire on completion of such period not exceeding ten years from the date of vesting of Options as may be determined by the Board Governance, Remuneration & Nomination Committee ("BGRNC") for each grant".
The above amendment was also approved by the Board at its Meeting held on the same day subject to the approval of the shareholders. The amendment is intended to cover only future grants to be made and would come into effect only after approval by Members and will not cover grants already made. There is no incremental Exercise Period being granted or proposed. The present definition provides for a fixed term Exercise Period of ten years and does not allow flexibility to align the Exercise Period of future grants to reflect the time horizon of short term and long term strategies of the Bank. The amendment would enable grants to be made with appropriate Exercise Period(s) for each grant after vesting to better align (i) employee efforts to the articulated strategy; and (ii) the compensation payout schedules for senior management to the time horizon of risks. Approval of the shareholders for the above amendment is being sought through postal ballot notice dated May 5, 2017.
The BGRNC at its Meeting held on May 3, 2017 also approved a grant of approximately 33 million options for fiscal 2017 to eligible employees and whole time Directors of ICICI Bank and its subsidiaries (options granted to whole time Directors of ICICI Bank being subject to RBI approval). Each option confers on the employee a right to apply for one equity share of face value of Rs, 2 of ICICI Bank at Rs, 275.60 which was closing price on the stock exchange which recorded the highest trading volume in ICICI Bank shares on May 2, 2017. The grant price is calculated as per the SEBI regulations.
Particulars of options granted by ICICI Bank up to May 3, 2017 are given below:
Options granted till May 3, 2017 (excluding options forfeited/lapsed) |
446,459,925 |
Options forfeited/lapsed |
71,626,600 |
Options vested |
364,814,425 |
Options exercised |
210,565,925 |
Total number of options in force |
235,894,000 |
Number of shares allotted pursuant to exercise of options |
210,565,925 |
Extinguishment or modification of options |
Nil |
Amount realized by exercise of options (?) |
16,661,600,441 |
Note:
For details on option movement during the year refer Financials-Schedule 18-Employee Stock Option Scheme. 31,107,650 options vested during FY2017 and Rs, 1,772,579,808 was realized by exercise of options during FY2017.
The following Key Managerial Personnel (other than whole time Directors) and Senior Management Personnel (SMP) were granted ESOPs up to a maximum of 332,500 options, aggregating to 4,156,000 in May 2017. Additionally 850,000 joining ESOPs were granted to a SMP
Sr. No. |
Name |
Grade |
1 |
Rakesh Jha |
Group Executive (Chief Financial Officer) |
2 |
B Madhivanan |
Group Executive |
3 |
Balachander Prasanna |
Group Executive |
4 |
Sanjay Chougule |
Senior General Manager |
5 |
Anita Pai |
Senior General Manager |
6 |
G Srinivas |
Senior General Manager |
7 |
T K Srirang |
Senior General Manager |
8 |
Kumar Ashish |
Senior General Manager |
9 |
Anuj Bhargava |
Senior General Manager |
10 |
Prathit Bhobe |
Senior General Manager |
Sr. No. |
Name |
Grade |
11 |
Partha Dey |
Senior General Manager |
12 |
Sujit Ganguli |
Senior General Manager |
13 |
Ajay Gupta |
Senior General Manager |
14 |
Anirudh Kamani |
Senior General Manager |
15 |
Anil Kaul |
Senior General Manager |
16 |
Loknath Mishra |
Senior General Manager |
17 |
Narayanan N R |
Senior General Manager |
18 |
Amit Palta |
Senior General Manager |
19 |
Murali Ramakrishnan |
Senior General Manager |
20 |
Kusal Roy |
Senior General Manager |
21 |
Anup Kumar Saha |
Senior General Manager |
22 |
Avijit Saha |
Senior General Manager |
23 |
Sanker Parameswaran |
Senior General Manager (Company Secretary) |
24 |
Supritha Shirish Shetty |
Senior General Manager |
25 |
Saurabh Singh |
Senior General Manager |
No employee was granted options during any one year equal to or exceeding 0.05% of the issued equity shares of ICICI Bank at the time of the grant.
The diluted earnings per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with AS-20 was Rs, 16.77 in fiscal 2017 compared to basic EPS of Rs, 16.84. Based on the intrinsic value of options, no compensation cost was recognized during fiscal 2017. However, if the Bank had used the fair value of options based on the binomial tree model, compensation cost in fiscal 2017 would have been higher by Rs, 5.11 billion including additional cost of Rs, 1.39 billion due to change in exercise period (approved by shareholders vide postal ballot on April 22, 2016) and preformed profit after tax would have been Rs, 92.90 billion. Additional cost of Rs, 1.39 billion at the date of modification reflects the difference between fair value of option calculated as per revised exercise period and fair value of option calculated as per original exercise period. On a preformed basis, the Bank''s basic and diluted earnings per share would have been Rs, 15.97 and Rs, 15.90 respectively.
The key assumptions used to estimate the fair value of options granted during fiscal 2017 are given below:
Risk-free interest rate |
7.43% to 7.77% |
Expected life |
3.89 to 5.89 years |
Expected volatility |
32.03% to 33.31% |
Expected dividend yield |
2.04% to 2.15% |
The weighted average fair value of options granted during fiscal 2017 is Rs, 84.39 (Rs, 100.50 during fiscal 2016).
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The Bank has undertaken various initiatives for energy conservation at its premises, further details are given under Principle 6 of Section E of the Business Responsibility Report. The Bank has used information technology extensively in its operations, for more details please refer the section on Information Technology under Business Overview.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
In line with the ''Green Initiative'' since the last five years, the Bank has effected electronic delivery of Notice of Annual General Meeting and Annual Report to those Members whose e-mail IDs were registered with the respective Depository Participants and downloaded from the depositories viz. National Securities Depository Limited/Central Depository Services (India) Limited. The Companies Act, 2013 and the underlying rules as well as Regulation 36 of Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, permit the dissemination of financial statements and annual report in electronic mode to the Members. Your Directors are thankful to the Members for actively participating in the Green Initiative and seek your continued support for implementation of the green initiative.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;
2. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;
3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;
4. that they have prepared the annual accounts on a going concern basis;
5. that they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and
6. that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and overseas regulators for their continued co-operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, rating agencies and stock exchanges for their support.
ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation to all the employees, whose outstanding professionalism, commitment and initiative has made the organizationâs growth and success possible and continues to drive its progress. Finally, the Directors wish to express their gratitude to the Members for their trust and support.
For and on behalf of the Board
M. K. Sharma
May 15, 2017 Chairman
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the Twenty-first Annual
Report of ICICI Bank Limited along with the audited financial
statements for the year ended March 31,2015.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2015 is summarised in the
following table:
Rs.in billion, except percentages Fiscal 2014 Fiscal 2015 % change
Net interest income and other income 269.03 312.16 16.0%
Operating expenses 103.09 114.96 11.5%
Provisions & contingencies1 26.26 39.00 48.5%
Profit before tax 139.68 158.20 13.3%
Profit after tax 98.10 111.75 13.9%
1. Excludes provision for taxes.
Rs.in billion, except percentages Fiscal 2014 Fiscal 2015 % change
Consolidated profit after tax 110.41 122.47 10.9%
Appropriations
The profit after tax of the Bank for fiscal 2015 is Rs.111.75 billion
after provisions and contingencies of Rs. 39.00 billion, provision for
taxes of Rs. 46.45 billion and all expenses. The disposable profit is Rs.
244.93 billion, taking into account the balance of Rs. 133.18 billion
brought forward from the previous year. Your Bank''s dividend policy is
based on the profitability and key financial metrics of the Bank, the
Bank''s capital position and requirements and the regulations pertaining
to the same. Your Bank has a consistent dividend payment history. Given
the financial performance for fiscal 2015 and in line with the Bank''s
dividend policy, your Directors are pleased to recommend a dividend of
Rs. 5.00 per equity share for the year ended March 31, 2015 and have
appropriated the disposable profit as follows:
Rs. in billion Fiscal 2014 Fiscal 2015
To Statutory Reserve, making in all
Rs. 163.21 billion 24.53 27.94
To Special Reserve created and maintained
in terms of Section 36(1)(viii) of the
Income-tax 9.00 11.00
Act, 1961, making in all Rs. 65.79 billion
To Capital Reserve, making in
all Rs. 25.85 billion 0.76 2.92
To/(from) Investment Reserve Account,
making in all Nil 1.27 (1.27)
To Revenue and other reserves, making in
all Rs. 26.47 billion1-2 0.05 0.01
Dividend for the year (proposed)
- On equity shares @ Rs. 5.00 per share of
face value Rs. 2.00 each (@ Rs. 23.00 per
share of face 26.57 29.02
value Rs. 10.00 each for fiscal 2014)
- On preference shares @ Rs. 100.00 per
preference share (@ Rs. 100.00 per
preference share 35,000 35,000
for fiscal 2014) (Rs.)
- Corporate dividend tax 1.76 2.71
Leaving balance to be carried forward
to the next year 133.18 172.61
1. Includes transfer of Rs. 7.7 million to Reserve Fund for fiscal 2015
(Rs. 46.1 million to Reserve Fund and Investment Fund account for fiscal
2014) in accordance with regulations applicable to the Sri Lanka
branch.
2. During fiscal 2015, an amount of Rs. 9.29 billion was utilised with
approval of RBI to provide for outstanding Funded Interest Term Loan
related to accounts restructured prior to the issuance of RBI
guidelines in 2008. Refer detailed note no. 25 in schedule 18 ''notes to
accounts'' of the financial statements.
3. Includes dividend for the prior year paid on shares issued after the
balance sheet date and prior to the record date.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Pursuant to the clarification dated February 13, 2015 issued by
Ministry of Corporate Affairs and Section 186(11) of the Companies Act,
2013, the provisions of Section 186(4) of the Companies Act, 2013
requiring disclosure in the financial statements of the full
particulars of the loan given, investment made or guarantee given or
security provided and the purpose for which the loan or guarantee or
security is proposed to be utilised by the recipient of the loan or
guarantee or security is not applicable to a banking company.
SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES
ICICI Bank Eurasia Limited Liability Company ceased to be a subsidiary
of the Bank effective March 17, 2015.
The Bank, to protect its interests as a lender, converts loans or
exercises pledge of shares from time to time and hence acquires equity
holding in unrelated companies, which are required to be reported as
associates under the Companies Act, 2013 if the holding exceeds 20.0%.
Accordingly, pursuant to invocation of pledge for recovery of monies,
Falcon Tyres Limited became an associate company of the Bank effective
December 4, 2014 for the purpose of reporting under the Companies Act,
2013. The particulars of subsidiary and associate companies as on March
31, 2015 have been included in Form MGT-9 which is annexed to this
report as Annexure D.
PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARIES, JOINT VENTURES AND
ASSOCIATES
The performance and financial position of subsidiaries and associates
of the Bank as on March 31,2015 has been annexed to this report as
Annexure A.
The Bank will make available separate audited financial statements of
the subsidiaries to any Member upon request. These documents/details
are available on the Bank''s website (www.icicibank.com) and will also
be available for inspection by any Member or trustee of the holder of
any debentures of the Bank at its Registered Office and Corporate
Office. As required by Accounting Standard-21 issued by the Institute
of Chartered Accountants of India, the Bank''s consolidated financial
statements included in this Annual Report incorporate the accounts of
its subsidiaries and other consolidating entities. A summary of key
financials of the Bank''s subsidiaries is also included in this Annual
Report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR
TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY
There are no significant and/or material orders passed by the
Regulators or Courts or Tribunals impacting the going concern status of
the Bank.
DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
Changes in the composition of the Board of Directors and other Key
Managerial Personnel
Alok Tandon, Joint Secretary, Ministry of Finance, has been nominated
by Government of India as Director on Board of the Bank effective June
6, 2014 in place of Arvind Kumar. The Board placed on record its
appreciation of the valuable contribution and guidance provided by
Arvind Kumar to the Bank.
V K. Sharma was appointed as an independent Director by the Members at
the last Annual General Meeting (AGM) held on June 30, 2014.
There was no other appointment or cessation of appointment of key
managerial personnel during the financial year. Independent Directors
The Board of the Bank consists of 12 Directors, out of which seven are
independent Directors, one is a Government Nominee Director and four
are wholetime Directors.
All independent Directors have given declarations that they meet the
criteria of independence as laid down under Section 149 of the
Companies Act, 2013 which has been relied on by the Bank and placed at
the Board Meeting of the Bank held on April 27, 2015.
Retirement by rotation
In terms of Section 152 of the Companies Act, 2013, N. S. Kannan,
Executive Director would retire by rotation at the forthcoming AGM and
is eligible for re-appointment. N. S. Kannan has offered himself for
re-appointment.
Re-appointments/Approvals for Executive Directors
The Members of the Company at the AGM held on June 30, 2014 approved
the re-appointment of Rajiv Sabharwal as Executive Director of the Bank
for a period of five years effective June 24, 2015 upto June 23, 2020.
RBI vide its letter dated March 31, 2015 has approved the
re-appointment of Rajiv Sabharwal for a period of three years effective
June 24, 2015 upto June 23, 2018.
AUDITORS
Statutory Auditors
At the AGM held on June 30, 2014 the Members approved the appointment
of M/s B S R & Co. LLP, Chartered Accountants as statutory auditors for
a period of four years commencing from the twentieth AGM till the
conclusion of the twenty- fourth AGM subject to the annual approval of
RBI and ratification by the Members every year. As recommended by the
Audit Committee, the Board has proposed the re-appointment of M/s B S R
& Co. LLP, Chartered Accountants as statutory auditors for fiscal 2016.
Their appointment has been approved by RBI for fiscal 2016. The
appointment is accordingly proposed in the Notice of the current AGM
vide item no. 5 for ratification by Members.
There are no qualifications, reservation or adverse remarks made by the
statutory auditors in the audit report. Secretarial Auditors
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Bank with the approval of its Board,
appointed M/s. Parikh Parekh & Associates, a firm of Company
Secretaries in Practice to undertake the Secretarial Audit of the Bank
for the financial year ended March 31, 2015. The Secretarial Audit
Report is annexed herewith as Annexure B. There are no qualifications,
reservation or adverse remark or disclaimer made by the auditor in the
report save and except disclaimer made by them in discharge of their
professional obligation.
PERSONNEL
The statement containing particulars of employees as required under
Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is given in an annexure and forms part of this report. In terms of
Section 136(1) of the Companies Act, 2013, the Report and the Accounts
are being sent to the Members excluding the aforesaid Annexure. Any
Member interested in obtaining a copy of the Annexure may write to the
Company Secretary at the Registered Office of the Bank.
INTERNAL CONTROL AND ITS ADEQUACY
The Bank has adequate internal controls and processes in place with
respect to its financial statements which provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements. These controls and processes are driven through
various policies, procedures and certifications. The processes and
controls are reviewed periodically. The Bank has a mechanism of testing
the controls at regular intervals for their design and operating
effectiveness to ascertain the reliability and authenticity of
financial information.
DISCLOSURE UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999
The Bank has obtained a certificate from its statutory auditors that it
is in compliance with the Foreign Exchange Management Act, 1999
provisions with respect to investments made in its consolidated
subsidiaries during FY2015.
RELATED PARTY TRANSACTIONS
The Bank undertakes various transactions with related parties in the
ordinary course of business. The Bank has a Board approved policy on
Related Party Transactions, which has been disclosed on the website of
the Bank and can be viewed at
http://www.icicibank.com/managed-assets/docs/personal/general-links/
related-party-transactions-policy.pdf.
The Bank also has a Board approved Group Arms'' Length Policy which
requires transactions with the group companies to be at arm''s length.
The transactions between the Bank and its related parties, during the
year ended March 31,2015, were in the ordinary course of business and
based on the principles of arm''s length. The details of material
related party transactions at an aggregate level for year ended March
31,2015 is annexed as Annexure C.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in form
MGT-9 is annexed herewith as Annexure D.
BUSINESS RESPONSIBILITY REPORTING
Business Responsibility Report as mandated by Securities and Exchange
Board of India (SEBI) vide its circular dated August 13, 2012 has been
hosted on the website of the Bank
(http://www.icicibank.com/aboutus/annual.html). Any Member interested
in obtaining a physical copy of the same may write to the Company
Secretary at the Registered Office of the Bank.
RISK MANAGEMENT FRAMEWORK
The Bank''s risk management framework is based on a clear understanding
of various risks, disciplined risk assessment and measurement
procedures and continuous monitoring. The policies and procedures
established for this purpose are continuously benchmarked with
international best practices. The Board of Directors has oversight on
all the risks assumed by the Bank. Specific Committees have been
constituted to facilitate focused oversight of various risks as
follows:
The Risk Committee of the Board reviews risk management policies of the
Bank pertaining to credit, market, liquidity, operational, outsourcing
and reputation risks and business continuity management. The Committee
also reviews the Risk Appetite & Enterprise Risk Management frameworks,
Internal Capital Adequacy Assessment Process (ICAAP) and stress
testing. The stress testing framework includes a wide range of
Bank-specific and market (systemic) scenarios. The ICAAP exercise
covers the domestic and overseas operations of the Bank, banking
subsidiaries and material non- banking subsidiaries. The Committee
reviews migration to the advanced approaches under Basel II and
implementation of Basel III, risk return profile of the Bank,
compliance with RBI guidelines pertaining to credit, market and
operational risk management systems and the activities of the Asset
Liability Management Committee. The Committee reviews the level and
direction of major risks pertaining to credit, market, liquidity,
operational, compliance, group, management and capital at risk as part
of risk profile templates. In addition, the Committee has oversight on
risks of subsidiaries covered under the Group Risk Management
Framework. The Risk Committee also reviews the Liquidity Contingency
Plan for the Bank and the threshold limits.
The Credit Committee of the Board, apart from sanctioning credit
proposals based on the Bank''s credit authorisation framework, reviews
developments in key industrial sectors and the Bank''s exposure to these
sectors as well as to large borrower accounts and borrower groups. The
Credit Committee also reviews the major credit portfolios,
non-performing loans, accounts under watch, overdues and incremental
sanctions.
The Audit Committee of the Board provides direction to and monitors the
quality of the internal audit function and also monitors compliance
with inspection and audit reports of Reserve Bank of India, other
regulators and statutory auditors.
The Asset Liability Management Committee is responsible for managing
liquidity and interest rate risk and reviewing the asset-liability
position of the Bank.
Summaries of reviews conducted by these Committees are reported to the
Board on a regular basis.
Policies approved from time to time by the Board of
Directors/Committees of the Board form the governing framework for each
type of risk. The business activities are undertaken within this policy
framework. Independent groups and sub-groups have been constituted
across the Bank to facilitate independent evaluation, monitoring and
reporting of various risks. These groups function independently of the
business groups/sub-groups.
The Bank has dedicated groups, viz., the Risk Management Group,
Compliance Group, Corporate Legal Group, Internal Audit Group and the
Financial Crime Prevention & Reputation Risk Management Group, with a
mandate to identify, assess and monitor all of the Bank''s principal
risks in accordance with well-defined policies and procedures. The Risk
Management Group is further organised into the Credit Risk Management
Group, Market Risk Management Group and Operational Risk Management
Group. These groups are completely independent of all business
operations and coordinate with representatives of the business units to
implement the Bank''s risk management policies and methodologies. The
internal audit and compliance groups are responsible to the Audit
Committee of the Board.
INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Please refer Principle 3 under Section E of the Business Responsibility
Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
The Bank has undertaken various initiatives for energy conservation at
its premises, further details are given under Principle 6 of Section E
of the Business Responsibility Report. The Bank has used information
technology extensively in its operations, for more details please refer
the section on Information Technology under Business Overview.
GREEN INITIATIVES IN CORPORATE GOVERNANCE
In line with the ''Green Initiative'' since the last four years, the Bank
has effected electronic delivery of Notice of Annual General Meeting
and Annual Report to those shareholders whose email ids were registered
with the respective Depository Participants and downloaded from the
depositories viz. National Securities Depository Limited/Central
Depository Services (India) Limited. The Companies Act, 2013 and the
underlying rules as well as Clause 32 of the Listing Agreement permit
the dissemination of financial statements in electronic mode to the
shareholders. Your Directors are thankful to the shareholders for
actively participating in the Green Initiative and seek your continued
support for implementation of the green initiative.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable
accounting standards had been followed along with proper explanation
relating to material departures;
2. that they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the company at the end of the financial year and of the profit of the
company for that period;
3. that they have taken proper and sufficient care for the maintenance
of adequate accounting records, in accordance with the provisions of
the Banking Regulation Act, 1949 and the Companies Act, 2013 for
safeguarding the assets of the Bank and for preventing and detecting
fraud and other irregularities;
4. that they have prepared the annual accounts on a going concern
basis;
5. that they have laid down internal financial controls to be followed
by the Bank and that such internal financial controls are adequate and
were operating effectively; and
6. that they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, RBI, SEBI, IRDA and
overseas regulators for their continued co- operation, support and
guidance. ICICI Bank wishes to thank its investors, the domestic and
international banking community, rating agencies and stock exchanges
for their support.
ICICI Bank would like to take this opportunity to express sincere
thanks to its valued clients and customers for their continued
patronage. The Directors express their deep sense of appreciation of
all the employees, whose outstanding professionalism, commitment and
initiative has made the organisation''s growth and success possible and
continues to drive its progress. Finally, the Directors wish to express
their gratitude to the Members for their trust and support.
For and on behalf of the Board
K. V. Kamath
May 22, 2015 Chairman
Mar 31, 2013
The Directors have pleasure in presenting the Nineteenth Annual Report
of ICICI Bank Limited along with the audited statement of accounts for
the year ended March 31, 2013.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2013 is summarised in the
following table:
Rs. billion, except percentages Fiscal 2012 Fiscal 2013 % change
Net interest income and other income 182.36 222.12 21.8%
Operating expenses 78.50 90.13 14.8%
Provisions & contingencies1 15.83 18.02 13.8%
Profit before tax 88.03 113.97 29.5%
Profit after tax 64.65 83.25 28.8%
1. Excludes provision for taxes.
Rs. billion, except percentages Fiscal 2012 Fiscal 2013 % change
Consolidated profit after tax 76.43 96.04 25.7%
Appropriations
The profit after tax of the Bank for fiscal 2013 is Rs. 83.25 billion
after provisions and contingencies of Rs. 18.02 billion, provision for
taxes of Rs. 30.72 billion and all expenses. The disposable profit is
Rs. 153.79 billion, taking into account the balance of Rs. 70.54
billion brought forward from the previous year. In accordance with the
guidelines prescribed by Reserve Bank of India (RBI) and the dividend
policy adopted by the Bank, your Directors have recommended a dividend
at the rate of Rs. 20.00 per equity share of face value Rs. 10 for the
year and have appropriated the disposable profit as follows:
Rs. billion Fiscal 2012 Fiscal 2013
To Statutory Reserve, making in all
Rs. 110.74 billion 16.17 20.82
To Special Reserve created and maintained
in terms of Section 36(1)(viii) 6.50 7.60
of the Income-tax Act, 1961, making in all
Rs. 45.79 billion
To Capital Reserve, making in all
Rs. 22.17 billion 0.38 0.33
To Revenue and other reserves, making in all
Rs. 49.90 billion1 0.02 0.03
Dividend for the year (proposed)
- On equity shares @ Rs. 20.00 per share
(@ Rs. 16.50 per share for 19.02 23.07
fiscal 2012)2
- On preference shares (Rs.) 35,000 35,000
- Corporate dividend tax 2.20 2.92
Leaving balance to be carried
forward to the next year 70.54 99.02
1. Includes transfer to Reserve Fund and Investment Fund account Rs.
27.8 million for fiscal 2013 (Rs. 10.7 million for fiscal 2012) in
accordance with regulations applicable to Sri Lanka branch. No amount
was transferred to General Reserve in fiscal 2013 (Rs. 3.2 million for
fiscal 2012).
2. Includes dividend for the prior year paid on shares issued after
the balance sheet date and prior to the record date.
SUBSIDIARY COMPANIES
At March 31, 2013, ICICI Bank had 17 subsidiaries as listed in the
following table:
Domestic Subsidiaries International Subsidiaries
ICICI Prudential Life Insurance ICICI Bank UK PLC
Company Limited
ICICI Lombard General Insurance ICICI Bank Canada
Company Limited
ICICI Prudential Asset ICICI Bank Eurasia
Management Limited Liability Company
Company Limited
ICICI Prudential Trust Limited ICICI Securities Holdings Inc.2
ICICI Securities Limited ICICI Securities Inc.3
ICICI Securities Primary ICICI International Limited
Dealership Limited
ICICI Venture Funds Management
Company Limited
ICICI Home Finance Company
Limited
ICICI Investment Management
Company Limited
ICICI Trusteeship Services
Limited
ICICI Prudential Pension Funds
Management Company Limited1
1. Subsidiary of ICICI Prudential Life Insurance Company Limited.
2. Subsidiary of ICICI Securities Limited.
3. Subsidiary of ICICI Securities Holdings Inc.
The Ministry of Corporate Affairs (MCA) vide its Circular
No.51/12/2007- CL-III dated February 8, 2011 has granted general
exemption under Section 212(8) of the Companies Act, 1956 to companies
from attaching the accounts of their subsidiaries in their annual
reports subject to fulfilment of certain conditions prescribed.
Pursuant to the requirements of the above Circular, the Board of
Directors of the Bank at its Meeting held on April 26, 2013 passed the
necessary resolution granting the requisite approvals for not attaching
the balance sheet, profit & loss account, report of the board of
directors and report of the auditors of each of the subsidiary
companies to the accounts of the Bank. The Bank will make available
these documents/details upon request by any Member of the Bank. These
documents/details will be available on the Bank''s website
(www.icicibank.com) and will also be available for inspection by any
Member of the Bank at its Registered Office and Corporate Office and
also at the registered offices of the concerned subsidiaries. As
required by Accounting Standard-21 (AS- 21) issued by the Institute of
Chartered Accountants of India, the Bank''s consolidated financial
statements included in this Annual Report incorporate the accounts of
its subsidiaries and other consolidating entities. A summary of key
financials of the Bank''s subsidiaries is also included in this Annual
Report.
During fiscal 2013, ICICI Bank formed a joint venture with Bank of
Baroda, Citicorp Finance and Life Insurance Corporation of India, to
incorporate India Infradebt Limited, India''s first infrastructure debt
fund structured as a non-banking finance company.
DIRECTORS
Pursuant to the provisions of the Banking Regulation Act, 1949, Sridar
Iyengar retired from the Board effective April 30, 2013 on completion
of eight years as a non-executive Director. The Board placed on record
its deep appreciation and gratitude for his guidance and contribution
to the Bank.
The Board, at its Meeting held on April 26, 2013, appointed Dileep
Choksi, a chartered accountant and former Joint Managing Partner of
Deloitte in India as an additional Director effective April 26, 2013.
Dileep Choksi holds office upto the date of the forthcoming Annual
General Meeting (AGM) and is eligible for appointment.
In terms of the provisions of the Companies Act, 1956 and the Articles
of Association of the Bank, K. V Kamath, Tushaar Shah and Rajiv
Sabharwal would retire by rotation at the forthcoming AGM and are
eligible for re-appointment. K. V Kamath, Tushaar Shah and Rajiv
Sabharwal have offered themselves for re-appointment.
The Members of the Company previously by way of postal ballot in
February 2009, approved the appointment of K. V Kamath as non-
executive Chairman of the Bank effective May 1, 2009 upto April 30,
2014 and the re-appointment of Chanda Kochhar as Joint Managing
Director & CFO effective April 1, 2009 upto April 30, 2009 and her
appointment as Managing Director & CEO effective May 1, 2009 upto March
31, 2014.
The Members at the Annual General Meeting (AGM) held on June 29, 2009
approved the appointment of N. S. Kannan as Executive Director
(designated as Executive Director & CFO) for a period of five years
effective May 1, 2009 upto April 30, 2014 and K. Ramkumar as Executive
Director for a period of five years effective February 1, 2009 upto
January 31, 2014.
The requisite approvals have been received from RBI for all the
aforesaid appointments.
The Board at its Meeting held on April 26, 2013 (based on the
recommendations of the Board Governance, Remuneration & Nomination
Committee) approved the re-appointment of the following Directors of
the Bank subject to the approval of Members and RBI for a further
period of five years as given below:
I. K. V Kamath as non-executive Chairman of the Bank for a period of
five years effective May 1, 2014 upto April 30, 2019,
II. Chanda Kochhar as Managing Director & CEO of the Bank for a period
of five years effective April 1, 2014 upto March 31, 2019,
III. N. S. Kannan as Executive Director (designated as Executive
Director & CFO) of the Bank for a period of five years effective May 1,
2014 upto April 30, 2019 and
IV K. Ramkumar as Executive Director of the Bank for a period of five
years effective February 1, 2014 upto January 31, 2019.
The resolution for the re-appointments are proposed to the Members in
the Notice of the current AGM vide item nos. 10-13 and the explanatory
statements for these items include the duration and terms of re-
appointment as well as remuneration. You are requested to consider the
re-appointment of the above Directors.
The Members approved the appointment of Rajiv Sabharwal as Executive
Director for a period of five years effective June 24, 2010 upto June
23, 2015 at the AGM held on June 28, 2010. RBI has approved the
appointment of Rajiv Sabharwal as an Executive Director for a period of
three years effective June 24, 2010 upto June 23, 2013. An application
has been made to RBI seeking approval for re-appointment of Rajiv
Sabharwal as an Executive Director for a further period of two years
effective June 24, 2013 upto June 23, 2015.
AUDITORS
The Members are informed that while the registration number of the
statutory auditors continues to remain the same, the name of the
statutory auditors which was formerly S. R. Batliboi & Co., Chartered
Accountants has been changed to S. R. Batliboi & Co. LLP Chartered
Accountants with effect from April 1, 2013 consequent to their
conversion into a limited liability partnership.
The auditors, S. R. Batliboi & Co. LLP Chartered Accountants will
retire at the ensuing AGM. As recommended by the Audit Committee, the
Board has proposed the appointment of S. R. Batliboi & Co. LLP
Chartered Accountants as statutory auditors for fiscal 2014. Their
appointment is subject to the approval of RBI. The appointment of the
auditors is proposed to the Members in the Notice of the current AGM
vide item no.7. The explanatory statement to the notice sets out the
facts with respect to the change in name. You are requested to consider
their appointment.
PERSONNEL
The statement containing particulars of employees as required under
Section 217(2A) of the Companies Act, 1956 and the rules hereunder is
given in an Annexure and forms part of this report. In terms of Section
219(1)(iv) of the Act, the Report and Accounts are being sent to the
shareholders excluding the aforesaid Annexure. Any shareholder
interested in obtaining a copy of the Annexure may write to the Company
Secretary at the Registered Office of the Bank.
BUSINESS RESPONSIBILITY REPORTING
Securities and Exchange Board of India (SEBI) through a circular dated
August 13, 2012 has mandated the inclusion of Business Responsibility
(BR) Report as part of the Annual Report for the top 100 listed
entities based on their market capitalisation on Bombay Stock Exchange
and National Stock Exchange at March 31, 2012. The SEBI circular is
effective from financial year ending on or after December 31, 2012. In
line with the press release and FAQ''s dated May 10, 2013 issued by
SEBI, the BR Report has been hosted on the website of the Bank
http://www.icicibank.com/aboutus/annual.html. Any shareholder
interested in obtaining a physical copy of the same may write to the
Company Secretary at the Registered Office of the Bank.
RISK MANAGEMENT FRAMEWORK
The Bank''s risk management strategy is based on a clear understanding
of various risks, disciplined risk assessment and measurement
procedures and continuous monitoring. The policies and procedures
established for this purpose are continuously benchmarked with
international best practices. The Board of Directors has oversight on
all the risks assumed by the Bank. Specific Committees have been
constituted to facilitate focused oversight of various risks, as
follows:
- The Risk Committee of the Board reviews risk management policies of
the Bank pertaining to credit, market, liquidity, operational,
outsourcing and reputation risks, business continuity plan and disaster
recovery plan. The Committee also reviews the risk management framework
with respect to Enterprise Risk Management and risk appetite, Internal
Capital Adequacy Assessment Process (ICAAP) and stress testing. The
stress testing framework includes a wide range of Bank-specific and
market (systemic) scenarios. Linkage of macroeconomic factors to stress
test scenarios is also documented as a part of the ICAAP The ICAAP
exercise covers the domestic and overseas operations of the Bank,
banking subsidiaries and material non-banking subsidiaries. The
Committee reviews migration to the advanced approaches under Basel II
and implementation of Basel III, risk return profile of the Bank,
outsourcing activities, compliance with RBI guidelines pertaining to
credit, market and operational risk management systems and the
activities of the Asset Liability Management Committee. The Committee
reviews the level and direction of major risks pertaining to credit,
market, liquidity, operational, compliance, group, management and
capital at risk as part of risk profile templates. In addition, the
Committee has oversight on risks of subsidiaries covered under the
Group Risk Management Framework. The Risk Committee also reviews the
Liquidity Contingency Plan (LCP) for the Bank and the threshold limits.
- Apart from sanctioning credit proposals, the Credit Committee of
the Board reviews developments in key industrial sectors and the Bank''s
exposure to these sectors as well as to large borrower accounts and
borrower groups. The Credit Committee also reviews the major credit
portfolios, non-performing loans, accounts under watch, overdues and
incremental sanctions.
- The Audit Committee of the Board provides direction to and monitors
the quality of the internal audit function and also monitors compliance
with inspection and audit reports of Reserve Bank of India, other
regulators and statutory auditors.
- The Asset Liability Management Committee is responsible for
managing liquidity and interest rate risk and reviewing the
asset-liability position of the Bank.
Summaries of reviews conducted by these Committees are reported to the
Board on a regular basis.
Policies approved from time to time by the Board of
Directors/Committees of the Board form the governing framework for each
type of risk. The business activities are undertaken within this policy
framework. Independent groups and sub-groups have been constituted
across the Bank to facilitate independent evaluation, monitoring and
reporting of various risks. These groups function independently of the
business groups/sub-groups.
The Bank has dedicated groups, namely, the Risk Management Group,
Compliance Group, Corporate Legal Group, Internal Audit Group and the
Financial Crime Prevention & Reputation Risk Management Group, with a
mandate to identify, assess and monitor all of the Bank''s principal
risks in accordance with well-defined policies and procedures. The Risk
Management Group is further organised into the Credit Risk Management
Group, Market Risk Management Group and Operational Risk Management
Group. These groups are completely independent of all business
operations and coordinate with representatives of the business units to
implement ICICI Bank''s risk management policies and methodologies. The
internal audit and compliance groups are responsible to the Audit
Committee of the Board.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO, UNDER SECTION 217(1)(E) OF THE COMPANIES ACT, 1956.
The provisions of Section 217(1)(e) of the Companies Act, 1956 relating
to conservation of energy and technology absorption do not apply to the
Bank. The Bank has, however, used information technology extensively in
its operations.
IMPLEMENTATION OF CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON
"GREEN INITIATIVES IN CORPORATE GOVERNANCE"
The Bank has implemented the ''Green Initiative'' as per Circular No.
17/2011 dated April 21, 2011 and Circular No. 18/2011 dated April 29,
2011 issued by the Ministry of Corporate Affairs (MCA) to enable
electronic delivery of notices/documents and annual reports to
shareholders and effected electronic delivery of Notice of Annual
General Meeting (AGM) and Annual Reports for the years ended March 31,
2011 and March 31, 2012 to those shareholders whose email addresses
were registered with the respective Depository Participants (DPs) and
downloaded from the depositories, namely, National Securities
Depository Limited (NSDL)/Central Depository Services (India) Limited
(CDSL). Securities and Exchange Board of India (SEBI) have also in line
with the MCA circulars and as provided in Clause 32 of the Listing
Agreement executed with the stock exchanges, permitted listed entities
to supply soft copies of full annual reports to all those shareholders
who have registered their email addresses for the purpose. Your
Directors are thankful to the shareholders for actively participating
in the green initiative and seek your continued support for
implementation of the green initiative.
DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable
accounting standards have been followed, along with proper explanation
relating to material departures;
2. that they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Bank at the end of the financial year and of the profit of the Bank
for that period;
3. that they have taken proper and sufficient care for the maintenance
of adequate accounting records, in accordance with the provisions of
the Banking Regulation Act, 1949 and the Companies Act, 1956 for
safeguarding the assets of the Bank and for preventing and detecting
fraud and other irregularities; and
4. that they have prepared the annual accounts on a going concern
basis.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, RBI, SEBI, IRDA and
overseas regulators for their continued co-operation, support and
guidance. ICICI Bank wishes to thank its investors, the domestic and
international banking community, rating agencies and stock exchanges
for their support.
ICICI Bank would like to take this opportunity to express sincere
thanks to its valued clients and customers for their continued
patronage. The Directors express their deep sense of appreciation of
all the employees, whose outstanding professionalism, commitment and
initiative has made the organisation''s growth and success possible and
continues to drive its progress. Finally, the Directors wish to express
their gratitude to the Members for their trust and support.
For and on behalf of the Board
K. V Kamath
May 13, 2013 Chairman
Mar 31, 2012
The Directors have pleasure in presenting the Eighteenth Annual Report
of ICICI Bank Limited along with the audited statement of accounts for
the year ended March 31, 2012.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2012 is summarised in the
following table:
Rs billion, except percentages Fiscal 2011 Fiscal 2012 % Change
Net interest income and other
income 156.65 182.36 16.4%
Provisions & contingencies1 22.87 15.83 (30.8)%
Profit before tax 67.61 88.03 30.2%
Profit after tax 51.51 64.65 25.5%
1. Excludes provision for taxes.
Rs billion, except percentage Fiscal 2011 Fiscal 2012 % Change
Consolidated profit after tax 60.93 76.43 25.4%
Appropriations
The profit after tax of the Bank for fiscal 2012 is Rs 64.65 billion
after provisions and contingencies of Rs 15.83 billion, provision for
taxes of Rs 23.38 billion and all expenses. The disposable profit is Rs
114.83 billion, taking into account the balance of Rs 50.18 billion
brought forward from the previous year. Your Directors have recommended
a dividend at the rate of Rs 16.50 per equity share of face value Rs 10
for the year and have appropriated the disposable profit as follows:
Rs billion Fiscal 2011 Fiscal 2012
To Statutory Reserve, making in all
Rs 89.92 billion1 12.88 16.17
To Special Reserve, created and
maintained in terms of Section 36(1) 5.25 6.50
(viii) of the Income Tax Act, 1961,
making in all Rs 38.19 billion
To Capital Reserve, making in all
Rs 21.84 billion 0.83 0.38
To/(from) Investment Reserve (1.16) -
To General Reserve, making in all
Rs 49.87 billion2 - 0.02
Dividend for the year (proposed)
- On equity shares @ Rs 16.50 per
share (@ Rs 14 per share for fiscal 16.15 19.02
2011)3
- On preference shares (Rs) 35,000 35,000
- Corporate dividend tax 2.02 2.20
Leaving balance to be carried
forward to the next year 50.18 70.54
1. Includes Rs 2.00 billion at March 31, 2011 on account of
amalgamation of erstwhile The Bank of Rajasthan Limited with ICICI Bank
Limited.
2. Includes transfer to Reserve Fund and Investment Fund account Rs
10.7 million for fiscal 2012 (Rs 0.4 million for fiscal 2011) in
accordance with regulations applicable to Sri Lanka branch and transfer
to General Reserve Rs 3.2 million for fiscal 2012 (Rs 2.6 million for
fiscal 2011).
3. Includes dividend for the prior year paid on shares issued after
the balance sheet date and prior to the record date.
SUBSIDIARY COMPANIES
At March 31, 2012, ICICI Bank had 17 subsidiaries as listed in the
following table:
Domestic Subsidiaries Intermational Subsidiaries
ICICI Prudential Life Insurance ICICI Bank UK PLC
Company Limited
ICICI Lombard General Insurance ICICI Bank Canada
Company Limited
ICICI Prudential Asset ICICI Bank Eurasia Limited
Management Company Limited Liability Company
ICICI Prudential Trust Limited ICICI Securities Holdings Inc.2
ICICI Securities Limited ICICI Securities Inc.3
ICICI Securities Primary ICICI International Limited
Dealership Limited
ICICI Venture Funds Management
Company Limited
ICICI Home Finance
Company Limited
ICICI Investment Management
Company Limited
ICICI Trusteeship Services Limited
ICICI Prudential Pension Funds
Management Company Limited1
1. Subsidiary of ICICI Prudential Life Insurance Company Limited.
2. Subsidiary of ICICI Securities Limited.
3. Subsidiary of ICICI Securities Holdings Inc.
The Ministry of Corporate Affairs (MCA) vide its Circular
No.51/12/2007-CL-III dated February 8, 2011 has granted general
exemption under Section 212(8) of the Companies Act, 1956 to companies
from attaching the accounts of their subsidiaries in their annual
reports subject to fulfilment of certain conditions prescribed. The
Board of Directors of the Bank at its Meeting held on April 27, 2012
noted the provisions of the circular of MCA and passed the necessary
resolution granting the requisite approvals for not attaching the
balance sheet, profit & loss account, report of the board of directors
and report of the auditors of each of the subsidiary companies to the
accounts of the Bank. The Bank will make available these
documents/details upon request by any Member of the Bank. These
documents/details will be available on the Bank's website
(www.icicibank.com) and will also be available for inspection by any
Member of the Bank at its Registered Office and Corporate Office and
also at the registered offices of the concerned subsidiaries. As
required by Accounting Standard-21 (AS-21) issued by the Institute of
Chartered Accountants of India, the Bank's consolidated financial
statements included in this Annual Report incorporate the accounts of
its subsidiaries and other consolidating entities. A summary of key
financials of the Bank's subsidiaries is also included in this Annual
Report.
DIRECTORS
RBI, vide its letter dated January 3, 2012, approved the re-
appointment of K. Ramkumar as an Executive Director of the Bank for a
further period of two years, i.e. from February 1, 2012 till January
31, 2014. The Members approved his appointment at the Fifteenth Annual
General Meeting (AGM) held on June 29, 2009 for a period of five years
from February 1, 2009 up to January 31, 2014.
RBI, vide its letter dated April 19, 2012, approved the re- appointment
of K. V. Kamath, Chanda Kochhar and N. S. Kannan as Chairman, Managing
Director & CEO and Executive Director & CFO of the Bank respectively
for a further period of two years i.e. from May 1, 2012 till April 30,
2014. The Members approved the appointment of K. V Kamath as Chairman
and Chanda Kochhar as Managing Director & CEO through postal ballot on
February 13, 2009 for a period of five years from May 1, 2009 up to
April 30, 2014. The appointment of N. S. Kannan as Executive Director &
CFO was approved by the Members at the Annual General Meeting held on
June 29, 2009 for a period of five years from May 1, 2009 up to April
30, 2014.
With effect from May 1, 2012, K. V Kamath, Chairman is classified as a
non-executive independent Director. In terms of the definition of
independent director as defined in Clause 49 of the Listing Agreement
executed with the stock exchanges, a director who has been an executive
of the Company in the immediately preceding three financial years would
not be classified as an independent director. Pursuant to the said
clause, K. V Kamath who was appointed as a Chairman with effect from
May 1, 2009 was classified as a non-executive, non-independent Director
as he had been an executive of the Bank upto April 30, 2009 in his
capacity as Managing Director & CEO of the Bank.
V. Prem Watsa retired by rotation on June 27, 2011 at the last AGM and
did not seek re-appointment. The Board placed on record its
appreciation of the valuable guidance provided by Prem Watsa to the
Bank.
The Board, at its Meeting held on January 31, 2012, appointed Swati
Piramal, Director-Strategic Alliances and Communications in Piramal
Healthcare Limited as an additional Director effective January 31,
2012. Swati Piramal holds office up to the date of the forthcoming AGM
and is eligible for appointment.
The Government of India has nominated Arvind Kumar, Joint Secretary,
Department of Financial Services, Ministry of Finance, Government of
India, as a Director on the Board of the Bank effective July 22, 2011,
in place of Anup K. Pujari. The Board placed on record its appreciation
of the valuable guidance provided by Anup K. Pujari to the Bank. In
terms of Article 128A of the Articles of Association of the Bank,
Arvind Kumar is not liable to retire by rotation.
In terms of the provisions of the Companies Act, 1956 and the Articles
of Association of the Bank, Homi Khusrokhan, V Sridar and N. S. Kannan
would retire by rotation at the forthcoming AGM and are eligible for
re-appointment. Homi Khusrokhan, V Sridar and N. S. Kannan have offered
themselves for re-appointment.
AUDITORS
The auditors, S. R. Batliboi & Co., Chartered Accountants, will retire
at the ensuing AGM. As recommended by the Audit Committee, the Board
has proposed the appointment of S. R. Batliboi & Co., Chartered
Accountants as statutory auditors for fiscal 2013. Their appointment
has been approved by RBI vide its letter dated April 9, 2012. You are
requested to consider their appointment.
PERSONNEL
As required by the provisions of Section 217(2A) of the Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of the employees are set out
in the Annexure to the Directors' Report.
APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF ASSISTED COMPANIES
Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee
directors on the boards of certain borrower companies based on loan
covenants, with a view to enable monitoring of the operations of those
companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank
continues to nominate directors on the boards of assisted companies.
Apart from the Bank's employees, experienced professionals from various
fields are appointed as nominee directors. At March 31, 2012, ICICI
Bank had 15 nominee directors of whom 13 were employees of the Bank, on
the boards of 25 assisted companies. The Bank has a Nominee Director
Cell for maintaining records of nominee directorships.
RISK MANAGEMENT FRAMEWORK
The Bank's risk management strategy is based on a clear understanding
of various risks, disciplined risk assessment and measurement
procedures and continuous monitoring. The policies and procedures
established for this purpose are continuously benchmarked with
international best practices. The Board of Directors has oversight on
all the risks assumed by the Bank. Specific Committees have been
constituted to facilitate focused oversight of various risks, as
follows:
- The Risk Committee of the Board reviews risk management policies of
the Bank in relation to various risks. The Risk Committee reviews
various risk policies pertaining to credit, market, liquidity,
operational and outsourcing risks, review of the Bank's stress testing
framework and group risk management framework. The Committee reviews
the risk profile of the Bank through periodic review of the key risk
indicators and risk profile templates and annual review of the Internal
Capital Adequacy Assessment Process (ICAAP). The Committee also reviews
the risk profile of its overseas banking subsidiaries annually. The
Risk Committee reviews the Bank's compliance with risk management
guidelines stipulated by the Reserve Bank of India and of the status of
implementation of the advanced approaches under the Basel framework.
The Risk Committee also reviews the stress-testing framework as part of
the ICAAP The stress-testing framework included a wide range of
Bank-specific and market (systemic) scenarios. Linkage of macroeconomic
factors to stress test scenarios was documented as a part of ICAAP The
ICAAP exercise covers the domestic and overseas operations of the Bank,
the banking subsidiaries and the material non- banking subsidiaries.
The Risk Committee also reviews the Liquidity Contingency Plan (LCP)
for the Bank and the threshold limits. During the year the Bank has
also finalised the approach towards Enterprise Risk Management
framework.
- Apart from sanctioning credit proposals, the Credit Committee of
the Board reviews developments in key industrial sectors and the Bank's
exposure to these sectors as well as to large borrower accounts. The
Credit Committee also reviews the non-performing loans, accounts under
watch, overdues and incremental sanctions.
- The Audit Committee of the Board provides direction to and monitors
the quality of the internal audit function and also monitors compliance
with inspection and audit reports of Reserve Bank of India and
statutory auditors.
- The Asset Liability Management Committee is responsible for
managing liquidity and interest rate risk and reviewing asset-liability
position of the Bank.
A summary of reviews conducted by these Committees are reported to the
Board on a regular basis.
Policies approved from time to time by the Board of
Directors/Committees of the Board form the governing framework for each
type of risk. The business activities are undertaken within this policy
framework. Independent groups and sub-groups have been constituted
across the Bank to facilitate independent evaluation, monitoring and
reporting of various risks. These groups function independently of the
business groups/sub-groups.
The Bank has dedicated groups, namely, the Risk Management Group,
Compliance Group, Corporate Legal Group, Internal Audit Group and the
Financial Crime Prevention & Reputation Risk Management Group, with a
mandate to identify, assess and monitor all of the Bank's principal
risks in accordance with well-defined policies and procedures. Risk
Management Group is further organised into the Credit Risk Management
Group, Market Risk Management Group and Operational Risk Management
Group. These groups are completely independent of all business
operations and coordinate with representatives of the business units to
implement ICICI Bank's risk management policies and methodologies. The
internal audit and compliance groups are responsible to the Audit
Committee of the Board.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable
accounting standards have been followed, along with proper explanation
relating to material departures;
2. that they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Bank at the end of the financial year and of the profit or loss of
the Bank for that period;
3. that they have taken proper and sufficient care for the maintenance
of adequate accounting records, in accordance with the provisions of
the Banking Regulation Act, 1949 and the Companies Act, 1956 for
safeguarding the assets of the Bank and for preventing and detecting
fraud and other irregularities; and
4. that they have prepared the annual accounts on a going concern
basis.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, RBI, SEBI, IRDA and
overseas regulators for their continued co-operation, support and
guidance. ICICI Bank wishes to thank its investors, the domestic and
international banking community, rating agencies and stock exchanges
for their support.
ICICI Bank would like to take this opportunity to express sincere
thanks to its valued clients and customers for their continued
patronage. The Directors express their deep sense of appreciation of
all the employees, whose outstanding professionalism, commitment and
initiative has made the organisation's growth and success possible and
continues to drive its progress. Finally, the Directors wish to express
their gratitude to the Members for their trust and support.
For and on behalf of the Board
K. V Kamath
May 14, 2012 Chairman
Mar 31, 2011
The Directors have pleasure in presenting the Seventeenth Annual
Report of ICICI Bank Limited with the audited statement of accounts for
the year ended March 31, 2011.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2011 is summarised in the
following table:
Rs. billion, except percentages Fiscal 2010 Fiscal 2011 % change
Net interest income and
other income 155.92 156.65 0.5%
Provisions & contingencies1 43.87 22.87 (47.9)%
Profit before tax 53.45 67.61 26.5%
Profit after tax of the Bank 40.25 51.51 28.0%
1. Excludes provision for taxes.
Rs. billion, except percentages Fiscal 2010 Fiscal 2011 % change
Consolidated profit after tax 46.70 60.93 30.5%
Appropriations
The profit after tax of the Bank for fiscal 2011 is Rs. 51.51 billion
after provisions and contingencies (excluding provision for taxes) of Rs.
22.87 billion and all expenses. The disposable profit is Rs. 86.15
billion, taking into account the balance of Rs. 34.64 billion brought
forward from the previous year. Your Directors have recommended a
dividend at the rate of Rs. 14 per equity share of face value Rs. 10 for
the year and have appropriated the disposable profit as follows:
Rs. billion Fiscal 2010 Fiscal 2011
To Statutory Reserve, making in all
Rs. 73.75 billion1 10.07 12.88
To Special Reserve created and maintained
in terms of Section 36(1) (viii) of 3.00 5.25
the Income-tax Act, 1961, making in all
Rs. 31.69 billion
To Capital Reserve, making in all
Rs. 21.46 billion 4.44 0.83
To/(from) Investment Reserve, making
in all Nil 1.16 (1.16)
To General Reserve, making in
all Rs. 49.80 billion 0.01 --
Dividend for the year (proposed)
- On equity shares @ Rs. 14 per share
(@ Rs. 12 per share for fiscal 2010)2 13.38 16.15
- On preference shares (Rs.) 35,000 35,000
- Corporate dividend tax 1.64 2.02
Leaving balance to be carried forward
to the next year3 34.64 50.18
1. Includes Rs. 2.00 billion on amalgamation of The Bank of Rajasthan
Limited with ICICI Bank Limited.
2. Includes dividend for the prior year paid on shares issued after
the balance sheet date and prior to the record date.
3. After taking into account transfer to Reserve Fund Rs. 0.4 million
for fiscal 2011, making in all Rs. 11.3 million.
Internet Banking
Our comprehensive Internet Banking service is designed to give our
customers a convenient banking experience from the comfort of their
homes or offices.
Our Internet Banking offering has evolved over time not only to enable
basic online transactions but also to provide cutting edge features.
Innovative features, such as applying for a new account, opening a
fixed deposit and the Money Manager, help our customers to manage
almost all their financial needs online. Further, our Internet Banking
service goes beyond fulfilling the routine banking needs of customers
by enabling them to buy mutual funds, insurance, forex and gold online.
MERGER OF THE BANK OF RAJASTHAN LIMITED WITH ICICI BANK
The Bank of Rajasthan Limited (Bank of Rajasthan), a banking company
incorporated within the meaning of Companies Act, 1956 and licensed by
Reserve Bank of India (RBI) under the Banking Regulation Act, 1949 was
amalgamated with ICICI Bank Limited (ICICI Bank/the Bank) with effect
from close of business on August 12, 2010 in terms of the Scheme of
Amalgamation (the Scheme) approved by RBI vide its order DBOD No. PSBD
2599/16.01.056/2010-11 dated August 12, 2010 under sub section (4) of
section 44A of the Banking Regulation Act, 1949. The consideration for
the amalgamation was 25 equity shares of ICICI Bank of the face value
of T 10 each fully paid-up for every 118 equity shares of Rs. 10 each of
Bank of Rajasthan. Accordingly, ICICI Bank allotted 31,323,951 equity
shares to the shareholders of Bank of Rajasthan on August 26, 2010 and
2,860,170 equity shares, which were earlier kept in abeyance pending
civil appeal, on November 25, 2010.
SUBSIDIARY COMPANIES
At March 31, 2011, ICICI Bank had 17 subsidiaries as listed in the
following table:
Domestic Subsidiaries International Subsidiaries
ICICI Prudential Life Insurance
ICICI Bank UK PLC
Company Limited
ICICI Lombard General Insurance
ICICI Bank Canada
Company Limited
ICICI Prudential Asset Management ICICI Bank Eurasia
Company Limited Limited Liability Company
ICICI Prudential Trust Limited ICICI Securities Holdings Inc.2
ICICI Securities Limited ICICI Securities Inc.3
ICICI Securities Primary Dealership
Limited ICICI International Limited
ICICI Venture Funds Management
Company Limited
ICICI Home Finance Company Limited
ICICI Investment Management
Company Limited
ICICI Trusteeship Services Limited
ICICI Prudential Pension Funds
Management Company Limited1
1. Subsidiary of ICICI Prudential Life Insurance Company Limited.
2. Subsidiary of ICICI Securities Limited.
3. Subsidiary of ICICI Securities Holdings Inc.
The Ministry of Corporate Affairs (MCA) vide its Circular
No.51/12/2007-CL-lll dated February 8, 2011 has granted general
exemption under Section 212(8) of the Companies Act, 1956 to companies
from attaching the accounts of their subsidiaries in their annual
reports subject to fulfillment of certain conditons prescribed. The
Board of Directors of the Bank at its Meeting held on April 28, 2011
noted the provisions of the circular of MCA and passed the necessary
resolution granting the requisite approvals for not attaching the
balance sheet, profit & loss account, report of the board of directors
and report of the auditors of each of the subsidiary companies to the
accounts of the Bank for fiscal 2011. The
Bank will make available these documents/details upon request by any
Member of the Bank. These documents/details will be available on the
Banks website (www.icicibank.com) and will also be available for
inspection by any Member of the Bank at its Registered Office and
Corporate Office and also at the registered offices of the concerned
subsidiaries. As required by Accounting Standard-21 (AS-21) issued by
the Institute of Chartered Accountants of India, the Banks
consolidated financial statements included in this Annual Report
incorporate the accounts of its subsidiaries and other consolidating
entities. A summary of key financials of the Banks subsidiaries is
also included in this Annual Report.
DIRECTORS
The RBI vide its letter dated June 24, 2010 approved the appointment of
Rajiv Sabharwal as an Executive Director of the Bank. The Members
approved his appointment at the Sixteenth Annual General Meeting (AGM)
held on June 28, 2010.
Narendra Murkumbi retired by rotation on June 28, 2010 at the last AGM
and did not seek re-appointment. The valuable guidance and contribution
made by Narendra Murkumbi was recognised by the Board.
Pursuant to the provisions of the Banking Regulation Act, 1949, M. K.
Sharma retired from the Board effective January 31, 2011 on completion
of eight years as a non-executive Director of the Bank. The Board
placed on record its deep appreciation and gratitude for his guidance
and contribution to the Bank.
In terms of the provisions of the Companies Act, 1956 and the Articles
of Association of the Bank, V Prem Watsa, M. S. Ramachandranand K.
Ramkumar would retire by rotation at the forthcoming AGM and are
eligible for re-appointment. M. S. Ramachandran and K. Ramkumar have
offered themselves for re-appointment. V. Prem Watsa has expressed his
desire not to seek re-appointment as a Director as his maximum
permissible tenure of eight years as a non-executive Director of the
Bank would end on January 28, 2012. A Resolution is proposed to the
Members in the Notice of the current AGM to this effect and also not to
fill up the vacancy caused by the retirement of V Prem Watsa at this
meeting or any adjourned meeting thereof.
AUDITORS
The auditors, S.R. Batliboi & Co., Chartered Accountants, will retire
at the ensuing AGM. As recommended by the Audit Committee, the Board
has proposed the appointment of S.R. Batliboi & Co., Chartered
Accountants as statutory auditors for fiscal 2012. Their appointment is
subject to approval of RBI. You are requested to consider their
appointment.
PERSONNEL
As required by the provisions of Section 217(2A) of the Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of the employees are set out
in the Annexure to the Directors Report.
APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF ASSISTED COMPANIES
Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee
directors on the boards of certain borrower companies based on loan
covenants, with a view to enable monitoring of the operations of those
companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank
continues to nominate directors on the boards of assisted companies.
Apart from the Banks employees, experienced professionals from various
fields are appointed as nominee directors. At March 31, 2011, ICICI
Bank had 19 nominee directors of whom 16 were employees of the Bank, on
Mobile Banking
Our innovations in Mobile Banking have transformed the mobile phone
into a personal banking assistant for our customers. Be it simple SMS
alerts, service requests using Instant Messaging or the iMobile
application, our wide range of Mobile Banking services takes care of
our customers varied needs.
Today, customers can use their mobile phones not only to check account
balances and transfer funds but also to apply for a loan. Our
innovative Mobile Banking service takes convenience to a different
level by enabling customers to buy flight and movie tickets and also
shop for apparels, books and flowers.
ATM
The ICICI Bank ATM is much more than just a money-dispensing machine.
Our state-of-the-art technology has led to redefining convenience for
the customer. With newly introduced innovative features, our ATM is now
equipped to take care of banking needs that go beyond basic cash
withdrawal. Today our ATMs offer services such as opening fixed
deposits, payment of credit card & utility bills, payment of insurance
premium, mobile re-charges and Ultra Fast Cash which facilitates
withdrawal of Rs. 5,000 in a single click.
We have used technology to transform our vast network of ATMs to
provide greater convenience & efficiency to our customers, thereby
almost making them a network of mini branches. the boards of 34
assisted companies. The Bank has a Nominee Director Cell for
maintaining records of nominee directorships.
RISK MANAGEMENT FRAMEWORK
The Banks risk management strategy is based on a clear understanding
of various risks, disciplined risk assessment and measurement
procedures and continuous monitoring. The policies and procedures
established for this purpose are continuously benchmarked with
international best practices. The Board of Directors has oversight on
all the risks assumed by the Bank. Specific Committees have been
constituted to facilitate focused oversight of various risks, as
follows:
- The Risk Committee of the Board reviews risk management policies of
the Bank in relation to various risks. The Risk Committee reviews
various risk policies pertaining to credit, market, liquidity,
operational and outsourcing risks, review of the Banks stress testing
framework and group risk management framework. The Committee reviews
the risk profile of the Bank through periodic review of the key risk
indicators and risk profile templates and annual review of the Internal
Capital Adequacy Assessment Process. The Committee also reviews the
risk profile of its overseas banking subsidiaries annually. The Risk
Committee reviews the Banks compliance with risk management guidelines
stipulated by the Reserve Bank of India and of the status of
implementation of the advanced approaches under the Basel framework.
The Risk Committee also reviews the stress-testing framework as part of
the Internal Capital Adequacy Assessment Process (ICAAP). The stress
testing frame work included a wide range of Bank-specific and market
(systemic) scenarios. Linkage of macroeconomic factors to stress test
scenarios was documented as a part of ICAAP The ICAAP exercise covers
the domestic and overseas operations of the Bank, the banking
subsidiaries and the material non- banking subsidiaries. The Risk
Committee also reviews the Liquidity Contingency Plan (LCP) for the
Bank and the threshold limits.
- Apart from sanctioning credit proposals, the Credit Committee of the
Board reviews developments in key industrial sectors and the Banks
exposure to these sectors as well as to large borrower accounts. The
Credit Committee also reviews the non-performing loans, accounts under
watch, overdues and incremental sanctions.
- The Audit Committee of the Board provides direction to and also
monitors the quality of the internal audit function and also monitors
compliance with inspection and audit reports of RBI and statutory
auditors.
- The Asset Liability Management Committee is responsible for managing
liquidity and interest rate risk and reviewing the asset-liability
position of the Bank.
A summary of reviews conducted by these committees are reported to the
Board on a regular basis.
Policies approved from time to time by the Board of
Directors/Committees of the Board form the governing framework for each
type of risk. The business activities are undertaken within this policy
framework. Independent groups and sub-groups have been constituted
across the Bank to facilitate independent evaluation, monitoring and
reporting of various risks. These groups function independently of the
business groups/sub-groups.
The Bank has dedicated groups namely the Risk Management Group (RMG),
Compliance Group, Corporate Legal Group, Internal Audit Group and the
Financial Crime Prevention and Reputation Risk Management Group
(FCPRRMG), with a mandate to identify, assess and monitor all of the
Banks principal risks in accordance with well-defined policies and
procedures. RMG is further organised into Credit Risk Management Group,
Market Risk Management Group and Operational Risk
Management Group. These groups are completely independent of all
business operations and coordinate with representatives of the business
units to implement ICICI Banks risk management policies and
methodologies. The internal audit and compliance groups are responsible
to the Audit Committee of the Board.
CORPORATE GOVERNANCE
The corporate governance framework in ICICI Bank is based on an
effective independent Board, the separation of the Boards supervisory
role from the executive management and the constitution of Board
Committees, generally comprising a majority of
independent/non-executive Directors and chaired by
independent/non-executive Directors, to oversee critical areas.
EMPLOYEE STOCK OPTION SCHEME
In fiscal 2000, ICICI Bank instituted an Employee Stock Option Scheme
(ESOS) to enable the employees and Directors of ICICI Bank and its
subsidiaries to participate in future growth and financial success of
the Bank. As per the ESOS, as amended from time to time, the maximum
number of options granted to any employee/Director in a year is limited
to 0.05% of ICICI Banks issued equity shares at the time of the grant,
and the aggregate of all such options is limited to 5% of ICICI Banks
issued equity shares on the date of the grant (equivalent to 57.59
million shares at April 28, 2011).
Options granted for fiscal 2003 and earlier years vest in a graded
manner over a three-year period, with 20%, 30% and 50% of the grants
vesting in each year, commencing not earlier than 12 months from the
date of grant. Options granted lot fiscal 2004 to 2008 vest >n a
graded manner over.a four year period, with 20%, 20%, 30% and 30% of
the grants vesting in each year, commencing not earlier than 12 months
from the date of grant. Options granted in April 2009 vest in a graded
manner over a five year period with 20%, 20%, 30% and 30% of grant
vesting each year commencing from the end of 24 months from the date of
grant.
Options granted in April 2010 vest in a graded manner over a four year
period with 20%, 20%, 30% and 30% of the grant vesting each year
commencing from the end of 12 months from the date of grant.
On the basis of the recommendation of the Board Governance,
Remuneration and Nomination Committee (BGRNC), the Board at its Meeting
held on October 29, 2010 approved a grant of approximately 3.1 million
options as a special measure to eligible employees and wholetime
Directors of ICICI Bank and certain of its subsidiaries. Each option
confers on the beneficiary a right to apply for one equity share of
face value of Rs. 10 of ICICI Bank at Rs. 967.00 which was the average
closing price of the ICICI Bank stock on the stock exchange during the
six months up to October 28, 2010. 50% of the options granted would
vest on April 30, 2014 and the balance 50% on April 30, 2015. The Bank
has received approval of RBI for the above grant of options to
wholetime Directors of the Bank.
The Board further at its meeting held on April 28, 2011 approved a
grant of approximately 4.25 million options for fiscal 2011 to eligible
employees and wholetime Directors (options granted to wholetime
Directors being subject to RBI approval). Each option confers on the
employee a right to apply for one equity share of face value of Rs. 10 of
ICICI Bank atRs. 1,106.85 which was closing puce on the stock exchange
which recorded the highest trading volume in ICICI Bank shares on April
27, 2011. These options would vest over a four year period, with 20%,
20%, 30% and 30% respectively of the grant of vesting each year
commencing from the end of 12 months from the date of grant.
Options can be exercised within 10 years from the date of grant or five
years from the date of vesting, whichever is later. The price of the
options granted prior to June 30, 2003 is the closing market price on
the stock exchange, which recorded the highest trading volume on the
date of grant. The price for options granted on or after June 30, 2003
till July 21, 2004 is equal to the average of the high and low market
price of the equity shares in the two week period preceding the date of
grant of the options, on the stock exchange which recorded the highest
trading volume during the two week period. The price for options
granted on or after July 22, 2004 (other than the grants made on
October 29, 2010) is equal to the closing price on the stock exchange
which recorded the highest trading volume preceding the date of grant
of options. The above disclosure is in line with the SEBI guidelines,
as amended from time to time.
No employee was granted options during any one year equal to or
exceeding 0.05% of the issued equity shares of ICICI Bank at the time
of the grant.
The diluted earnings per snare :US) pursuant to Issue of shares on
exercise of options calculated in accordance with AS-20 was Rs. 45.06 in
fiscal 2011 against basic EPS of Rs. 45.27. The Bank recognised a
compensation cost of Rs. 2.9 million in fiscal 2011 based on the
intrinsic value of options. However if ICICI Bank had used the fair
value of options based on binomial tree model, compensation cost in the
year ended March 31, 2011 would have been higher by Rs. 905.8 million and
proforma profit after tax would have been Rs. 50.60 billion. On a
proforma basis, ICICI Banks basic and diluted earnings per share would
have been Rs. 44.47 and Rs. 44.27 respectively.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO, UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956.
The provisions of Section 217(1)(e) of the Companies Act, 1956 relating
to conservation of energy and technology absorption do not apply to the
Bank. The Bank has, however, used information technology extensively in
its operations.
IMPLEMENTATION OF CIRCULAR ISSUED BY MINISTRY OF CORPORATE AFFAIRS ON
"GREEN INITIATIVES IN CORPORATE GOVERNANCE"
The Bank has implemented the Green Initiative as per Circular No.
17/2011 dated April 21, 2011 and Circular No. 18/2011 dated April 29,
2011 issued by the Ministry of Corporate Affairs to enable electronic
delivery of notices/documents and annual reports to shareholders.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable
accounting standards have been followed, along with proper explanation
relating to material departures;
2. that they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Bank at the end of the financial year and of the profit or loss of
the Bank for that period;
3. that they have taken proper and sufficient care for the maintenance
of adequate accounting records, in accordance with the provisions of
the Banking Regulation Act, 1949 and the Companies Act, 1956 for
safeguarding the assets of the Bank and for preventing and detecting
fraud and other irregularities; and
4. that they have prepared the annual accounts on a going concern
basis.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, RBI, SEBI and
overseas regulators for their continued co- operation, support and
guidance. ICICI Bank wishes to thank its investors, the domestic and
international banking community, rating agencies and stock exchanges
for their support.
ICICI Bank would like to take this opportunity to express sincere
thanks to its valued clients and customers for their continued
patronage. The Directors express their deep sense of appreciation of
all the employees, whose outstanding professionalism, commitment and
initiative has made the organisations growth and success possible and
continues to drive its progress. Finally, the Directors wish to express
their gratitude to the Members for their trust and support.
For and on behalf of the Board
K. V. Kamath
May 13, 2011 Chairman
Mar 31, 2010
The Directors have pleasure in presenting the Sixteenth Annual Report
of ICICI Bank Limited with the audited statement of accounts for the
year ended March 31, 2010.
FINANCIAL HIGHLIGHTS
The financial performance for fiscal 2010 is summarised in the
following table:
Rs. billion, except percentages Fiscal 2009 Fiscal 2010 % change
Net interest income and
other income 159.70 155.92 (2.4)
Operating profit 89.25 97.32 9.0
Provisions & contingencies1 38.08 43.87 15.2
Profit before tax 51.17 53.45 4.5
Profit after tax 37.58 40.25 7.1
Consolidated profit after tax 35.77 46.70 30.6
Excludes provision
for taxes.
Appropriations
The profit & loss account shows a profit after tax of Rs. 40.25 billion
after provisions and contingencies of Rs. 43.87 billion and all
expenses. The disposable profit is Rs. 68.35 billion, taking into
account the balance of Rs. 28.10 billion brought forward from the
previous year. Your Directors have recommended a dividend at the rate
of Rs. 12 per equity share of face value Rs. 10 for the year and have
appropriated the disposable profit as follows:
Rs. billion
Fiscal 2009 Fiscal 2010
To Statutory Reserve, making in
all Rs. 58.86 billion 9.40 10.07
To Special Reserve created and
maintained in terms of Section 36(1)
(viii) of the Income-tax Act, 1961,
making in all Rs. 26.44 billion 2.50 3.00
To Capital Reserve, making in
all Rs. 20.63 billion 8.18 4.44
To Investment Reserve, making in
all Rs. 1.16 billion -- 1.16
To General Reserve, making in
all Rs. 49.79 billion -- 0.01
Dividend for the year (proposed)
- On equity shares @ Rs. 12 per
share (@ Rs. 11 per share for
fiscal 2009) 12.25 13.38
- On preference shares (Rs.) 35,000 35,000
- Corporate dividend tax 1.51 1.64
Leaving balance to be carried
forward to the next year2 28.10 34.64
1. Includes dividend for the prior year paid on shares issued after
the balance sheet date and prior to the record date.
2. After taking into account transfer to Reserve Fund Rs. 2.2 million
for fiscal 2010, making in all Rs. 10.9 million.
MERGER OF THE BANK OF RAJASTHAN LIMITED WITH
ICICI BANK
The Board of Directors of ICICI Bank and the Board of Directors of The
Bank of Rajasthan Limited (Bank of Rajasthan) at their respective
Meetings held on May 23, 2010, approved the scheme of amalgamation of
Bank of Rajasthan with ICICI Bank. The amalgamation is subject to
approval of RBI and Members of both the Banks. Approval of the Members
of ICICI Bank is being sought at an extraordinary general meeting
scheduled on June 21, 2010.
The proposed amalgamation would substantially enhance ICICI BankÃs
branch network, already the largest among Indian private sector banks,
and especially strengthen its presence in northern and western India.
It would combine Bank of RajasthanÃs branch franchise with ICICI BankÃs
strong capital base, to enhance the ability of the merged entity to
capitalise on the growth opportunities in the Indian economy.
About Bank of Rajasthan
Bank of Rajasthan is a listed old Indian private sector bank with its
corporate office at Mumbai in Maharashtra and registered office at
Udaipur in Rajasthan. At March 31, 2009, Bank of Rajasthan had 463
branches and 111 ATMs, total assets of Rs. 172.24 billion, deposits of
Rs. 151.87 billion and advances of Rs. 77.81 billion. It made a net
profit of Rs. 1.18 billion in fiscal 2009 and a net loss of Rs. 0.10
billion in the nine months ended December 31, 2009. Around 40% of the
branches of the Bank of Rajasthan are located in rural and semi-urban
areas.
SUBSIDIARY COMPANIES
At March 31, 2010, ICICI Bank had 17 subsidiaries as listed in the
following table:
Domestic Subsidiaries International Subsidiaries
ICICI Prudential Life Insurance ICICI Bank UK PLC
Company Limited
ICICI Lombard General Insurance ICICI Bank Canada
Company Limited
ICICI Prudential Asset Management ICICI Bank Eurasia Limited
Company Limited Liability Company
ICICI Prudential Trust Limited ICICI Securities Holdings Inc.2
ICICI Securities Limited ICICI Securities Inc.3
ICICI Securities Primary
Dealership ICICI International Limited
Limited
ICICI Venture Funds Management
Company Limited
ICICI Home Finance Company Limited
ICICI Investment Management
Company Limited
ICICI Trusteeship Services Limited
ICICI Prudential Pension Funds
Management Company Limited1
1. Subsidiary of ICICI Prudential Life Insurance Company Limited.
2. Subsidiary of ICICI Securities Limited.
3. Subsidiary of ICICI Securities Holdings Inc.
ICICI Wealth Management Inc., a subsidiary of ICICI Bank Canada, has
been dissolved effective December 31, 2009.
As approved by the Central Government vide letter dated April 9, 2010
under Section 212(8) of the Companies Act, 1956, copies of the balance
sheet, profit & loss account, report of the board of directors and
report of the auditors of each of the subsidiary companies have not
been attached to the accounts of the Bank for fiscal 2010. The Bank
will make available these documents/details upon request by any Member
of the Bank. These documents/details will be available on the BankÃs
website www.icicibank. com and will also be available for inspection
by any Member of the Bank at its Registered Office and Corporate Office
and also at the registered offices of the concerned subsidiaries. As
required by Accounting Standard-21 (AS-21) issued by the Institute of
Chartered Accountants of India, the BankÃs consolidated financial
statements included in this Annual Report incorporate the accounts of
its subsidiaries and other entities. A summary of key financials of
the BankÃs subsidiaries is also included in this Annual Report.
DIRECTORS
The Members at their Fifteenth Annual General Meeting held on June 29,
2009, approved the appointment of Sandeep Bakhshi, Deputy Managing
Director, N. S. Kannan, Executive Director & CFO and K. Ramkumar,
Executive Director. Reserve Bank of India (RBI) vide its letter dated
July 2, 2009 approved the appointment of Sandeep Bakhshi. RBI vide its
letter dated June 16, 2009 approved the appointment of N. S. Kannan and
K. Ramkumar.
T. S. Vijayan, Chairman, Life Insurance Corporation of India, and a
non-executive Director of the Bank resigned from the Board effective
November 24, 2009. Pursuant to the provisions of the Banking Regulation
Act, 1949, P. M. Sinha retired from the Board effective January 22,
2010 and L. N. Mittal, Anupam Puri and Marti Subrahmanyam retired from
the Board effective May 3, 2010 on completion of eight years as
non-executive Directors of the Bank. The Board placed on record its
deep appreciation and gratitude for their guidance and contribution to
the Bank.
The Board at its Meeting held on January 21, 2010 appointed Homi R.
Khusrokhan, former Managing Director, Tata Chemicals Limited and V.
Sridar, former Chairman, National Housing Bank and former Chairman &
Managing Director, UCO Bank, as additional Directors effective January
21, 2010. Further, the Board at its Meeting held on April 30, 2010
appointed Tushaar Shah, Senior Fellow at the International Water
Management Institute and former Director of the Institute of Rural
Management as an additional Director effective May 3, 2010. Homi R.
Khusrokhan, Tushaar Shah and V. Sridar hold office upto the date of the
forthcoming Annual General Meeting (AGM) and are eligible for
appointment.
Sonjoy Chatterjee, Executive Director resigned from the services of the
Bank effective April 30, 2010.
The Board at its Meeting held on April 30, 2010 approved a proposal for
the appointment of Rajiv Sabharwal as a wholetime Director of the Bank
subject to approval of RBI. Approval of the Members is being sought at
the current AGM for the appointment of Rajiv Sabharwal as a wholetime
Director of the Bank for a period of five years effective only from the
date of receipt of RBI approval.
In terms of the provisions of the Companies Act, 1956 and the Articles
of Association of the Bank, K. V. Kamath, Sridar Iyengar and Narendra
Murkumbi would retire by rotation at the forthcoming AGM and are
eligible for re-appointment. K. V. Kamath and Sridar Iyengar have
offered themselves for re-appointment. Narendra Murkumbi has expressed
his desire not to seek re-appointment as a Director. A resolution is
proposed to the Members in the Notice of the current AGM to this effect
and also not to fill up the vacancy caused by the retirement of
Narendra Murkumbi at this meeting or any adjourned meeting thereof.
AUDITORS
The auditors, B S R & Co., Chartered Accountants, will retire at the
ensuing AGM. They had been statutory auditors of the Bank for the last
four years, which is the maximum term of appointment of auditors
permitted by RBI. As recommended by the Audit Committee, the Board has
proposed the appointment of S. R. Batliboi & Co., Chartered Accountants
as statutory auditors for fiscal 2011. Their appointment has been
approved by RBI vide its letters dated April 20, 2010 and May 13, 2010.
You are requested to consider their appointment.
PERSONNEL
As required by the provisions of Section 217(2A) of the Companies Act,
1956, read with Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of the employees are set out
in the Annexure to the Directorsà Report.
APPOINTMENT OF NOMINEE DIRECTORS ON THE BOARDS OF ASSISTED COMPANIES
Erstwhile ICICI Limited (ICICI) had a policy of appointing nominee
directors on the boards of certain borrower companies based on loan
covenants, with a view to enable monitoring of the operations of those
companies. Subsequent to the merger of ICICI with ICICI Bank, the Bank
continues to nominate directors on the boards of assisted companies.
Apart from the BankÃs employees, experienced professionals from various
fields are appointed as nominee Directors. At March 31, 2010, ICICI
Bank had 24 nominee directors, of whom 20 were employees of the Bank,
on the boards of 39 assisted companies. The Bank has a Nominee Director
Cell for maintaining records of nominee directorships.
RISK MANAGEMENT FRAMEWORK
The BankÃs risk management strategy is based on a clear understanding
of various risks, disciplined risk assessment and measurement
procedures and continuous monitoring. The policies and procedures
established for this purpose are continuously benchmarked with
international best practices.
The key principles underlying our risk management framework are as
follows:
- The Board of Directors has oversight on all the risks assumed by the
Bank. Specific Committees of the Board have been constituted to
facilitate focused oversight of various risks. The Risk Committee
reviews risk management policies of the Bank in relation to various
risks and regulatory compliance issues. It reviews key risk indicators
covering areas such as credit risk, interest rate risk, liquidity risk,
and foreign exchange risk and the limits framework, including stress
test limits, for various risks. It also carries out an assessment of
the capital adequacy based on the risk profile of the BankÃs balance
sheet and reviews the status with respect to implementation of Basel II
norms. The Credit Committee reviews developments in key industrial
sectors and BankÃs exposure to these sectors as well as to large
borrower accounts. The Audit Committee provides direction to and also
monitors the quality of the internal audit function. The Asset
Liability Management Committee is responsible for managing the balance
sheet and reviewing asset-liability position of the Bank.
- Policies approved from time to time by the Board of
Directors/Committees of the Board form the governing framework for each
type of risk. The business activities are undertaken within this policy
framework.
- Independent groups and sub-groups have been constituted across the
Bank to facilitate independent evaluation, monitoring and reporting of
various risks. These groups function independently of the business
groups/sub-groups.
The Bank has dedicated groups namely the Global Risk Management Group
(GRMG), Compliance Group, Corporate Legal Group, Internal Audit Group
and the Financial Crime Prevention and Reputation Risk Management Group
(FCPRRMG), with a mandate to identify, assess and monitor all of the
BankÃs principal risks in accordance with well-defined policies and
procedures. GRMG is further organised into the Global Credit Risk
Management Group, the Global Market Risk Management Group and the
Global Operational Risk Management Group. These groups are completely
independent of all business operations and coordinate with
representatives of the business units to implement ICICI BankÃs risk
management methodologies. The internal audit and compliance groups are
responsible to the Audit Committee of the Board.
DIRECTORSÃ RESPONSIBILITY STATEMENT
The Directors confirm:
1. that in the preparation of the annual accounts, the applicable
accounting standards have been followed, along with proper explanation
relating to material departures;
2. that they have selected such accounting policies and applied them
consistently and made judgements and estimates that are reasonable and
prudent, so as to give a true and fair view of the state of affairs of
the Bank at the end of the financial year and of the profit or loss of
the Bank for that period;
3. that they have taken proper and sufficient care for the maintenance
of adequate accounting records, in accordance with the provisions of
the Banking Regulation Act, 1949 and the Companies Act, 1956 for
safeguarding the assets of the Bank and for preventing and detecting
fraud and other irregularities; and
4. that they have prepared the annual accounts on a going concern
basis.
ACKNOWLEDGEMENTS
ICICI Bank is grateful to the Government of India, RBI, SEBI and
overseas regulators for their continued co-operation, support and
guidance. ICICI Bank wishes to thank its investors, the domestic and
international banking community, rating agencies and stock exchanges
for their support.
ICICI Bank would like to take this opportunity to express sincere
thanks to its valued clients and customers for their continued
patronage. The Directors express their deep sense of appreciation of
all the employees, whose outstanding professionalism, commitment and
initiative has made the organisationÃs growth and success possible and
continues to drive its progress. Finally, the Directors wish to express
their gratitude to the Members for their trust and support.
For and on behalf of the Board
K. V. Kamath
May 24, 2010 Chairman