ICICI Bank 2015 Annual Report Download - page 130

128 Annual Report 2014-2015
Schedules
forming part of the Accounts (Contd.)
Financial Statements of ICICI Bank Limited
10. At the end of each reporting period, security receipts issued by the asset reconstruction companies are valued in
accordance with the guidelines applicable to such instruments, prescribed by RBI from time to time. Accordingly,
in cases where the cash flows from security receipts issued by the asset reconstruction companies are limited
to the actual realisation of the financial assets assigned to the instruments in the concerned scheme, the Bank
reckons the net asset value obtained from the asset reconstruction company from time to time, for valuation of
such investments at each reporting period end.
11. The Bank follows trade date method of accounting for purchase and sale of investments, except for government of
India and state government securities where settlement date method of accounting is followed in accordance with RBI
guidelines.
3. Provision/write-offs on loans and other credit facilities
The Bank classifies its loans and investments, including at overseas branches and overdues arising from crystallised
derivative contracts, into performing and NPAs in accordance with RBI guidelines. Loans and advances held at the
overseas branches that are identified as impaired as per host country regulations for reasons other than record of
recovery, but which are standard as per the extant RBI guidelines, are classified as NPAs to the extent of amount
outstanding in the host country. Further, NPAs are classified into sub-standard, doubtful and loss assets based on the
criteria stipulated by RBI.
In the case of corporate loans and advances, provisions are made for sub-standard and doubtful assets at rates
prescribed by RBI. Loss assets and the unsecured portion of doubtful assets are provided/written-off as per the
extant RBI guidelines. For loans and advances booked in overseas branches, which are standard as per the extant RBI
guidelines but are classified as NPAs based on host country guidelines, provisions are made as per the host country
regulations. For loans and advances booked in overseas branches, which are NPAs as per the extant RBI guidelines
and as per host country guidelines, provisions are made at the higher of the provisions required under RBI regulations
and host country regulations. Provisions on homogeneous retail loans and advances, subject to minimum provisioning
requirements of RBI, are assessed at a borrower level, on the basis of the ageing of the loans in the non-performing
category. In respect of borrowers classified as non-cooperative borrowers, wilful defaulters and NPAs covered under
distressed assets framework of RBI, the Bank makes accelerated provisions as per extant RBI guidelines.
The Bank holds specific provisions against non-performing loans and advances, general provision against performing
loans and advances and floating provision taken over from erstwhile Bank of Rajasthan upon amalgamation. The
assessment of incremental specific provisions is made after taking into consideration the existing specific provision
held. The specific provisions on retail loans and advances held by the Bank are higher than the minimum regulatory
requirements.
a) Provision on loans and advances restructured/rescheduled is made in accordance with the applicable RBI
guidelines on restructuring of loans and advances by the Bank.
In respect of non-performing loans and advances accounts subjected to restructuring, the account is upgraded
to standard only after the specified period i.e. a period of one year after the date when first payment of interest
or of principal, whichever is later, falls due, subject to satisfactory performance of the account during the period.
A standard restructured loan is upgraded to the standard category when satisfactory payment performance is
evidenced during the specified period and after the loan reverts to the normal level of standard asset provisions/
risk weights.
b) Amounts recovered against debts written-off in earlier years and provisions no longer considered necessary in the
context of the current status of the borrower are recognised in the profit and loss account.
c) In addition to the specific provision on NPAs, the Bank maintains a general provision on performing loans and
advances at rates prescribed by RBI. For performing loans and advances in overseas branches, the general
provision is made at higher of host country regulations requirement and RBI requirement.
d) In addition to the provisions required to be held according to the asset classification status, provisions are held for
individual country exposures including indirect country risk (other than for home country exposure). The countries
are categorised into seven risk categories namely insignificant, low, moderately low, moderate, moderately high,
high and very high, and provisioning is made on exposures exceeding 180 days on a graded scale ranging from