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ICICI Bank Directors Report, ICICI Bank Reports by Directors
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ICICI Bank

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Directors Report Year End : Mar '16    « Mar 15
The Directors have pleasure in presenting the Twenty-Second Annual
 Report of ICICI Bank Limited along with the audited financial
 statements for the year ended March 31, 2016.
 
 FINANCIAL HIGHLIGHTS
 
 The financial performance for fiscal 2016 is summarised in the
 following table:
 
 Rs. in billion, 
 except percentages     Fiscal 2015   Fiscal 2016   % change
 
 Net interest 
 income and 
 other income               312.16        365.46     17.1%
 
 Operating expenses         114.96        126.83     10.3%
 
 Provisions & 
 contingencies 
 (excluding 
 collective 
 contingency
 and related 
 reserve)                 1 39.00         80.67    106.8%
 
 Profit before 
 collective 
 contingency  and 
 related reserve
 and tax                  158.20        157.96        - 
 
 Collective 
 contingency and 
 related reserv2            -            36.00        - 
 
 Profit before tax        158.20        121.96   (22.9)%
 
 Prof it after tax        111.75         97.26   (13.0)%
 
 
 1.  Excludes provision for taxes.
 
 2.  Refer detailed note no. 39 in schedule 18 ''Notes to Accounts'' of
 the financial statements.
 
 3. in billion, except  
 percentages                     Fiscal 2015   Fiscal 2016    % change
 
 Consolidated profit before 
 collective contingency and 
 related reserve, tax and
 minority interest                    183.39        179.04      (2.4)%
 
 Collective contingency and
 related reserve1                        -           36.00        - 
 
 Consolidated profit before 
 tax and minority interest            183.39         143.04    (22.0)%
 
 Consolidated profit aftertax 
 and minority interest                122.47         101.80    (16.9)%
  
 
 1.  Refer note no. 7 in schedule 18 ''Notes to Accounts'' of the
 consolidated financial statements.
 
 Appropriations
 
 The profit after tax of the Bank for fiscal 2016 is Rs. 97.26 billion
 after provisions and contingencies of Rs. 116.67 billion (including
 collective contingency and related reserve amounting to Rs. 36.00
 billion), provision for taxes of Rs. 24.70 billion and all expenses. The
 disposable profit is Rs. 269.87 billion, taking into account the balance
 of Rs. 172.61 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 2016 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, 2016 and have appropriated the disposable profit as follows:
 
 
 Rs. in billion                         Fiscal 2015      Fiscal 2016
 
 To Statutory Reserve, making 
 in all Rs. 187.52 billion                   27.94            24.32
 
 To Special Reserve created and 
 maintained in terms of Section 36(1
 )(viii) of the IncomeTax Act, 1961,
 making in all Rs. 79.29 billion             11.00            13.50
 
 To Capital Reserve, making in all 
 Rs. 49.67 billion1                           2.92            23.82
 
 To/(from) Investment Reserve 
 Account, making in all Nil                  (1.27)               -  
 
 To Revenue and other reserves, 
 making in all Rs. 31.48 billion2-3           0.01             5.01
 
 Dividend for the year (proposed)
 
 On equity shares @ Rs. 5.00 per share
 of face value Rs. 2.00 each (@ Rs. 5.00
 per share of face value Rs. 2.00 each 
 for fiscal 2015)                           29.02            29.11
 
 On prrence shares @ Rs. 100.00 per 
 preference share (@ Rs. 100.00 per
 preference share for fiscal 2015)
 (Rs.)                                       35,00           35,000
 
 Corporate dividend tax                       2.71             2.79
 
 Leaving balance to be carried 
 forward to the next year                   172.61           171.32
 
 1.Includes transfer of Rs. 19.47 billion on account of sale of part 
 of equity investment in the Bank''s insurance subsidiaries during
 fiscal 2016.
 
 2.  Includes transfer of f. 9.3 million to Reserve Fund for fiscal 2016
 (t 7.7 million for fiscal 2015) in accordance with regulations
 applicable to the Sri Lanka branch.
 
 3.  During fiscal 2015, an amount of Rs. 9.29 billion was utilised with
 approval of Reserve Bank of India (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.
 
 4.  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
 
 The provisions of Section 186(4) of the Companies Act, 2013 requiring
 disclosure in the financial statements of the full particulars of the
 loans 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
 
 3i Infotech Limited, which was considered as an associate under Section
 2(6) of the Companies Act, 2013, ceased to be an associate of the Bank
 effective May 13, 2015.
 
 The particulars of subsidiary and associate companies as on March 31,
 2016 have been included in Form MGT-9 which is annexed to this report
 as Annexure D.
 
 PERFORMANCE AND FINANCIAL POSITION OF SUBSIDARIES, JOINT VENTURES AND
 ASSOCIATES
 
 The performance and financial position of subsidiaries and associates
 of the Bank as on March 31, 2016 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 (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.
 
 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 of
 future operations of the Bank.
 
 DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL
 
 Changes in the composition of the Board of Directors and other Key
 Managerial Personnel
 
 K. V. Kamath ceased to be a Director on the Board of the Bank effective
 close of business hours on June 30, 2015. The Board placed on record
 its deep appreciation of K. V. Kamath''s leadership of the ICICI Group
 as the CEO of ICICI Bank till 2009, and as Chairman of the Bank''s Board
 thereafter for a period of six years.
 
 Pursuant to the approval granted by Reserve Bank of India (RBI), M. K.
 Sharma was appointed as the independent non- executive (part-time)
 Chairman on the Board of the Bank effective July 1, 2015 upto June 30,
 2018. The appointment was approved by the Members through a postal
 ballot on April 22, 2016.
 
 The Board of Directors at their Meeting held on November 16, 2015 
 approved the appointment of Vishakha Mulye as
 wholetime Director (designated as executive Director) for a period of
 five years effective from the date of receipt of RBI approval. Pursuant
 to approval granted by RBI, Vishakha Mulye was appointed as an
 executive Director on the Board of the Bank effective January 19, 2016
 for a period of three years. The Members through a postal ballot on
 April 22, 2016 approved the appointment of Vishakha Mulye for a period
 of five years effective January 19,2016 upto January 18,2021.
 
 K. Ramkumar, executive Director stepped down from his position as an
 executive Director effective close of business hours on April 29, 2016
 consequent to his decision to opt for early retirement to pursue other
 interests. The Board placed on record its appreciation of K. Ramkumar''s
 immense contribution to the Bank.
 
 Appointment subject to regulatory approvals
 
 Vijay Chandok was appointed as an executive Director by the Board of
 the Bank at its Meeting held on April 29, 2016 for a period of five
 years subject to approval of RBI and Members and other approvals, as
 may be applicable.
 
 The appointment of Vijay Chandok as an executive Director would be
 effective from the date of receipt of RBI approval.  Approval of the
 Members is being sought for Vijay Chandok''s appointment in the Notice
 of the forthcoming Annual General Meeting vide item nos. 8 and 9.
 
 Independent Directors
 
 The Board of the Bank at March 31, 2016 consisted of 13 Directors, out
 of which seven are independent Directors, one is a Government Nominee
 Director and five 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 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 29, 2016.
 
 Retirement by rotation
 
 In terms of Section 152 of the Companies Act, 2013, Rajiv Sabharwal and
 N. S. Kannan would retire by rotation at the forthcoming AGM and are
 eligible for re-appointment. Rajiv Sabharwal and N. S. Kannan have
 offered themselves 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
 Reserve Bank of India (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 2017. Their appointment
 for fiscal 2017 has been approved by RBI. The appointment is
 accordingly proposed in the Notice of the forthcoming AGM vide item no.
 6 for ratification by Members.
 
 There are no qualifications, reservation or adverse remarks made by the
 statutory auditors in the audit report.
 
 Secretarial Auditors
 
 Pursuanttothe 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, 2016. 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 fiscal 2016.
 
 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, 2016, 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, 2016 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 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 Et 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, 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 threshold limits.
 
 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.
 
 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 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 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 Meetings held on September 20, 2004 and June 25, 2012
 and vide a postal ballot resolution passed on April 22, 2016. The Bank
 has upto April 28, 2016 granted 423.62 million stock options from time
 to time aggregating to 7.28% of the issued equity capital of the Bank
 at April 28, 2016. 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 581.52 million shares of face valueRs. 2 each at April 28, 2016).
 
 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 would vest in equal proportions
 on April 30, 2017 and 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 vest 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 wholetime 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 vest 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.
 
 Pursuant to the postal ballot resolution dated April 22, 2016 approved
 by the Members, the definition of exercise period has been modified
 from the period commencing from the date of vesting of Options and
 ending on the later of (i) the tenth anniversary of the date of grant
 of Options or (ii) the fifth anniversary of the date of vesting of
 Options to the period commencing from the date of vesting of Options
 and ending on the tenth anniversary of the date of vesting of Options.
 
 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 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.  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 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
 
                                                            M. K. Sharma
 
 May 26, 2016                                                   Chairman
Source : Dion Global Solutions Limited
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