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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 '15    « Mar 14
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
Source : Dion Global Solutions Limited
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