ICICI Bank Ltd.
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ISIN No INE090A01021 52Wk High (Rs.) 375 BV (Rs.) 167.11 FV (Rs.) 2.00
Bookclosure 12/09/2018 52Wk Low (Rs.) 257 EPS (Rs.) 11.98 P/E (X) 29.88
Mkt Cap. (Rs. Cr.) 230,440.67 P/BV (X) 2.14 Div Yield (%) 0.64 Mkt Lot 1
2018-03

NOTES FORMING PART OF THE ACCOUNTS

The following disclosures have been made taking into account the requirements of Accounting Standards (ASs) and Reserve Bank of India (RBI) guidelines in this regards.

1. Earnings per share

Basic and diluted earnings per equity share are computed in accordance with AS 20 - Earnings per share. Basic earnings per equity share is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year. Diluted earnings per equity share is computed using the weighted average number of equity shares and weighted average number of dilutive potential equity shares outstanding during the year.

1. Pursuant to the issue of bonus shares by the Bank during the year ended March 31, 2018, number of shares and per share information has been restated for the year ended March 31, 2017.

2. The dilutive impact is due to options granted to employees by the Bank.

1. For the purpose of computing the ratio, working funds represent the monthly average of total assets computed for reporting dates of Form X submitted to RBI under Section 27 of the Banking Regulation Act, 1949.

2. Operating profit is profit for the year before provisions and contingencies.

3. For the purpose of computing the ratio, assets represent the monthly average of total assets computed for reporting dates of Form X submitted to RBI under Section 27 of the Banking Regulation Act, 1949.

4. Computed based on average number of employees which include sales executives, employees on fixed term contracts and interns.

5. The average deposits and the average advances represent the simple average of the figures reported in Form A to RBI under Section 42(2) of the Reserve Bank of India Act, 1934.

3. Capital adequacy ratio

The Bank is subject to the Basel III capital adequacy guidelines stipulated by RBI with effect from April 1, 2013. The guidelines provide a transition schedule for Basel III implementation till March 31, 2019. As per the guidelines, the Tier-1 capital is made up of Common Equity Tier-1 (CET1) and Additional Tier-1.

At March 31, 2018, Basel III guidelines require the Bank to maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 10.975% with minimum CET1 CRAR of 7.475% and minimum Tier-1 CRAR of 8.975%. The minimum total CRAR, Tier-1 CRAR and CET1 CRAR requirement include capital conservation buffer of 1.875% and additional capital requirement of 0.10% on account of the Bank being designated as Domestic Systemically Important Bank.

The following table sets forth, for the periods indicated, computation of capital adequacy as per Basel III framework.

The Bank during the three months ended March 31, 2018 maintained average HQLA (after haircut) of Rs, 1,051,010.5 million (March 31, 2017: Rs, 971,361.1 million) against the average liquidity requirement of Rs, 842,650.4 million (March 31, 2017: Rs, 795,626.5 million) at minimum LCR requirement of 90.0% (March 31, 2017: 80.0%). HQLA primarily includes government securities in excess of minimum statutory liquidity ratio (SLR) and to the extent allowed under marginal standing facility (MSF) and facility to avail liquidity for LCR (FALLCR) of Rs, 815,035.6 million (March 31, 2017: Rs, 806,903.7 million). Additionally, cash balance in excess of cash reserve requirement with RBI and balances with central banks of countries where the Bank's branches are located amounted to Rs, 160,400.8 million (March 31, 2017: Rs, 100,448.7 million). Further, average level 2 assets primarily consisting of AA- and above rated corporate bonds and commercial papers, amounted to Rs, 50,909.9 million (March 31, 2017: Rs, 36,348.1 million).

At March 31, 2018, top liability products/instruments and their percentage contribution to the total liabilities of the Bank were term deposits 30.83% (March 31, 2017: 31.51%), savings account deposits 22.86% (March 31, 2017: 22.27%), bond borrowings 10.68% (March 31, 2017: 12.33%) and current account deposits 10.12% (March 31, 2017: 9.72%). Top 20 depositors constituted 6.20% (March 31, 2017: 7.04%) of total deposits of the Bank at March 31, 2018. Further, the total borrowings mobilised from significant counterparties (from whom the funds borrowed were more than 1.00% of the BankRs,s total liabilities) were 8.92% (March 31, 2017: 10.26%) of the total liabilities of the Bank at March 31, 2018.

The weighted cash outflows are primarily driven by unsecured wholesale funding which includes operational deposits, non-operational deposits and unsecured debt. During the three months ended March 31, 2018, unsecured wholesale funding contributed 59.32% (March 31, 2017: 53.60%) of the total weighted cash outflows. The non-operational deposits include term deposits with premature withdrawal facility. Retail deposits including deposits from small business customers and other contingent funding obligations contributed 21.40% (March 31, 2017: 20.65%) and 5.61% (March 31, 2017: 5.46%) of the total weighted cash outflows, respectively. The other contingent funding obligations primarily include bank guarantees (BGs) and letters of credit (LCs) issued on behalf of the Bank's clients.

In view of the margin rules for non-centrally cleared derivative transactions issued by the Basel Committee on Banking Supervision and RBI, currently in a draft stage, certain derivative transactions would be subject to margin reset and consequent collateral exchange would be as governed by Credit Support Annex (CSA). The margin rules are applicable for both the domestic and overseas operations of the Bank. The Bank has entered into CSAs which would require maintenance of collateral due to valuation changes on transactions under the CSA framework. The Bank considers the increased liquidity requirement on account of valuation changes in the transactions settled through Qualified Central Counterparties (QCCP) in India including the Clearing Corporation of India (CCIL) and other exchange houses as well as for transactions covered under CSAs. The potential outflows on account of such transactions have been considered based on the look-back approach prescribed in the RBI guidelines.

The average LCR of the Bank for the three months ended March 31, 2018 was 112.25% (March 31, 2017: 97.67%). During the three months ended March 31, 2018, other than Indian Rupee, USD was the only significant foreign currency which constituted more than 5.00% of the balance sheet size of the Bank. The average LCR of the Bank for USD currency, computed based on month-end LCR values, was 112.57% for the three months ended March 31, 2018 (March 31, 2017: 44.51%).

5. Information about business and geographical segments

Business Segments

Pursuant to the guidelines issued by RBI on AS 17 - Segment Reporting - Enhancement of Disclosures dated April 18, 2007, effective from year ended March 31, 2008, the following business segments have been reported.

- Retail Banking includes exposures which satisfy the four criteria of orientation, product, granularity and low value of individual exposures for retail exposures laid down in Basel Committee on Banking Supervision (BCBS) document 'International Convergence of Capital Measurement and Capital Standards: A Revised Framework'. This segment also includes income from credit cards, debit cards, third party product distribution and the associated costs.

- Wholesale Banking includes all advances to trusts, partnership firms, companies and statutory bodies, which are not included under Retail Banking.

- Treasury includes the entire investment and derivative portfolio of the Bank.

- Other Banking includes leasing operations and other items not attributable to any particular business segment.

Income, expenses, assets and liabilities are either specifically identified with individual segments or are allocated to segments on a systematic basis.

All liabilities are transfer priced to a central treasury unit, which pools all funds and lends to the business units at appropriate rates based on the relevant maturity of assets being funded after adjusting for regulatory reserve requirements.

The transfer pricing mechanism of the Bank is periodically reviewed. The segment results are determined based on the transfer pricing mechanism prevailing for the respective reporting periods.

1. Includes tax paid in advance/tax deducted at source (net) and deferred tax assets (net).

2. Includes share capital and reserves and surplus.

1. Includes tax paid in advance/tax deducted at source (net) and deferred tax assets (net).

2. Includes share capital and reserves and surplus.

Geographical segments

The Bank reports its operations under the following geographical segments.

- Domestic operations comprise branches in India.

- Foreign operations comprise branches outside India and offshore banking units in India. The following table sets forth, for the periods indicated, geographical segment results.

The estimates and assumptions used by the Bank for classification of assets and liabilities under the different maturity buckets is based on the returns submitted to RBI for the relevant periods.

7. Preference shares

At March 31, 2018, certain government securities amounting to Rs, 3,338.9 million (March 31, 2017: Rs, 3,219.7 million) were earmarked against redemption of preference shares issued by the Bank. The preference shares have been subsequently redeemed after approval from RBI on April 20, 2018, as per the original terms of the issue.

8. Employee Stock Option Scheme (ESOS)

In terms of the ESOS, as amended, the maximum number of options granted to any eligible employee in a financial year shall not exceed 0.05% of the issued equity shares of the Bank at the time of grant of the options and aggregate of all such options granted to the eligible employees shall not exceed 10% of the aggregate number of the issued equity shares of the Bank on the date(s) of the grant of options in line with SEBI Regulations. Under the stock option scheme, eligible employees are entitled to apply for equity shares. In April 2016, exercise period was modified from 10 years from the date of grant or five years from the date of vesting, whichever is later, to 10 years from the date of vesting of options. In June 2017, exercise period was further modified to not exceed 10 years from the date of vesting of options as may be determined by the Board Governance, Remuneration & Nomination Committee to be applicable for future grants.

Options granted after March 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 grant other than certain options granted in April 2014 which vested to the extent of 50% on April 30, 2017 and the balance vested on April 30, 2018 and option granted in September 2015 which would vest to the extent of 50% on April 30, 2018 and balance 50% would vest on April 30, 2019. However, for the options granted in September 2015, if the participant's employment terminates due to retirement (including pursuant to any early/voluntary retirement scheme), all the unvested options would lapse. Options granted in January 2018 would vest at the end of four years from the date of grant.

Options granted prior to March 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. Options granted in April 2009 vested 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 September 2011 vested in a graded manner over a five-years period with 15%, 20%, 20% and 45% of grant vesting each year, commencing from the end of 24 months from the date of the grant.

Pursuant to the issuance of bonus shares approved by the shareholders on June 12, 2017, stock options were also adjusted with increase of one option for every 10 outstanding options and the exercise prices of options were proportionately adjusted. Accordingly the option and exercise price numbers are re-stated.

The exercise price of the Bank's options, except mentioned below, is the last closing price on the stock exchange, which recorded highest trading volume preceding the date of grant of options. In February 2011, the Bank granted 16,692,500 options to eligible employees and whole-time Directors of the Bank and certain of its subsidiaries at an exercise price of ' 175.82. This exercise price was the average closing price on the stock exchange during the six months ended October 28, 2010. Of these options granted, 50% vested on April 30, 2014 and the balance 50% vested on April 30, 2015.

Based on intrinsic value of options, no compensation cost was recognized during the year ended March 31, 2018 (year ended March 31, 2017: Nil). If the Bank had used the fair value of options based on binomial tree model, compensation cost in the year ended March 31, 2018 would have been higher by Rs, 3,526.6 million (year ended March 31, 2017: Rs, 5,107.5 million) including additional cost of Rs, 74.3 million (March 31, 2017: Rs, 1,393.1 million) due to change in exercise period and proforma profit after tax would have been Rs, 64,247.6 million (year ended March 31, 2017: Rs, 92,903.4 million). On a proforma basis, the BankRs,s basic and diluted earnings per share would have been Rs, 10.01 (year ended March 31, 2017: Rs, 14.51) and Rs, 9.91 (year ended March 31, 2017: Rs, 14.45) respectively for the year ended March 31, 2018. The following table sets forth, for the periods indicated, the key assumptions used to estimate the fair value of options granted.

The weighted average fair value of options granted during the year ended March 31, 2018 was Rs, 86.43 (year ended March 31, 2017: Rs, 76.72).

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 term of option 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 Bank's publicly traded equity shares. Expected dividends during the estimated expected term of the option are based on recent dividend activity.

The following table sets forth, for the periods indicated, the summary of the status of the Bank's stock option plan.

1. A adjusted for bonus issuance.

2. Adjusted on account of fractional entitlement payout due to issuance of bonus shares.

The following table sets forth, the summary of stock options outstanding at March 31, 2018.

The options were exercised regularly throughout the period and weighted average share price as per National Stock Exchange price volume data adjusted for bonus issue during the year ended March 31, 2018 was Rs, 296.94 (year ended March 31, 2017: Rs, 234.38).

9. Subordinated debt

The following table sets forth, the details of subordinated debt bonds qualifying for Additional Tier-1 capital raised during the year ended March 31, 2018.

1. Call option exercisable on September 20, 2022 and on every interest payment date thereafter (exercisable with RBI approval).

2. Call option exercisable on October 4, 2022 and on every interest payment date thereafter (exercisable with RBI approval).

3. Call option exercisable on June 20, 2023 and on every interest payment date thereafter (exercisable with RBI approval).

The following table sets forth, the details of subordinated debt bonds qualifying for Additional Tier-1 capital raised during the year ended March 31, 2017.

1. Call option exercisable on March 17, 2022 and on every interest payment date thereafter (exercisable with RBI approval).

During the year ended March 31, 2018, the Bank has not raised subordinated debt qualifying for Tier-2 capital (March 31, 2017: Nil).

10. Repurchase transactions

The following tables set forth for the periods indicated, the details of securities sold and purchased under repo and reverse repo transactions respectively including transactions under Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF).

1. Amounts reported are based on face value of securities under Repo and Reverse repo.

2. Amounts reported are based on lending/borrowing amount under LAF and MSF.

1. Amounts reported are based on face value of securities under Repo and Reverse repo.

2. Amounts reported are based on lending/borrowing amount under LAF and MSF.

11. Investments

The following table sets forth, for the periods indicated, the details of investments and the movement of provision held towards depreciation on investments of the Bank.

During the year ended March 31, 2018, the Bank sold approximately 7.00% of its shareholding in ICICI Lombard General Insurance Company Limited in the IPO for a total consideration of Rs, 20,994.3 million and made a gain (net of IPO related expenses) of Rs, 20,121.5 million on this sale. Further, the Bank sold approximately 20.78% of its shareholding in ICICI Securities Limited in the IPO for a total consideration of Rs, 34,801.2 million and made a gain (net of IPO related expenses) of Rs, 33,197.7 million on this sale.

During the year ended March 31, 2017, the Bank sold approximately 12.63% of its shareholding in ICICI Prudential Life Insurance Company Limited in the IPO for a total consideration of Rs, 60,567.9 million and made a gain (net of IPO related expenses) of Rs, 56,820.3 million on this sale.

12. Investment in securities, other than government and other approved securities (Non-SLR investments)

i) Issuer composition of investments in securities, other than government and other approved securities

The following table sets forth, the issuer composition of investments of the Bank in securities, other than government and other approved securities at March 31, 2018.

1. Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive.

2. Excludes equity shares, units of equity-oriented mutual fund, units of venture capital fund, pass through certificates, security receipts, commercial papers, certificates of deposit, non-convertible debentures (NCDs) with original or initial maturity up to one year issued by corporate (including NBFC), unlisted convertible debentures and securities acquired by way of conversion of debt.

3. Excludes investments in non-Indian government securities by overseas branches amounting to Rs, 23,477.2 million.

4. Excludes investments in non-SLR government of India securities amounting to Rs, 7,578.5 million.

1. Amounts reported under columns (a), (b), (c) and (d) above are not mutually exclusive.

2. Excludes equity shares, units of equity-oriented mutual fund, units of venture capital fund, pass through certificates, security receipts, commercial papers, certificates of deposit, non-convertible debentures (NCDs) with original or initial maturity up to one year issued by corporate (including NBFCs), unlisted convertible debentures and securities acquired by way of conversion of debt.

3. Excludes investments in non-Indian government securities by overseas branches amounting to Rs, 21,051.8 million.

4. Excludes investments in non-SLR government of India securities amounting to Rs, 18,686.3 million.

ii) Non-performing investments in securities, other than government and other approved securities

The following table sets forth, for the periods indicated, the movement in gross non-performing investments in

securities, other than government and other approved securities.

13. Sales and transfers of securities to/from Held to Maturity (HTM) category

During the three months ended June 30, 2017, with the approval of Board of Directors, the Bank had transferred securities amounting to Rs, 243,620.6 million from held-to-maturity (HTM) category to available-for-sale (AFS) category, being transfer of securities at the beginning of the accounting year as permitted by RBI. Further, during the year ended March 31, 2018, the Bank sold securities from HTM category in 52 transactions amounting to a net book value of Rs, 44,039.5 million which was 4.69% of portfolio under HTM category at April 1, 2017 (year ended March 31, 2017: 1,547 transactions amounting to a net book value of Rs, 700,024.5 million, which was 70.60% of the HTM portfolio at April 1, 2016). The above sale is excluding sale to RBI under pre-announced open market operation auctions and repurchase of government securities by Government of India, as permitted by RBI guidelines. The market value of investments held in the HTM category was Rs, 1,549,786.6 million at March 31, 2018 (March 31, 2017: Rs, 1,229,543.3 million), which includes investments in unlisted subsidiaries/joint ventures at cost.

14. CBLO transactions

Collateralized Borrowing and Lending Obligation (CBLO) is a discounted money market instrument, established by CCIL and approved by RBI, which involves secured borrowings and lending transactions. At March 31, 2018, the Bank had outstanding borrowings amounting to ' 48,642.5 million (March 31, 2017: Nil) and no outstanding lending (March 31, 2017: Nil) in the form of CBLO. The amortized book value of securities given as collateral by the Bank to CCIL for availing the CBLO facility was Rs, 157,319.7 million at March 31, 2018 (March 31, 2017: Rs, 53,134.3 million).

15. Derivatives

The Bank is a major participant in the financial derivatives market. The Bank deals in derivatives for balance sheet management, proprietary trading and market making purposes whereby the Bank offers derivative products to its customers, enabling them to hedge their risks.

Dealing in derivatives is carried out by identified groups in the treasury of the Bank based on the purpose of the transaction. Derivative transactions are entered into by the treasury front office. Treasury Control and Service Group (TCSG) conducts an independent check of the transactions entered into by the front office and also undertakes activities such as confirmation, settlement, accounting, risk monitoring and reporting and ensures compliance with various internal and regulatory guidelines.

The market making and the proprietary trading activities in derivatives are governed by the Investment policy and Derivative policy of the Bank, which lays down the position limits, stop loss limits as well as other risk limits. The Risk Management Group (RMG) lays down the methodology for computation and monitoring of risk. The Risk Committee of the Board (RCB) reviews the Bank's risk management policy in relation to various risks including credit and recovery policy, investment policy, derivative policy, Asset Liability Management (ALM) policy and operational risk management policy. The RCB comprises independent directors and the Managing Director & CEO.

The Bank measures and monitors risk of its derivatives portfolio using such risk metrics as Value at Risk (VaR), stop loss limits and relevant greeks for options. Risk reporting on derivatives forms an integral part of the management information system.

The use of derivatives for hedging purposes is governed by the hedge policy approved by ALCO. Subject to prevailing RBI guidelines, the Bank deals in derivatives for hedging fixed rate, floating rate or foreign currency assets/liabilities. Transactions for hedging and market making purposes are recorded separately. For hedge transactions, the Bank identifies the hedged item (asset or liability) at the inception of the hedge itself. The effectiveness is assessed at the time of inception of the hedge and periodically thereafter.

Hedge derivative transactions are accounted for pursuant to the principles of hedge accounting based on guidelines issued by RBI. Derivatives for market making purpose are marked to market and the resulting gain/loss is recorded in the profit and loss account. The premium on option contracts is accounted for as per Foreign Exchange Dealers Association of India (FEDAI) guidelines.

Over the counter (OTC) derivative transactions are covered under International Swaps and Derivatives Association (ISDA) master agreements with the respective counter parties. The exposure on account of derivative transactions is computed as per RBI guidelines.

1. Exchange traded and OTC options, cross currency interest rate swaps and currency futures are included in currency derivatives.

2. OTC Interest rate options, Interest rate swaps, forward rate agreements, swaptions and exchange traded interest rate derivatives are included in interest rate derivatives.

3. For trading portfolio including accrued interest.

4. Includes accrued interest and has been computed based on current exposure method.

5. Amounts given are absolute values on a net basis, excluding options.

6. The swap contracts entered into for hedging purpose would have an opposite and off-setting impact with the underlying on-balance sheet items.

1. Computed based on current exposure method.

2. Amounts given are absolute values on a net basis.

The net overnight open position at March 31, 2018 was Rs, 992.6 million (March 31, 2017: Rs, 2,926.7 million).

The Bank has no exposure in credit derivative instruments (funded and non-funded) including credit default swaps (CDS) and principal protected structures at March 31, 2018 (March 31, 2017: Nil).

The Bank offers deposits to customers of its overseas branches with structured returns linked to interest, forex, credit or equity benchmarks. The Bank covers these exposures in the inter-bank market. At March 31, 2018, the net open notional position on this portfolio was Nil (March 31, 2017: Nil) with no mark-to-market gain/loss (March 31, 2017: Nil).

The profit and loss impact on the aforementioned structured deposits portfolio on account of mark-to-market and realised profit and loss during the year ended March 31, 2018 was Nil (year ended March 31, 2017: net loss of Rs, 0.1 million). The non-Indian Rupee denominated derivatives are marked to market by the Bank based on counterparty valuation quotes or internal models using inputs from market sources such as Bloomberg/Reuters, counterparties and Fixed Income Money Market and Derivative Association (FIMMDA). The Indian Rupee denominated credit derivatives are marked to market by the Bank based on CDS curve published by FIMMDA.

16. Exchange traded interest rate derivatives and currency derivatives Exchange traded interest rate derivatives

The following table sets forth, for the periods indicated, the details of exchange traded interest rate derivatives.

17. Forward rate agreement (FRA)/Interest rate swaps (IRS)/Cross currency swaps (CCS)

The Bank enters into FRA, IRS and CCS contracts for balance sheet management and market making purposes whereby the Bank offers derivative products to its customers to enable them to hedge their interest rate risk and currency risk within the prevalent regulatory guidelines.

A FRA is a financial contract between two parties to exchange interest payments for 'notional principal' amount on settlement date, for a specified period from start date to maturity date. Accordingly, on the settlement date cash payments based on contract rate and the settlement rate, which is the agreed bench-mark/reference rate prevailing on the settlement date, are made by the parties to one another. The benchmark used in the FRA contracts of the Bank is London Inter-Bank Offered Rate (LIBOR) of various currencies.

An IRS is a financial contract between two parties exchanging or swapping a stream of interest payments for a 'notional principal' amount on multiple occasions during a specified period. The Bank deals in interest rate benchmarks like Mumbai Inter-Bank Offered Rate (MIBOR), Indian Government Securities Benchmark Rate (INBMK), Mumbai Inter-Bank Forward Offer Rate (MIFOR) and LIBOR of various currencies.

A CCS is a financial contract between two parties exchanging interest payments and principal, wherein interest payments and principal in one currency would be exchanged for an equally valued interest payments and principal in another currency.

These contracts are subject to the risks of changes in market interest rates and currency rates as well as the settlement risk with the counterparties.

The following table sets forth, for the periods indicated, the details of the FRA/IRS.

1. For trading portfolio both mark-to-market and accrued interest have been considered and for hedging portfolio only accrued interest has been considered.

2. Credit risk concentration is measured as the highest net receivable under swap contracts from a particular counter party.

3. Fair value represents mark-to-market including accrued interest.

The following table sets forth, for the periods indicated, the details of the CCS.

1. CCS includes cross currency interest rate swaps and currency swaps.

2. For trading portfolio both mark-to-market and accrued interest have been considered and for hedging portfolio only accrued interest has been considered.

3. Credit risk concentration is measured as the highest net receivable under swap contracts from a particular counter party.

4. Fair value represents mark-to-market including accrued interest.

On February 12, 2018, RBI issued a revised framework for resolution of stressed assets, which superceded the existing guidelines on SDR, change in ownership outside SDR (except projects under implementation) and S4A with immediate effect. Under the revised framework, the stand-still benefits for accounts where any of these schemes had been invoked but not yet implemented were revoked and the accounts have been classified as per the extant RBI norms on income recognition and asset classification.

Further, in accordance with RBI guidelines, the 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. During the year ended March 31, 2018, the Bank has not classified any loans as NPAs at overseas branches (year ended March 31, 2017: ' 6,587.8 million) as per the requirement of these guidelines and not made any provision (year ended March 31, 2017: Rs, 3,993.7 million) on these loans.

Divergence in asset classification and provisioning for NPAs

I n 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 condition mentioned in RBI circular, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI's supervisory process for the year ended March 31, 2017.

The following table sets forth, for the period indicated, details of divergence in the asset classification and provisioning as per RBI's supervisory process for the year ended March 31, 2016.

1. Excludes investment in shares of Rs, 1,071.9 million with an additional provision requirement of Rs, 168.0 million and an impact of Rs, 109.9 million on net profit after tax for the year ended March 31, 2016.

The impact of changes in classification and provisioning arising out of the RBI's supervisory process for the year ended March 31, 2016 has been fully given effect to in the audited financial statements for the year ended March 31, 2017.

Accounts covered under Insolvency and Bankruptcy Code, 2016

During three months ended June 30, 2017 and three months ended September 30, 2017, RBI advised the banks to initiate insolvency resolution process under the provisions of Insolvency and Bankruptcy Code, 2016 (IBC) for certain specific accounts. RBI also required the banks to make provision at 50% of the secured portion and 100% of unsecured portion, or provision as per extant RBI guideline on asset classification norms, whichever is higher. Subsequently, in April 2018, RBI revised the provisioning requirements in respect of these specified cases from 50% of secured portion to 40% of secured portion at March 31, 2018 and to 50% of the secured portion at June 30, 2018. Accordingly, the Bank has made the provision as per the April 2018 guidelines of RBI.

19. Floating provision

During the year ended March 31, 2018, the Bank did not make any floating provision (year ended March 31, 2017, the Bank made floating provision of ' 15,150.0 million, which was subsequently utilized during the same year by allocating it to specific non-performing assets).

The following table sets forth, for the periods indicated, the movement in floating provision held by the Bank.

1. Includes amount taken over from erstwhile Bank of Rajasthan upon amalgamation.

20. General provision on standard assets

The general provision on standard assets held by the Bank at March 31, 2018 was Rs, 25,906.6 million (March 31, 2017: Rs, 23,126.2 million). The general provision on standard assets amounting to Rs, 2,771.1 million was made during the year ended March 31, 2018 (year ended March 31, 2017: provision reversed by Rs, 3,392.3 million) as per applicable RBI guidelines.

RBI, through its circular dated January 15, 2014 had advised banks to create incremental provision on standard loans and advances to entities with unhedged foreign currency exposure (UFCE). The Bank assesses the UFCEs of the borrowers through its credit appraisal and internal ratings process. The Bank also undertakes reviews of such exposures through thematic reviews evaluating the impact of exchange rate fluctuations on the Bank's portfolio on an yearly basis.

The Bank has made provision against borrowers with UFCE amounting to Rs, 50.0 million during the year ended March 31, 2018 (year ended March 31, 2017: Nil). The Bank held incremental capital of Rs, 5,487.5 million at March 31, 2018 on advances to borrowers with UFCE (March 31, 2017: Rs, 4,120.0 million).

On April 18, 2017, RBI through its circular advised that the provisioning rates prescribed as per the prudential norms circular are the regulatory minimum and banks are encouraged to make provisions at higher rates in respect of advances to stressed sectors of the economy and had specifically highlighted the telecom sector. Accordingly, during the year ended March 31, 2018, the Bank, as per its Board approved policy, has made additional general provision amounting to Rs, 1,911.5 million on standard loans to specific borrowers below certain rating threshold and in specific identified stressed sectors.

21. Provision Coverage Ratio

The provision coverage ratio of the Bank at March 31, 2018 computed as per the extant RBI guidelines was 47.7% (March 31, 2017: 40.2%).

22. Priority Sector Lending Certificates (PSLCs)

During the year ended March 31, 2018, the Bank purchased PSLCs under agriculture category amounting to Rs, 10,000.0 million (year ended March 31, 2017: Nil), general category amounting to Rs, 17,300.0 million (year ended March 31, 2017: Rs, 35,000.0 million) and small and marginal farmers category amounting to Rs, 25,000.0 million (year ended March 31, 2017: Nil). The Bank sold PSLCs amounting to Rs, 1,000.0 million under general category during the year ended March 31, 2018 (year ended March 31, 2017: Nil).

23. Securitizations

A. The Bank sells loans through securitization and direct assignment. The following tables set forth, for the periods indicated, the information on securitization and direct assignment activity of the Bank as an originator till May 7, 2012.

The outstanding credit enhancement in the form of guarantees amounted to Nil at March 31, 2018 (March 31, 2017: Nil) and outstanding liquidity facility in the form of guarantees amounted to Rs, 265.8 million at March 31, 2018 (March 31, 2017: Rs, 265.5 million).

The outstanding credit enhancement in the form of guarantees for third party originated securitization transactions amounted to Rs, 4,189.5 million at March 31, 2018 (March 31, 2017: Rs, 3,456.9 million) and outstanding liquidity facility for third party originated securitization transactions amounted to Nil at March 31, 2018 (March 31, 2017: Nil).

The following table sets forth, for the periods indicated, the details of provision for securitization and direct assignment transactions.

B. The information on securitization and direct assignment activity of the Bank as an originator as per RBI guidelines 'Revisions to the Guidelines on Securitizations Transactions' dated May 7, 2012 is given below.

a. The Bank, as an originator, has not sold any loan through securitization during the year ended March 31, 2018 (March 31, 2017: Nil).

24. Financial assets transferred during the year to securitization company (SC)/reconstruction company (RC)

The Bank has transferred certain assets to Asset Reconstruction Companies (ARCs) in terms of the guidelines issued by RBI circular no. DBOD.BPBC.No.98/21.04.132/2013-14 dated February 26, 2014. For the purpose of the valuation of the underlying security receipts issued by the underlying trusts managed by ARCs, the SRs are valued at their respective net asset values as advised by the ARCs.

The following table sets forth, for the periods indicated, the details of the assets transferred.

1. During the year ended March 31, 2018, there was no loss on sale of financial assets to ARCs (year ended March 31, 2017: loss of Rs, 7,043.5 million).

2. During the year ended March 31, 2018, the Bank made a gain of Rs, 320.8 million (year ended March 31, 2017: gain of Rs, 2,216.4 million) on sale of financial assets to ARCs, out of which Rs, 200.2 million (year ended March 31, 2017: Rs, 1,883.8 million) is set aside towards the security receipts received on such sale.

3. Excludes security receipts received amounting to Rs, 34.5 million towards interest overdue not recognized as income (year ended March 31, 2017: Rs, 359.2 million).

The following tables set forth, for the periods indicated, the details of investments in security receipts (SRs).

1. During the year ended March 31,2018, no investment in a security receipt was fully redeemed by the ARC (year ended March 31, 2017: one security receipt was fully redeemed) and there was no gain/loss to the Bank (year ended March 31, 2017: Nil).

25. Details of non-performing assets purchased/sold, excluding those sold to SC/RC

The Bank did not purchase any non-performing assets in terms of the guidelines issued by RBI circular no. DBOD. BPBC.No.98/21.04.132/2013-14 dated February 26, 2014 during the year ended March 31, 2018 (year ended March 31, 2017: Nil).

The following table sets forth, for the periods indicated, details of non-performing assets sold, excluding those sold to SC/RC.

During the year ended March 31, 2018, the Bank did not sell any non-performing loan to an entity, other than to a financial intermediary (year ended March 31, 2017: one loan to a corporate for sale consideration of Rs, 39.3 million and gain of Rs, 39.3 million).

1. With effect from February 12, 2018, RBI has withdrawn SDR scheme. Accordingly, at March 31, 2018, cases where SDR has been invoked but not implemented are classified as per the extant Income Recognition and Asset Classification norms of RBI and have not been included here.

2. At March 31, 2017, eight cases amounting to Rs, 23,182.5 million classified as standard restructured.

3. Represents gross loans and credit substitutes.

4. Cases where the Bank has not taken stand-still benefit for NPA are excluded.

The Bank does not recognise any amount towards interest on the cases under SDR. With effect from February 12, 2018, RBI has withdrawn the scheme and the interest income, for cases where SDR were not implemented has been recognized as per the Income Recognition and Asset Classification norms of RBI.

The following table sets forth, for the periods indicated, details for cases of change in ownership outside SDR scheme (accounts which are currently under the stand-still period).

1. With effect from February 12, 2018, Reserve Bank of India (RBI) has withdrawn change of management outside SDR scheme. Accordingly, at March 31, 2018, cases where change of management outside SDR has been invoked but not implemented are classified as per the extant Income Recognition and Asset Classification norms of RBI and have not been included here.

2. Represents gross loans and credit substitutes.

3. Cases where the Bank has not taken stand-still benefit for NPA are excluded.

The Bank does not recognise any amount towards interest on the cases under change of management outside SDR. With effect from February 12, 2018, RBI has withdrawn the scheme and the interest income, for cases where the change in management outside SDR were not implemented has been recognized as per the Income Recognition and Asset Classification norms of RBI.

During the year ended March 31, 2018, the Bank has upgraded one NPA borrower to standard category subsequent to change in ownership in accordance with RBI circular dated February 12, 2018. At March 31, 2018, the borrower's fund based outstanding was Rs, 15,452.7 million, which includes Rs, 10,262.0 million of credit substitutes and shares converted as per the resolution plan. The Bank holds an aggregate provision of Rs, 7,785.1 million against this borrower, which includes Rs, 6,508.2 million held against credit substitutes and shares.

The following table sets forth, for the periods indicated, details for cases of change in ownership for projects under implementation (accounts which are currently under the stand-still period).

The following table sets forth, for the periods indicated, details of cases where scheme for Sustainable Structuring of Stressed Assets (S4A) is implemented.

1. Represents loans, credit substitutes and shares under S4A scheme.

2. Includes outstanding amounting to Rs, 1,327.2 million which was upgraded to standard from NPA on implementation of S4A.

The Bank does not recognise any amount towards interest on the cases under S4A. With effect from February 12, 2018, RBI has withdrawn the scheme and the interest income, for cases where S4A were not implemented has been recognized as per the Income Recognition and Asset Classification norms of RBI.

The following table sets forth, for the periods indicated, details of cases under flexible structuring of existing loans.

1. During the year ended March 31, 2018, two borrowers were taken up for flexible structuring, out of which one borrower was demerged into two entities through National Company Law Appellate Tribunal (NCLAT) order dated February 28, 2018.

2. Represents implementation amount.

29. Exposure to sensitive sectors

The Bank has exposure to sectors, which are sensitive to asset price fluctuations. The sensitive sectors include capital markets and real estate.

The following table sets forth, for the periods indicated, the position of exposure to capital market sector.

1. At March 31, 2018, excludes investment in equity shares of Rs, 27,085.1 million (March 31, 2017: Rs, 18,098.1 million) exempted from the regulatory ceiling, out of which investments of Rs, 25,481.8 million (March 31, 2017: Rs, 17,887.0 million) were acquired under resolution schemes of RBI.

The following table sets forth, for the periods indicated, the summary of exposure to real estate sector.

1. Commercial real estate exposure include loans to individuals against non-residential premises, loans given to land and building developers for construction, corporate loans for development of special economic zone, loans to borrowers where servicing of loans is from a real estate activity and exposures to mutual funds/venture capital funds/private equity funds investing primarily in the real estate companies.

30. Factoring business

At March 31, 2018, the outstanding receivables acquired by the Bank under factoring business were Nil (March 31, 2017: Rs, 2,061.0 million).

31. Risk category-wise country exposure

As per the extant RBI guidelines, the country exposure of the Bank is categorised into various risk categories listed in the following table. The funded country exposure (net) of the Bank as a percentage of total funded assets for United States of America was 3.08% (March 31, 2017: 2.27%) and for Singapore was 1.13% (March 31, 2017: 1.20%). As the net funded exposure to United States of America and Singapore exceeded 1.0% of total funded assets, the Bank held a provision of Rs, 455.0 million on country exposure at March 31, 2018 (March 31, 2017: Rs, 375.0 million) based on RBI guidelines.

32. Details of Single Borrower Limit and Borrower Group Limit exceeded by the Bank

During the year ended March 31, 2018 and March 31, 2017, the Bank has complied with the RBI guidelines on single borrower and borrower group limit.

33. Unsecured advances against intangible assets

The Bank has not made advances against intangible collaterals of the borrowers, which are classified as 'Unsecured' in the financial statements at March 31, 2018 (March 31, 2017: Nil).

34. Revaluation of fixed assets

The Bank follows the revaluation model for its premises (land and buildings) as per AS 10 - 'Property, Plant and Equipment'. The Bank had initially revalued its premises at March 31, 2016. In accordance with the Bank's policy, annual revaluation was carried out during the year ended March 31, 2018 through external valuers, using methodologies such as direct comparison method and income generation method and the incremental amount has been taken to revaluation reserve. The revalued amount at March 31, 2018 was Rs, 56,637.9 million (March 31, 2017: Rs, 57,161.9 million) as compared to the historical cost less accumulated depreciation of Rs, 26,606.0 million (March 31, 2017: Rs, 26,740.5 million).

The revaluation reserve is not available for distribution of dividend.

35. Fixed Assets

The following table sets forth, for the periods indicated, the movement in software acquired by the Bank, as included in fixed assets.

Provident Fund (PF)

As there is no liability towards interest rate guarantee on exempt provident fund on the basis of actuarial valuation, the Bank has not made any provision for the year ended March 31, 2018 (year ended March 31, 2017: Nil).

The following tables set forth, for the periods indicated, movement of the present value of the defined benefit obligation, fair value of plan assets and other details for provident fund.

The Bank has contributed Rs, 1,982.2 million to provident fund for the year ended March 31, 2018 (year ended March 31, 2017: Rs, 1,823.6 million), which includes compulsory contribution made towards employee pension scheme under Employees Provident Fund and Miscellaneous Provisions Act, 1952.

Superannuation Fund

The Bank has contributed Rs, 207.2 million for the year ended March 31, 2018 (year ended March 31, 2017: Rs, 197.4 million) to Superannuation Fund for employees who had opted for the scheme.

National Pension Scheme (NPS)

The Bank has contributed Rs, 76.8 million for the year ended March 31, 2018 (year ended March 31, 2017: Rs, 64.4 million) to NPS for employees who had opted for the scheme.

Compensated absence

The following table sets forth, for the periods indicated, movement in provision for compensated absence.

1. Included in line item 'Payments to and provision for employees' of Schedule-16 Operating expenses.

39. Movement in provision for credit cards/debit cards/savings accounts and direct marketing agents reward points

The following table sets forth, for the periods indicated, movement in provision for credit cards/debit cards/savings accounts reward points.

40. Provisions and contingencies

The following table sets forth, for the periods indicated, the break-up of provisions and contingencies included in profit and loss account.

1. Includes provision towards NPA amounting to Rs, 163,793.6 million (March 31, 2017: ' 164,334.2 million).

2. During the year ended March 31, 2017, the Bank has fully utilized an amount of Rs, 36,000.0 million from collective contingency and related reserve.

3. During the year ended March 31, 2018, the Bank has recognized Minimum Alternate Tax (MAT) credit as an asset amounting to Rs, 2,178.0 million, as the normal income tax liability related to the year ended March 31, 2017 was less than the MAT computed as per section 115JB of the Income tax Act, 1961. The MAT asset has been fully utilized against the normal income tax liability for the year ended March 31, 2018.

4. Includes general provision made towards standard assets amounting to Rs, 2,771.1 million (March 31, 2017: reversal of provision by Rs, 3,392.4 million).

The Bank has assessed its obligations arising in the normal course of business, including pending litigations, proceedings pending with tax authorities and other contracts including derivative and long term contracts. In accordance with the provisions of AS 29 on 'Provisions, Contingent Liabilities and Contingent Assets', the Bank recognizes a provision for material foreseeable losses when it has a present obligation as a result of a past event and it is probable that an outflow of resources will be required to settle the obligation, in respect of which a reliable estimate can be made. In cases where the available information indicates that the loss on the contingency is reasonably possible but the amount of loss cannot be reasonably estimated, a disclosure to this effect is made as contingent liabilities in the financial statements. The Bank does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

The following table sets forth, for the periods indicated, the movement in provision for legal and fraud cases, operational risk and other contingencies.

1. Excludes provision towards sundry expenses.

41. Provision for income tax

The provision for income tax (including deferred tax) for the year ended March 31, 2018 amounted to Rs, 6,571.3 million (March 31, 2017: Rs, 14,775.1 million).

The Bank has a comprehensive system of maintenance of information and documents required by transfer pricing legislation under section 92-92F of the Income Tax Act, 1961. The Bank is of the opinion that all transactions with international related parties and specified transactions with domestic related parties are primarily at arm's length so that the above legislation does not have material impact on the financial statements.

42. Deferred tax

At March 31, 2018, the Bank has recorded net deferred tax assets of Rs, 74,770.2 million (March 31, 2017: Rs, 54,722.3 million), which have been included in other assets.

The following table sets forth, for the periods indicated, the break-up of deferred tax assets and liabilities into major items.

1. Tax rate of 34.944% is adopted based on Finance Act, 2018.

2. Tax rate of 34.608% is adopted based on Finance Act, 2017.

3. These items are considered in accordance with the requirements of Income Computation and Disclosure Standards (ICDS).

As per ICDS and subsequent circular issued by Central Board of Direct Taxes, during the year ended March 31, 2017, the Bank had recognized tax expense and deferred tax asset on closing balance of Foreign Currency Translation Reserve (FCTR) at March 31, 2017. Delhi High Court struck down certain part of ICDS in November 2017. Further, pursuant to amendments in Income tax Act, 1961 through Finance Act, 2018, the movement during the year in FCTR has become taxable effective from April 1, 2016. Accordingly, tax expense of Rs, 4,159.0 million and equal amount of deferred tax asset on the opening balance of FCTR at April 1, 2016 recognized earlier under ICDS has been reversed.

43. Details of provisioning pertaining to fraud accounts

The following table sets forth, for the periods indicated, the details of provisioning pertaining to fraud accounts.

1. Excludes amount written off and interest reversal.

Additionally, during the year ended March 31, 2018, the Bank accounted for three borrower accounts with outstanding of ' 7,948.7 million as fraud and made a provision of ' 2,894.5 million through profit and loss account and ' 5,054.2 million through balance in profit and loss account under 'Reserves and Surplus'. As permitted by RBI, provision made through balance in profit and loss account under 'Reserves and Surplus' will be reversed and recognized through profit and loss account in the subsequent quarters of the next financial year.

44. Proposed dividend on equity and preference shares

The Board of Directors at its meeting held on May 7, 2018 has recommended a dividend of ' 1.50 per equity share for the year ended March 31, 2018 (year ended March 31, 2017: ' 2.50 per equity share). The declaration and payment of dividend is subject to requisite approvals.

The Board at its meeting held on April 2, 2018 recommended an interim dividend of ' 100.00 per preference share for the year ended March 31, 2018. The interim dividend will be placed for ratification by the shareholders as final dividend. The Board of Directors had recommended a dividend of ' 100.00 per preference share for the year ended March 31, 2017.

According to the revised AS 4 - 'Contingencies and events occurring after the balance sheet date' as notified by the Ministry of Corporate Affairs through amendments to Companies (Accounting Standards) Amendment Rules, 2016, the Bank has not accounted for proposed dividend (including tax) as a liability for the year ended March 31, 2018. However, the Bank has reckoned proposed dividend in determining capital funds in computing capital adequacy ratio at March 31, 2018.

45. Dividend distribution tax

Dividend received from Indian subsidiaries, on which dividend distribution tax has been paid by them and dividend received from overseas subsidiaries, on which tax has been paid under section 115BBD of the Income Tax Act, 1961, have been reduced from dividend to be distributed by the Bank for the purpose of computation of dividend distribution tax as per section 115-O of the Income Tax Act, 1961.

46. Related party transactions

The Bank has transactions with its related parties comprising subsidiaries, associates/joint ventures/other related entities, key management personnel and relatives of key management personnel.

I. Related parties Subsidiaries

I CICI Bank Canada, ICICI Bank UK PLC, ICICI Home Finance Company Limited, ICICI International Limited, ICICI Investment Management Company Limited, ICICI Lombard General Insurance Company Limited, ICICI Prudential Asset Management Company Limited, ICICI Prudential Life Insurance Company Limited, ICICI Prudential Pension Funds Management Company Limited, ICICI Prudential Trust Limited, ICICI Securities Holdings Inc., ICICI Securities Inc., ICICI Securities Limited, ICICI Securities Primary Dealership Limited, ICICI Trusteeship Services Limited and ICICI Venture Funds Management Company Limited.

Associates/joint ventures/other related entities

ICICI Merchant Services Private Limited, ICICI Strategic Investments Fund1, India Advantage Fund-III, India Advantage Fund-IV, India Infradebt Limited, I-Process Services (India) Private Limited, NIIT Institute of Finance, Banking and Insurance Training Limited, Comm Trade Services Limited and ICICI Foundation for Inclusive Growth.

1. Entity consolidated as per Accounting Standard (AS) 21 on 'Consolidated Financial Statements'.

Akzo Nobel India Limited and FINO PayTech Limited ceased to be related parties effective from April 30, 2016 and January 5, 2017 respectively.

Key management personnel

Ms. Chanda Kochhar, Mr. N. S. Kannan, Ms. Vishakha Mulye, Mr. Vijay Chandok1, Mr. Anup Bagchi2, Mr. K. Ramkumar3 and Mr. Rajiv Sabharwal4.

1. Identified as related party effective from July 28, 2016.

2. Identified as related party effective from February 1, 2017.

3. Ceased to be related party effective close of business hours on April 30, 2016.

4. Ceased to be related party effective close of business hours on January 31, 2017.

Relatives of key management personnel

Mr. Deepak Kochhar, Mr. Arjun Kochhar, Ms. Aarti Kaji, Mr. Mahesh Advani, Ms. Rangarajan Kumudalakshmi, Ms. Aditi Kannan, Ms. Sudha Narayanan, Mr. Raghunathan Narayanan, Mr. Rangarajan Narayanan, Mr. Vivek Mulye, Ms. Vriddhi Mulye, Dr. Gauresh Palekar, Ms. Shalaka Gadekar, Ms. Manisha Palekar, Ms. Poonam Chandok1, Ms. Saluni Chandok1, Ms. Simran Chandok1, Mr. C. V Kumar1, Ms. Shad Kumar1, Ms. Sanjana Gulati1, Ms. Mitul Bagchi2, Mr. Aditya Bagchi2, Mr. Shishir Bagchi2, Mr. K. Jayakumar3, Ms. J. Krishnaswamy3, Ms. Sangeeta Sabharwal4, Mr. Kartik Sabharwal4 and Mr. Arnav Sabharwal4.

1. Identified as related party effective from July 28, 2016.

2. Identified as related party effective from February 1, 2017.

3. Ceased to be related party effective close of business hours on April 30, 2016.

4. Ceased to be related party effective close of business hours on January 31, 2017.

1. Insignificant amount.

2. The Bank undertakes derivative transactions with its subsidiaries, associates, joint ventures and other related entities. The Bank manages its foreign exchange and interest rate risks arising from these transactions by covering them in the market. While the Bank, within its overall position limits covers these transactions in the market, the above amounts represent only the transactions with its subsidiaries, associates, joint ventures and other related entities and not the offsetting/covering transactions.

3. Excludes the perquisite value on account of employee stock options exercised.

1. The Bank undertakes derivative transactions with its subsidiaries, associates, joint ventures and other related entities. The Bank manages its foreign exchange and interest rate risks arising from these transactions by covering them in the market. While the Bank, within its overall position limits covers these transactions in the market, the above amounts represent only the transactions with its subsidiaries, associates, joint ventures and other related entities and not the offsetting/covering transactions.

2. Excludes the perquisite value on account of employee stock options exercised.

3. Identified as related party effective from July 28, 2016.

4. Identified as related party effective from February 1, 2017.

5. Ceased to be related party effective close of business hours on April 30, 2016.

6. Ceased to be related party effective close of business hours on January 31, 2017.

7. Insignificant amount.

IV. Related party outstanding balances

The following table sets forth, for the periods indicated, the balance payable to/receivable from related parties.

VI. Letters of comfort

The Bank has issued letters of comfort on behalf of its banking subsidiary ICICI Bank UK PLC to Financial Services Authority, UK (now split into two separate regulatory authorities, the Prudential Regulation Authority and the Financial Conduct Authority) to confirm that the Bank intends to financially support ICICI Bank UK PLC in ensuring that it meets all of its financial obligations as they fall due.

The Bank has issued an undertaking on behalf of ICICI Securities Inc. for Singapore dollar 10.0 million (currently equivalent to Rs, 498.2 million) to the Monetary Authority of Singapore (MAS) and has executed indemnity agreement on behalf of ICICI Bank Canada to its independent directors for a sum not exceeding Canadian dollar 2.5 million each (currently equivalent to Rs, 126.6 million), aggregating to Canadian dollar 17.5 million (currently equivalent to Rs, 886.4 million). The aggregate amount of Rs, 1,384.6 million at March 31, 2018 (March 31, 2017: Rs, 1,314.5 million) is included in the contingent liabilities.

The letters of comfort in the nature of letters of awareness that were outstanding at March 31, 2018 issued by the Bank on behalf of its subsidiaries in respect of their borrowings made or proposed to be made, aggregated to Rs, 12,363.0 million (March 31, 2017: Rs, 12,363.0 million).

In addition to the above, the Bank has also issued letters of comfort in the nature of letters of awareness on behalf of its subsidiaries for other incidental business purposes. These letters of awareness are in the nature of factual statements or confirmation of facts and do not create any financial impact on the Bank.

47. Details of amount transferred to The Depositor Education and Awareness Fund (the Fund) of RBI

The following table sets forth, for the periods indicated, the movement in amount transferred to the Fund.

48. Small and micro enterprises

The following table sets forth, for the periods indicated, details relating to enterprises covered under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.

49. Penalties/fines imposed by RBI and other banking regulatory bodies

The penalty imposed by RBI and other banking regulatory bodies during the year ended March 31, 2018 was Rs, 627.2 million (year ended March 31, 2017: Nil).

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 Rs, 589.0 million on the 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. During the year ended March 31, 2018, an overseas regulator imposed a composition sum of Rs, 38.2 million for non-adherence of rules under AML regulations at one of the Bank's overseas branches, resulting from regulatory inspection conducted in 2013 and subsequently, pursuant to consultant's review of records, relating to the period of May 2012 to April 2014.

In February 2015, penalty was imposed on several banks, including the Bank, by the Financial Intelligence Unit - India for failure in reporting of attempted suspicious transactions, with respect to the incidents concerning the media sting operation in September 2013. A penalty of Rs, 1.4 million was levied on the Bank, which the Bank had paid and filed an appeal against the penalty with the Appellate Tribunal. In June 2017, the Appellate Tribunal ruled that the penalty was not sustainable and asked the appellant banks to be careful and report such matters in future.

50. Disclosure on Remuneration 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 and 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 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 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, 2018.

- 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 the year ended March 31, 2018 and approved by the BGRNC and the Board at their meeting held on May 3, 2017, 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.

- Type of employees covered and number of such employees

All employees of the Bank are governed by the Compensation Policy. The total number of permanent employees of the Bank at March 31, 2018 was 81,548.

b) Information relating to the design and structure of remuneration processes.

- Key features and objectives of remuneration policy

The Bank has under the guidance of the Board and the BGRNC, followed compensation practices intended to drive meritocracy within the framework of prudent risk management. This approach has been incorporated in the Compensation Policy, the key elements of which are given below.

- Effective governance of compensation: The BGRNC has oversight over compensation. The Committee defines Key Performance Indicators (KPIs) for WTDs and equivalent positions and the organizational performance norms for bonus based on the financial and strategic plan approved by the Board. The KPIs include both quantitative and qualitative aspects. The BGRNC assesses organizational performance as well as the individual performance for WTDs and equivalent positions. Based on its assessment, it makes recommendations to the Board regarding compensation for WTDs and equivalent positions and bonus for employees, including senior management and key management personnel.

- 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 of 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 the year ended March 31, 2018, the Bank's Compensation Policy was reviewed by the BGRNC and the Board at their meeting held on May 3, 2017. 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 and 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.

- Discussion of how the nature and type of these measures have changed over the past year and reasons for the changes, as well as the impact of changes on remuneration.

The nature and type of these measures have not changed over the past year and hence, there is no impact on remuneration.

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 above mentioned aspects while assessing performance and making compensation-related recommendations to the Board regarding the performance assessment of WTDs and equivalent positions. The performance assessment of individual employees is undertaken based on achievements compared to their goal sheets, which incorporate 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 malus 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 clawback 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 frontline 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 WTDs (including MD and CEO) and equivalent positions.

1. Includes deferred remuneration paid during the year to retired WTDs.

2. Fixed pay includes basic salary, supplementary allowances, superannuation, contribution to provident fund and gratuity fund by the Bank.

3. For the years ended March 31, 2018 and March 31, 2017, variable pay and share-linked instruments represent amounts paid/options awarded for the years ended March 31, 2017 and March 31, 2016 respectively, as per RBI approvals. For the year ended March 31, 2018, ' 90.4 million of variable pay (year ended March 31, 2017: Rs, 75.6 million) and 4,307,500 share-linked instruments (year ended March 31, 2017: 4,526, 500 option) are subject to RBI approval.

4. Pursuant to the issuance of bonus shares by the Bank on June 24, 2017, the share-linked instruments have been adjusted with increase of one option for every 10 outstanding options.

Payment of compensation in the form of profit related commission to the non-executive directors

The Board at its meeting held on September 16, 2015 and the shareholders at their meeting held on July 11, 2016 approved the payment of profit related commission of Rs, 1.0 million per annum to be paid to each non-executive Director of the Bank (excluding government nominee and part-time Chairman) subject to the availability of net profits at the end of each financial year.

The Bank accordingly recognized an amount of Rs, 5.1 million as profit related commission payable to the nonexecutive Directors during the year ended March 31, 2018, subject to requisite approvals. For the year ended March 31, 2017, the Bank had recognized an amount of Rs, 6.0 million as profit related commission payable to the non-executive Directors, which was paid in August 2017 after obtaining the shareholders' approval in the Annual General Meeting of the Bank.

51. Corporate Social Responsibility

The gross amount required to be spent by the Bank on Corporate Social Responsibility (CSR) related activities during the year ended March 31, 2018 was Rs, 1,702.0 million (March 31, 2017: Rs, 1,997.3 million).

The following table sets forth, for the periods indicated, the amount spent by the Bank on CSR related activities.

52. Disclosure of customer complaints

The following table sets forth, for the periods indicated, the movement of the outstanding number of complaints.

53. Drawdown from reserves

The Bank has not drawn any amount from reserves during the year ended March 31, 2018 (year ended March 31, 2017: Nil).

54. Investor Education and Protection Fund

The unclaimed dividend amount due to be transferred to the Investor Education and Protection Fund during the year ended March 31, 2018 has been transferred without any delay.

55. Comparative figures

Figures of the previous year have been re-grouped to conform to the current year presentation.