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

DIRECTORS' REPORT

The Directors have pleasure in presenting the Twenty-Fourth Annual Report of ICICI Bank Limited along with the audited financial statements for the year ended March 31, 2018.

FINANCIAL HIGHLIGHTS

The financial performance for fiscal 2018 is summarized in the following table:

' in billion, except percentages

Fiscal 2017

Fiscal 2018

% change

Net interest income and other income

412.42

404.45

(1.9)%

Operating expenses

147.55

157.04

6.4%

Provisions & contingencies1

152.08

173.07

13.8%

Profit before tax

112.79

74.34

(34.1)%

Profit after tax

98.01

67.77

(30.9)%

1Excludes provision for taxes.

' in billion, except percentages

Fiscal 2017

Fiscal 2018

% change

Consolidated profit before tax and minority interest

138.09

109.78

(20.5)%

Consolidated profit after tax and minority interest

101.88

77.12

(24.3)%

APPROPRIATIONS

The profit after tax of the Bank for fiscal 2018 is Rs, 67.77 billion after provisions and contingencies of Rs, 173.07 billion, provision for taxes of Rs, 6.57 billion and all expenses. The accumulated profit is Rs, 249.97 billion, taking into account the balance of Rs, 187.45 billion brought forward from the previous year and deducting Rs, 5.25 billion directly from balance in profit and loss account towards provision for frauds on non-retail accounts. Your Bank's dividend policy is based on the profitability and key financial metrics of the Bank, the Bank's capital position and requirements and the regulations pertaining to the same. Your Bank has a consistent dividend payment history. Given the financial performance for fiscal 2018 and in line with the Bank's dividend policy and applicable regulations, your Directors are pleased to recommend a dividend of Rs, 1.50 per equity share for the year ended March 31, 2018 and have appropriated the disposable profit as follows:

Rs, billion

Fiscal 2017

Fiscal 2018

To Statutory Reserve, making in all Rs, 228.97 billion

24.50

16.94

To Special Reserve created and maintained in terms of Section 36(1 )(viii) of the Income Tax Act, 1961, making in all Rs, 89.79 billion

4.50

6.00

To Capital Reserve, making in all Rs, 128.26 billion1

52.93

25.66

To Revenue and other reserves, making in all Rs, 39.59 billion2

0.01

7.01

Dividend paid during the year

- On equity shares, during fiscal 2018 @ Rs, 2.50 per share of face value Rs, 2.00 each3,4

0.01

14.57

- On preference shares, during fiscal 2018 @ 100.00 per preference shares (?)

35,000

- Corporate dividend tax4

(0.07)

0.09

Leaving balance to be carried forward to the next year

187.45

179.70

1. Includes transfer of Rs, 24.90 billion on account of sale of part of a equity investment in the Bank's insurance subsidiary during fiscal 2018 f 42.61 billion for fiscal 2017).

2. Includes transfer of Rs, 10.6 million to Reserve Fund for fiscal 2018 ft 9.8 million for fiscal 2017) in accordance with regulations applicable to the Sri Lanka branch.

3. Includes dividend for the prior year paid on shares issued after the balance sheet date and prior to the record date.

4. The proposed dividend (including dividend distribution tax) is not accounted as a liability in accordance with the revised /4S 4 -'Contingencies and events occurring after the balance sheet date' from fiscal 2017.

The Bank prepares its financial statements in accordance with the applicable accounting standards, Reserve Bank of India (RBI) guidelines and other applicable laws/regulations. RBI, under its risk-based supervision exercise, carries out the risk assessment of the Bank on an annual basis. This assessment is initiated subsequent to the finalization, completion of audit and publication of audited financial statements for a financial year and typically occurs a few months after the financial year-end. As a part of this assessment, RBI separately reviews asset classification and provisioning of credit facilities given by the Bank to its borrowers. The divergences, if any, in classification or provisioning arising out of the supervisory process are given effect to in the financial statements in subsequent periods after conclusion of the exercise.

In terms of the RBI circular no. DBR.BPBC.No.63/21.04.018/2016-17 dated April 18, 2017, banks are required to disclose the divergences in asset classification and provisioning consequent to RBI's annual supervisory process in their notes to accounts to the financial statements, wherever either (a) the additional provisioning requirements assessed by RBI exceed 15% of the published net profits after tax for the reference period or (b) the additional Gross NPAs identified by RBI exceed 15% of the published incremental Gross NPAs for the reference period, or both. Based on the above, no disclosure on divergence in asset classification and provisioning for NPAs is required with respect to RBI's annual supervisory process for fiscal 2017.

redemption of preference shares

The Board of Directors at their Meeting held on April 2, 2018 considered and approved the redemption of 350, 0.001% Redeemable Non-Cumulative Preference Shares of Rs, 1,00,00,000/- each which was due on April 20, 2018. Pursuant to the RBI approval dated April 16, 2018, the above mentioned preference shares were redeemed on April 20, 2018. In line with the provisions of Section 61 and other applicable provisions of the Companies Act, 2013, approval of members is being sought in the Notice of the forthcoming Annual General Meeting (AGM) for re-classification of the authorized share capital of the Bank from Rs, 25,000,000,000 divided into 10,000,000,000 equity shares of Rs, 2 each, 15,000,000 shares of Rs, 100 each and 350 shares of Rs, 10,000,000 each to Rs, 25,000,000,000 comprising 12,500,000,000 equity shares of Rs, 2 each. No objection under Section 49C of the Banking Regulation Act, 1949 for the above alteration in the Memorandum of Association and Articles of Association of the Bank has been received from RBI vide DBR.PSBD No.11582/16.01.128/2017-18 dated June 25, 2018.

DIVIDEND DISTRIBUTION POUCY

In accordance with Regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Bank has formulated a Dividend Distribution Policy and the same is annexed herewith as Annexure F. The Policy is hosted on the website of the Bank and can be viewed (https://www.icicibank.com/ managed-assets/docs/investor/policy-for-determining-material-subsidiaries/dividend-distribution-policy.pdf).

particulars of loans, guarantees or investments

Pursuant to Section 186(11) of the Companies Act, 2013, the provisions of Section 186 of Companies Act, 2013, except sub-section (1), do not apply to a loan made, guarantee given or security provided by a banking company in the ordinary course of business. The particulars of investments made by the Bank are disclosed in Schedule 8 of the financial statements as per the applicable provisions of Banking Regulation Act, 1949.

SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES

The Bank, to protect its interests as a lender, converts loans or exercises pledge of shares from time to time and hence acquires holding in unrelated companies, which is required to be reported as associate under the Companies Act, 2013 if the holding exceeds 20.0% of the total share capital. Accordingly, during fiscal 2018, pursuant to conversion of loan, Shree Renuka Sugars Limited became an associate company of the Bank for the purpose of reporting under the Companies Act, 2013. Further, pursuant to the Bank's investments in National Investment and Infrastructure Fund Limited (NIIFL), NIIFL became an associate company of the Bank during the year ended March 31, 2018. The particulars of subsidiary and associate companies as on March 31, 2018 have been included in Form MGT-9 which is annexed to this report as Annexure D. Escorts Motors Limited, which was considered as an associate under Section 2(6) of the Companies Act, 2013, ceased to be an associate of the Bank during fiscal 2018.

HIGHLIGHTS OF PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES AND THEIR CONTRIBUTION TO THE OVERALL PERFORMANCE OF THE COMPANY

The performance of subsidiaries and associates and their contribution to the overall performance of the Bank as on March 31, 2018 has been annexed to this report as Annexure A. A summary of key financials of the Bank's subsidiaries is also included in this Annual Report.

The highlights of the performance of key subsidiaries are given as a part of Management's Discussion & Analysis under the section "Consolidated financials as per Indian GAAP".

The Bank will make available separate audited financial statements of the subsidiaries to any Member upon request. These documents/details are available on the Bank's website (www.icicibank.com) and will also be available for inspection by any Member or trustee of the holder of any debentures of the Bank at its Registered Office and Corporate Office. As required by Accounting Standard 21 (AS 21) issued by the Institute of Chartered Accountants of India, the Bank's consolidated financial statements included in this Annual Report incorporate the accounts of its subsidiaries and other consolidating entities.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS OF THE COMPANY AND ITS FUTURE OPERATIONS

There are no significant and/or material orders passed by the regulators or courts or tribunals impacting the going concern status or future operations of the Bank.

DIRECTORS AND OTHER KEY MANAGERIAL PERSONNEL

The Board of the Bank at March 31, 2018 consisted of 12 Directors, out of which six were independent Directors, one was a Government Nominee Director and five were whole time Directors. The current composition of the Board consisted of 12 Directors, out of which seven are independent Directors, one is a Government Nominee Director and four are whole time Directors.

Changes in the composition of the Board of Directors and other Key Managerial Personnel

The Board of Directors at their Meetings held on January 12, 2018, January 17, 2018, May 2, 2018 and May 29, 2018 approved the appointments of Neelam Dhawan, Uday Chitale, Radhakrishnan Nair and M. D. Mallya, respectively as additional (independent) Directors for a period of five years subject to the approval of the Members. All the above four Directors hold office upto the date of the forthcoming AGM and are eligible for appointment. Their appointments are being proposed in the Notice of the forthcoming AGM.

Lok Ranjan, Joint Secretary, Department of Financial Services, Ministry of Finance has been nominated by Government of India as a Director on the Board of the Bank effective April 5, 2018 in place of Amit Agrawal.

Pursuant to completion of their maximum permissible tenure of eight years as per the provisions of the Banking Regulation Act, 1949, Homi Khusrokhan and V. Sridar, independent Directors ceased to be Directors on the Board of the Bank effective close of business hours on January 20, 2018 and Tushaar Shah, independent Director, ceased to be a Director on the Board of the Bank effective close of business hours on May 2, 2018. The Board acknowledges the valuable contribution and guidance provided by the above Directors.

Further, the Board at its Meeting held on June 18, 2018 recommended to the Board of Directors of ICICI Prudential Life Insurance Company Limited (ICICI Life/Company) to appoint N. S. Kannan as the Managing Director & Chief Executive Officer (CEO) of the Company subject to regulatory and other approvals. The Board of Directors of ICICI Life at its Meeting held on June 18, 2018 appointed N. S. Kannan, as Managing Director & Chief Executive Officer of the Company with effect from June 19, 2018, subject to approval of Insurance Regulatory Development Authority of India (IRDAI) and Members of the Company. Pursuant to the aforesaid movement, N. S. Kannan ceased to be the Executive Director of the Bank effective close of business hours on June 18, 2018. The Board acknowledges the valuable contribution and guidance provided by N. S. Kannan during his tenure as executive Director of the Bank.

The Board of Directors at its Meeting held on June 18, 2018 approved the appointment of Sandeep Bakhshi as a whole time Director and Chief Operating Officer (Designate) for a period of five years effective from June 19, 2018 or the date of receipt of approval from RBI, whichever is later. Application has been made to RBI for seeking necessary approval. The said appointment is subject to the approval of RBI and Members. Approval of the Members is being sought for Sandeep Bakhshi's appointment for five years in the Notice of the forthcoming Annual General Meeting through item nos.13 and 14. The Appointment of Mr. Bakhshi as a Whole time Director to be designated as Chief Operating Officer is subject to the approval of RBI and would be effective from the date of RBI approval.

Further, the Board at its Meeting held on June 29, 2018 approved the appointment of Girish Chandra Chaturvedi as an Additional (Independent) Director effective July 1, 2018 for a period of three years subject to the approval of Members. The Board also approved the appointment of Girish Chandra Chaturvedi as non-executive part-time Chairman effective from July 1, 2018 or the date of receipt of RBI approval for such appointment whichever is later. RBI vide its letter no DBR. Appt.No.451/08.88.001/ 2018-19 dated July 17, 2018 has approved the appointment of Mr. Girish Chandra Chaturvedi as Non-executive (part time) Chairman of the Bank effective July 17, 2018 till June 30, 2021. Approval of the Members is being sought for Girish Chandra Chaturvedi's appointment for five years in the Notice of the forthcoming Annual General Meeting through item nos.11 and 12.

The Board of Directors at its Meeting held July 27, 2018 appointed Ranganath Athreya as the Company Secretary and Compliance Officer of the Bank effective July 28, 2018. The Board in the same Meeting noted the cessation of Mr. P Sanker, as the Company Secretary and Compliance Officer of the Bank effective close of business hours on July 27, 2018. The Board acknowledges the valuable contribution provided by P Sanker during his tenure as the Company Secretary and Compliance Officer of the Bank.

Declaration of Independence

All independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149 of the Companies Act, 2013 and as amended by the Companies (Amendment) Act, 2017 and Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which have been relied on by the Bank and were placed at the Board Meetings held on April 2, 2018 and May 29, 2018. In the opinion of the Board, the independent Directors fulfill the necessary criteria for independence as stipulated under the statutes.

Retirement by rotation

In terms of Section 152 of the Companies Act, 2013, Vijay Chandok would retire by rotation at the forthcoming AGM and is eligible for re-appointment. Vijay Chandok has offered himself for re-appointment.

AUDITORS

Statutory Auditors

M/s B S R & Co. LLP, Chartered Accountants will retire at the ensuing AGM. B S R & Co. LLP, Chartered Accountants were appointed as auditors by the Members at their Twentieth Annual General Meeting (AGM) held on June 30, 2014 to hold office till conclusion of the Twenty-Fourth AGM. Their appointment was last ratified by the Members at their Twenty Third Annual General Meeting held on June 30, 2017 where they were appointed as auditors to hold office from the conclusion of the Twenty Third AGM until the conclusion of the Twenty-Fourth AGM of the Bank. B S R & Co. LLP have been auditors of the Company for four consecutive years, which is the maximum term for statutory auditors of banking companies as per the guidelines issued by Reserve Bank of India (RBI). Hence they would be retiring at the conclusion of the forthcoming Annual General Meeting. The Audit Committee and the Board of Directors have placed on record their appreciation of the professional services rendered by B S R & Co. LLP during their association with the Company as its auditors. As recommended by the Audit Committee, the Board has proposed the appointment of M/s Walker Chandiok & Co LLP as statutory auditors for the year ending March 31, 2019 (fiscal 2019). Their appointment has been approved by RBI on May 17, 2018. The appointment of the auditors is proposed to the Members in the Notice of the current AGM through item no. 5. You are requested to consider their appointment.

There are no qualifications, reservation or adverse remarks made by the statutory auditors in the audit report.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Bank with the approval of its Board, appointed M/s. Parikh Parekh & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Bank for fiscal 2018. The Secretarial Audit Report is annexed herewith as Annexure B. There are no qualifications, reservation or adverse remark or disclaimer made by the auditor in the report save and except disclaimer made by them in discharge of their professional obligation.

The Secretarial Auditor has drawn reference to the following observation in the audit report:

In reference to show cause notice issued by RBI dated September 6, 2017 and supplementary show cause notice dated November 7, 2017 and as mentioned by RBI in its press release dated March 29, 2018, RBI has through an order dated March 26, 2018, imposed a monetary penalty of ' 589.0 million on ICICI Bank for non-compliance with directions/ guidelines issued by RBI. This penalty has been imposed in exercise of powers vested in RBI under the provisions of Section 47A(1)(c) read with Section 46(4)(i) of the Banking Regulation Act, 1949.

PERSONNEL

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report. In terms of Section 136(1) of the Companies Act, 2013, the annual report and the accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Bank.

INTERNAL CONTROL AND ITS ADEQUACY

The Bank has adequate internal controls and processes in place with respect to its financial statements which provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements. These controls and processes are driven through various policies, procedures and certifications. The processes and controls are reviewed periodically. The Bank has a mechanism of testing the controls at regular intervals for their design and operating effectiveness to ascertain the reliability and authenticity of financial information.

DISCLOSURE UNDER FOREIGN EXCHANGE MANAGEMENT ACT, 1999

The Bank has obtained a certificate from its statutory auditors that it is in compliance with the Foreign Exchange Management Act, 1999 provisions with respect to investments made in its consolidated subsidiaries and associates during fiscal 2018.

RELATED PARTY TRANSACTIONS

The Bank undertakes various transactions with related parties in the ordinary course of business. The Bank has a Board approved policy on Related Party Transactions, which has been disclosed on the website of the Bank and can be viewed at https://www.icicibank.com/managed-assets/docs/personal/general-links/related-party-transactions-policy.pdf. The Bank also has a Board approved Group Arm's Length Policy which requires transactions with the group companies to be at arm's length. The transactions between the Bank and its related parties, during fiscal 2018, were in the ordinary course of business and based on the principles of arm's length. The details of material related party transactions at an aggregate level for fiscal 2018 are given in Annexure C.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9 is annexed herewith as Annexure D.

BUSINESS RESPONSIBILITY REPORTING

The Business Responsibility Report as stipulated under Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been hosted on the website of the Bank (https:// www.icicibank.com/aboutus/annual.html). Any Member interested in obtaining a physical copy of the same may write to the Company Secretary at the Registered Office of the Bank.

RISK MANAGEMENT FRAMEWORK

The Bank's risk management framework is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously benchmarked with international best practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific Committees have been constituted to facilitate focused oversight of various risks, as follows:

- The Risk Committee of the Board reviews risk management policies of the Bank pertaining to credit, market, liquidity, operational and outsourcing risks and business continuity management. The Committee also reviews the Risk Appetite and Enterprise Risk Management frameworks, Internal Capital Adequacy Assessment Process (ICAAP) and stress testing. The stress testing framework includes a range of Bank-specific, market (systemic) and combined scenarios. The ICAAP exercise covers the domestic and overseas operations of the Bank, banking subsidiaries and non-banking subsidiaries. The Committee reviews migration to the advanced approaches under Basel II and implementation of Basel III, risk return profile of the Bank and the activities of the Asset Liability Management Committee. The Committee reviews the level and direction of major risks pertaining to credit, market, liquidity, operational, technology, compliance, group, management and capital at risk as a part of the risk dashboard. In addition, the Committee has oversight on risks of subsidiaries covered under the Group Risk Management Framework. The Risk Committee also reviews the Liquidity Contingency Plan for the Bank and the various thresholds set out in the Plan.

- The Credit Committee of the Board, apart from sanctioning credit proposals based on the Bank's credit approval authorization framework, reviews developments in key industrial sectors and the Bank's exposure to these sectors as well as to large borrower accounts and borrower groups. The Credit Committee also reviews major credit portfolios, non-performing loans, accounts under watch, overdoes and incremental sanctions.

- The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function and also monitors compliance with inspection and audit reports of RBI, other regulators and statutory auditors.

- The Asset Liability Management Committee provides guidance for management of liquidity of the overall Bank and management of interest rate risk in the banking book within the broad parameters laid down by the Board of Directors/ Risk Committee.

Summaries of reviews conducted by these Committees are reported to the Board on a regular basis.

Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework. Independent groups and subgroups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/sub-groups.

The Bank has dedicated groups, namely, the Risk Management Group, Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention & Reputation Risk Management Group, with a mandate to identify, assess and monitor all of the Bank's principal risks in accordance with well-defined policies and procedures. The Risk Management Group is further organized into the Credit Risk Management Group, Market Risk Management Group, Operational Risk Management Group and Information Security Group. The Bank has designated an official in the grade of Senior General Manager as Chief Risk Officer (CRO) who reports to the Risk Committee constituted by the Board which reviews risk management policies of the Bank. The CRO, for administrative purpose reports to an President. The above mentioned groups are independent of all business operations and coordinate with representatives of the business units to implement the Bank's risk management policies and methodologies. The Internal Audit and Compliance groups are responsible to the Audit Committee of the Board.

INFORMATION REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL), ACT, 2013

Please refer Principle 3 under Section E of the Business Responsibility Report

The Bank is in compliance with requirements specified in Regulations 17 to 27 and clauses (b) to (i) of subregulation (2) of Regulation 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Bank has also complied with the discretionary requirements such as maintaining a separate office for the Chairman at the Bank's expense, ensuring financial statements with unmodified audit opinion, separation of posts of Chairman and Chief Executive Officer and reporting of internal auditor directly to the Audit Committee.

ANALYSIS OF CUSTOMER COMPLAINTS

a) Customer complaints in fiscal 2018

No. of complaints pending at the beginning of the year

4,272

No. of complaints received during the year

237,343

No. of complaints redressed during the year

235,406

No. of complaints pending at the end of the year

6,209

Note: The above does not include complaint redressed within 1 working day.

b) Awards passed by the Banking Ombudsman in fiscal 2018

Number of unimplemented awards at the beginning of the year

Nil

Number of awards passed by the Banking Ombudsman during the year

Nil

Number of awards implemented during the year

Nil

Number of unimplemented awards at the end of the year

Nil

COMPLIANCE CERTIFICATE OF THE AUDITORS

I CICI Bank has annexed to this report, a certificate obtained from the statutory auditors, M/s B S R & Co. LLP, Chartered Accountants, regarding compliance of conditions of Corporate Governance as stipulated in Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

EMPLOYEE STOCK OPTION SCHEME

The Bank has an Employee Stock Option Scheme (ESOS/Scheme) which was instituted in fiscal 2000 to enable the employees and whole time Directors of ICICI Bank and its subsidiaries to participate in future growth and financial success of the Bank. The ESOS aims at achieving the twin objectives of (i) aligning employee interest to that of the shareholders; and (ii) retention of talent. Through employee stock option grants, the Bank seeks to foster a culture of long-term sustainable value creation. The Scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014 and the below disclosures are available at www.icicibank.com/aboutus/annual.page. Pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014, options are granted by the Board Governance, Remuneration & Nomination Committee (BGRNC) and noted by the Board.

The Scheme was initially approved by the Members at their meeting held on February 21, 2000 and thereafter further amended through resolutions at the General Meeting held on September 20, 2004, June 25, 2012 and vide a postal ballot resolution passed on April 22, 2016. The scheme was further amended through a resolution at the Board Governance, Remuneration & Nomination Committee held on July 11, 2016 and vide a postal ballot resolution passed on June 12, 2017. The Bank has upto March 31, 2018 granted 487.11 million stock options from time to time aggregating to 7.58% of the issued equity capital of the Bank at March 31, 2018. As per the ESOS, as amended from time to time, the maximum number of options granted to any employee/Director in a year is limited to 0.05% of ICICI Bank's issued equity shares at the time of the grant, and the aggregate of all such options is limited to 10% of ICICI Bank's issued equity shares on the date of the grant (equivalent to 642.80 million shares of face value ' 2 each at March 31, 2018).

Options granted after April 1, 2014 vest in a graded manner over a three year period, with 30%, 30% and 40% of the grant vesting in each year, commencing from the end of 12 months from the date of the grant, other than the following:

- 275,000 options granted in April 2014, 50% vested on April 30, 2017 and balance 50% vested on April 30, 2018.

- Options granted in September 2015, 50% vested on April 30, 2018 and balance 50% would vest on April

30, 2019. The unvested options would lapse upon termination of employment due to retirement (including pursuant to early/voluntary retirement scheme).

- 300,000 options granted in January 2018, would vest to the extent of 100% at the end of four years from the date of grant.

Options granted prior to April 1, 2014 vested in a graded manner over a four-year period, with 20%, 20%, 30% and 30% of the grants vesting in each year commencing from the end of 12 months from the date of grant, other than the following:

- Options granted in April 2009 vested in a graded manner over a five-year period with 20%, 20%, 30% and 30% of the grant vesting in each year, commencing from the end of 24 months from the date of the grant.

- The grant approved by the Board at its Meeting held on October 29, 2010 (for which RBI approval for grant to whole time Directors was received in January 2011), vested 50% on April 30, 2014 and the balance 50% vested on April 30, 2015.

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

The price for options granted (except for grants approved on October 29, 2010 where the grant price was the average closing price of the ICICI Bank stock on the stock exchange during the six months upto October 28, 2010) is equal to the closing price on the stock exchange which recorded the highest trading volume preceding the date of grant of options in line with the SEBI regulations.

The BGRNC at its Meeting held on May 3, 2017 approved a grant of approximately 36.3 million options (bonus adjusted) for fiscal 2017 to eligible employees and whole time Directors of ICICI Bank and its subsidiaries. Each option confers on the employee a right to apply for one equity share of face value of ' 2 of ICICI Bank at ' 250.55 being the grant price proportionately adjusted post issuance of bonus options in June 2017 based on the price of ' 275.60 calculated as per the SEBI Regulations which was closing price on the stock exchange which recorded the highest trading volume in ICICI Bank shares on May 2, 2017.

Particulars of options granted by ICICI Bank upto March 31, 2018 are given below:

Options granted till March 31, 2018 (excluding options forfeited/lapsed)

487,109,621

Options forfeited/lapsed

83,085,543

Options vested

401,079,784

Options exercised

251,437,371

Total number of options in force

235,672,250

Number of shares allotted pursuant to exercise of options

251,437,371

Extinguishment or modification of options

Nil

Amount realised by exercise of options (?)

20,369,703,051

1. The numbers indicated include options granted till March 31, 2018 including those granted to whole time Directors (WTDs)as per RBI approvals. For the year ended March 31, 2018, approx. 35.5 million options were approved by BGRNC at its meeting held on May 7, 2018 (FY2017: 36.3 million options bonus adjusted) which includes options granted to WTDs subject to RBI approval.

2. For details on option movement during the year refer Financials-Schedule 18-Employee Stock Option Scheme. 37,507,933 options vested during FY2018 and ' 3,939,489,824 was realized by exercise of options during FY2018.

3. Pursuant to the issuance of bonus shares by the Bank in June 2017, stock options were also adjusted with increase of one option for every 10 outstanding options. Accordingly, all numbers reported above have been re-stated.

The following Key Managerial Personnel (other than whole time Directors) and Senior Management Personnel (SMP) were granted ESOPs up to maximum of 365,750 options, aggregating to 3,768,545 in FY2018. The numbers reported here are adjusted with increase of one option for every 10 outstanding options pursuant to the issuance of bonus shares by the Bank in June 2017.

Sr. No.

Name

Grade

1

Madhivanan B

Group Executive

2

Prasanna Balachander

Group Executive

3

Rakesh Jha

Group Executive (Chief Financial Officer)

4

Sanjay Chougule

Senior General Manager

5

G Srinivas

Senior General Manager

6

T. K. Srirang

Senior General Manager

7

Anita Pai

Senior General Manager

8

Partha Dey

Senior General Manager

9

Sanker Parameswaran

Senior General Manager (Company Secretary)

10

Saurabh Singh

Senior General Manager

11

Supritha Shirish Shetty

Senior General Manager

12

Sujit Ganguli

Senior General Manager

13

Ajay Gupta

Senior General Manager

14

Murali Ramakrishnan

Senior General Manager

15

Amit Palta

Senior General Manager

16

Narayanan N R

Senior General Manager

17

Kumar Ashish

Senior General Manager

18

Loknath Mishra

Senior General Manager

19

Anuj Bhargava

Senior General Manager

20

Avijit Saha

Senior General Manager

21

Subir Saha

Senior General Manager

22

Anil Kaul

Senior General Manager

1. For the year-ended March 31, 2018 the numbers indicated are the options granted during the year FY2018.

No employee was granted options during any one year equal to or exceeding 0.05% of the issued equity shares of ICICI Bank at the time of the grant.

The diluted earnings per share (EPS) pursuant to issue of shares on exercise of options calculated in accordance with AS-20 was Rs, 10.46 in fiscal 2018 compared to basic EPS of Rs, 10.56. Based on the intrinsic value of options, no compensation cost was recognized during fiscal 2018. However, if the Bank had used the fair value of options based on the binomial tree model, compensation cost in fiscal 2018 would have been higher by Rs, 3.52 billion including additional cost of Rs, 0.07 billion due to change in exercise period and preformed profit after tax would have been Rs, 64.25 billion. On a preformed basis, the Bank's basic and diluted earnings per share would have been Rs, 10.01 and Rs, 9.91 respectively.

The key assumptions used to estimate the fair value of options granted during fiscal 2018 are given below:

Risk-free interest rate

7.06% to 7.59%

Expected life

3.90 to 6.90 years

Expected volatility

31.71% to 32.92%

Expected dividend yield

0.73% to 1.81%

The weighted average fair value of options granted during fiscal 2018 was Rs, 86.43 f 76.72 during fiscal 2017).

The Bank has an 'Employees Stock Option Scheme - 2000' (ESOS scheme) framed in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 (Regulations). The Scheme has been amended from time to time with the approval of the Members and as per the amendments last approved by the Members vide a Postal Ballot resolution passed on June 12, 2017 the Exercise Period was defined as the period commencing from the date of

vesting and which will expire on completion of such period not exceeding ten years from the date of vesting of Options as may be determined by the Board Governance, Remuneration & Nomination Committee ("BGNRC") for each grant.

The Board Governance Remuneration & Nomination Committee and Board at its meetings held on May 7, 2018 with the objective to further enhance employee efforts to execute the current strategy and align the compensation payout schedules for senior management to the time horizon of risks approved the amendment to the definition of Exercise Period as given below:

"The "Exercise Period" would commence from the date of vesting and will expire on completion of such period not exceeding five years from the date of vesting of Options as may be determined by the Board Governance Remuneration & Nomination Committee for each grant".

The amendment is intended to cover only future grants to be made and would come into effect only after approval by Members and will not cover grants already made. As per the Regulations, any variation to the terms of the Scheme requires the approval of Members by way of a special resolution. There are no other changes to the existing terms of the Scheme.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The Bank has undertaken various initiatives for energy conservation at its premises, further details are given under Principle 6 of Section E of the Business Responsibility Report. The Bank has used information technology extensively in its operations, for more details please refer the section on Information Technology under Business Overview.

UPDATE ON RECENT DEVELOPMENTS AT THE BANK

The Audit Committee of the Bank under direction given by the Board of Directors has instituted an independent enquiry, headed by a former Supreme Court Judge, Hon'ble Mr. Justice B. N. Srikrishna (Retd.), to consider various allegations relating to the MD and CEO, Ms. Chanda Kochhar. The allegations have been levelled against Ms. Kochhar through media articles, a whistleblower complaint and complaints written by a private individual to senior government officials and regulators. The allegations include nepotism, quid pro quo and claims that Ms. Kochhar, by not disclosing conflicts of interest caused by certain transactions between certain borrowers of the Bank and entities controlled by Ms. Kochhar's spouse, committed infractions under applicable regulations and the Bank's Code of Conduct.

The independent enquiry is supported by an independent law firm and a forensic firm. The independent enquiry is under way.

In addition, SEBI issued a show-cause notice to Ms. Kochhar and to the Bank in May 2018 related to the allegations. The Bank is in the process of responding to the relevant allegations in the notice which pertain to the Bank. The Central Bureau of Investigation (CBI) also initiated a preliminary enquiry against various individuals and firms including unknown officers and/or officials of the Bank.

Ms. Kochhar is on a leave of absence while the independent enquiry takes place. In the interim, Mr. Sandeep Bakhshi has been appointed as Chief Operating Officer, subject to approval of the Reserve Bank of India (RBI), and reports directly to the Board of Directors during her absence.

GREEN INITIATIVES IN CORPORATE GOVERNANCE

In line with the 'Green Initiative' since the last five years, the Bank has effected electronic delivery of Notice of Annual General Meeting and Annual Report to those Members whose e-mail IDs were registered with the respective Depository Participants and downloaded from the depositories viz. National Securities Depository Limited/Central Depository Services (India) Limited. The Companies Act, 2013 and the underlying rules as well as Regulation 36 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, permit the dissemination of financial statements and annual report in electronic mode to the Members. Your Directors are thankful to the Members for actively participating in the Green Initiative and seek your continued support for implementation of the green initiative.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors confirm:

1. that in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

2. that they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Bank at the end of the financial year and of the profit of the Bank for that period;

3. that they have taken proper and sufficient care for the maintenance of adequate accounting records, in accordance with the provisions of the Banking Regulation Act, 1949 and the Companies Act, 2013 for safeguarding the assets of the Bank and for preventing and detecting fraud and other irregularities;

4. that they have prepared the annual accounts on a going concern basis;

5. t hat they have laid down internal financial controls to be followed by the Bank and that such internal financial controls are adequate and were operating effectively; and

6. that they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENTS

ICICI Bank is grateful to the Government of India, Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and overseas regulators for their continued co-operation, support and guidance. ICICI Bank wishes to thank its investors, the domestic and international banking community, rating agencies and stock exchanges for their support.

ICICI Bank would like to take this opportunity to express sincere thanks to its valued clients and customers for their continued patronage. The Directors express their deep sense of appreciation to all the employees, whose outstanding professionalism, commitment and initiative has made the organization’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

Girish Chandra Chaturvedi

July 27, 2018 Chairman