A PROJECT REPORT ON

Accounting Policies and Financial Statement Analysis through Ratio Analysis

FOR

TABLE OF CONTENT

SR.NO 1 2

PERTICULARS EXECUTIVE SUMMARY HISTORY OF INDIAN BANKING Early History Post Independence Nationalization Liberalization Current Scenario

PAGE NO. 8 9 10 11 12 12 13 14 15 17 19 20 21

HISTORY OF ICICI BANK Overview & Milestones Vision Statement Directors Profile Awards In year 2007 Codes of Business Conduct & Ethics of ICICI Bank

OVERVIEW OF CREDIT CARD History of Credit Card Functions of Credit Card Product & Services of Credit Card

26 27 28 33

 Experts Whisper Pick a Card Fair Practice Code for Credit Card 5 6 H.R. SERVICES FINANCIAL ANALYSIS

43 46 53 59 69 70

A/c Data of FY 2006 & 2007 83 85

Cash Flow Statement Financial Finding & Highlights of performance Accounting policies of ICICI Bank Financial Data Analysis Risk Management Financial Statement Analysis 7 8 9 10 SWOT ANALYSIS LEARNING EXPERIENCE CONCLUSION ANNEXURE Terms & Conditions of ICICI Bank 11 BIBLIOGRAPHY

90 97 106 113 139 143 144 147 148 156

EXECUTIVE SUMMARY The role of banking industry is ever expanding and is becoming inseparable part of the growth of the country. There are many financial products coming everyday in to the pool of banking sector. Some are old and some are new from Indian context. However, there are some products have presence in the country since long, like Saving A/c, Current A/c, Fixed Deposits etc. But in the era of Globalizations and with free entry of lot of private players this product need some modification. So, in the current situation lots of different and attractive products regarding Investment banking, treasurary banking and Credit Cards are available with different banks in India to encase maximum market share. Now to avail such kind of Products detailed knowledge & various financial tools and technique, south Gujarat university, Surat arranged eight week summer project in any business organization for sharpen our skills & to bridge to gap of the theory & practice. I completed my project at ICICI Bank, Rajkot. This is a General training project report prepared at ICICI Bank, which consist of detailed analysis on the topic of Accounting Policies & financial Statement Analysis through Ratio Analysis. In first part of this project I highlighted brief introduction of ICICI group bank. This include Brief introduction about the Bank, director of the bank, Vision of the bank, Overview of Credit Card and how it work and experts whisper to Credit Card, etc. So this section includes brief history about ICICI Bank Credit Card. In second part of the project, I get detailed knowledge about the different products and services of the ICICI Bank and work of Accounting Policies are followed at Bank and Financial Statement Analysis through Ratio Analysis of the year 2005, 2006 and 2007.

BANKING IN INDIA Banking in India originated in the first decade of 18th century with The General Bank of India coming into existence in 1786. This was followed by Bank of Hindustan. Both these banks are now defunct. The oldest bank in existence in India is the State Bank of India being established as "The Bank of Bengal" in Calcutta in June 1806. A couple of decades later, foreign banks like Credit Lyonnais started their Calcutta operations in the 1850s. At that point of time, Calcutta was the most active trading port, mainly due to the trade of the British Empire, and due to which banking activity took roots there and prospered. The first fully Indian owned bank was the Allahabad Bank, which was established in 1865. By the 1900s, the market expanded with the establishment of banks such as Punjab National Bank, in 1895 in Lahore and Bank of India, in 1906, in Mumbai - both of which were founded under private ownership. The Reserve Bank of India formally took on the responsibility of regulating the Indian banking sector from 1935. After India's independence in 1947, the Reserve Bank was nationalized and given broader powers. Early history At the end of 18th century, there were hardly any banks in India in the modern sense of the term. At the time of the American Civil War, a void was created as the supply of cotton to Lancashire stopped from the Americas. Some banks were opened at that time which functioned as entities to finance industry, including speculative trades in cotton. With large exposure to speculative ventures, most of the banks opened in India during that period could not survive and failed. The depositors lost money and lost interest in keeping deposits with banks. Subsequently, banking in India remained the exclusive domain of Europeans for next several decades until the beginning of the 20th century.

The Bank of Bengal, which later became the State Bank of India.

At the beginning of the 20th century, Indian economy was passing through a relative period of stability. Around five decades have elapsed since the India's First war of Independence, and the social, industrial and other infrastructure have developed. At that time there were very small banks operated by Indians, and most of them were owned and operated by particular communities. The banking in India was controlled and dominated by the presidency banks, namely, the Bank of Bombay, the Bank of Bengal, and the Bank of Madras - which later on merged to form the Imperial Bank of India, and Imperial Bank of India, upon India's independence, was renamed the State Bank of India. There were also some exchange banks, as also a number of Indian joint stock banks. All these banks operated in different segments of the economy. The presidency banks were like the central banks and discharged most of the functions of central banks. They were established under charters from the British East India Company. The exchange banks, mostly owned by the Europeans, concentrated on financing of foreign trade. Indian joint stock banks were generally under capitalized and lacked the experience and maturity to compete with the presidency banks, and the exchange banks. There was potential for many new banks as the economy was growing. Under these circumstances, many Indians came forward to set up banks, and many banks were set up at that time, and a number of them set up around that time continued to survive and prosper even now like Bank of India and Corporation Bank, Indian Bank, Bank of Baroda, and Canada Bank. Post-independence The partition of India in 1947 had adversely impacted the economies of Punjab and West Bengal, and banking activities had remained paralyzed for months. India's independence marked the end of a regime of the Laissez-faire for the Indian banking. The Government of India initiated measures to play an active role in the economic life of the nation, and the Industrial Policy Resolution adopted by the government in 1948 envisaged a mixed economy. This resulted into greater involvement of the state in different segments of the economy including banking and finance. The major steps to regulate banking included: In 1948, the Reserve Bank of India, India's central banking authority, was nationalized, and it became an institution owned by the Government of India. In 1949, the Banking Regulation Act was enacted which empowered the Reserve Bank of India (RBI) "to regulate, control, and inspect the banks in India." The Banking Regulation Act also provided that no new bank or branch of an existing bank may be opened without a licence from the RBI, and no two banks could have common directors. However, despite these provisions, control and regulations, banks in India except the State Bank of India, continued to be owned and operated by private persons. This changed with the nationalization of major banks in India on 19th July, 1969.

Nationalization: By the 1960s, the Indian banking industry has become an important tool to facilitate the development of the Indian economy. At the same time, it has emerged as a large employer, and a debate has ensued about the possibility to nationalize the banking industry. Indira Gandhi, the-then Prime Minister of India expressed the intention of the GOI in the annual conference of the All India Congress Meeting in a paper entitled "Stray thoughts on Bank Nationalization." The paper was received with positive enthusiasm. Thereafter, her move was swift and sudden, and the GOI issued an ordinance and nationalized the 14 largest commercial banks with effect from the midnight of July 19, 1969. Jayaprakash Narayan, a national leader of India, described the step as a "masterstroke of political sagacity." Within two weeks of the issue of the ordinance, the Parliament passed the Banking Companies (Acquition and Transfer of Undertaking) Bill, and it received the presidential approval on 9th August, 1969. A second dose of nationalisation of 6 more commercial banks followed in 1980. The stated reason for the nationalisation was to give the government more control of credit delivery. With the second dose of nationalisation, the GOI controlled around 91% of the banking business of India. Liberalisation In the early 1990s the then Narasimha Rao government embarked on a policy of liberalisation and gave licences to a small number of private banks, which came to be known as New Generation tech-savvy banks, which included banks such as UTI Bank (the first of such new generation banks to be set up), ICICI Bank and HDFC Bank. This move, along with the rapid growth in the economy of India, kick started the banking sector in India, which has seen rapid growth with strong contribution from all the three sectors of banks, namely, government banks, private banks and foreign banks. The next stage for the Indian banking has been setup with the proposed relaxation in the norms for Foreign Direct Investment, where all Foreign Investors in banks may be given voting rights which could exceed the present cap of 10%,at present it has gone up to 49% with some restrictions. The new policy shook the Banking sector in India completely. Bankers, till this time, were used to the 4-6-4 method (Borrow at 4%; Lend at 6%; Go home at 4) of functioning. The new wave ushered in a modern outlook and tech-savvy methods of working for traditional banks. All this led to the retail boom in India. People not just demanded more from their banks but also received more.

Current scenario: Currently (2007), overall, banking in India is considered as fairly mature in terms of supply, product range and reach-even though reach in rural India still remains a challenge for the private sector and foreign banks. Even in terms of quality of assets and capital adequacy, Indian banks are considered to have clean, strong and transparent balance sheets-as compared to other banks in comparable economies in its region. The Reserve Bank of India is an autonomous body, with minimal pressure from the government. The stated policy of the Bank on the Indian Rupee is to manage volatility-without any stated exchange rate-and this has mostly been true. With the growth in the Indian economy expected to be strong for quite some timeespecially in its services sector, the demand for banking services-especially retail banking, mortgages and investment services are expected to be strong. M&As, takeovers, asset sales and much more action will happen on this front in India. Currently, India has 88 scheduled commercial banks (SCBs) 28 public sector banks (Government of India holding a stake), 29 private banks (Publicly listed and traded on stock exchanges), 31 foreign banks.

31, 35%

28, 32%
Public sector Bank Private Banks Foreign Banks

29, 33%

They have a combined network of over 53,000 branches and 17,000 ATMs. According to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of total assets of the banking industry, with the private and foreign banks holding 18.2% and 6.5% respectively.

HISTORY OF ICICI BANK

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ICICI Bank (Industrial Credit and Investment Corporation of India) is India's largest private sector bank and second largest overall. ICICI Bank has total assets of about USD 5.6 Billion, a network of over 950 (including 190 branches of Sangli bank recently taken over by ICICI Bank) branches and offices, and about 3500 ATMs. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialized subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. ICICI Bank's equity shares are listed in India on stock exchanges at Kolkata and Vadodara, the Stock Exchange, Mumbai and the National Stock Exchange of India Limited and its ADRs are listed on the New York Stock Exchange (NYSE). During the year 2005 ICICI bank was involved as a defendant in cases of alleged criminal practices in its debt collection operations and alleged fraudulent tactics to sell its products. Overview: ICICI Bank is India's second-largest bank with total assets of Rs. 3,446.58 billion at March 31, 2007 and profit after tax of Rs. 31.10 billion for fiscal 2007. ICICI Bank is the most valuable bank in India in terms of market capitalization and is ranked third amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalisation. The Bank has a network of about 950 branches and 3,300 ATMs in India and presence in 17 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka and Dubai International Finance Centre and representative offices in the United States, United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited. Milestones:

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The World Bank, the Government of India and representatives of Indian industry form ICICI Limited as a development finance institution to provide medium-term and long-term project financing to Indian businesses in 1955.

1994 ICICI establishes ICICI Banking Corporation as a banking subsidiary. ICICI Banking Corporation is renamed as ICICI Bank Limited. 1999 ICICI becomes the first Indian company and the first bank or financial institution from non-Japan Asia to list on the NYSE. 2001 ICICI acquired Bank of Madura. Bank of Madura was a Chettiar bank, and had acquired Chettinad Mercantile Bank and Illanji Bank in the 1960s. 2002 The Boards of Directors of ICICI and ICICI Bank approve the merger of ICICI, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. After receiving all necessary regulatory approvals, ICICI integrates the group's financing and banking operations, both wholesale and retail, into a single entity. Also, ICICI bought the Shimla and Darjeeling branches that Standard Chartered Bank had inherited when it acquired Grindlays Bank.

2002 ICICI establishes representative offices in NY and London. 2003 ICICI opens subsidiaries in Canada and the United Kingdom (UK), and in the UK it establishes alliance with Lloyds TSB. It also opens an Offshore Banking Unit (OBU) in Singapore and representative offices in Dubai and Shanghai.

2004 ICICI opens a rep office in Bangladesh to tap the extensive trade between that country, India and South Africa. 2005 ICICI acquires Investitsionno-Kreditny Bank (IKB), a Russia bank with about US$4mn in assets, head office in Balabanovo in the Kaluga region, and with a branch in Moscow. ICICI Bank offers a high-interest (5.4% gross) internet savings account to UK customers. Also, ICICI establishes a branch in the Dubai International Financial Centre.

VISION

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To make ICICI Bank dominant Among the banking player with built on trust by world-class people and service. This we hope to achieve by

Understanding the needs of customers and offering them superior products and

service

Leveraging technology to service customers quickly, efficiently and conveniently Developing and implementing superior risk management and investment strategies

to offer sustainable and stable returns to our shareholders

Providing an enabling environment to foster growth and learning for our employees And above all, building transparency in all our dealings. The success of the bank will be founded in its unflinching commitment to 5

core values which are Integrity, Customer First, Boundary less, Ownership and Passion. Each of the values describes what the bank stands for, the qualities of ICICIs people and the way they work.

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1. CUSTOMER FIRST partners. RICE Respect Internal Customer Expectations Seek and empower decision making for superior service quality. Own the customer; deliver the promise. Listen actively, stretch continually to add value to customer and channel

2. BOUNDARYLESS Never say its not my job, Go beyond the call of duty Experiment Believe anything is possible Seek new ideas and thoughts freely across levels and functions

3. OWNERSHIP If it is to be, it is up to me Bias for action. Accountable for team performance

4. PASSION Winning Instinct Transmit Boundless energy and enthusiasm to drive results. Stand up and make a difference Demonstrate speed for competitive advantage.

5. INTEGRITY Walk and Talk Stand up honestly and fearlessly for what we truly care about. Always act in a consistent and equitable manner.

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Dont compromise the future to pay for the present

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DIRECTORS PROFILE

K. V. Kamath Managing Director and Chief Executive Officer

Chanda Kochhar Deputy Managing Director

Nachiket Mor Deputy Managing Director

V. Vaidyanathan Executive Director

Madhabi Puri Buch Executive Director

Awards & Recognitions ICICI Bank 2007 Excellence in Remittance Business Award, 2007 from Asian Banker. ICICI Bank has won the Readers Digest Trusted Brand Gold Award for the Bank category in India in 2007.

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CODE OF BUSINESS CONDUCT AND ETHICS OF ICICI BANK Introduction This Code of Business Conduct and Ethics has been adopted by banks Board of Directors and summaries the standards that must guide banks actions. While covering a wide range of business practices and procedures, these standards cannot and do not cover every issue that may arise, or every situation where ethical decisions must be made, but rather set forth key guiding principles that represent the Banks policies and establish conditions for employment at the Bank. We must strive to foster a culture of honesty and accountability. Our commitment to the highest level of ethical conduct should be reflected in all of the Banks business activities including, but not limited to, relationships with employees, customers, suppliers, competitors, the government and the public, and our shareholders. All of our employees, officers and directors must conduct themselves according to the language and spirit of this Code and seek to avoid even the appearance of improper behavior. Even well intentioned actions that violate the law or this Code may result in negative consequences for the Bank and for the individuals involved. One of our most valuable assets is our reputation for integrity, professionalism and fairness. We should all recognize that our actions are the foundation of our reputation and adhering to this Code and applicable law is imperative. Conflicts of Interest Our employees, officers and directors have an obligation to conduct themselves in an honest and ethical manner and act in the best interest of the Bank. All employees, officers and directors should endeavour to avoid situations that present a potential or actual conflict between their interest and the interest of the Bank. A conflict of interest occurs when a persons private interest interferes in any way, or even appears to interfere, with the interest of the Bank, including its subsidiaries and affiliates. A conflict of interest can arise when an employee, officer or director takes an action or has an interest that may make it difficult for him or her to perform his or her work objectively and effectively. Conflicts of interest may also arise when an employee, officer or director receives improper personal benefits as a result of the employees, officers or directors position in the Bank. Although it would not be possible to describe every situation in which a conflict of interest may arise, the following are examples of situations which may constitute a conflict of interest:

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 Working, in any capacity, for a competitor, customer, supplier or other third party while employed by the Bank. Accepting gifts of more than modest value or receiving personal discounts (if such discounts are not generally offered to the public) or other benefits as a result of your position in the Bank from a competitor, customer or supplier. Competing with the Bank for the purchase or sale of property, products, services or other interests. Having an interest in a transaction involving the Bank, a competitor, customer or supplier (other than as an employee, officer or director of the Bank and not including routine investments in publicly traded companies). Directing business to a supplier owned or managed by, or which employs, a relative or friend. In the event that an actual or apparent conflict of interest arises between the personal and professional relationship or activities of an employee, officer or director, the employee, officer or director involved is required to handle such conflict of interest in an ethical manner in accordance with the provisions of this Code. Quality of Public Disclosures The Bank has a responsibility to communicate effectively with shareholders so that they are provided with full and accurate information, in all material respects, about the Banks financial condition and results of operations. Our reports and documents required to be filed with or submitted to the Reserve Bank of India, Securities and Exchange Board of India, stock exchanges in India, United States Securities and Exchange Commission or other regulatory agencies and our other public communications shall include full, fair, accurate, timely and understandable disclosure. Compliance with Laws, Rules and Regulations We are strongly committed to conducting our business affairs with honesty and integrity and in full compliance with all applicable laws, rules and regulations. No employee, officer or director of the Bank shall commit an illegal or unethical act, or instruct others to do so, for any reason. The Bank also disseminates information regarding compliance with the laws, rules and regulations that affect our business. Trading on Inside Information Using non-public information to trade in securities, or providing a family member, friend or any other person with a tip, is illegal. All non-public information should be considered inside information and should never be used for personal gain. You are required to familiarize yourself and comply with the Banks Code of Conduct for Prevention of Insider Trading, copies of which are distributed to all employees, officers and directors and

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are available on the Intranet or from the Company Secretary. You should contact the Company Secretary with any questions about your ability to buy or sell securities. Protection of Confidential Proprietary Information Confidential proprietary information generated and gathered in our business is a valuable asset. Protecting this information plays a vital role in our continued growth and ability to compete, and all proprietary information should be maintained in strict confidence, except when disclosure is authorized by the Bank or required by law. Proprietary information includes all non-public information that might be useful to competitors or that could be harmful to the Bank or its customers if disclosed. Intellectual property such as trade secrets, patents, trademarks and copyrights, as well as business, research and new product plans, objectives and strategies, records, databases, salary and benefits data, employee medical information, customer, employee and suppliers lists and any unpublished financial or pricing information must also be protected. Unauthorized use or distribution of proprietary information violates the Banks policy and could be illegal. Such use or distribution could result in negative consequences for both the Bank and the individuals involved, including potential legal and disciplinary actions. We respect the property rights of other companies and their proprietary information and require our employees, officers and directors to observe such rights. Your obligation to protect the Banks proprietary and confidential information continues even after you leave the Bank, and you must return all proprietary information in your possession upon leaving the Bank. Protection and Proper Use of the Banks Assets Protecting the Banks assets against loss, theft or other misuse is the responsibility of every employee, officer and director. Loss, theft and misuse of the Banks assets directly impact our profitability. Any suspected loss, misuse or theft should be reported to a manager/supervisor or the Chief Financial Officer. The sole purpose of the Banks equipment, vehicles, supplies and electronic resources (including, hardware, software and the data thereon) is the conduct of our business. They may only be used for the Banks business consistent with the Banks guidelines. Corporate Opportunities Employees, officers and directors are prohibited from taking for themselves business opportunities that arise through the use of corporate property, information or position. No employee, officer or director may use corporate property, information or position for personal gain, and no employee, officer or director may compete with the Bank. Competing with the Bank may involve engaging in the same line of business as the Bank, or any situation where the employee, officer or director takes away from the Bank opportunities for sales or purchases of property, products, services or interests. 19

Fair Dealing Each employee, officer and director of the Bank should endeavour to deal fairly with customers, suppliers, competitors, the public and one another at all times and in accordance with ethical business practices. No one should take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair dealing practice. No payment in any form shall be made directly or indirectly to or for anyone for the purpose of obtaining or retaining business or obtaining any other favorable action. The Bank and the employee, officer or director involved may be subject to disciplinary action as well as potential civil or criminal liability for violation of this policy. Occasional business gifts to and entertainment of non-employees in connection with business discussions or the development of business relationships are generally deemed appropriate in the conduct of the Banks business. However, these gifts should be given infrequently and their value should be modest. Gifts or entertainment in any form that would likely result in a feeling or expectation of personal obligation should not be extended or accepted. Compliance with This Code and Reporting of Any Illegal or Unethical Behavior All employees, directors and officers are expected to comply with all of the provisions of this Code. The Code will be strictly enforced and violations will be dealt with immediately, including subjecting persons to corrective and/or disciplinary action such as dismissal or removal from office. Violations of the Code that involve illegal behavior will be reported to the appropriate authorities. The Bank recognizes the need for this Code to be applied equally to everyone it covers. The Head, Corporate Legal Group of the Bank will have primary authority and responsibility for the enforcement of this Code, subject to the supervision of the Board Governance & Remuneration Committee or, in the case of accounting, internal accounting controls or auditing matters, the Audit Committee of the Board of Directors, and the Bank will devote the necessary resources to enable the Head, Corporate Legal Group to establish such procedures as may be reasonably necessary to create a culture of accountability and facilitate compliance with this Code. Questions concerning this Code should be directed to the Head, Corporate Legal Group. The Bank encourages all employees, officers and directors to report any suspected violations promptly and intends to thoroughly investigate any good faith reports of violations. The Bank will not tolerate any kind of retaliation for reports or complaints regarding misconduct that were made in good faith. Open communication of issues and concerns by all employees, officers and directors without fear of retribution or retaliation is vital to the successful implementation of this Code. You are required to cooperate in internal investigations of misconduct and unethical behaviour. Employees, officers and directors should promptly report any concerns about violations of ethics, laws, rules, regulations or this Code, including by any senior executive

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officer or director, to their supervisors/managers or Head, Corporate Legal Group or, in the case of accounting, internal accounting controls or auditing matters, the Audit Committee of the Board of Directors. Any such concerns involving the Head, Corporate Legal Group should be reported to the Board Governance & Remuneration Committee. Interested parties may also communicate directly with the Companys non-management directors through contact information located in the Companys annual report or its website. The Head, Corporate Legal Group shall notify the Board Governance & Remuneration Committee of any concerns about violations of ethics, laws, rules, regulations or this Code by any senior executive officer or director reported to him. You should report actions that may involve a conflict of interest to the Corporate Legal Group. In order to avoid conflicts of interests, senior executive officers and directors must disclose to the Head, Corporate Legal Group any material transaction or relationship that reasonably could be expected to give rise to such a conflict, and the Head, Corporate Legal Group shall notify the Board Governance & Remuneration Committee of any such disclosure. Conflicts of interests involving the Head, Corporate Legal Group shall be disclosed to the Board Governance & Remuneration Committee.

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HISTORY OF CREDIT CARD Credit was first used in Assyria, Babylon and Egypt 3000 years ago. The bill of exchange - the forerunner of banknotes - was established in the 14th century. Debts were settled by one-third cash and two-thirds bill of exchange. Paper money followed only in the 17th century. The first advertisement for credit was placed in 1730 by Christopher Thornton, who offered furniture that could be paid off weekly. From the 18th century until the early part of the 20th, tallymen sold clothes in return for small weekly payments. They were called "tallymen" because they kept a record or tally of what people had bought on a wooden stick. One side of the stick was marked with notches to represent the amount of debt and the other side was a record of payments. In the 1920s, a shopper's plate - a "buy now, pay later" system - was introduced in the USA. It could only be used in the shops which issued it. In 1950, Diners Club and American Express launched their charge cards in the USA, the first "plastic money". In 1951, Diners Club issued the first credit card to 200 customers who could use it at 27 restaurants in New York. But it was only until the establishment of standards for the magnetic strip in 1970 that the credit card became part of the information age. The first use of magnetic stripes on cards was in the early 1960s, when the London Transit Authority installed a magnetic stripe system. San Francisco Bay Area Rapid Transit installed a paper based ticket the same size as the credit cards in the late 1960's. First Bank Credit Card The inventor of the first bank issued credit card was John Biggins of the Flatbush National Bank of Brooklyn in New York. In 1946, Biggins invented the "Charge-It" program between bank customers and local merchants. Merchants could deposit sales slips into the bank and the bank billed the customer who used the card.

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Introduction to Credit Card: A credit card is a system of payment named after the small plastic card issued to users of the system. A credit card is different from a debit card in that it does not remove money from the user's account after every transaction. In the case of credit cards, the issuer lends money to the consumer. It is also different from a charge card (though this name is sometimes used by the public to describe credit cards), which requires the balance to be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. Most credit cards are the same shape and size, as specified by the ISO 7810 standard. How Credit Card Work? A user is issued credit after an account has been approved by the credit provider, with which the user will be able to make purchases from merchants accepting that credit card up to a pre-established credit limit. When a purchase is made, the credit card user agrees to pay the card issuer. The cardholder indicates their consent to pay, by signing a receipt with a record of the card details and indicating the amount to be paid or by entering a PIN. Also, many merchants now accept verbal authorizations via telephone and electronic authorization using the Internet, known as a Card not present (CNP) transaction. Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card; the latter system is in the United Kingdom commonly known as Chip and PIN, but is more technically an EMV card. Other variations of verification systems are used by eCommerce merchants to determine if the user's account is valid and able to accept the charge. These will typically involve the cardholder providing additional information, such as the security code printed on the back of the card, or the address of the cardholder. Each month, the credit card user is sent a statement indicating the purchases undertaken with the card, any outstanding fees, and the total amount owed. After receiving the statement, the cardholder may dispute any charges that he or she thinks are incorrect. Otherwise, the cardholder must pay a defined minimum proportion of the bill by a due date, or may choose to pay a higher amount up to the entire amount owed. The credit provider charges interest on the amount owed (typically at a much higher rate than most other forms of debt). Some financial institutions can arrange for automatic payments to be deducted from the user's bank accounts.

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Credit card issuers usually waive interest charges if the balance is paid in full each month, but typically will charge full interest on the entire outstanding balance from the date of each purchase if the total balance is not paid. The credit card may simply serve as a form of revolving credit, or it may become a complicated financial instrument with multiple balance segments each at a different interest rate, possibly with a single umbrella credit limit, or with separate credit limits applicable to the various balance segments. Usually this compartmentalization is the result of special incentive offers from the issuing bank, either to encourage balance transfers from cards of other issuers, or to encourage more spending on the part of the customer. In the event that several interest rates apply to various balance segments, payment allocation is generally at the discretion of the issuing bank, and payments will therefore usually be allocated towards the lowest rate balances until paid in full before any money is paid towards higher rate balances. Interest rates can vary considerably from card to card, and the interest rate on a particular card may jump dramatically if the card user is late with a payment on that card or any other credit instrument, or even if the issuing bank decides to raise its revenue. As the rates and terms vary, services have been set up allowing users to calculate savings available by switching cards, which can be considerable if there is a large outstanding balance (see external links for some on-line services). Because of intense competition in the credit card industry, credit providers often offer incentives such as frequent flier points, gift certificates, or cash back to try to attract customers to their program. Low interest credit cards or even 0% interest credit cards are available. The only downside to consumers is that the period of low interest credit cards is limited to a fixed term, usually between 6 and 12 months after which a higher rate is charged. However, services are available which alert credit card holders when their low interest period is due to expire. Most such services charge a monthly or annual fee. Grace (Credit) period: A credit card's grace period is the time the customer has to pay the balance, before interest is charged to the balance. Grace periods vary, but usually range from 20 to 30 days depending on the type of credit card and the issuing bank. Some policies allow for reinstatement after certain conditions are met. Usually, if a customer is late paying the balance, finance charges will be calculated and the grace period does not apply. Finance charge incurred depends on the grace period and balance, with most credit cards there is no grace period if there's any outstanding balance from the previous billing cycle or statement (i.e. interest is applied on both the previous balance and new transactions). However, there are some credit cards that will only apply finance charge on the previous or old balance, excluding new transactions.

Security:

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The low security of the credit card system presents countless opportunities for fraud. This opportunity has created a huge black market in stolen credit card numbers, which are generally used quickly before the cards are reported stolen. The goal of the credit card companies is not to eliminate fraud, but to "reduce it to manageable levels", such that the total cost of both fraud and fraud prevention is minimized. This implies that high-cost low-return fraud prevention measures will not be used if their cost exceeds the potential gains from fraud reduction. Most internet fraud is done through the use of stolen credit card information which is obtained in many ways, the simplest being copying information from retailers, either online or offline. Despite efforts to improve security for remote purchases using credit cards, systems with security holes are usually the result of poor implementations of card acquisition by merchants. For example, a website that uses SSL to encrypt card numbers from a client may simply email the number from the web server to someone who manually processes the card details at a card terminal. Naturally, anywhere card details become human-readable before being processed at the acquiring bank, a security risk is created. However, many banks offer systems such as Clear Commerce, where encrypted card details captured on a merchant's web server can be sent directly to the payment processor. Controlled Payment Numbers are another option for protecting one's credit card number: they are "alias" numbers linked to one's actual card number, generated as needed, valid for a relatively short time, with a very low limit, and typically only valid with a single merchant. The Indian Penal Code is the authority responsible for prosecuting criminals who engage in credit card fraud in the India, but they do not have the resources to pursue all criminals. In general, they only prosecute in cases exceeding Rs.5,000 in value. Three improvements to card security have been introduced to the more common credit card networks but none has proven to help reduce credit card fraud so far. First, the on-line verification system used by merchants is being enhanced to require a 4 digit Personal Identification Number (PIN) known only to the card holder. The way credit card owners pay off their balances has a tremendous effect on their credit history. All the information is collected by credit bureaus. The credit information stays on the credit report, depending on the jurisdiction and the situation, for 1, 2, 5, 7 or even 10 years after the debt is repaid.

Profits and losses:

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In recent times, credit card portfolios have been very profitable for banks, largely due to the booming economy of the late nineties. However, in the case of credit cards, such high returns go hand in hand with risk, since the business is essentially one of making unsecured (uncollateralized) loans, and thus dependent on borrowers not to default in large numbers. Costs: Credit card issuers (banks) have several types of costs: Interest expenses Banks generally borrow the money that they then lend to their customers. As they receive very low-interest loans from other firms, they may borrow as much as their customers require, while lending their capital to other borrowers at higher rates. If the card issuer charges 15% on money lent to users, and it costs 5% to borrow the money to lend, and the balance sits with the cardholder for a year, the issuer earns 10% on the loan. This 5% difference is the "interest expense" and the 10% is the "net interest margin".

Operating costs This is the cost of running the credit card portfolio, including everything from paying the executives who run the company to printing the plastics, to mailing the statements, to running the computers that keep track of every cardholder's balance, to taking the many phone calls which cardholders place to their issuer, to protecting the customers from fraud rings. Depending on the issuer, marketing programs are also a significant portion of expenses

Charge offs When a consumer becomes severely delinquent on a debt (often at the point of six months without payment), the creditor may declare the debt to be a chargeoff. It will then be listed as such on the debtor's credit bureau reports (Equifax lists "R9" in the "Status" column.) It is one of the worst possible items to have on your file. The item will include relevant dates, and the amount of the bad debt.

Rewards

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Many credit card customers receive rewards, such as frequent flier points, gift certificates, or cash back as an incentive to use the card. Rewards are generally tied to purchasing an item or service on the card, which may or may not include balance transfers, cash advances, or other special uses. Depending on the type of card, rewards will generally cost the issuer between 0.25% and 2.0% of the spend. Networks like Visa or MasterCard have increased their fees to allow issuers to fund their rewards system. However, most rewards points are accrued as a liability on a company's balance sheet and expensed at the time of reward redemption. As a result, some issuers discourage redemption by forcing the cardholder to call customer service for rewards. On their servicing website, redeeming awards is usually a feature that is very well hidden by the issuers. Others encourage redemption for lower cost merchandise; instead of an airline ticket, which is very expensive to an issuer, the cardholder may be encouraged to redeem for a gift certificate instead. With a fractured and competitive environment, rewards points cut dramatically into an issuer's bottom line, and rewards points and related incentives must be carefully managed to ensure a profitable portfolio. There is a case to be made that rewards not redeemed should follow the same path as gift cards that are not used: in certain states the gift card breakage goes to the state's treasury. The same could happen to the value of points or cash not redeemed. Fraud Where a card is stolen, or an unauthorized duplicate made, most card issuers will refund some or all of the charges that the customer has received for things they did not buy. These refunds will, in some cases, be at the expense of the merchant, especially in mail order cases where the merchant cannot claim sight of the card, but in other cases, these costs must be borne by the card issuer. In several countries, merchants will lose the money if no ID card was asked for, therefore merchants usually require ID card in these countries. The cost of fraud is high; in the UK in 2004 it was over 500 million.[2] Credit card companies generally guarantee the merchant will be paid on legitimate transactions regardless of whether the consumer pays their credit card bill. Soft fraud is fraud committed by the customer himself: getting a card and using it with no intention to ever repay the balance. Such customers are called "diabolical" by the credit card companies, that try to avoid them at all cost.

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ICICI BANK CREDIT CARDS:

29

ICICI Bank offers a variety of cards to suit your different transactional needs. Our range includes Credit Cards, Debit Cards and Prepaid cards. These cards offer you convenience for your financial transactions like cash withdrawal, shopping and travel. These cards are widely accepted both in India and abroad. Read on for details and features of each. Credit Cards ICICI Bank Credit Cards give you the facility of cash, convenience and a range of benefits, anywhere in the world. These benefits range from life time free cards, Insurance benefits, global emergency assistance service, discounts, utility payments, travel discounts and much more. 30

Debit Cards The ICICI Bank Debit Card is a revolutionary form of cash that allows customers to access their bank account around the clock, around the world. The ICICI Bank Debit Card can be used for shopping at more than 3.5 Lakh merchants in India and 24 million merchants worldwide.

Travel Card

Presenting ICICI Bank Travel Card. The Hassle Free way to Travel the world. Traveling with US Dollar, Euro, Pound Sterling or Swiss Francs; Looking for security and convenience; take ICICI Bank Travel Card. Issued in duplicate. Offers the Pin based security. Has the convenience of usage of Credit or Debit card. Pre Paid Cards ICICI Bank brings to you a complete bouquet of pre-paid cards providing payment solutions at your fingertips. ICICI Bank pre-paid cards are a safe & convenient way for associate payments, disbursements, gifting & small ticket transactions. Pre-paid cards are available on a VISA platform thus providing accessibility to over 3.5 Lakh merchant establishments & cash withdrawal from all VISA ATMs in India.

Merchant Service on Credit Cards Benefits of Card Acceptance:

Fast and efficient: ICICI Bank Credit Cards serve as a fast and efficient means of processing payments.

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More Sales: Studies show that Credit Card customers spend more than customers who carry only cash. More Expensive Merchandise: Cards entice customers to purchase more expensive merchandise than they had originally planned to buy. Competitive Weapon: Differentiates your business from those merchants who do not accept credit / debit cards and hence gives you an edge over the competition. Enhanced Advertising: Since customers are more likely to shop at businesses where they have credit / debit card acceptance, they tend to look for and read those ads first. Steadier Sales: Credit smoothens out business peaks. Cash shoppers buy heavier on paydays and just before holidays whereas credit card customers buy whenever the need arises. Reaching a wider customer base: You can reach customers who prefer card payments over cash. Improved security: Due to card transactions merchants have to hold lesser cash in the premises. International Transactions: Cards represent the most used instrument for crossborder payments. Foreign customers prefer cards as a mode of payment rather than cash. Enhance Your Business Image: Accepting credit / debit cards creates a better image for you. Enhanced customer satisfaction: Acceptance of cards leads to greater customer satisfaction as the customer always gets something in return for the purchase made on his card either in the form of reward points, discount or cash back.

Payseal Payseal, the ICICI Bank payment gateway enables organizations to accept secure online Credit Cards payments over the Internet.

It makes electronic commerce more convenient & offers ease and security of accepting payments on the Internet. It provides that trust and security which your customers require.

Payseal is an online real-time payment gateway

Offers 128-bit SSL encryption, an established security technology protocol. Can process Visa and MasterCard Credit Cards issued around the globe.

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Provides a robust, flexible and scalable solution used by some of the leading Internet merchants in India. Ensures real time authorizations for your Credit Card transactions and reduces your back end transaction processing requirements.

How it works In a typical retail purchase on the Internet: The customer fills his shopping cart on a merchant website and proceeds to check out. The transaction information is transmitted to the merchant server. The web merchant forwards a digital order to the Payseal server in an encrypted format.

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 Payseal authenticates the merchant and provides a payment options and payment details screens directly on the customer's browser over a secure 128-bit SSL+ connection. The customer provides his Credit Card details, which is directly sent to the payment server. The Credit Card details are then forwarded to ICICI Bank for authentication. ICICI Bank then transmits the message to the Cardholders (issuing) bank for payment authorization. The issuing bank authorizes the payment and transmits the confirmation back to the payment gateway through the acquiring bank. On receiving authentication and authorization, Payseal forwards the validation of the payment instrument to the merchant server. The merchant transmits the acknowledgement of the payment to the customer's browser. The entire process integrates seamlessly with the shop and buys application of the web merchant ensuring a pleasant shopping experience for the customer. The Credit Card details of the customer remain unknown to the net merchant.

Advantages of Payseal Easy installation, operation and management Payseal eliminates the need for complex software, large databases, and heavy-duty processing on the merchant site. Instead, all payment operations are handled by Payseal's own 24x7 secure Payment Servers. As a result, software installation, integration and management is no longer a major hurdle for merchants and their site developers. Single platform for all payment options

34

Payseals unified architecture can support the Internet's widest range of secure payment options.

Adaptability to multiple platforms The Payment Client software is available for Microsoft Windows NT and leading versions of UNIX. Optimum server utilization on your site The Payment Client software connects the merchant's storefront to Payseal's services. It is the only software component that needs to reside on the merchant's site server, as Payseal physically hosts the rest of the software at its own sites. This leaves the merchants' server resources free for other tasks, at the same time allows them to accept multiple modes of payment from your net customers. Fast, easy integration The Payment Client offers developers and integrators of shop-and-buy applications a number of programming language interfaces, minimizing the coding effort required. The Payment Client can be quickly and easily customized to facilitate integration with all major merchant storefront platforms. Centralised and secure data management To protect the integrity of merchant transactions, Payseal supports the Internet's strongest security technologies. The client software encrypts transaction information using 280 bit RSA before passing it through an SSL pipe using 128-bit encryption. Verisign certification The gateway server is assigned a server ID and authenticated by "Verisign", one of the leading certifying authorities for websites. Automatic upgrades and scalability Businesses can automatically take advantage of new payment technologies, standards and services as they emerge, without undergoing costly and timeconsuming software changes to merchant site. Businesses retain the same interface, yet are able to stay abreast of the latest technologies and offer customers the widest range of options. Swift Transaction processing 35

Payseal delivers a real time, highly scalable and reliable Internet payment platform that processes transactions in real time.

POS Terminals ICICI Bank can help merchants accept the following Cards Some of the leading retail segments accepting Card payments include the following: Airlines Auto Parts Bookshops Car Rentals Carpets Departmental Stores Electronics Garment Stores Handicrafts Hotels Jewellery Leather Goods Opticians Petrol Pumps Restaurants Saris & Silks 2 wheeler & 4 wheeler Showrooms

Product Features Acceptance of Credit Cards : Visa, MasterCard Debit Cards : Visa Electron, Maestro

State of the art terminal Zero Balance ICICI Bank account with Cheque book Direct account credits to ICICI Bank account for settlement amounts New network Fast transaction speeds Merchant Training on Usage and Fraud prevention Prompt Service 36

 Access to ICICI Banks vast portfolio of finance products for your business and family needs 24x 7 Merchant service desk to address queries Presence in all the leading metro cities across India Advantages of a Merchant relationship with ICICI Bank ICICI Bank has a huge range of Credit Cards on offer to customers. Each of these Cards comes packed with several powerful benefits which attract high net worth individuals to spend and shop at premium merchant establishments like you. ICICI Bank has also in place the most powerful catalogue based rewards program that encourages customers to spend more and earn more. You can now tap this spends by making ICICI Bank Cardholders aware of your special offers, discount deals, promotions etc. To understand the key benefits that each type of Card offers click the link below. Your understanding of the benefits will help you tailor make your offers to the ICICI Bank Card members resulting in higher spends for you.

Advertising Opportunities ICICI Bank provides you advertising opportunities that's sure to give maximum mileage to your product or service. Credit Card Statement and Envelopes Direct Mailers EMI offers ICICI Bank Rewards Plus Program E-mailers, Banners and Personalised WebPages Merchandising opportunities

ICICI Bank Credit Card Statement and Envelopes Imagine a leading newspaper reserving sole space for you, running your ad, and mailing it individually to each of your prospective customers. Here's an innovative marketing idea that's sure to give maximum mileage to your product or 37

service. Just carry your offer on the monthly statements of India's high end Credit Cards - ICICI Bank. Targeted Direct Mailers You get a direct reach to your specific target group and you can communicate one on one with them. You have a captive audience who'll read and re-read your message at leisure. And since the people you are targeting are personally addressed, there's no wastage. EMI Opportunities Advertise your EMI offers to ICICI Bank Credit Card customers interested in buying now and paying later in installments coupled with a fantastic finance offer. Catalogue based rewards Program. You can also widen your reach and popularize your products by participating in ICICI Bank's Rewards Program. Internet Shoppers Club We have an Internet shoppers club program reaching out to all of our online customers. Your banners can reach out to them, directly and cost-effectively. You can also display your products or offers to our customers and enable immediate purchase on your own web page, which we can host and advertise on our site. ``

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EXPERTS WHISPER
(ADVICE OF CREDIT CARD EXPERT BEFORE HOLD CREDIT CARD)

Ask the fundamental question? Are you using plastic to pay for items you used to buy with cash? Are you confused about how the outstanding on your card keeps increasing every month? Do you feel sometimes that you have been singled out as a victim in a colossal, well kept campaign by the card company to get you to part with your fortunes? First, wake up and smell the coffee - and know the fundamental truth! There is nothing like free lunch in this world. When you use a credit card, it comes at a cost. There are annual fees, which range from as low as Rs 250 to Rs 2000, depending upon type of card (Standard, Gold, and Platinum etc). More important, there is the interest charged on holding off the payment beyond due date. But at the same time, you do get many benefits like free credit period, discounts on air and rail travel, express loans.

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So deciding on choosing the right card should be a trade off between the cost involved in holding a card and the benefits enjoyed from it. Again, a higher Air accident Insurance shouldnt become an important factor for buying a Gold card and not a Silver card, for a person who rarely travels by air. The fundamental question every prospective cardholder should ask is "Does this feature make any difference to me?" The Card Company does make a big scene about the benefits of holding their cards. But, it is the prospective cardholders responsibility to differentiate between the nice and the desired ones. Retire your Debt There's more than one compelling reason to retire costly credit card debt. Truth is, it's next to impossible without risking your money to get a return of 36 per cent even from the stock market, l eave alone conservative investment options like bank or company deposits Let's assume you're earning sufficiently high returns on the stock market to meet your credit card interest payment. To equal the average 36 per cent annual outflow on your outstanding card balance, the appreciation in the stock prices on your portfolio would have to be at least 45 per cent to cover the long-term-capital gains tax (at 20 per cent) of 9 per cent on this income. So if you have money idling in a savings bank account takes it out and clears your card dues. It makes sense to even break a fixed deposit that might mature in, say, six months to pay off card bill s that you'd have paid in three months.

Read between the lines As most of the literature that flood your mailbox head straight into the dustbin. For instance checkout the lost card liability before reporting the loss for the cardholder. Often, what is advertised is the liability after reporting the loss. Before reporting, the liability is unlimited which means you are responsible for all the purchases made through the stolen card till the time it is reported. One important thing which is strange but trueyour credit card can be used to spend several times what you are actually entitled to spend. Sometimes renewal fees are just billed in your statement. So it is better to cross check the items on the bill with the charge slip. Then, the card companies give a mild notice about an upgrade of class of card say from Classic to Gold and they take it as a Yes if you dont say `No. Be discreet One often runs into people offering a free holiday package or doing a survey at a petrol pump. Usually they ask you to fill out forms that ask for details about your work, office, home, car, the kind of cards you have, the expiry date of the cards and your date of 40

birth. The card expiry date and your date of birth are the key things. Part with that information and you may be walking into a trap. Generally card companies confirm personal details like birth date, card limit etc before disclosing details about the card. Any person can misuse the card after having access to these kinds of information. Dont be an ostrich! Don't trust the future to cure today's problems. Card users are often wishful spenders and convince themselves that they will have the money to pay up by the time the bill comes. They don't look at their overall indebtedness because that can be scary. Another common trap is to focus on monthly payments rather than the overall debt. An amount of Rs 5000 might not look that scary, but thats how a beginning is made. If only credit card junkies saw the big picture, they might stop short of charging frivolous purchases.

Premium Credit Cards: The Premium Credit Cards from ICICI Bank bring to you the benefits of owning an exclusive Credit Card for your convenience and usage. Our Cards include special deals to complement your lifestyle. We have Super Gold Credit Cards and Platinum Credit Cards along with Travel Cards for Air miles, the best holiday packages and air tickets. Our special Golf Credit Card gets you a free membership of the Indian Golf Union along with special Golfing benefits.

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Premium Cards: Features at a Glance Chart American Express Gold Features Type of Cards offered Acceptance Service Charges for Revolving Credit Limited Lost Card Liability (Post reporting) Life Time Balance Transfer Scheme Introductory offer of Travel Bookings Tieup Discount on Basic Domestic airfares Discount on Basic International airfares Forex and Travel Cheque Services Photo Card option Internet Web based access Access to ICICI Bank 24-Hour Customer Care Centre Personal Loan facility on Credit Card EMI on Call facility Dial-a-draft facility Xpress Rewards Programme Global Emergency Assistance Services Surcharge on fuel (2.5% of transaction value or Rs. 10, whichever is higher) Revolving Credit facility Free Credit Period American Express International 2.95% Nil Travel Smart Gold (3) Master Card International 2.95% Nil Platinum Card Visa International 1.99% Upto Rs 50000

0.75% for first 6 months (9% p.a.), followed by 1.49% (17.88% p.a.) thereafter, until the transferred amount is paid back Makemytrip.com 3% 3% Yes No Yes Yes No Yes Yes No Yes Waived at HPCL outlets (Upto Rs. 3000/- per transaction) Yes Min : 22 days; Max : Makemytrip.com 10% 10% Yes Yes Yes Yes Yes Yes Yes Yes Yes Applicable None none none Yes No Yes Yes Yes Yes Yes No Yes surcharge waived across all petrol pumps Yes Min : 22 day;

Yes Min : 22 days; Max :

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(Applicable provided the Total payment due shown in the previous statement is settled in full)

52 days

52 days

Max 52 days

Premium Cards Premium Cards: Features at a Glance ICICI Bank Platinum Card

Own The World Benefits:

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 24 x 7 personal concierge service, offering a host of services, to name a few travel assistance, hotel bookings, emergency assistance, gift delivery, restaurant booking assistance An exclusive rewards earning program and one of a kind redemption offer Fuel surcharge waiver across all petrol pumps Priority Pass provides access to over 480 lounges world wide Domestic and international life style offers Low Interest charge of only 1.99% High credit and cash limit Air accident insurance of up to Rs 1 crore. A specialized customer service desk The ICICI Bank Platinum is currently offered only by invitation

ICICI Bank Solid Gold Credit Card

Most Powerful Global Card Benefits: 44

 Welcomed internationally at over 22 million merchant establishments. High credit and cash limits. Dial a Draft at 2.5% of the draft amount subject to a minimum of Rs.300. Lifetime Balance Transfer offer: 0.75% for first 6 months, followed by 1.49%. Zero lost Card liability. Most powerful catalogue based rewards Program. Mobile Alerts and Statement by E-mail

ICICI Bank Gold American Express Card

The card that rewards you more. Everything that you spend on the card earns you Imiles which you can redeem towards free air tickets or holidays that befits your discerning lifestyle. Superlative Benefits

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Earn 5 I-miles for every Rs. 100 spent on the card, which you can redeem for a range of exciting rewards such as air-tickets, holidays, shopping vouchers, electronics and more

Redeem your I-miles for air miles or vouchers from leading domestic and international airlines frequent flyer programmes such as Air Sahara Cosmos, Indian Airlines Flying Returns, Jet Airways Jet Privilege, Singapore Airlines Kris Flyer and more.

No expiry dates for your I-miles earned Discount of 3% on basic airfares and 5% on holiday packages from makemytrip.com Enjoy an exciting selection of year round privileges and savings in travel, leisure, dining and shopping in key destinations around the world with American Express. .Access over 2,200 American Express Travel Services Office locations in over 130 countries worldwide for assistance in travel bookings and arrangements, purchase or encashment of travelers cheques, or simply to access cash

Enjoy overseas emergency assistance and support with Global Service hotline Life time Free Free Add-On card 0% Balance Transfer offers for 90 days Round the clock customer service hotline ICICI BANK Travel Smart Gold Credit Card

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Most Powerful Travel Card A card which gives the best deals on air travel and holiday packages, 24x7

Exclusive Benefits 10% cash back (discount) on any airline ticket booked through

Makemytrip.com 24x7 Personal Travel Desk for assistance in booking flights, hotels, holiday packages Upto 50% discount on holiday packages booked through Makemytrip.com Upto 20% discount at over 500 fine restaurants in India All the benefits of the ICICI Bank Solid Gold Card

ICICI BANK Golf Card

A card specially designed for the discerning golfer

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Exclusive Benefits

Free annual membership of the Indian Golf union Access to over 160 golf courses across India Upto 25% discount on green fees Offers on International Luxury Golf Holiday Packages 10% discount on premium Golf equipment brands & also get 0% EMI offer at select outlets. Special discount available on Golf line Magazine & Golf Digest 24x7 Golf Concierge Service for assistance on booking tee off times, finding golf coaches and obtaining tickets to golfing events Invitation to tournaments held by the IGU All the benefits of the ICICI Bank Solid Gold Card

FAIR PRACTICES CODE FOR CREDIT CARD 1. In the Code, 'you' denotes the credit card customer and 'we' ICICI Bank Limited as the card issuer. Unless stated otherwise, all parts if this Code applies to all our credit card products and services, whether we provide them across the counter, over the phone, on the internet or by any other method Commitments outlined in this code are applicable under normal operating environment. In the event of force majeure, we may not be able to fulfill the commitments under this Code 48

2. 2.1

Key Commitments bank promise to customers: Act fairly and reasonably in all our dealings with you by Making sure our products and services meet relevant laws and regulations ensuring that our dealings with you will rest on ethical principles of integrity and transparency. Making sure our products an services meet relevant laws and regulations ensuring that our dealings with you will rest on ethical principles of integrity and transparency. Not engaging in any unlawful or unethical consumer practice. Help you to understand how the following information in a simple language What are the benefits to you How you can avail of the benefits What are their financial implications Whom you can contact for addressing your queries and how Deal quickly and effectively with your queries and complaints by: Offering channels for you to route your queries listening to you patiently accepting our mistakes, if any correcting mistakes/implementing changes to your address your queries communicating our response to you promptly telling you how to take your complaint forward if you are not satisfied with the response

2.2

2.3

3. 3.1

Information: (To help you to choose products and services, which meet your needs) Before you become a credit card customer, bank will: Give you information explaining the key features of our credit card products including applicable fees and charges. Advise you what information/documentation we need from you to enable us to issue credit card to you. We will also advise you what documentation we need from you with respect to your identity, address, employment etc. and any other document that may be stipulated by statutory authorities (for e.g. PAN details), in order to comply with legal and regulatory requirements. Verify the details mentioned by you in the credit card application by contacting you on your residence and/ or business telephone numbers and /or physically

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3.2

visiting your residence and/or business addresses through agencies appointed by us for this purpose, if deemed necessary by us While you apply for credit card, we will explain the relevant terms and conditions such as fees and interest charges, billing and payment, renewal and termination procedures and any other information that you may require to operate the card. We will advise you of our targeted turn around time while you are availing / applying for a product / service We will send a service guide / member booklet giving detailed terms and conditions, interest and charges applicable and other relevant information with respect to usage of your credit card along with your first credit card. We will advise you our contact details such as contact telephone numbers, postal address, website / e-mail address to enable you to contact us whenever you need to If you do not recognize a transaction, which appears on your credit card statement, we will give you more details if you ask us. In some cases, we may need you to give us confirmation or evidence that you have not authorized a transaction. We will inform you, through service guide / member booklet of the losses on your account that you may be liable if your card is lost / misused

3.3

3.4

3.5 3.6

3.7

4. 4.1

Tariff (Fees / Charges /Interest) You find our schedule of common fees and charges (including interest rates) by In our application form Referring to the service guide/member booklet Calling up on customer service members Visiting out website; or Asking our designated staff.

4.2

When you become a customer, we will provide you information on the interest rates applicable on your credit card and we will charge the same to your credit card account, if applicable. If you ask us, we will explain how we apply interest to your account

4.3

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Changes in out tariff 4.4 When we change our tariff (interest rate of other fees / charges) on our credit card products, we will update the information on our telephone help-line/web site, we will inform through monthly statement. Marketing Ethics: Field Personnel Our sales representatives will identify themselves when they approach you for selling card products. We have prescribed a code of conduct for our Direct Selling Agents (DSAs) whose services we may avail to make credit card products. The code of conduct is available in our web site also. In the event of receipt of any complaint from you that our representative has engaged in any improper conduct, we shall take appropriate steps to redress the complaint. 5.2 Telemarketing If our telemarketing staff / agents contact you over phone for selling any of our credit card products or with any cross sell offer, the caller will identify himself / herself and advise you that he / she is calling on our behalf. \ Our telemarketing agents would not call those customers, who have registered with us in "Do not Call Registry".

5. 5.1

6. 6.1

Issuance of Credit Card/PIN: Bank will dispatch your credit card only to the mailing address mentioned by you through courier / post. Alternatively, we shall deliver your credit card at our branches which maintain your banking account under due intimation to you. You can collect them by showing proper identity proof of yourself Bank may also issue deactivated credit card if we consider your profile appropriate for issuing credit card and each deactivated card will become active only after your acceptance of the same. PIN (Personal identification number) when allotted will be sent to you separately Account Operations: Credit Card statements

6.2

6.3 7.

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7.1

To help you manage your credit card account and check details of purchases / cash drawings using the credit card, we will offer you a facility to receive credit card transaction details either via monthly statement by post or through the internet. Credit card statement will be dispatched on a predetermined date of every month which will be notified to you In the even to non-receipt of this information we expect you to get in touch with us so that we can arrange to resend the details to enable you to make the payment and highlight exception, if any in a timely manner We will let you know / notify changes of fees and charges and terms and conditions. Normally, changes (other that interest rates and those which are a result of regulatory requirements) will be made only prospective effect giving notice of at least one month Signature in the charge slip is not mandatory. The very fact that the card is present in the POS during the transaction is construed as a genuine transaction. Protecting your account.

7.2

7.3

7.4

7.5 7.6

We will advise you what you can do to prevent your credit card from misuse In the even your credit card has been lost or stolen or that someone else knows your PIN or other security information, we will require you to notifying us, take immediate steps to try to prevent these from being misused subject to operating regulations and law in force

8. 8.1

Confidentiality of Account Details: We will treat all your information as private and confidential (even when you are no longer a customer). We will not reveal transaction details of your accounts to a third party, including entities or group, other than in the following four exceptional cases when we are allowed to do it. If we have to give the information by law If there is a duty toward the public to reveal the information If our interests require us to give the information (for e.g., to prevent fraud) but we will not use this as a reason for giving information about you or your accounts (including your name and address) to anyone else, including other companies in our group, for marketing purposes. If you ask us to reveal information, or if we have your permission to provide such information to our group / associate / entities or companies when we have tie-up arrangements for providing other financial service products.

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9.

Collection of dues: Our bank's dues collection policy is built on courtesy, fair treatment and persuasion. We believe in fostering customer confidence and long-term relationship. Our staff or any person authorized to represent us in collection or dues or / and security repossession will identify himself / herself and interact with you in a civil manner. We will provide you with all the information regarding dues and will give sufficient notice for payment of dues. Our staff / agencies are governed by Model code for Collection of Dues and Repossession of Security by Indian Banks Association.

10. 10.1

Redressal of Grievances. Redressal of your complaints internally We have a Grievance Redressal Cell / Department / Center within the organization. If you want to make a complaint, we will tell you how to do this and what to do if you are not happy about the outcome. Our staff will help you with any queries you have. Our complaint handling procedure is displayed on our web site. The timeframe for the responding to your complaints and escalation process etc. are also displayed on the web site. Banking Ombudsman Service and other avenues for Redressal Within 60 days of lodging a complaint with us if you do not get a satisfactory response from us and you wish to pursue other avenues for Redressal of grievances, you may approach Banking Ombudsman appointed by Reserve Bank of India under Banking Ombudsman Scheme 2002. Termination of Credit Card: You may terminate your credit card by giving notice to us and by following the procedure laid down by us in our service guide / member booklet after clearing outstanding dues, if any. We may terminate your credit card, if in our understanding you are in breach of the cardholder agreement.

11. 11.1 11.2

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HUMAN RESOURCE PLANNING Human resource planning is the process of forecasting a firms future demand for and supply of the right type of people in the right number. The planning process: HRP essentially involves forecasting personnel needs, assessing personnel supply and matching demand supply actors through personnel related programmes. The planning process is influenced by overall organizational objectives and the environment of business. Environment

Organizational objectives and polices

H R Need Forecast Surplus restricted Hiring Reduced Hours Control and Evaluation of HRPProgramme H RImplementation Programming

H R Supply Forecast 55 Shortage Recruitment and Selection

HRP help to any organization for the estimation of how many qualified people are necessary to carry out the assigned activities, how many people will be available and what must be done to ensure that personnel supply equals personnel supply equals personnel demand at the appropriate point in the future, which helpful to achieve efficiency of bank in their various services. Reason behind success of any organization is efficient system of Human Resource Planning activities carries out by their human resource department. ICICI Bank also follow the golden system and try to implement those system in their organization well. Human Resource Planning is the process by which an organization ensures that it has the right number and kind of people, at the right place, at the right time, capable of effectively and efficiently completing those tasks that will helps the organization achieve its overall objectives. How HRP stands helpful to ICICI Bank: Future personnel needs: Parts of strategic planning:

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Creating highly talented work force: International Banking Strategies: Foundations of Personnel functions: Increasing investment in human to survive long-term:

RECRUITMENT AND SELECTION OF EMPLOYEES RECRUITMENT: Recruitment involves attracting and obtaining as many applications as possible from eligible job seekers. Purpose behind implement of Recruitment system: Determine the present and future requirement of the organization in conjunction with its other activities. Helpful to attract the pool of job candidates at minimum cost. Help increase the success rate of the selection process by reducing number of unqualified employees in the prior evaluation. Help to reduce the probability that job applicants once recruited and selected will leave the organization only after a short period of time. Meet the organizations legal and social obligations regarding the composition of its workforce.

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Begin identifying and preparing potential job applicants who are appropriate candidate for ICICI Bank.

Recruitment process: `` Personnel Planning Job Analysis Employee Requisition

Job Vacancies

Recruitment planning -Numbers -Type

Searching Activation -Message -Media

Applicant Pool

Potential Hires

Strategy Development -Where-How -When

Applicant Population

Evaluation and Control Selection

Sources of Recruitment: Trade Associations Present Employees Advertisements

Employee Referrals

Employment Exchanges

Campus Recruitment Former Employees Walk-ins interviews Previous Applicants E- Recruiting

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E-Recruiting Perhaps no method has ever had as revolutionary an effect on recruitment practices as the internet. There are respective company websites devoted in some manner to job posing activities. Currently, employers can electronically screen candidates soft attributes, direct potential hires to a special website for online skill assessment. Conduct background checks over the internet, interview candidates via videoconferencing. And manage the entire process with web-based software. Companies benefit immensely through cost savings. Speed enhancement and extended worldwide candidate reach which the internet offers. From the job seekers perspective the internet allows for searches over a broader array of geographic and company posting than was possible before. Problems notwithstanding, both job givers as well as job seekers find internet as the most effective source of recruiting and its usage in the days to come will be all pervasive. Evaluation of External Recruitment:

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External sources of recruitment have both merits and demerits. On the plus side, the following may be cited: Merits. The organization will have the benefit of new skills, new talents and new experiences, if people are hired from external sources. The management will be able to fulfil reservation requirements in favour of the disadvantaged sections of the society. Scope for resentment, heartburn end jealousy can be avoided by recruiting from outside. Demerits. Better motivation and increased morale associated with promoting own employees are lost ot the organization. External recruitment is costly. If recruitment and selection processes are not properly carried out. Chances of right candidates being rejected and wrong applicans being selected occur. SELECTION: Selection is the processes of differentiating between applicants in order in identifies and hire those with a greater likelihood of success in a job. Selection Process: `` Tele - Interview

Selection Test

Final Interview

Reference & Background Analysis 60 Selection Letter EmploymentDecision Medical Clarification Job Evaluation Offer Agreement

TRAINNING AND DEVELOPMET Training refers to the process of imparting specific skills. Development refers to the learning opportunity design to help employees grow.

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`CC TRAINING PROGRAME

On The Job Training

Off The Job Training

Internship Job Rotation Coaching

Lecture Video Conference Case study Role playing Sensitivity Training

BENEFITS TO THE INDIVIDUAL WHICH ULYMATELY BENEFIT TO THE ICICI BANK Helps the individual in making better decisions and effective problem solving Through training and development, motivational variables of recognition, achievement, growth, responsibility and advancement are internalized. 62

aids in encouraging and achieving self-development and self-confidence helps a person handle stress, tension, frustration and conflict provides information for improving leadership, knowledge, communication skills and attitudes increase job satisfaction and recognition moves a person towards personal goals while iproving interactive skills satisfies personal needs of the trainer provides the trainee an avenue for growth and a say in his own future develops a sense of growth in learning helps a person develop speaking and listening skills helps eliminate fear in attempting new tasks

PARTICIPATIVE MANAGEMENT The process of involving employees or group leaders at all levels of decision making or co-determination. Importance of Participative Management

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Remove Conditions of Powerlessness Changes Leadership Reward system Job

Perception of Empowerment Competence High value Job meaning Increased use of talent Performance

Enhance Job-related Self-efficacy Job mastery Role models Reinforcem ent Support

To create empowered team: Leadership Action - Competitive Quality - Productivity - Customer 64 Service

Human Resources System

Empowerment

Continuous Improvement Action

Organization al Structural Job Design

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Internal Part: - All the 18 Schedules of Accounts.

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FINANCIAL FINDINGS AND HIGHLIGHTS OF PERFORMANCE OF ICICI BANK 1) For the Financial Year 1 April 2005 to 31 March 2006: 27% growth in profit after tax compare to last financial year. Profit after tax for FY2006 increased 27% to Rs. 2,540 crore from Rs. 2,005 crore for the year ended March 31, 2005 Net interest income increased 48% to Rs. 4,187 crore for FY2006 from Rs. 2,839 crore for FY2005. Fee income increased 55% to Rs. 3,259 crore for FY2006 from Rs. 2,098 crore for FY2005. Profit after tax for the quarter ended March 31, 2006 increased 29% to Rs. 790 crore from Rs. 615 crore for the quarter ended March 31, 2005. Total assets increased by 50% to Rs. 251,389 crore at March 31, 2006 from Rs. 167,659 crore at March 31, 2005. Total advances increased by 60% to Rs. 146,163 crore at March 31, 2006 from Rs. 91,405 crore at March 31, 2005. Deposits increased 65% to Rs. 165,083 crore at March 31, 2006 from Rs. 99,819 crore at March 31, 2005. At March 31, 2006, the Banks net non-performing assets constituted 0.71% of customer assets against 2.03% at March 31, 2005. 2) For the Financial Year 1 April 2006 to 31 March 2007: 22 % growth in profit after tax compare to last financial year. Operating profit increased 51% to Rs. 5,874 crore for FY2007 from Rs. 3,888 crore for the year ended March 31, 2006. Profit after tax increased 22% to Rs. 3,110 crore for FY2007 from Rs. 2,540 crore for FY2006. Net interest income increased 41% to Rs. 6,636 crore for FY2007 from Rs. 4,709 crore for FY2006.

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 Fee income increased 45% to Rs. 5,012 crore for FY2007 from Rs. 3,447 crore for FY2006. Profit before general provisions and tax increased 40% to Rs. 1,369 crore for the quarter ended March 31, 2007 from Rs. 975 crore for the quarter ended March 31, 2006. Profit after tax for Q4-2007 increased 4% to Rs. 825 crore from Rs. 790 crore for Q4-2006. Total advances increased 34% to Rs. 195,866 crore at March 31, 2007 from Rs. 146,163 crore at March 31, 2006. Deposits increased 40% to Rs. 230,510 crore at March 31, 2007 from Rs. 165,083 crore at March 31, 2006. Dividend on equity shares The Board has recommended a higher dividend of 100% for FY2007 i.e. Rs. 10 per equity share (equivalent to US$ 0.46 per ADS) as compared to 85% for FY2006. The declaration and payment of dividend is subject to requisite approvals. The record/book closure dates shall be announced in due course. Operating review Credit growth The Banks net customer assets increased 35% to Rs. 205,374 crore at March 31, 2007 compared to Rs. 152,049 crore at March 31, 2006. The Banks retail advances increased by 39% to Rs. 127,689 crore at March 31, 2007 from Rs. 92,198 crore at March 31, 2006. Retail assets constituted 65% of advances and 62% of customer assets. The Bank is focusing on fee based products and services, as well as capitalizing on opportunities Presented by the domestic and international expansion of Indian companies. The Banks rural portfolio increased by 37% on a year-on-year basis to about Rs. 20,179 crore. The Bank is also extending its reach in the small and medium enterprises segment. Deposit growth The Banks total deposits increased 40% to Rs. 230,510 crore at March 31, 2007 from Rs. 165,083 crore at March 31, 2006. During this period, savings deposits increased by 38% from Rs. 20,938 crore to Rs. 28,839 crore. The Bank added 141 branches and 1,071 ATMs during the year, taking the number of branches and extension counters to 755 and ATMs to 3,271. The Bank has also received Reserve Bank of Indias approval for amalgamation of Sangli Bank, which will increase the Banks branch network to about 950 branches.

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International operations The Bank now has wholly-owned subsidiaries, branches and representative offices in 17 countries, and an offshore banking unit in Mumbai. The total assets of the Banks international branches increased to about Rs. 52,500 crore at March 31, 2007 from about Rs. 27,500 crore at March 31, 2006. The total assets of the Banks international banking subsidiaries increased to about Rs. 30,500 crore at March 31, 2007 from about Rs. 13,400 crore at March 31, 2006. The Banks remittance volumes grew by 23 45% in FY2007 compared to FY2006. ICICI Bank UKs profit after tax for FY2007 was US$ 39 million, translating into a return on equity of about 22%. At March 31, 2007 the Banks international operations accounted for about 19% of its consolidated banking assets. Capital adequacy The Banks capital adequacy at March 31, 2007 was 11.7% including Tier-1 capital adequacy of 7.4%. Asset quality At March 31, 2007, the Banks net non-performing assets constituted 0.98% of net customer assets. The net non-performing asset ratio in the home loan portfolio was .71%. Consolidated profits The consolidated profit after tax increased 14% to Rs. 2,761 crore in FY2007 from Rs. 2,420 crore in FY2006. The consolidated profit was lower than the standalone profit due to the accounting losses of ICICI Prudential Life Insurance Company. Insurance and asset management subsidiaries ICICI Life continued to maintain its market leadership among private sector life insurance companies with a market share of 29% on the basis of weighted received premium. Life insurance companies worldwide make losses in the initial years, in view of business set-up and customer acquisition costs in the initial years as well as reserving for actuarial liability. While the growing operations of ICICI Life had a negative impact of Rs. 480 crore on the Banks consolidated profit after tax in FY2007 on account of the above reasons, the companys New Business Achieved Profit (NBAP) for FY2007 was Rs. 881 crore as compared to Rs. 528 crore in FY2006. NBAP is a metric for the economic value of the new business written during a defined period. It is measured as the present value of all the future profits for the shareholders, on account of the new business based on standard assumptions of mortality, expenses and other parameters. Actual experience could differ based on variance from these assumptions especially in respect of expense overruns in the initial years. ICICI Lombard General Insurance Company enhanced its leadership position with a market share of about 35% among private sector general insurance companies and an overall market share of about 12.4% during April 2006-February 2007. ICICI Generals

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gross written premium grew by 89% from Rs. 1,592 crore in FY2006 to Rs. 3,004 crore in FY2007. ICICI General is required to expense upfront, on origination of a policy, all sourcing expenses related to the policy. While ICICI Generals profit after tax for FY2007 was Rs. 68 crore, its combined ratio for FY2007 was 97%. The combined ratio is the sum of net claims and expenses as a percentage of premiums and indicates the surplus generated on an annualized basis from the business written during a period excluding investment income). The surplus based on the combined ratio, and investment income aggregated Rs. 180 crore on a pre tax basis in FY2007. At March 31, 2007, ICICI Prudential Asset Management Company was among the top two asset management companies in India with assets under management of over Rs. 37,900 crore. ICICI AMCs profit after tax increased by 55% to Rs. 48 crore in FY2007 from Rs. 31 crore in FY2006.

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SIGNIFICANT ACCOUNTING POLICIES Financial reporting under US GAAP: There are significant differences in the basis of accounting between US GAAP and Indian GAAP primarily relating to determination of allowance for loan losses, amortization of fees and origination costs, accounting for business combinations and consolidation. In the merger of erstwhile ICICI Limited (ICICI) with ICICI Bank, the Bank was the legal acquirer. Under Indian GAAP, the Bank is the accounting acquirer. Under US GAAP, ICICI is deemed to have acquired ICICI Bank. ICICIs assets were fair valued while accounting for the merger under Indian GAAP. The primary impact of the fair valuation was the creation of additional provisions against ICICIs loan and investment portfolio, reflected in the Indian GAAP balance sheet at March 31, 2002. Under US GAAP, ICICI Banks assets were fair valued while accounting for the merger, resulting in the creation of goodwill and intangibles. There is a significant difference in the basis of computation of provision for restructured loans under US GAAP, which discounts expected cash flows at contracted interest rates, unlike Indian GAAP, under which current interest rates are used. 1. Revenue recognition Interest income is recognised in the profit and loss account as it accrues except in the case of non-performing assets (NPAs) where it is recognised, upon realization, as per the prudential norms of RBI. Income from hire purchase operations is accrued by applying the implicit interest rate on outstanding balances. Income from leases is calculated by applying the interest rate implicit in the lease to the net investment outstanding on the lease over the primary lease period. Leases entered into till March 31, 2001 have been accounted for as operating leases. Leases effective from April 1, 2001 are accounted as advances at an amount equal to the net investment in the lease. The lease rentals are apportioned between principal and finance income based on a pattern reflecting a constant periodic return on the net investment outstanding in respect of finance lease. The principal amount is recognised as repayment of advances and the finance income is reported as interest income. Income on discounted instruments is recognised over the tenure of the instrument on a Constant yield basis. Dividend is accounted on an accrual basis when the right to receive the dividend is established.

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 Loan processing fee is accounted for upfront when it becomes due. Project appraisal/structuring fee is accounted for at the completion of the agreed service. Arranger fee is accounted for as income when a significant portion of the arrangement/syndication is completed. Commission received on guarantees issued is amortised on a straight line basis over the period of the guarantee. All other fees are accounted for as and when they become due. 2. Investments Investments are accounted for in accordance with the extant RBI guidelines on investment classification and valuation as given below. All investments are classified into Held to Maturity, Available for Sale and Held for Trading. Reclassifications, if any, in any category are accounted for as per RBI guidelines. Under each classification, the investments are further categorized as o Government securities o Other approved securities o Shares o Bonds and debentures, o Subsidiaries and joint ventures. Held to Maturity securities are carried at their acquisition cost or at amortized cost, if acquired at a premium over the face value. Any premium over the face value of the securities acquired is mortised over the remaining period to maturity on constant yield basis. Available for Sale and Held for Trading securities are valued periodically as per BI guidelines. Any premium over the face value of the investments in government securities, classified as Available for Sale, is mortised over the remaining period to maturity on constant yield basis. Quoted investments are valued based on the trades/quotes on the recognized stock exchanges, subsidiary general ledger account transactions, price list of RBI or prices declared by Primary Dealers Association of India jointly with Fixed income Money Market and Derivatives Association, periodically. The market/fair value of unquoted government and other approved securities (SLR securities) included in the Available for Sale and Held for Trading

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categories is as per the rates published by Fixed Income Money Market and Derivatives Association. The valuation of other than government and other approved securities (non-SLR securities), other than those quoted on the stock exchanges, wherever linked to the Yield-to-Maturity (YTM) rates, is computed with a mark-up (reflecting associated credit risk) over the TM rates for government securities published by Fixed Income Money Market and Derivatives Association. Securities are valued scrip-wise and depreciation/appreciation is aggregated for each category. Net appreciation in each category, if any, being unrealized, is ignored, while net depreciation is provided for. Costs including brokerage and commission pertaining to investments, paid at the time of acquisition, are charged to the profit and loss account. Equity investments in subsidiaries/joint ventures are categorized as Held to Maturity in accordance with RBI guidelines. Profit on sale of investments in the Held to Maturity category is credited to the profit And loss account and is thereafter appropriated (net of applicable taxes and statutory Reserve requirements) to Capital Reserve. Profit on sale of investments in Available for Sale and Held for Trading categories is credited to profit and loss account. Repurchase and reverse repurchase transactions are accounted for in accordance with the extant RBI guidelines. Broken period interest on debt instruments is treated as a revenue item. at the end of each reporting period, security receipts issued by the asset reconstruction Company are valued in accordance with the guidelines applicable to instruments, other than government and other approved securities, prescribed by RBI from time to time. Accordingly, in cases where the security receipts issued by the asset reconstruction company are limited to the actual realizations of the financial assets assigned to the instruments in the concerned scheme, the Bank reckons the net asset value obtained from the asset reconstruction company from time to time, for valuation of such investments at each reporting period / year end. The Bank follows trade date method for accounting of its investments.

3. Provisions / Write-offs on loans and other credit facilities

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 All credit exposures are classified as per RBI guidelines, into performing and nonperforming assets (NPAs). Further, NPAs are classified into sub-standard, doubtful and loss assets based on the criteria stipulated by RBI. In the case of corporate loans, provisions are made for sub-standard and doubtful assets at rates prescribed by RBI. Loss assets and the unsecured portion of doubtful assets are provided / written off as per the extant RBI guidelines. Subject to the minimum provisioning levels prescribed by RBI, provision on homogeneous retail loans is assessed at a portfolio level, on the basis of days past due. For restructured / rescheduled assets, provision is made in accordance with the guidelines issued by RBI, which requires a provision equal to the present value of the interest sacrifice to be made at the time of restructuring. In the case of loan accounts classified as NPAs (other than those subjected to restructuring), the account is upgraded to standard category if arrears of interest and principal are fully paid by the borrower. In respect of non-performing loan accounts subjected to restructuring, the account is upgraded to standard only after the specified period. Amounts recovered against debts written off in earlier years and provisions no longer considered necessary in the context of the current status of the borrower are recognised in the profit and loss account. In addition to the specific provision on NPAs, the Bank maintains a general provision on performing loans. The general provision covers the requirements of the RBI guidelines. In addition to the provisions required to be held according to the asset classification status, provisions are held for individual country exposures (other than for home country exposure). The countries are categorized into seven risk categories namely insignificant, low, moderate, high, very high, restricted and off-credit and provisioning is made on exposures exceeding 90 days on a graded scale ranging from 0.25% to 100%. For exposures with contractual maturity of less than 90 days, 25% of the above provision is required to be held. 4. Transfer and servicing of assets The Bank transfers commercial and consumer loans through securitisation transactions. The transferred loans are de-recognized and gains/losses, net of provisions, are accounted for only if the Bank surrenders the rights to benefits specified in the loan contract. Recourse and servicing obligations are reduced from proceeds of the sale. Retained beneficial interests in the loans is measured by allocating the carrying value of the loans between the assets sold and the retained interest, based on the relative fair value at the date of the securitisation. 5. Fixed assets and depreciation

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6. Employee Stock Option Scheme (ESOS): The Employees Stock Option Scheme (the scheme ) provides for the grant of equity shares of the Bank to its employees. The Scheme provides that employees are granted an option to acquire equity shares of the Bank that vests in a graded manner. The options may be exercised within a specified period. The Bank follows the intrinsic value method to account for its stock-based employees compensation plans. Compensation cost is measured by the excess, if any, of the fair market price of the underlying stock over the exercise price on the grant date. The fair market price is the latest closing price, immediately prior to the date of the Board of Directors meeting in which the options are granted, on the stock exchange on which the shares of the Bank are listed. If the shares are listed on more than one stock exchange, then the stock exchange where there is highest trading volume on the said date is considered. Since the exercise prices of the Banks stock options are equal to fair market price on the grant date, there is no compensation cost under the intrinsic value method. 7. Staff Retirement Benefits 7.1 Gratuity ICICI Bank pays gratuity to employees who retire or resign after a minimum period of five years of continuous service. ICICI Bank makes contributions to three separate gratuity funds, for employees inducted from erstwhile ICICI Limited (erstwhile ICICI), employees inducted from erstwhile Bank of Madura and employees of ICICI Bank other than employees inducted from erstwhile ICICI and erstwhile Bank of Madura.

Separate gratuity funds for employees inducted from erstwhile ICICI and erstwhile Bank of Madura are managed by ICICI Prudential Life Insurance Company Limited. Actuarial

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Valuation of the gratuity liability is determined by an actuary appointed by ICICI Prudential Life Insurance Company Limited. The investments of the funds are made according to rules prescribed by the Government of India. The gratuity fund for employees of ICICI Bank, other than employees inducted from erstwhile ICICI and erstwhile Bank of Madura, is administered by the Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited. In accordance with the gratuity funds rules, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the projected unit credit method. 7.2 Superannuation Fund ICICI Bank contributes 15.0% of the total annual salary of each employee to a superannuation fund for ICICI Bank employees. ICICI Banks employees get an option on retirement or resignation to receive one-third of the total balance and a monthly pension based on the remaining two-third balance. In the event of death of an employee, his or her beneficiary receives the remaining accumulated two-third balance. ICICI Bank also gives cash option to its employees, allowing them to receive the amount contributed by ICICI Bank in their monthly salary during their employment. Upto March 31, 2005, the superannuation fund was administered solely by the Life Insurance Corporation of India. Subsequent to March 31, 2005, the fund is being administered by both Life Insurance Corporation of India and ICICI Prudential Life Insurance Company Limited. Employees had the option to retain the existing balance with Life Insurance Corporation of India or seek a transfer to ICICI Prudential Life Insurance Company Limited. 7.3 Pension The Bank provides for pension, a deferred retirement plan covering certain employees. The plan provides for a pension payment on a monthly basis to these employees on their Retirement based on the respective employees salary and years of employment with the Bank. Employees covered by the pension plan are not eligible for benefits under the Provident fund plan, a defined contribution plan. As per the transition provision of AS 15 (Revised) on Accounting for retirement benefits in financial statements of employer, the difference in the liability on account of pension Benefits created by the Bank at March 31, 2006 due to the revised standard have been Included in Schedule 2 (Reserves and Surplus).

7.4 Provident Fund

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ICICI Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees. There are separate provident funds for employees inducted from erstwhile Bank of Madura (other than those employees who have opted for pensions), and for other employees of ICICI Bank. These funds are managed by in-house trustees. Each employee contributes 12.0% of his or her basic salary (10.0% for clerks and sub-staff of erstwhile Bank of Madura) and ICICI Bank contributes an equal amount to the funds. The investments of the funds are made according to rules prescribed by the Government of India. 7.5 Leave encashment The Bank provides for leave encashment benefit, which is a defined benefit scheme, based on actuarial valuation as at the balance sheet date conducted by an independent ctuary. As per the transition provision of AS 15 (Revised) on Accounting for retirement benefits in financial statements of employer, the difference in the liability on account of leave ncashment benefits created by the Bank at March 31, 2006 due to the revised standard have been included in Schedule 2 (Reserves and Surplus). 8. Income Taxes Income tax expense is the aggregate amount of current tax, deferred tax and fringe benefit tax charge. The annual income tax provision is based on the tax liability determined in accordance with the Income Tax Act, 1961. Deferred tax adjustments comprise of changes in the deferred tax assets or liabilities during the year. Deferred tax assets and liabilities are recognised on a prudent basis for the future tax consequences of timing differences arising between the carrying values of assets and liabilities and their respective tax basis, and carry forward losses. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. The impact of changes in the deferred tax assets and liabilities is recognised in the profit and loss account. Deferred tax assets are recognised and reassessed at each reporting date, based upon managements judgement as to whether realisation is considered as reasonably certain. Deferred tax assets are recognised on carry forward of unabsorbed depreciation, tax losses and carry forward capital losses, only if there is virtual certainty supported by convincing evidence that such deferred tax asset can be realised against future profits.

9. Provisions, contingent liabilities and contingent assets

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The Bank estimates the probability of any loss that might be incurred on outcome of contingencies on the basis of information available up to the date on which the financial statements are prepared. A provision is recognised when an enterprise 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. Provisions are determined based on management estimate required to settle the obligation at the balance sheet date, supplemented by experience of similar transactions. These are reviewed at each balance sheet date and adjusted to reflect the current management estimates. 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 is made in the financial statements. In case of remote possibility neither provision nor disclosure is made in the financial statements. The Bank does not account for or disclose contingent assets, if any. 10. Earnings Per Share (EPS) Basic earnings per share are calculated by dividing the net profit or loss for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. Diluted earning per share reflects the potential dilution that could occur if contracts to issue equity shares were exercised or converted during the year. Diluted earnings per equity share are computed using the weighted average number of equity shares and dilutive potential equity shares outstanding during the year, except where the results are ant dilutive.

FINANCIAL DATA ANALYSIS OF ICICI BANK:

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1. Equity issue During the year ended March 31, 2006, the Bank raised equity capital amounting to Rs. 80,006.1 million. The expenses of the issue amounting to Rs. 874.1 million have been charged to the share premium account.

2. Capital adequacy ratio: The capital to risk weighted assets ratio (CRAR) as assessed on the basis of the financial Statements and guidelines issued by RBI

3. Business / information ratios (annualized):

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The business / information ratios for the year ended March 31, 2007 and for March 31, 2006 are here.

4. Geographical segments The Bank has its operations under the following geographical segments. Domestic operations comprise branches having operations in India. Foreign operations comprise branches having operations outside India and offshore banking unit having operations in India.

5. Business Segments:

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Business segment distribute into two different types of internal segments: Consumer and Commercial Banking comprising of the retail and corporate banking operations of the Bank. Investment banking comprising the treasury operations of the Bank.

Inter-segment transactions are generally based on transfer pricing measures as determined By management. Income, expenses, assets and liabilities are either specifically identified with individual segments or are allocated to segments on a systematic basis. Based on such allocations, segmental balance sheet as on March 31, 2007 and March 31, 2006 and segmental profit & loss account for the year ended March 31, 2007 and for the year ended March 31, 2006 have been prepared.

6. Earnings Per Share

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

7. Staff retirement benefits

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Reconciliation of opening and closing balance of the present value of the defined benefit Obligation for pension and gratuity benefits is given below.

8. Employee Stock Option Scheme (ESOS)

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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 5% of the aggregate number of the issued equity shares of the Bank on the date of the grant of options. In terms of the Scheme, 13,187,783 options (March 31, 2006: 17,362,584 options) granted to eligible employees were outstanding at March 31, 2007. As per the scheme, the exercise price of ICICI Banks options is the last closing price on the stock exchange which recorded highest trading volume preceding the date of grant of options. Hence, there is no compensation cost in year ended March 31, 2007 based on intrinsic value of options. However, if ICICI Bank had used the fair value of options based on the Black-Scholes model, compensation cost in year ended March 31, 2007 would have been higher by Rs. 827.4 million and proforma profit after tax would have been Rs. 30,274.8 million. On a proforma basis, ICICI Banks basic and diluted earnings per share would have been Rs. 33.91 and Rs. 33.72 respectively. The key assumptions used to estimate the fair value of options are:

Summary Report of ESOS Outstanding during the year 2007.

9. Investments:

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The details of investments and the movement of provisions held towards depreciation of Investment of the Bank as on March 31, 2007 and March 31, 2006 is given below.

10. Lending to sensitive sectors

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The Bank has lending to sectors, which are sensitive to asset price fluctuations. The sensitive sectors include capital market and real estate. The position of lending to capital market is given below. 10.1. Capital Market Sector:

10.2 Real Estate Sector:

11. Risk Management at ICICI bank:

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Risk is an inherent part of ICICI Banks business, and effective Risk Compliance & Audit Group is critical to achieving financial soundness and profitability. ICICI Bank has identified Risk Compliance & Audit Group as one of the core competencies for the next millennium. The Risk Compliance & Audit Group (RC & AG) at ICICI Bank benchmarks itself to international best practices so as to optimize capital utilization and maximize shareholder value. With well defined policies and procedures in place, ICICI Bank identifies, assesses, monitors and manages the principal risks: 11.1. Credit Risk Management Credit risk, the most significant risk faced by ICICI Bank, is managed by the Credit Risk Compliance & Audit Department (CRC & AD) which evaluates risk at the transaction level as well as in the portfolio context. The industry analysts of the department monitor all major sectors and evolve a sectoral outlook, which is an important input to the portfolio planning process. The department has done detailed studies on default patterns of loans and prediction of defaults in the Indian context. Risk-based pricing of loans has been introduced. The functions of this department include: Review of Credit Origination & Monitoring Credit rating of companies/structures Default risk & loan pricing Review of industry sectors Review of large exposures in industries/ corporate groups/ companies Ensure Monitoring and follow-up by building appropriate systems such as CAS

Design appropriate credit processes, operating policies & procedures Portfolio monitoring Methodology to measure portfolio risk Credit Risk Information System (CRIS) Pricing, New Product Approval Policy, Monitoring

Focused attention to structured financing deals Monitor adherence to credit policies of RBI The department has been instrumental in reorienting the credit processes, including delegation of powers and creation of suitable control points in the credit delivery process with the objective of improving customer response time and enhancing the effectiveness of the asset creation and monitoring activities. Availability of information on a real time basis is an important requisite for sound risk management. To aid its interaction with the strategic business units, and provide real time 102

information on credit risk, the CRC & AD has implemented a sophisticated information system, namely the Credit Risk Information System. 11.1.1. Credit exposure During the year ended March 31, 2007, the Bank had no single borrower exposure above 15% and no group borrower exposure above 40% of capital funds.

11.2. Market Risk Compliance & Audit Group ICICI Bank is exposed to all categories of Market Risk, viz. Interest Rate Risk (risk due to changes in interest rates) Exchange Rate Risk (risk due to changes in exchange rates) Equity Risk (risk due to change in equity prices) Liquidity Risk (risk due to deterioration in market liquidity for tradable instruments) The Market Risk Compliance & Audit Department evaluates tests and approves market risk methodologies developed by the Treasury. It also participates in the new product approval process on a firm-wide basis and evaluates all new products from a market risk perspective.

11.3. Operational Risk Management

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ICICI Bank, like all large banks, is exposed to many types of operational risks. These include potential losses caused by events such as breakdown in information, communication, transaction processing and settlement systems/ procedures. The Audit Department, an integral part of the Risk Compliance & Audit Group, focuses on the operational risks within the organization. In recent times, there has been a shift in the audit focus from transactions to controls. Some examples of this paradigm shift are: Adherence to internal policies, procedures and documented processes Risk Based Audit Plan Widening of Treasury operations audit coverage Use of Computer Assisted Audit Techniques (CAATs) Information Systems Audit Plans to develop/ buy software to capture the workflow of the Audit Department

The Audit Department conceptualized and put into operation a Risk Based Audit Plan during the year 1998-99. The Risk Based Audit Plan envisages allocation of audit resources in accordance with the risk constituents of ICICI Banks business.

11.4.. Forward rate agreement (FRA) :

104

The notional principal amount of Rupee IRS contracts at March 31, 2007 was Rs. Nil for Hedging contracts (March 31, 2006: Rs. Nil) and Rs. 2,389,261.3 million for trading contracts (March 31, 2006: Rs. 1,870,025.6 million). The fair value represents the estimated replacement cost of swap contracts at balance sheet date. At March 31, 2007 the fair value of trading rupee interest rate swap contracts was Rs. 1,111.4 million (March 31, 2006: Rs. 922.4 million). Associated credit risk is the loss that the Bank would incur in case all the counter-parties to these swaps fail to fulfil their contractual obligations. At March 31, 2007, the associated credit risk on trading rupee interest rate swap contracts was Rs. 37,605.4 million (March 31, 2006: Rs. 16,754.4 million). Market risk is monitored as the loss that would be incurred by the Bank for a 100 basis points change in the interest rates. At March 31, 2007 the market risk on trading rupee interest rate swap contracts amounted to Rs. 844.4 million (March 31, 2006: Rs. 1,192.3 million). Credit risk concentration is measured as the highest net receivable under swap contracts from a particular counter-party. At March 31, 2007, there was a credit risk concentration of Rs. 657.9 million with ICICI Securities Primary Dealership Limited (formerly known as ICICI Securities Limited) (March 31, 2006: Rs. 476.4 million with ICICI Securities Primary Dealership Limited) under rupee interest rate swap contracts. As per the prevailing market practice, the Bank does not insist on collateral from the counter-parties in these contracts.

12. Derivatives

105

ICICI Bank is a major participant in the financial derivatives market. The Bank deals in derivatives for balance sheet management 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 middle office conducts an independent check of the transactions entered into by the front office and also undertakes activities such as confirmation, settlement, and 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 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 Banks risk management policy in relation to various risks (portfolio, liquidity, interest rate, off-balance sheet and operational risks), investment policies and compliance issues in relation thereto. The RCB comprises of independent directors and the Managing Director and CEO. Risk monitoring of the derivatives portfolio other than credit derivatives is done on a daily basis. Risk monitoring of the credit derivatives portfolio is done on a monthly basis. The Bank measures and monitors risk using Value at Risk (VAR) approach and the relevant greeks for options. Risk reporting on derivatives forms an integral part of the management information system and the marked to market position and the VAR of the derivatives portfolio other than credit derivatives is reported on a daily basis. The marked to market position and VAR on the credit derivatives portfolio is reported on a monthly basis. The use of derivatives for hedging purpose is governed by the hedge policy approved by Asset Liability Management Committee (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 transaction itself. The effectiveness is assessed at the time of inception of the hedge and periodically thereafter. During the year ended March 31, 2006, the Bank changed its method for testing hedge effectiveness from the price value of basis point (PVBP) or duration method to the marked to market method. Due to this change certain derivative contracts, which were hitherto accounted for as hedges, became ineffective and were accordingly accounted for as trading.

Hedge derivative transactions are accounted for pursuant to the principles of hedge accounting. 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

106

accounted for as per Foreign Exchange Dealers Association of India guidelines. The Bank makes provisions on the outstanding positions in trading derivatives for possible adverse movements in the underlying. Derivative transactions are covered under International Swap Dealers Association (ISDA) master agreements with the respective counterparties. The credit exposure on account of derivative transactions is computed as per RBI guidelines and is marked against the credit limits approved for the respective counterparties.

107

Findings: The notional principal amount of credit derivatives outstanding at March 31, 2007 was Rs.59, 096.9 million (March 31, 2006: Rs. 23,514.4 million). Of the above, notional principal amount Rs. 434.7 million represents protection bought by the Bank through its overseas branches as on March 31, 2007. The notional principal amount of forex contracts classified as hedging at March 31, 2007 Amounted to Rs. 288,639.6 million (March 31, 2006: Rs. 165,041.4 million). The notional principal amount of forex contracts classified as trading at March 31, 2007 Amounted to Rs. 1,042,920.8 million (March 31, 2006: Rs. 753,273.6 million). The net overnight open position at March 31, 2007 was Rs. 1,279.7 million (March 31, 2006: Rs. 457.8 million).

108

Financial Performance Measure through Ratio Analysis 1. Introduction to Ratio: A ratio is only a comparison of the numerator with the denominator. The term ratio refers to the numerical or quantitative relationship between two figures. A ratio is the relationship between two figures and obtained by dividing the former by the letter. Ratios are designed to show how one number is related to another. It is worked out by dividing one number by another. Ratio analysis is an important and age old technique of financial analysis. The data given in financial statements, in absolute form, and are unable to communicate anything. Ratios are relative form of financial data and very useful technique to check upon the efficiency of an organization. Some ratios indicate the trend or the progress or downfall of an organization. Traditionally banks have looked at certain ratios to assess whether they have a satisfactory financial soundness. The commonly used ratios are: Capital position ratio, debt to equity ratio, Capital gearing debt equity share capital ratio, interest coverage ratio, and debt service coverage ratio etc. Ratio analysis is an instrument for diagnosis of the financial health of any organization which is also useful for banking organization. Ratios, in fact, are meaning and communicate the relative importance of the various items appearing in the Balance Sheet and Profit and Loss Account. Ratios refer to the use of the arithmetic expression to highlights relationship between various figures of financial statements. Ratio may express relationship between two figures of the profit & loss account & another from balance sheet from available data, ratio can be computed but only a few are meaningful & of interest to us Ratios of Specific interest top the ending banking. Just like a doctor examines his patient by recording his body temperature, blood pressure etc., before making his conclusion regarding the illness and various tools of analysis before commenting upon the financial health or weaknesses of an organization ratio indicates a quantitative relationship which can be in turn used to make a quantitative judgment.

109

2. Importance of Ratio Analysis: The inter relationship that exists among the different items appeared in the financial statements, are revealed by accounting ratios. Ratio analysis of a banks financial statements is of interest to a number of parties, mainly, shareholders, creditors, depositors, and other future investors. Aid to measure General Efficiency: Ratios enable the mass of accounting data to be summarized and simplified. They act as an index of the efficiency of the banks financial performance. As such they serve as an instrument of management control. Aid to measure financial Solvency: Ratios are useful tools in the hands of management and other concerned to evaluate the banks performance over a period of time by comparing the present ratio with the past ones. They point out banks liquidity position to meet its short-term obligations and long term solvency. Aid in Forecasting and Planning: Ratio analysis is an invaluable aid to management in the discharge of its basic function such as planning, forecasting, control, etc. The ratios that are derived after analyzing and scrutinizing the past result help the management to prepare budgets to formulate policies and to prepare the future plan of action etc. Facilitate decision-making: It throws light on the degree of efficiency of the management and utilization of the assets and that is why it is called surveyor of efficiency. They help management in decision making. Aid in corrective Action: Ratio analysis provides inter-bank comparison. If comparison shows an unfavorable variance, corrective actions can be initiated. Aid in Intra firm comparison: Intra bank comparisons are facilitated. It is an instrument for diagnosis of financial health of bank. It facilitates the management to know whether the banks financial position is improving or deteriorating by setting a trend with the help of ratios. Act as a Good communication: Ratios are an effective mean of communication and play a vital role in informing the position of and progress made by the organization concern to the banks and other interested parties. The communications by simplified and summarized ratios are more easy and understandable. Evaluation of Efficiency: Ratio analysis is an effective instrument which, when properly used, is useful to assess important characteristics of business liquidity, solvency, profitability etc. Effective tool: Ratio analysis helps in making effective control of the business measuring performance, control of cost etc. effective control is the keynote of better management.

110

3. Limitation of Ratio analysis: Ratio analysis is widely used tool of financial analysis. It is because ratios are simple and easy to understand. But they must be used very carefully. They suffer from various limitations. Differences in definitions: Comparisons are made difficult due to differences in definitions of various financial terms. Lack of standards formula for working out ratios makes it difficult to compare them. They are worked out on the basis of different items in different industries.

Limitations of accounting records: Ratio analysis is based on financial statements which are themselves subject to limitations. Lack of Proper standards: It is very difficult to ascertain the standard ratio in order to make proper comparison. Changes in Account Procedure: Comparison between two variables proves worth provided their basis of valuation is identical. Qualitative factors are ignored: Ratios are tools of quantitative analysis only and normally qualitative factors which may generally influence the conclusion derived are ignored while computing ratios. For instance, a high current ratio may not necessarily mean sound liquid position when current assets include a large inventory consisting of mostly obsolete items. Limited use of single ratio: A single ratio would not be able to convey anything. Ratio can be useful only when they are computed in a sufficient large number. If too many ratios are calculated, they are likely to confuse instead of revealing meaningful conclusion. Background is overlooked: When inter bank comparison is made, they differ substantially in age, size, nature of product etc. When an inter bank, comparison is made, these factors are not considered. Therefore, ratio analysis cannot give satisfactory results. Limited use: Ratio analysis is only a beginning and gives just a fraction of information needed for decision making. Ratio analysis is not a substitute for sound judgment. Conclusions drawn from the ratio analysis are not sure indicators of bad or good management.

111

Personal Bias: Ratios have to be interpreted and different people may interpret the same ratio different ways. Ratios are only means of financial analysis but not an end of in themselves. It should be noted that ratios are only tools and the personal judgment of analyst is more important.

Arithmetic Window dressing: Window dressing means manipulation of accounts in a way so as to conceal vital facts and presents the statement in a way to shoe better position than what it actually is. By, doing so, it is possible to cover up bad financial position. Therefore, ratios based on such figures are not reliable.

Changing policies: Ratios are computed on the basis of past result. Past is not an indicator of future. Ratios computed from historical data are used for predicting and projecting the likely events in the future such ratios provide a glimpse of banks past performance. But forecast for the future may not be correct as several other factors like management policies market conditions etc.

112

4. Types of Ratio: Balance sheet ratio: Current Ratio: This is most widely used ratio. This ratio shows the proposition of current assets to current liabilities. This ratio is also called working capital ratio as it is a measure of working capital available at a particular time. This ratio is obtained by dividing current assets by current liabilities. This ratio indicates short-term financial strength of the bank and shows as to whether the business will be able to meet its obligations towards current liabilities as and when they mature. Current assets here would mean the assets, which will be realized within a period of 12 months in the normal course of business. Similarly, current liabilities would mean liabilities that would mature within a period of 12 months. Generally, current ratio of 2 is considered as comfortable working capital position. It implies that current assets are twice the current liabilities. However, there can not be hard and fast rule, because a current ratio which is satisfactory for one industry may not be satisfactory in another industry. CURRENT RATIO: = CURRENT ASSETS CURRENT LIABILITIES Year 2005 2006 2007

C.A. C.L.

= 1139046773 213961606

= 2347507278 252278777

=3242447660 382286356

Times

= 5.32

=9.30

=8.46

113

Current Ratio Comparison 12 10 Times 8 to 6 C.L. 4 2 0

9.3 5.32

8.46

2005

2006 Financial Year

2007

Interpretation: Current ratio shows the short term financial soundness of the bank it judge whether the current assets are sufficient to meet the current liabilities. The standard current ratio is 2:1 (i.e. Current Assets should be two times of the current liabilities). In case of ICICI Bank, there is increase in 2006 and started to decline in current financial year. However, current ratio is satisfactory in all the 3 year. Acid-Test Ratio: Acid-Test Ratio shows the banks liquidity capacity to meet short-term financial soundness of the bank and helpful to judge whether the liquid assets are sufficient to meet current liabilities. ACID-TEST RATIO: = QUICK ASSETS CURRENT LIABILITIES Year 2005 2006 2007

Q.A. C.L.

= 129299723 213961606

= 170402245 252278777

=371213452 382286356

Times

= 0.60

=0.68

=0.97

114

Acid-Test Ratio Comparison 2 Times to C.L. 1.5 1 0.5 0 2005 2006 Financial Year 2007

0.6

0.68

0.97

Interpretation: Acid-Test ratio shows the short term financial soundness of the company it judge whether the Quick assets are sufficient to meet the current liabilities. The standard Acid-test ratio is 0.5:1. In case of ICICI Bank, there is increase in 2006 and in current financial year also. So, Acid test ratio is satisfactory in all the 3 year Debt Equity Ratio: This is another very widely used ratio in the business, which shows relationship between outside long-term liabilities and owners fund. It shows the proposition of long term debt and internal equities. This ratio is calculated by dividing long term liabilities by Shareholders fund. A ratio of 56% would mean long term debt of Rs. 56 as against net worth of Rs. 100. However, there can not be any strict norm for debt equity ratio. Capital intensive industry will have higher lower debt equity ratio. Debt equity ratio is also calculated on the basis of total debts. This takes into account all types of debts (long term and short term) in place of long term debt only. DEBT EQUITY RATIO = DEBT EQUITY DEBT EQUITY RATIO = LONG-TERM DEBT SHARE-HOLDERS EQUITY

115

Year

2005

2006

2007

DEBT EQUITY

= 1333632735 128999712

= 2036050849 225560916

= 2817662126 246632644

Times

= 10.34

=09.06

=11.43

Debt-Equity Ratio Comparison 14 12 Times 10 8 to 6 Equity 4 2 0

10.34

9.06

11.43

2005

2006 Financial Year

2007

Interpretation: Higher debt equity ratio would mean high level of outside debt visa a versa owners fund. This will result into higher pressure from lenders / creditors. Normally debt equity ratio of 2 is considered reasonable. In the case of ICICI Bank, Debt equity ratio is changing in nature because banks main debt is of deposit from customer to bank so it is not steady in nature so it change every time mostly depends on money market situation. The main reason behind high rate in the last FY is because of high FD rate at ICICI Bank compare to other competitive banks.

116

DEBT-EQUITY RATIO = TOTAL DEBT SHARE-HOLDERS EQUITY Year 2005 2006 2007

TOTAL DEBT EQUITY

= 1547594341 128999712

= 2288329626 225559916

=3199948482 246632644

Times

= 11.99

=10.11

=12.97

Debt-Equity Ratio Comparison 16 14 12 Times 10 to 8 Equity 6 4 2 0

11.99

12.97 10.11

2005

2006 Financial Year

2007

117

comparison of Long-term debt and Total debt to Equity.

11.99 10.34 10.11 9.06 12.97

14 12 10 8 6 4 2 0

11.43

Times to equity

2005

2006 Financial year

2007

Defensive-Interval Ratio: The defensive-interval ratio provides such a measure of liquidity. The liquidity position of a firm should be examined to check the ability of bank to meet their projected daily cash expenditure from different banking operations. The projected cash expenditure is based on past expenditures and future plans. To take rough estimate of cash expenditure can be obtained by deducting the non cash expenses from total expenses. The defensive-interval ratio measures the time span a bank can operates on present liquid assets without resorting to next years income. DEFENCIVE-INTERVAL RATIO= LIQUID ASSETS PROJECTED DAILY CASH REQUIREMENT PROJECTED DAILY CASH REQUIREMENT: = PROJECTED CASH EXPEDITURE

118

NO.OF DAYS IN A YEAR Year 2005 2006 2007

CACH EXP. 365

= 987004000 365

= 145986000 365

=230490600 365

Daily Exp. Year

= 270142 2005

=399961 2006

=631481 2007

L.A. Daily Exp.

= 129229723 270142

= 170402245 399961

=371213246 631481

Days to defend

= 478

=426

=588

Defensive-Internval Ratio Comparison 650 600 550 No. of 500 450 Day 400 350 to 300 250 Defend 200 150 100 50 0

478

588

426

2005

2006 Financial Year

2007

Interpretation: 119

The short-term solvency of the bank can be judged not merely in terms of traditional liquidity ratio but the analysis should also extended towards examining the quality of turnover of the items of current assets on which such ratios are based. Defencive-interval ratio of the ICICI Bank, during FY 2005 it reaches to 478 days which shows strong financial position and that minor decrease in FY 2006 to 426 days because of increase in administrative expenses and last FY bank concentrate on that thing more and result become superior and touches new height of 588 days. Debt to total capital ratio: Debt to total capital ratio= Long-term debt Permanent Capital Year 2005 2006 2007

debt P.Capital

= 1333632735 1462632447

= 2036050849 2261610765

=2817662126 3064294770

Times

= 0.91:1

=0.90:1

=0.92:1

debt to total capital ratio comparison

1.2 1.1 1 0.9 Times 0.8 0.7 to 0.6 0.5 total cap. 0.4 0.3 0.2 0.1 0

0.91 1

0.9 1

0.92 1

2005

2006 Financial Year

2007

Reserves to Equity Share Capital: Reserves to Equity share Capital = Revenue reserves Equity Capital

120

Year

2005

2006

2007

R. Reserves E.Capital

= 118131954 10867758

= 213161571 12398345

=234139207 12493437

Times

=10.86

=17.19

=18.74

Reserve to equity share capital 25 20 Times 15 to 10 equity share. 5 0

17.19 10.86

18.74

2005

2006 Financial Year

2007

Interpretation: It reverses the policy pursued by the bank with regard to growth shares. A very high ratio indicates a conservative dividend policy and increased ploughing back a profit. Higher the ratio better will be the position. But here the company has very high ratio which shows the banks efficiency.

121

Total Debt to total asset Ratio: Ratio= Total Debt Total asset Year 2005 2006 2007

Total debt Total asset

= 1333632735 128369288

= 2036050849 166382264

= 2817662126 204133466

Times

=10.39

=12.24

=13.80

Debt to Asset Ratio Comparison 20 18 16 Times 14 12 to 10 total asset. 8 6 4 2 0

10.39

12.24

13.8

2005

2006 Financial Year

2007

Interpretation: This ratio has uniqueness to banking industry because total debt of banking involves deposit and advances from customer so need not make any special attention but comparison of last three year show that bank have more deposits so debt of bank may increase compare to its total asset much faster but banks profit also increase over the year 122

so bank may continue with their policy but at the time they need to take care of that in near future. Dividend Coverage ratio: Dividend Coverage Ratio = Earning After Tax Preference Dividend Year 2005 2006 2007

E.A.T. Pref. Div.

= 20582892 35

= 27282968 35

= 34036616 35

Times

=588082

=779513

=942475

Dividend Coverage Ratio Compaison 1000000 900000 800000 700000 Times 600000 to 500000 Pref.Div.. 400000 300000 200000 100000 0

942475

779513 588082

2005

2006 Financial Year

2007

Interpretation: By interpreting this ratio came to know that ICICI Bank has issued very limited no of preference share in the past and since then not issued any preference share so the dividend amount also steady and same.

123

As the bank had other long term financial debt instrument so they generally deal in that so dividend coverage ratio is much bigger than standard ratio.

Profitability Ratio: Operating profit Margin: A ratio of 5% shows for a receivable of every Rs.100, a margin of Rs. 5 is available from which operating expenses are to be recovered and net profit to be earned. This ratio shows as to weather the mark up obtained on cost of operation is sufficient. Higher ratio indicates better profitability. If the Operating profit margin is showing increasing trend, management must investigate causes for falling profitability and should take necessary measures to improve profitability. Operating Profit Margin = Operating Profit Total receivables Year 2005
* 100

2006

2007

Operating profit Receivables. 29560000 * 100 * 128260400 100

46906700*100 187676300

58744000*100 289234600

124

=23.04

=24.99

=20.31

Profitability Ratio Comparison 30 28 26 24 22 Percentage 20 18 16 to 14 receivables 12 10 8 6 4 2 0

23.04

24.99

20.31

2005

2006 Financial Year

2007

Interpretation: The Operating profit margin of the bank has fluctuated every year. In year 2005 banks Gross Profit was 23.04 % and which was increase very near to 25 % reason behind increase in the G.P. was competitive position and favorable condition of the money market. And in the last years G.P. decline due to high inflation rate in the economy. Which create adverse condition to banking sector because of increase in Lending Rate and Cash Reserve Ratio (CRR rate). Operating profit Ratio: Profitability Ratio = Earning Before Interest & Tax Total Receipt

Year E.B.I.T. Receipt.

2005

2006

2007

25272000 128260400

31966000 187676300

34975000 289234600

times

=0.20

=0.17

=0.13

125

Operating Profit Ratio Comparison 0.3 0.25 0.2 Times to 0.15 receivables 0.1 0.05 0

0.20

0.17

0.13

2005

2006 Financial Year

2007

Net Profit ratio: This ratio is also calculated as percentage to total receipt. This ratio is valuable for the purpose of ascertaining the overall profitability of the banks business and shows the efficiency of the bank. Net profit here would mean net Profit after taxes. A ratio of 5% shows that for a receipt of every Rs.100, bank may earns a net profit of Rs.5. This ratio is calculated on the basis of net profit earned from the banking business and non-operating income and non-operating expenses are excluded. The higher the ratio the higher will be the profitability. This ratio has to be seen along with Gross Profit ratio. If Gross Profit ratio is improving and this ratio is declining, it indicates that the administrative expenses/tax liability is increasingly. Net Profit Ratio = Net Profit * 100 Reciept Year E.A.T.* 100 Receipt. 2005 2006 2007

20052000*100 128260400

25400700*100 187676300

31102200*100 289234600

=15.6

=13.5

=10.7

126

Net Profit Ratio Comparison 20 15 % to 10 receivables 5 0 2005 2006 Financial Year Interpretation: In the case of ICICI Bank, there is constant decrease in net profit ratio. During the year 2005 it was 15.6 % of total receipt and which short fall to 13.5 % and last year also short fall fund in that ratio Upto 10.7 % so from above comparison came to know that banks operating expense and administrative cost increase which is responsible to adverse ratio.

15.6

13.5 10.7

2007

Expenses Ratio: Administrative ratio: Administrative Expenses Ratio = Administrative Expenses Total receipt

Year

2005

2006

2007

127

Admn.Exp*100 Receipt.

7374121*100 128260400

10822935*100 187676300

16167490*100 289234600

=5.75

=5.76

=5.58

Aministrative Expenses Ratio Comparison 10 9 8 7 % 6 to 5 receivables 4 3 2 1 0

5.75

5.76

5.58

2005

2006 Financial Year

2007

Interpretation: Administrative expenses of ICICI banks increases but as the turnover and profit also increases which result into the steady of the ratio between 5 to 6 %.

Advertising & publicity expenses ratio: Administrative & publicity ratio = Advertising expenses * 100 Total Receipts Year 2005 2006 2007

128

Adv. Exp*100 Receipt.

1162555*100 128260400

1855514*100 187676300

2177368*100 289234600

=0.90

=0.99

=0.75

Advertising & Publicity Expenses Ratio Comparison 1.5 1.4 1.3 1.2 1.1 1 % 0.9 0.8 to 0.7 receivables 0.6 0.5 0.4 0.3 0.2 0.1 0

0.90

0.99

0.75

2005

2006 Financial Year

2007

Interpretation: While comparing the financial ratio of advertising and publicity expenses of ICICI Bank was lower than one percentage of total receipt during the financial year since 2005 to last financial year. But analyst suggest that one % expense on advertising and publicity is Hugh expenses because the total receipt of bank is much higher so bank should concentrate on economic mode of advertising.

Direct Marketing Agency (DMA) ratio: DMA Ratio = DMA EXPENSES * 100 Total Receipt

129

Direct Marketing Agents are the rankers for the ICICI Banks various product lines for customer service department. They are the major expenses contribute to Administrative and management Dept. It is beneficial for bank to understand total expenses occur on that department and which helpful in future planning of bank. Year DMA Exp.*100 Receipt. 2005 2006 2007

4854521*100 128260400

11770607*100 187676300

15238964*100 289234600

=3.78

=6.21

=5.26

Direct Marketing Expenses Ratio Comparison 10 9 8 7 % 6 to 5 receivables 4 3 2 1 0

6.21 3.78

5.26

2005

2006 Financial Year

2007

Interpretation: This ratio helpful to understand the DMAs expenses to total receipt of ICICI Bank during financial year. DMA Expenses of bank was near about 4 % which was higher than it should be, which further increases in the next FY 2006 and with that ratio the net profit ratio of the bank reduced drastically so bank concentrate on that matter and try to reduce. Profitability Ratio related to investment: Return on investment (R.O.A.): ROA = Net Profit after Tax * 100 130

Average Total Asset Year NPAT.*100 Asset. 2005 2006 2007

20052000*100 128369288

25400700*100 166382264

31102200*100 204133468

=15.62

=15.27

=15.24

Return on Assets Comparison 20 15 % to 10 total asset 5 0 2005 2006 Financial Year Interpretation: This ratio helpful to understand the how much return bank can generate from their available asset with them which shows banks capacity to encash the return from above comparison suggest that bank generate near about 15 % return from available asset. So bank should increase their asset only when the rate of market return was less than 15 % and if market rate is higher should concentrate else. Return on capital employed (ROCE): Return on Equity Capital = NET PROFIT * 100 CAPITAL EMPLOYED 2007

15.62

15.27

15.24

131

Year N.P.A.T. * 100 E.B.I.T.

2005

2006

2007

20052000*100 1462632447

25400700*100 2261610765

31102200*100 3064294770

=1.37

=1.13

=1.01

Return on shareholder's equity Comparison 2 1.8 1.6 1.4 Times 1.2 to 1 0.8 Cap. Empled. 0.6 0.4 0.2 0

1.37

1.13

1.01

2005

2006 Financial Year

2007

Interpretation: The capital employed Basis provides a test of profitability related to the source of long term funds. A comparison of this ratio with similar firm with the industry average and over time would provide sufficient insight into how efficient the long term fund of owner and creditors are being used. The higher the ratio the more efficient is the use of capital employed. The bank has good position in the steady in each year which shows the efficient use of capital. Return on ordinary shareholders equity: Return on Net worth = NET PROFIT Pref. Dividend* 100 NET WORTH 132

Year NPAT Pref.Div.* 100 E.B.I.T.

2005 20052000-35 1462632447 * 100 =1.36

2006 25400700-35 2261610765 * 100 =1.12

2007 31102200-35 3064294770 * 100 =1.01

Return on ordinary shareholder's equity Comparison 2 1.8 1.6 Times 1.4 1.2 to 1 0.8 Net worth 0.6 0.4 0.2 0

1.37

1.12

1.01

2005

2006 Financial Year

2007

Interpretation: As the ICICI Bank had not issued more preference shares so dividend of preference share becomes very less which leads to same amount dividend on shareholders equity and return to ordinary shareholders equity during all three financial year. Earnings Per Share: This ratio measures the profit available to the equity shareholders on a per share basis the amount that they can get on every share held. The real available to the ordinary shareholders are represented by net profits after taxes and preferences dividends. 133

EPS = Net Profit available to equity holders No. of ordinary shares outstanding Year Dividend No. of shares 2005 20052000000 727728042 2006 25400700000 781693773 2007 31102200000 892876768

Rs.

=27.55

=32.49

=34.84

Earning Per Share Comparison

40 35 30 Earning Per 25 20 Share 15 10 5 0

27.55

32.49

34.84

2005

2006
Financial Year

2007

Interpretation: Comparison of EPS of ICICI Bank suggests that banks net earning increase over the year. Since 2005 constant increase noted in FY 2005 it was 27.55rs. Per share which increases to 32.49rs I n 2006 and which lead to record breaking operating profit of ICICI Bank and which continue in last financial year by 34.84rs per share

Dividend Per Share: Dividend per share is the net distributed profit belonging to the shareholders divided by the number of ordinary shares outstanding.

134

DPS = Dividend paid to equity shareholders No. of ordinary shares outstanding Year NPAT to equity No. of shares Rs. =8.70 =9.71 =10.09 2005 6329609000 727728042 2006 7593326000 781693773 2007 9011694000 892876768

Dividend Per Share Comparison

15 12 Dividend Per 9 Share 6 3 0

8.7

9.71

10.09

2005

2006
Financial Year

2007

Interpretation: The dividend per share would be a better indicator than EPS as the former shows what exactly is received by the owners. Same as the EPS, DPS also should not be taken at its face value as the increased DPS ay not be a reliable measures of profitability as the equity base may have increased due to increased relation without change in the number of outstanding shares.

Dividend-Pay out (D/P) Ratio: D/P Ratio = DPS * 100 EPS

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Year DPS * 100 EPS

2005 8.70 * 100 27.55

2006 9.71 * 100 32.49

2007 10.09 34.84

Ratio.

=31.58

=29.88

=28.96

D/P Ratio Comparison 50 45 40 % 35 30 to 25 EPS 20 15 10 5 0

31.58

29.88

28.96

2005

2006 Financial Year

2007

Interpretation: D/P Ratio is an important and widely-used ratio. The pay-out ratio can be compared with the trend followed in the banking sector. Here the ICICI Bank has policy to distribute less profit as dividend and invest that fund to generate more profit which good indicator of bank. Banks financial data indicate that in 2005 bank has average profit and to repute their credit distribute 31.58 % to total distributable earning which going to decrease from year to year but the amount to equity was steadily increase.

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SWOT ANALYSIS OF ICICI BANK CREDIT CARD.

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We did a SWOT analysis of the company on the basis of experience we had in the field while summer training STRENGTHS ICICI Bank is no. 1 private Bank and second largest bank in India. They not only teach the concept of Credit Card but also teach them how to sell policies effectively. They provide time-to-time training for not only how to provide superior Most of the Private banks DMA try to issue that Credit Card in which they effectively but also for self-development. earn handsome commission irrespective of the requirement of customer, but ICICI Banks DMA go for need based analysis of their customers and issue the most suitable Credit card, irrespective of the greed for commission. They can arrange product according to need of the customers. Extensive Network of Distribution Associates. It was one of the initial Credit Card players in this region.

WEAKNESS People were reluctant to join or trust a Private Banks Credit Card because fear Credit card Accepted only in urban area so rural segment of Rajkot not

of High charges and belief in mind of customer. interested to apply for Credit card.

OPPORTUNITIES

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Most of the people, in Rajkot, have fashion of opting for Credit Card and High There are very few players who issue Credit Card in the market in this region. The population in this region is need high Credit limit without investing money,

spending habit through Credit Card.

so they will apply for credit card in near future. THREATS Some Foreign Bank enter into Indian Market with superior service may Some of PSU Bank also concentrates on service part which creates threat to At present there are 29 Private Sector Bank and 31foreign national bank which ICICI Bank has celebration with 35 major company so bank dependent on that

decrease the market share of ICICI Bank. ICICI Bank in near future. create threat of Market Penetration. for providing service, if contract is broken than ICICI Credit Card Suffer like anything.

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LEARNING EXPERIENCE This was for the first time we experienced the taste of the corporate world. It was a great experience; we learned the various pros and cons of the Banking Industry. At first we started learning the basics of Banking Industry, how it worked, etc. Our project guide at ICICI Bank played a key role in enhancing our knowledge and also shared their practical experience with us. Our project guides at ICICI Bank (Manager of Retail Loan & Cards) guided us about the working of the Banking industry & Credit Cards, its future prospects, etc. we had also got the chance to join them during their meetings with their clients and also from the meetings with our clients were they came with us. During our training we got the chance to meet various types of people, people from various backgrounds like high net worth individuals, salaried person, small businessman, students, housewife, etc. They all had different views about the Private and public sector banks; we heard their queries and tried our best to solve them. Through this we learned how to tackle with different types of people. We also studied the attitude and way of thinking of the Customers towards bank which we came to know by conducting survey of Competitive analysis with respect to brand awareness of ICICI Bank Credit Cards, which we conducted during our training. Our main work at the company was to Promote the credit card of ICICI Bank, which we found throughout our training how difficult it was as the estimated conversion rate was good if person have talent for doing that.

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BASIC SUGGETION FOR CARD HOLDERS: Some of what we're going to describe here sounds paranoid - but hey, better safe than sorry! To minimize the possibility of someone getting your card information and ordering the Benz that you'd always thought about! Report lost or stolen cards immediately Never allow anyone else to use your card Ensure that your card is signed on the signature panel as soon as you receive it Never write down your PIN - memorize it Ensure that you get your card back after every purchase Always check sales vouchers/charge slips including purchase amount when you sign them - keep copies of sales vouchers and ATM receipts. Never give your credit card number over the phone or on the Net, unless you are dealing with a reputable company and have initiated the call yourself Always check your billing statement, especially after a trip. Check the amounts of your purchases with the charge slips - specifically look for transactions which are not yours. Make a record of your credit card PIN numbers and telephone numbers for reporting lost or stolen cards. Keep that list in a safe place. While traveling (abroad or within the country), ensure that you carry the telephone number of the card company Know who has access to your cards. If your credit card is borrowed by a family member (spouse, child, parent), with or without your knowledge, you may be responsible for their purchase/cash withdrawal.

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When Using a Credit Card as an ATM After completing transaction, remember to take your card and, if provided, your transaction record Never disclose your PIN to anyone. No one from Card Company, the police, or a merchant should ask for your PIN. You are the only person who should know it When traveling it is advisable that you only take one card and memorize the PIN. Protect your card from damage by keeping it in a safe place - dont allow it to bend or be scratched. Memorize your Personal Identification Number (PIN) - if you must write down your PIN, do not keep it in your wallet, purse, or on the card itself. Make sure that anyone waiting to use the card after you cannot see you entering your PIN or transaction amount. Cancel your transaction and leave immediately if you see anything suspicious. Confirm, as soon as possible, with your card company that the transaction was cancelled. If you are using an indoor ATM that requires your card to open the door, avoid letting anyone come in with you that you do not know. Do not leave your receipt behind - take it with you. Compare your ATM receipts to your monthly statement. It is the best way to guard against fraud and it makes record-keeping easier for you. If you lose your credit card contact the company that issued your card immediately.

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144

Annexure - 1 MOST IMPORTANT TERMS AND CONDITIONS 1. Definitions: 1.1. Applicant means person(s) who has / have applied for a Card to ICICI Bank. In case of a corporate credit card it shall mean the person/s named in the application form submitted by the Company. 1.2. Card or Credit Card or EMI Card or Corporate Credit Card or Online Credit Card or Business Card means an ICICI Bank VISA / AMEX / MasterCard Credit Card or any other Credit Card issued by ICICI Bank at the request of the Applicant. 1.3. Card Account means the account opened in the name of the Card Member and maintained by ICICI Bank for the purpose of usage of the Credit Card as per the terms and conditions contained herein. 1.4. Credit-Limit / Purchase Limit means the limit up to which the Card Member is authorized to spend on his Credit Card. 1.5. Cash-Limit means the maximum amount of cash or equivalent of cash as defined or prescribed by ICICI Bank, that the Card Member can withdraw on his Card Account. Cash-Limit forms a subset of the Card Member's Credit-Limit / Purchase Limit. (a) Fees and Charges: i) Joining Fees & Annual Fees No joining fees, annual fees and renewal fees are applicable on the Credit Card of both the Primary Card Member and the Supplementary Card Member unless indicated / informed by ICICI Bank. ii) Other fees and charges are as provided in the Annexure 1 No interest is charged if the Total Amount Due indicated in the Statement is paid on or before the Payment Due Date. For part or full payment after the Payment Due Date interest will be charged. The billing cycle is the Statement date and the grace period is from the date of the previous billing cycle to the current due date.

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For Example: The Card Members statement date is 15th of every month and due date is 7th of every month. Therefore the interest free credit is from the 16th of every month to the 6th of the next month provided full payment is made for the previous month. The Card Member makes total purchases of Rs.2000 on November 10th. The Total Amount Due (TAD) on the Statement dated 15th November is Rs.2000 to be paid before 7th December. On 7th December the Card Member may choose to pay the Minimum Amount Due (MAD) of Rs.100. Following will be the charges levied on the Card Account * 2.95% of Rs.2000 for 28 days (from 10th November till 7 December) equal to Rs 55.01. If the Card Member pays the balance Rs.1900 later on 10th December, 2.95% will be charged on Rs.1900 for 3 days (8th December till 10th December) equal to Rs.5.35. Therefore total interest charged on the Card Account on 15th December (the statement date) would be Rs.55.01+Rs.5.35 = Rs.60.36 However if the balance is carried on till the next due date following interest will be charged * 2.95% of Rs.2000 for 28 days (from 10th November till 7 December) equal to Rs 55.01 * 2.95% of Rs.1900 for 8 days (8th December till 15th December) equal to Rs 14.31. Therefore total interest charged on the Card Account on 15th December (your statement date) would be Rs. 55.01+Rs.14.31 =Rs.69.32.
Example in case of EMI CARD:

A Cardholder has an EMI Card with EAD of Rs 2000/- per month with purchase limit of Rs 48000 and interest (monthly) of 1.49%. The Statement date is 20th of every month and due date is 7th of every month. The cardholder has made total purchases of Rs 10000/- on 5th of Jan06. A transaction fee of Rs 149/- will be levied on this transaction. On 20th of Jan06 the Statement will be generated and the closing balance amount is Rs 10224.61/-. This will include interest of Rs 75.61/- on your purchases from 5th of Jan06 to 20th of Jan06. The Cardholder will be required to make a payment of EAD of Rs 2000 on 7th of Feb06. On 10th of Feb06 the Cardholder makes a purchase of Rs 6000/- A transaction fee of Rs 149/will be levied on this transaction. On 7th of Feb06 the Cardholder makes a payment of Rs 2000. Interest will be charged on the amount 10224.61 from 20th Jan06 to 7th Feb06 and on amt 8224.61 from 7th Feb06 to 20th Feb06. Interest will also be charged on purchase of Rs 6000/- from 10th Feb06 to 20th Feb 06.A total of 169.97/- interest amount will reflect in the statement generated on 20th Feb06 with closing balance amount of Rs 14543.58 on 20th Feb06. The Cardholder shall be required to make a payment of EAD of Rs 2000 on 7th of Mar06. Incase of any delay in payment late payment charges will be levied. Incase of any excess payment above the EAD, certain charges will be levied. Any incremental purchases made by the Card Member shall not result in an increase in the EAD, but shall result in a proportionate increase in the closing balance amount and tenure of repayment. The same is illustrated in the tabular format below.

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Any change in charges (other than interest and statutory charges such as service tax) may be made only with prospective effect with prior notice of at least one month. (b) Drawal limits (i) Credit Limit / Purchase-Limit: means the limit up to which the Card-Member is authorized to spend on his Credit Card. (ii) Available credit limit / Available Purchase -Limit: means the difference between the Credit Limit/Purchase-Limit and total amount due / EMI Amount Due (EAD). (iii) Cash withdrawal limit: The difference between the Cash Limit and cash withdrawals subject to Credit Limit / Purchase Limit being available.

(c) Billing (i) Billing Statement: All Card- Members will be billed on a monthly basis for all charges incurred by the use of Card and for all charges applicable to the Card- Account. However there may be no Statement generated for the period in which there has been no outstanding due and no transaction on the account in the past month. The billing statement will be dispatched on a monthly basis to customers on the mailing address as per our records by post.

(ii) Minimum Amount Due: 147

Without prejudice to the liability of the Card Member to immediately pay all charges incurred, the Card Member may exercise the option to pay on or before the payment due date, only the Minimum Amount Due (MAD) indicated in the Statement. The Minimum Amount Due shall be 5% of the total amount due or such other amount as may be determined by ICICI Bank at its sole discretion. If there is some unpaid Minimum Amount Due of the previous statements, these will also be added to the Minimum Amount Due of the current statement. If the total outstanding is more than the Credit Limit, then the amount by which the Credit Limit has been exceeded will also be included in the Minimum Amount Due. If the Card Members Cash Withdrawal exceeds his/her Cash Limit then his/her MAD shall be either 5% of his/her total amount due (calculated as described above) or the amount by which he/she has exceeded his/her Cash Limit, whichever is higher. (iii) Method of Payment: Payments towards the Card Account may be made in any of the following ways: Cash: The Card Member may deposit cash at any of ICICI Banks branches from 8 a.m to 6 p.m. towards his/her Card payment. The payment would reflect in the Card Account within 24 hours. Cheque/Draft: Make a cheque or draft favoring ICICI Bank Credit Card No. XXXX XXXX XXXX XXX and drop it into the collection boxes at any ICICI Bank branch/ATM/Skypak drop boxes. Internet: If the Card Member holds a savings account with ICICI Bank he/she may even pay online through ICICI Banks website. Just log on to www.icicibank.com. Auto Debit: If the Card Member holds a savings bank account with ICICI Bank, he/she may pay directly through the savings bank account by giving a written instruction to debit the payment from such account every month on the payment due date. In case the payment due date falls on a Sunday or a holiday, the amount would be debited from such account the next working day. (iv) Billing disputes resolution

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In the event the Card Member disagrees with a charge indicated in his Statement, the same should be communicated to reach ICICI Bank within 60 (sixty) days of receipt of the Statement, failing which it would be construed that all Charges indicated in the Statement are in order.
(v) Contact Particulars of ICICI Bank 24 hour Customer Care Centres

The Card Member can contact ICICI Bank at any of the following 24-hour customer care numbers and/or such other call center numbers as may be notified by ICICI Bank from time to time:
ICICI Bank Call Center Nos.

(vi) Grievances redressal escalation Grievances redressal escalation: The card member may write a mail to Email: headcustomer.care@icicibank.com or Fax No.:022-28307700. Alternately, The card member may write a letter to the below mentioned for the redressal of any unresolved grievances. Ms. Sujatha Rao, Chief Manager - Customer Service, ICICI Bank Ltd, Mohd Illyas Khan Estate, 3rd floor, Above Music World, Road no 1, Banjara Hills, Hyderabad 500034. (d) Default and Circumstances

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(i) If the Card Members fails to pay at least the Minimum Amount Due as mentioned in the Statement on or before the Payment Due Date, ICICI Bank shall be entitled to disclose information relating to days past due (dpd) of the Card Member to credit information bureaus / agencies (specifically authorized by RBI). A notice shall be deemed to have been given to the Card Member by ICICI Bank by informing the Card Member of the disclosures of information relating to dpd status of the Card Member through Statements. The time period between statement date and the payment due date of the credit card shall be construed to be the notice period for such reporting of the card member. (ii) ICICI Bank reports the credit/repayment history of the Card Members to bureaus/agencies in terms of the dpd. The dpd status will indicate the number of days the Card Member has not cleared his dues to ICICI Bank beyond the due date. The updated status of the Card Member will be sent to the bureaus/agencies on pre decided regular intervals and thus there will be no withdrawal of the default report except in case of disputes having been resolved in favor of the Card Member. (iii) Recovery procedure in case of default: ICICI Bank shall be entitled, at the sole risk and cost of the Card member, to engage one or, more person(s) to collect the Card Members dues and/or to enforce any security provided by the Card Member, and ICICI Bank may (for such purposes) furnish to such person(s) such information, facts and figures pertaining to the Card Member and the security as ICICI Bank deems fit. ICICI Bank may also delegate to such person(s) the right and authority to perform and execute all acts, deeds, matters and things connected therewith, or incidental thereto, as ICICI Bank deems fit. (iv) Recovery of dues in case of death/permanent incapacitance of Card Member: The whole of the outstanding balance on the Card Account, together with the amounts of any outstanding Card transactions, effected but not yet charged to the Card Account, shall become immediately due and payable in full to ICICI Bank, by the Card Member, his/her successors, nominees, legal heirs in the event of his/her death (after
adjustment of credit shield benefit if subscribed by the Card Member) or insolvency or winding up of the business of the Card Member.

(v) Available insurance cover for Card Member and date of activation of policy: 150

The Card Member may be offered various Insurance Benefits from time to time by ICICI Bank through a tie up with the Insurance Company. The date of activation of such policy will be communicated through the website. The Card Member specifically acknowledges that in all cases of claim, the Insurance Company will be solely liable for settlement of the claim, and he/she will not hold ICICI Bank responsible in any manner whether for compensation, recovery of compensation, processing of claims or for any reason whatsoever. (e) Termination / Revocation of Card Membership (i) (A) The Card Member may at any point of time, by notice in writing to ICICI Bank, request for termination of the Card Account. (B) Such a notice will not take effect till the Card has been defaced by cutting off the top right hand corner ensuring that both the hologram and magnetic stripe have been cut (except in case of an Online Credit Card), and has been received by ICICI Bank. (C) Save as aforesaid, neither the Card Account nor any Card may be terminated by the Card Member. (ii) In the event Charges are incurred on the Card after the Card Member claims to have destroyed the Card, the Card Member shall be entirely liable for charges incurred on the Card, whether or not the same are the result of the misuse and whether or not ICICI Bank has been intimated of the destruction of the Card. ICICI Bank may at any time, with or without notice, as to the circumstances in ICICI Bank's absolute discretion require, terminate the Card Account or any Card. On termination of the Card Account and notwithstanding any prior agreement between ICICI Bank and the Card Member to the contrary: (A) The total of all charges then outstanding, whether or not already reflected in the Statement and, (B) the amount of any Voluntary Charges incurred after termination (with effect from the date of relevant Transaction Instruction), shall become forthwith due and payable by the Card Member as though they had been so reflected, and interest will accrue thereon as applicable from time to time.

(iii)

(iv)

(f) Loss / Theft / Misuse Of Card

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If a Card is lost or stolen, the Card Member must report the loss/theft to ICICI Bank 24 Hour Customer Care/Infinity within 24 hours of such loss/theft. However, in case of loss of Card due to theft, the Card Member must also file a report with the local police station and send a copy of the same to the card operation office of ICICI Bank at the address as embossed on the back of the Card. ICICI Bank will, upon adequate verification, suspend the Card Account and terminate all facilities in relation thereto and will not be liable for any inconvenience caused to the Card Member. Card Members shall take cognizance of the fact that once a Card is reported lost, stolen or damaged, the Card cannot be used again, even if found subsequently. The Card Member declares that if a Card is reported lost, damaged or stolen, it shall not be used again, even if found or said to be in a non-damaged condition subsequently. In such cases, the Card Member shall promptly cut the Card in 4 pieces and return the same to ICICI Bank for cancellation. The Card Member is responsible for the security of the Card and shall take all steps towards ensuring that the Card is not misused. In the event that ICICI Bank determines that the Card Member has failed to take the steps as mentioned above in case of loss / theft / destruction of the card and the same are questionable, financial liability on the lost, stolen or damaged card would rest with the Card Member and could even result in cancellation of the Card Account. The Card Member shall be fully liable for: (a) any unauthorized use of the Card for the period preceding 48 hours, as counted from the end of the day of reporting of the loss/theft/damage; and/or (b) all authorized transactions on the Card irrespective of the 48 hour period preceding the reporting of the loss/theft/damage, or the period preceding such 48 hours. No liability shall attach to the Card Member for any unauthorized transactions done on the Card after the reporting of the loss/theft/damage of the Card and upon ICICI Bank having suspended the Card Account. (g) Disclosure The Card Member authorizes ICICI Bank and all its group companies and their agents to exchange, share or part with all the information relating to him/her and repayment history to other ICICI Bank group companies, banks, financial institutions, credit bureaus, agencies, statutory bodies etc. as may be required or as they may deem fit and shall not hold ICICI Bank (or any of its group companies or its/their agents) liable for use/sharing of this information. ICICI Bank shall disclose information relating to credit history/repayment record and dpd status of the Card Member to a credit information bureau in terms of the Credit Information Companies (Regulation) Act, 2005 (specifically authorized by RBI).

BIBLIOGRAPHY Reference Book: Financial Management -- Khan & Jain.

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Marketing Management -- Philip Kotler Principles of Management -- Stiffen Robbins Human Resource Management -- K Ashwathapa Research Methodology -- Donald Cooper

Journals: Indian Journal of Banking Web References: www.icicibank.com www.wikipedia.org www.rbi.gov.in www.sebi.gov.in www.google.co.in

Monthly journal of 2006-07

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