Beruflich Dokumente
Kultur Dokumente
PROJECT REPORT
ON
Affiliated with
Veer Narmada South Gujarat University, Surat
Academic year 2007-08
DECLARATION
I, Gajera Kaushikkumar Chandubhai hereby declare that the report on summer
training and project work entitled Accounting Policies and Financial Data Analysis
through Ratio Analysis submitted to GIDC Rajju Shroff Rofel Institute of
Management Studies is a result of my own work and my indebtedness to other work
publications if any, have been duly acknowledged.
PLACE: VAPI
DATE:
Gajera Kaushikkumar
CERTIFICATE
This is to certify that Mr. Gajera Kaushikkumar Chandubhai has satisfactorily
completed the project work entitled, Accounting Policies and Financial Data Analysis
through Ratio Analysis, Based on the declaration made by the candidate and my
association as a guide for carrying out this work, I recommended this project report for
evaluation as a part of the MBA programme of Veer Narmad South Gujarat University.
Place:
__ _______________
Date:
The project is forwarded for evaluation to Veer Narmad South Gujarat University, Surat
for Presentation.
Place:
Date:
____________________
(
Dr. R. S. Shah
PREFACE
Knowledge and human power are synonyms, once said the great philosopher Francis
Bacon. However based on the experience within todays global markets, he would
probably say, The ability to capture, communicate & leverage knowledge to solve
problems is human power. This raises the question how exactly one can best
capture, communicate & leverage knowledge, especially within world of Business
Finance.
The answer probably lies in statement itself by communicating your ideas and devising
ways and means to give shape to your plans in to reality, which requires a long-term
planning, investment and shrewd thinking.
The tryst for knowledge and power led me to two years M.B.A. degree course as part of
this long-term investment. This course not only enabled me to focus firmly on the current
trend but also helped to focus on future changes.
As a part of this M.B.A. degree, students have to undergo a project, which is designed
keeping the prerogative and preferences of industry in mind. This particular project
allows a student to implement what she has learned within the four walls of classroom. It
is here that the caliber of student is tested to find his flexibility for rigorous tasks assigned
to her in future.
This report that I am submitting intends to highlight my versatility in sustaining the pulls
and pressure of day to day professional life and put to perspective the facts that I am
capable enough to deliver whenever a challenge is thrown to me.
This report is divided in two parts. The first part gives the basic information about the
project, the industry and the Bank. The second part consists of Financial Analysis and
Conclusion on the basis of particular Analysis. At the end I have provided a short list of
the reference books and the sites that provided useful information during the project.
ACKNOWLEDGEMENT
TABLE OF CONTENT
SR.NO
PERTICULARS
PAGE
NO.
EXECUTIVE SUMMARY
Early History
10
Post Independence
11
Nationalization
12
Liberalization
12
Current Scenario
13
14
15
Vision Statement
17
Directors Profile
19
20
21
26
27
28
33
Experts Whisper
43
Pick a Card
46
53
H.R. SERVICES
59
FINANCIAL ANALYSIS
69
70
83
85
90
97
Risk Management
106
113
SWOT ANALYSIS
139
LEARNING EXPERIENCE
143
CONCLUSION
144
10
ANNEXURE
147
148
BIBLIOGRAPHY
156
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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.
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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.
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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.
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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 volatilitywithout 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.
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.
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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:
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.
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.
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.
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VISION
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
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
Own the customer; deliver the promise.
Listen actively, stretch continually to add value to customer and channel
partners.
RICE Respect Internal Customer Expectations
Seek and empower decision making for superior service quality.
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
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DIRECTORS PROFILE
K. V. Kamath
Managing Director and Chief Executive Officer
Chanda Kochhar
Deputy Managing Director
V. Vaidyanathan
Executive Director
Nachiket Mor
Deputy Managing Director
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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
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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 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.
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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
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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 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 nonmanagement 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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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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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.
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.
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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:
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
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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.
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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
charge-off. 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
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.
32
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.
33
34
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.
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
35
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.
Fast and efficient: ICICI Bank Credit Cards serve as a fast and efficient means of
processing payments.
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.
36
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.
Can process Visa and MasterCard Credit Cards issued around the globe.
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.
37
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.
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.
38
Advantages of Payseal
same time allows them to accept multiple modes of payment from your net
customers.
POS Terminals
ICICI Bank can help merchants accept the following Cards
Some of the leading retail segments accepting Card payments include the following:
40
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
Access to ICICI Banks vast portfolio of finance products for your business and
family needs
24x 7 Merchant service desk to address queries
41
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.
Direct Mailers
E-mailers,
WebPages
Banners
and
EMI offers
Merchandising opportunities
Personalised
42
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.
43
EXPERTS WHISPER
(ADVICE OF CREDIT CARD EXPERT BEFORE HOLD CREDIT CARD)
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.
45
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.
Platinum Card
Travel Smart
46
Gold (3)
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
(Applicable provided
American Express
International
2.95%
Master Card
International
2.95%
Visa
International
1.99%
Nil
Nil
Upto Rs
50000
Makemytrip.com
None
3%
10%
none
3%
10%
none
Yes
Yes
Yes
No
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Yes
Waived at HPCL
outlets
(Upto Rs. 3000/- per
transaction)
Yes
Applicable
surcharge
waived across
all petrol
pumps
Yes
Yes
Min : 22 day;
Max 52 days
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Premium Cards
Premium Cards: Features at a Glance
ICICI Bank Platinum Card
48
49
The card that rewards you more. Everything that you spend on the card earns you
I-miles which you can redeem towards free air tickets or holidays that befits your
discerning lifestyle.
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Superlative Benefits
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.
Enjoy overseas emergency assistance and support with Global Service hotline
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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
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Exclusive Benefits
10% discount on premium Golf equipment brands & also get 0% EMI offer at
select outlets.
24x7 Golf Concierge Service for assistance on booking tee off times, finding golf
coaches and obtaining tickets to golfing events
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2.1
2.2
2.3
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:
3.
Information:
(To help you to choose products and services, which meet your needs)
3.1
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3.2
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 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.
3.3
We will advise you of our targeted turn around time while you are availing /
applying for a product / service
3.4
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.
3.5
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
3.6
3.7
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
4.
4.1
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.
55
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.
4.3
If you ask us, we will explain how we apply interest to your account
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.
5.
Marketing Ethics:
5.1
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".
6.
6.1
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
6.2
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.
6.3
PIN (Personal identification number) when allotted will be sent to you separately
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7.
Account Operations:
Credit Card statements
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
7.2
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
7.3
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
7.4
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.
7.5
We will advise you what you can do to prevent your credit card from misuse
7.6
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
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.
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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.
Redressal of Grievances.
10.1
11.
11.1
11.2
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59
Surplus restricted
H
R
Need
Forecast
Hiring
Reduced
Hours
Organizational
objectives and polices
Control and Evaluation of
HRP
H RProgramme
Implementation
Programming
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Shortage Recruitment
H Rand
Supply
Forecast
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.
61
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.
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
Strategy
Development
-Where-How
-When
Applicant
Population
Applicant
Pool
Potential
Hires
Evaluation
and Control
Selection
Sources of Recruitment:
Trade Associations
Present Employees
Advertisements
Employee Referrals
Employment Exchanges
Campus Recruitment
Former Employees
Previous Applicants
Walk-ins
E- Recruiting
interviews
63
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.
64
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:
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.
Scope for resentment, heartburn end jealousy can be avoided by recruiting from
outside.
Demerits.
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
Employment
Medical
Selection
Job
Offer
Evaluation
Clarification
Letter
Decision
Agreement
Analysis
65
66
`CC
TRAINING
PROGRAME
On The Job
Training
Internship
Job Rotation
Coaching
Lecture
Video
Conference
Case study
Role playing
Sensitivity
Training
Helps the individual in making better decisions and effective problem solving
provides the trainee an avenue for growth and a say in his own future
PARTICIPATIVE MANAGEMENT
The process of involving employees or group leaders at all levels of decision
making or co-determination.
Importance of Participative Management
68
Remove
Conditions of
Powerlessness
Changes
Leadership
Reward
system
Job
Enhance
Job-related
Self-efficacy
Job
mastery
Role
models
Reinforcem
ent
Support
Perception of
Empowerment
Competence
High value
Job meaning
Increased use
of talent
Performance
Human
Resources
System
Empowerment
Continuous
Improvement
Action
Organization
al Structural
Job Design
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
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.
87
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
88
general insurance companies and an overall market share of about 12.4% during April
2006-February 2007. ICICI Generals 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.
89
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91
Dividend is accounted on an accrual basis when the right to receive the dividend
is established.
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.
92
93
94
95
Separate gratuity funds for employees inducted from erstwhile ICICI and erstwhile Bank
of Madura are managed by ICICI Prudential Life Insurance Company Limited. Actuarial
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).
96
97
98
99
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.
100
5. Business Segments:
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.
101
102
103
104
9. Investments:
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.
105
106
107
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
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.
108
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.
109
110
12. Derivatives
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.
111
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 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.
112
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).
113
114
115
116
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.
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.
117
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
C.A.
C.L.
Times
2005
2006
= 1139046773 = 2347507278
213961606
252278777
= 5.32
=9.30
2007
=3242447660
382286356
=8.46
118
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
119
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
120
Year
DEBT
EQUITY
Times
2005
2006
= 1333632735 = 2036050849
128999712
225560916
= 10.34
=09.06
2007
= 2817662126
246632644
=11.43
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.
121
TOTAL DEBT
EQUITY
Times
2005
2006
= 1547594341 = 2288329626
128999712
225559916
= 11.99
=10.11
2007
=3199948482
246632644
=12.97
122
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
123
2005
2006
2007
CACH EXP.
365
= 987004000
365
= 145986000
365
=230490600
365
Daily Exp.
= 270142
=399961
=631481
Year
2005
2006
2007
L.A.
Daily Exp.
= 129229723
270142
= 170402245
399961
=371213246
631481
Days to defend
= 478
=426
=588
Interpretation:
124
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
debt
P.Capital
Times
2005
2006
= 1333632735 = 2036050849
1462632447
2261610765
= 0.91:1
=0.90:1
2007
=2817662126
3064294770
=0.92:1
Revenue reserves
Equity Capital
125
Year
2005
2006
2007
R. Reserves
E.Capital
= 118131954
10867758
= 213161571
12398345
=234139207
12493437
Times
=10.86
=17.19
=18.74
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.
126
Total debt
Total asset
Times
2005
2006
= 1333632735 = 2036050849
128369288
166382264
=10.39
=12.24
2007
= 2817662126
204133466
=13.80
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
127
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
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.
128
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 46906700*100 58744000*100
*
128260400
187676300
289234600
100
129
=23.04
=24.99
=20.31
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.
times
2005
2006
2007
25272000
128260400
31966000
187676300
34975000
289234600
=0.20
=0.17
=0.13
130
Year
E.A.T.* 100
Receipt.
2005
2006
2007
20052000*100
128260400
25400700*100
187676300
31102200*100
289234600
=15.6
=13.5
=10.7
131
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.
Expenses Ratio:
Administrative ratio:
Administrative Expenses Ratio = Administrative Expenses
Total receipt
Year
2005
2006
2007
132
Admn.Exp*100
Receipt.
7374121*100
128260400
10822935*100
187676300
16167490*100
289234600
=5.75
=5.76
=5.58
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 %.
2005
2006
2007
133
Adv. Exp*100
Receipt.
1162555*100
128260400
1855514*100
187676300
2177368*100
289234600
=0.90
=0.99
=0.75
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.
134
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
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
135
2005
2006
2007
20052000*100
128369288
25400700*100
166382264
31102200*100
204133468
=15.62
=15.27
=15.24
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 =
136
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
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
137
Year
NPAT
Pref.Div.*
100
E.B.I.T.
%
2005
2006
2007
20052000-35
1462632447
*
100
25400700-35
2261610765
*
100
31102200-35
3064294770
*
100
=1.36
=1.12
=1.01
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.
138
2005
2006
2007
Dividend
No. of shares
20052000000
727728042
25400700000
781693773
31102200000
892876768
Rs.
=27.55
=32.49
=34.84
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
139
2005
2006
2007
6329609000
727728042
7593326000
781693773
9011694000
892876768
=8.70
=9.71
=10.09
No. of shares
Rs.
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.
140
Year
DPS * 100
EPS
Ratio.
2005
2006
2007
8.70 * 100
27.55
9.71 * 100
32.49
10.09
34.84
=31.58
=29.88
=28.96
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.
141
142
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
effectively but also for self-development.
Most of the Private banks DMA try to issue that Credit Card in which they
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 of High charges and belief in mind of customer.
Credit card Accepted only in urban area so rural segment of Rajkot not
interested to apply for Credit card.
OPPORTUNITIES
143
Most of the people, in Rajkot, have fashion of opting for Credit Card and High
spending habit through Credit Card.
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, so they will apply for credit card in near future.
THREATS
Some Foreign Bank enter into Indian Market with superior service may
decrease the market share of ICICI Bank.
Some of PSU Bank also concentrates on service part which creates threat to
ICICI Bank in near future.
At present there are 29 Private Sector Bank and 31foreign national bank
which create threat of Market Penetration.
ICICI Bank has celebration with 35 major company so bank dependent on that
for providing service, if contract is broken than ICICI Credit Card Suffer like
anything.
144
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.
145
146
147
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.
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.
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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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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.
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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.
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.
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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 7 th 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 20 th 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.
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.
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(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.
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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
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.
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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:
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.
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(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.
(iii)
(iv)
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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.
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
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www.rbi.gov.in
www.sebi.gov.in
www.google.co.in
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