MIRA INFORM REPORT

Report Date :

13.10.2008

IDENTIFICATION DETAILS

Name :	ICICI BANK LIMITED
Registered Office :	Landmark, Race Course Circle, Alkapuri, Vadodara - 390 007, Gujarat
Country :	India
Financials (as on) :	31.03.2008
Date of Incorporation :	31.03.2008
Com. Reg. No.:	04-21012
CIN No.: [Company Identification No.]	U65190GJ1994PLC021012
TAN No.: [Tax Deduction & Collection Account No.]	BRD100221E
Legal Form :	It is a public limited liability bank. The Bank's shares are listed on the Stock Exchanges.
Line of Business :	Subject is engaged in providing a wide range of banking and financial services including retail lending, commercial lending, trade finance and treasury products.

RATING & COMMENTS

MIRA’s Rating :

Aa

RATING		STATUS	PROPOSED CREDIT LINE
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large

Maximum Credit Limit :	Large
Status :	Good
Payment Behaviour :	Regular
Litigation :	Clear
Comments :	Subject is a well established and highly reputed bank in private sector having excellent track records. It is termed to be the 2^nd largest bank in India. Trade relations are reported as fair. Payments are always correct and as per commitments. The bank can be considered good for any normal business dealings.

LOCATIONS

Registered Office :	Landmark, Race Course Circle, Alkapuri, Vadodara - 390 007, Gujarat, India
Tel. No.:	91-265-2324318 / 2339923-27
Fax No.:	91-265-2339926
E-Mail :	info@icici.com jyotin.mehta@icicibank.com
Website :	http://www.icici.com
Head Office :	Zenith House, 3^rd Floor, Keshavrao Khade Marg, Mahalakshmi, Mumbai - 400 034, Maharashtra, India
Corporate Office :	ICICI Bank Towers, Bandra-Kurla Complex, Mumbai - 400 051, Maharashtra
Tel. No.:	91-22-26531414
Fax No.:	91-22-26531122
E-Mail :	jyotin.mehta@icicibank.com
Branches :	Located at : · Himachal Pradesh · Punjab · Haryana · Uttaranchal · Delhi · Rajasthan · Uttar Pradesh · Bihar · Assam · Madhya Pradesh · Gujarat · Jharkhand · West Bengal · Maharashtra · Chattisgarh · Orissa · Andhra Pradesh · Goa · Karnataka · Tamilnadu · Pondicherry · Kerala.

DIRECTORS

Name :	Mr. N Vaghul
Designation :	Chairman
Name :	Mr. K V Kamath
Designation :	Managing Director and Chief Executive Officer
Address :	B.E. (Mech.) (PGDBA)
Date of Appointment :	01.05.1996
Previous Employment:	Bakrie Group, Indonesia - Adviser to the Chairman
Name :	Somesh R Sathe
Designation :	Director
Name :	Mr. Lakshmi N Mittal
Designation :	Director
Name :	Mrs. Marti G Subrahmanyam
Designation :	Director
Name :	Mr. Anupam Puri
Designation :	Director
Name :	Mr. Nachiket Mor
Designation :	Deputy Managing Director
Name :	Ms. Kalpana Morparia
Designation :	Joint Managing Director
Name :	Mr. Chanda D Kochhar
Designation :	Joint Managing Director and Chief Finance Officer
Name :	Mr. P M Sinha
Designation :	Director
Name :	Mr. Vinod Rai
Designation :	Nominee (Govt)
Name :	Mr. M K Sharma
Designation :	Director
Name :	Mr. Jyotin Mehta
Designation :	General Manager & Company Secretary
Name :	Ms. Lalita D Gupte
Designation :	Joint Managing Director
Name :	Mr. V Prem Watsa
Designation :	Addtnl Non-Executive Director
Name :	Mr. Sridhar Iyengar
Designation :	Director
Name :	Mr. T S Vijayan
Designation :	Director
Name :	Mr. R K Joshi
Designation :	Additional Director
Name :	Mr. Narendra Murkumbi
Designation :	Additional Director
Name :	Mr. Arun Ramanathan
Designation :	Director
Name :	Mr. V Vaidyanathan
Designation :	Executive Director
Name :	Mr. Madhabi Puri Buch
Designation :	Executive Director
Name :	Mr. Sonjoy Chatterjee
Designation :	Executive Director

KEY EXECUTIVES

Name :	Mr. K Ramkumar
Designation :	Group Chief Human Resources Officer
Name :	Mr. Pravir Vohra
Designation :	Goup Chief Technology Officer
Name :	Mr. Sandeep Batra
Designation :	Group Compliance Officer and Company Secretary
Audit Committee :	Mr. Sridhar Iyengar, Chairman Mr. Narendra Mukumbi Mr. M K Sharma
Board Governance and Remuneration Committee:	Mr. N Vaghul, Chairman Mr. Anupam Puri Mr. M K Sharma Mr. Marti G Subrahmanyam
Credit Committee:	Mr. N Vaghul, Chairman Mr. Narendra Mukumbi Mr. M K Sharma Mr. P M Sinha Mr. K V Kamath
Customer Service Committee:	Mr. N Vaghul, Chairman Mr. Narendra Mukumbi Mr. M K Sharma Mr. P M Sinha Mr. K V Kamath
Fraud Monitoring Committee:	Mr. M K Sharma, Chairman Mr. Narendra Mukumbi Mr. K V Kamath Mr. Chanda D Kochhar Mr. V Vaidyanathan
Risk Committee:	Mr. Vahul, Chairman Mr. Sridar Iyengar Mr. Marti G Subrahmanyam Mr. V Prem Watsa Mr. K V Kamath
Share Transfer and Shareholders’/ Investors’ Grievance Committee	Mr. M K Sharma, Chairman Mr. Narendra Mukumbi Mr. Chanda D Kocchar Mr. Madhabi Puri Buch
Strategy Committee:	Mr. N Vaghul, Chairman Mr. Narendra Mukumbi Mr. M K Sharma Mr. K V Kamath Mr. Chanda D Kochhar
Committee of Directors	Mr. K V Kamath, Chairman Mr. Chanda D Kochhar Mr. V Vaidyanathan Mr. Madhabi Puri Buch Mr. Sonjoy Chatterjee.

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2008

Names of Shareholders	No. of Shares	Percentage of Holding
INSTITUTIONS
Mutual Funds/ UTI	66878872	8.45
Financial Institutions/ Banks	34170996	0.44
Insurance Companies	124745745	15.76
Foreign Institutions Investors	432431591	54.63
Foreign Bank	189826	0.02
FIIs- DR	1621154	0.20
NON INSTITUTIONS
Bodies Corporate	72284886	9.13
Individual-
Individual shareholders holding nominal share capital up to Rs. 0.100 Million	66239310	8.36
Individual Shareholders holding nominal share capital in excess of Rs. 0.100 Million	19193056	2.42
Overseas Corporate Bodies	1870	0.00
Foreign Companies	48021	0.01
Foreign Bodies DR	4553600	0.58
Shares held by custodians and against which Depository Receipts have been issued	321433334	0.00
Total	113092261	100.00

BUSINESS DETAILS

Line of Business :

Subject is engaged in providing a wide range of banking and financial services including retail lending, commercial lending, trade finance and treasury products.

GENERAL INFORMATION

No. of Employees :	18000
Bankers :	Reserve Bank of India

Banking Relations :	Good
Auditors :
Name :	S. B. Billimoria and Company Chartered Accountants
Address :	Meher Chambers, R. Kamani Road, Ballard Estate, Mumbai - 400 001, Maharashtra, India
Associates :	· ICICI Web-Trade Limited · ICICI Property Trust · ICICI Properties Private Limited · ICICI Real Estate Company Private Limited · ICICI Realty Private Limited · ICICI West Bengal Infrastructure Development Corporation Limited · ICICI KINFRA Limited · ICICI Knowledge Park · ICICI Technology Incubator Fund · ICICI Eco-net Internet and Technology Fund · ICICI Information Technology Fund · ICICI Equity Fund · TCW / ICICI Investment Partner LLC, USA · Prudential ICICI Asset Management Company Limited · Prudential ICICI Trust Limited
Subsidiaries:	· ICICI Securities and Finance Company Limited · ICICI Brokerage Services Limited · ICICI Venture Funds Management Company Limited · ICICI International Limited, Mauritius · ICICI Home Finance Company Limited · ICICI Trusteeship Services Limited · ICICI Investment Management Company Limited · ICICI Prudential Life Insurance Company Limited · ICICI Lombard General Insurance Company Limited · ICICI Securities Holdings Inc., USA · ICICI Securities Inc., USA

CAPITAL STRUCTURE

As on 31.03.2008

Authorised Capital :

No. of Shares	Type	Value	Amount
1275000000	Equity Shares	Rs. 10/- each	Rs. 12750.000 Millions
15000000	Preference Shares	Rs. 100/- each	Rs. 1500.000 Millions
350	Preference Shares	Rs. 10.000 Million each	Rs. 3500.000 Millions
	Total		Rs. 17750.000 Millions

Issued, Subscribed & Paid-up Capital :

No. of Shares	Type	Value	Amount
899266672	Equity Shares	Rs. 10/- each	Rs. 8992.667 Millions
Add: 3455008	Equity Shares	Rs. 10/- each	Rs. 34.550 Millions
Add:108598626	Equity Shares	Rs. 10/- each	Rs. 1085.986 Millions
Add: 99898476	Equity Shares	Rs. 10/-each	Rs. 998.985 Millions
Add: 1468713	Equity Shares	Rs. 10/- each	Rs. 14.687 Milllions
Less:	Calls Unpaid		Rs. 0.859 Million
Add: 111603	Equity Shares Forfeited		Rs. 0.770 Million
	Total Equity Capital		Rs. 11126.786 Millions
350	Preference Shares (Preference Shareholders of erstwhile ICICI Limited on amalgamation redeemable at par on 20^th April 2008	Rs. 10.000 Millions each	Rs. 3500.000 Millions
	Total		Rs. 14626.786 Milllions

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
LIABILITIES
Share Capital	14626.786	12493.437	12398.300
Reserves & Surplus	453575.309	234139.207	213161.600
Deposits	2444310.502	2305101.863	1650831.700
Borrowings	656484.338	512560.263	385219.100
Other Liabilities & Provisions	428953.827	382286.356	258976.000
GRAND TOTAL	3997950.762	3446581.126	2520586.700
ASSETS
Cash & Balances with RBI	293775.337	187068.794	89343.700
Balances with Banks & money at Call & Short notice	86635.952	184144.452	81058.500
Investments	1114543.415	912578.418	715473.900
Advances	2256160.827	1958656.996	1461631.100
Fixed Assets	41088.975	39234.232	39807.100
Other Assets	205746.256	164899.234	133272.400
GRAND TOTAL	3997950.762	3446582.126	2520586.700

PROFIT & LOSS ACCOUNT

PARTICULARS		31.03.2008	31.03.2007	31.03.2006
Sales Turnover		307842.429	219955.876	143061.300
Other Income		88107.628	69278.726	50622.200
Total Income		395950.057	289234.602	193683.500
Profit/(Loss) Before Tax		41577.279	31102.200	25400.700
Provision for Taxation		31594.538	28167.800	23518.500
Profit/(Loss) After Tax		9982.741	2934.400	1882.200
Expenditures :
	Interest Expanded	234842.423	163584.984	95974.500
	Operating Expenses	81541.819	66905.564	58568.900
	Provisions and Contingencies	38029.536	27641.854	13739.400
Total Expenditure		354413.778	258132.402	168282.800

QUARTERLY RESULTS

PARTICULARS	30.06.2008
Sales Turnover	78918.000
Other Income	15381.800
Total Income	94299.800
Total Expenditure	27064.000
Operating Profit	67235.800
Interest	58020.500
Gross Profit	9215.300
Depreciation	0.000
Tax	3646.400
Reported PAT	7280.100

KEY RATIOS

PARTICULARS	31.03.2008	31.03.2007	31.03.2006
Credit Deposit Ratio	88.74	86.46	89.68
Investment Deposit Ratio	42.68	41.15	46.07
Cash Deposit Ratio	10.12	6.99	5.77
Interest Expended/Interest Earned	76.28	71.14	67.09
Other Income/Total Income	22.38	23.24	26.14
Operating Expense/Total Income	20.73	25.78	30.24
Interest Income/Total Funds	8.26	7.70	6.80
Interest Expended /Total Funds	6.30	5.48	4.56
Net Interest Income/Total Funds	1.96	2.22	2.24
Non Interest Income/Total Funds	2.38	2.33	2.41
Operating Expense/Total Income	2.21	2.59	2.79
Profit Before Provisions/Total Funds	2.14	1.97	1.86
Net Profit/Total Funds	1.12	1.04	1.21
Return On Net Worth(%)	11.75	13.37	14.62

LOCAL AGENCY FURTHER INFORMATION

History:

ICICI Bank, a private sector bank under the house of ICICI was incorporated in the year of 1994. It is a multi-specialist financial service provider with leadership position across the spectrum of financial services in India. ICICI Bank is the 2nd largest bank in India and Bank breaking into the top 100 financial institutions in the world, in terms of market capitalisation. It got this position in short time, because the bank doing what customers want. ICICI running its business with six principal groups, such as Retail Banking, Wholesale Banking, International Banking, Rural, Micro Banking and Agri-Business, Government Banking and Corporate Centre. The Bank offers a wide spectrum of domestic and international banking services to facilitate trade, investment banking ,Insurance, Venture Capital, asset management, cross border business and treasury and foreign exchange services besides providing a full range of deposit and ancillary services for both individuals and corporates through various delivery Channels and specialized subsidiaries. ICICI Bank has 14 subsidiaries, out of that 10 in domestic and rest of 4 in international level such as UK, Canada and Russia. To efficiently distribute its products and services, the bank has developed multiple access channels comprising lean brick and mortar branches, ATMs, call centers and Internet banking. The Bank has introduced the concept of mobile ATMs in the remote/rural areas. It has also extended its mobile banking services to all cellular service providers across India and NRI customers in USA,UK,Middle-East and Singapore. 

The merger and acquisition are the key kind to bank. The Bank of Madura (BOM) got merged with ICICI Bank during the period 2000-01 and in 2001 ICICI (Financial Institution) merged with ICICI Bank. The two subsidiaries of ICICI Limited viz ICICI Personal Financial Services and ICICI Capital Services were also merged with the ICICI Bank on March 2002. During May,2003 the bank has acquired Transamerica Appple Distribution Finance Private Limited and renamed it to ICICI Distribution Finance Private Limited which is primarily engaged in financing in the two-wheeler segment.

Bank received many awards and recognitions during the year 2005-06. Some of them are Best Bank in India by Euromoney, Best Integrated Consumer Bank Site in Asia by Global Finance, Best Cash Management-Country Awards in India by The Asset and Best Secondary Offering by Finance Asia. ICICI Bank noted as Bank of the year 2006 India by The Banker, it was a award to ICICI Bank at second time from last year. During the year 2006-07 also Bank acquired the number of awards. Samples are, Best Transaction Bank in India by Asset Triple AAA, Best Bank of the Year 2006 by Business India, National Award for Excellence in Energy Management by CII and Excellence in Multi Channel Distribution by Asian Banker.

As on April 2007 Sangli Bank Limited was merged with ICICI Bank Limited In the Wholesale Banking segment, the bank has achieved a significant milestone in the market making activity by expanding the product suite to include foreign exchange options. As on May 2007 the bank have market capitalisation of Rs 778340.000 Millions. In 2007 June ICICI Bank has entered into an agreement with networking solutions provider GTL Limited to lease out its call centre facility at Mahape worth of around Rs 1000.000 Millions for a period of 25 years. In August of 2007 the bank has availed of a $200-million worth Line of Credit (LoC) from The Export-Import Bank of Korea (Korea Exim bank) for the purpose of the Hong Kong branch of ICICI Bank gets funds from Korea Exim bank, and the bank lends foreign currency loans to domestic companies investing in Korea and the bank had taken a similar LoC of $200 million from the Japan Bank for International Cooperation (JBIC) last year. In 2008 ICICI Bank, come a cropper in the global stage when it comes to their brand value, which is $2,603 million, it reveals by the study of London-based consultancy Brand Finance

Appropriations:

The profit and loss account shows a profit after tax of Rs. 41.58 billion after provisions and contingencies of Rs. 29.05 billion and all expenses. The disposable profit is Rs. 51.56 billion, taking into account the balance of Rs. 9.98 billion brought forward from the previous year. The Directors have recommended a dividend rate of 110%

OVERVIEW

ICICI Bank Limited (“ICICI Bank” or “the Bank”), incorporated in Vadodara, India is a publicly held banking company engaged in providing a wide range of banking and financial services including commercial banking and treasury operations. ICICI Bank is a banking company governed by the Banking Regulation Act, 1949.

NOTES FORMING PART OF THE ACCOUNTS

The following additional disclosures have been made taking into account the requirements of accounting standards and Reserve Bank of India (“RBI”) guidelines in this regard.

Merger of the Sangli Bank Limited

The Sangli Bank Limited (Sangli Bank), a banking company incorporated under the Companies Act, 1956 and licensed by RBI under the Banking Regulation Act, 1949 was amalgamated with ICICI Bank with effect from April 19, 2007 in terms of the Scheme of Amalgamation (the Scheme) approved by RBI vide its order DBOD No. PSBD 10268/16.01.128/2006-07 dated April 18, 2007 under section 44A(4) of the Banking Regulation Act, 1949. The consideration for the amalgamation was 100 equity shares of ICICI Bank of the face value Rs. 10 each fully paid-up for every 925 equity shares of Rs. 10 each of Sangli Bank. Accordingly on May 28, 2007, ICICI Bank allotted 3,455,008 equity shares of Rs. 10 each to the shareholders of Sangli Bank.

As per the Scheme, the entire undertaking of Sangli Bank including all its assets and liabilities stood transferred/deemed to be transferred to and vested in the Bank.

The amalgamation has been accounted as per the scheme in accordance with the purchase method of accounting as per Accounting Standard 14 (AS-14) “Accounting for Amalgamations” issued by the Institute of Chartered Accountants of India. Accordingly the assets and liabilities of Sangli Bank have been accounted at the values at which they were appearing in the books of Sangli Bank as on April 18, 2007 and provisions were made for the difference between the book values appearing in the books of Sangli Bank and the fair value as determined by ICICI Bank. In the books of ICICI Bank, an “Amalgamation Expenses Provision Account” was credited by an amount determined for the expenses and costs of the Scheme arising as a direct consequence on account of any changes in the business or operation of Sangli Bank proposed or considered necessary by the Board of Directors of ICICI Bank (including but not limited to rationalisation, upgradation and enhancement of human resources and expenses relating to modifying signage, modifying stationery, branding, changing systems and network, communication including media costs, impairments of technology and fixed assets, conducting general meetings, payments of listing fees and other statutory and regulatory charges, travel in relation to the consolidation contemplated in the Scheme, valuation, due diligence, investment banking expenses and charges relating to preparation of the Scheme, consultations in relation to the consolidation contemplated in the Scheme

and training), and other extraordinary expenses on integration and consolidation under the Scheme, to be incurred by the Bank and the balance in such account has been debited to the securities premium account. Accordingly, the excess of the paid-up value of the shares issued over the fair value of the net assets acquired (including reserves) of Rs. 3,259.5 million and amalgamation expenses of Rs. 222.7 million have been netted off from the securities premium account.

Capital adequacy ratio

The Bank is subject to the capital adequacy norms stipulated by the Reserve Bank of India (‘RBI’). As per the earlier applicable capital adequacy guidelines (Basel I), the Bank was required to maintain a minimum ratio of total capital to risk adjusted assets and off-balance sheet items of 9.0%, at least half of which must be Tier I capital. On April 27, 2007, the Reserve Bank of India issued Prudential Guidelines on Capital Adequacy and Market Discipline - Implementation of the New Capital Adequacy Framework, which are applicable to all Indian banks having operational presence outside India from March 31, 2008. Under the new guidelines (Basel II), which are now applicable to the Bank, the Bank is required to maintain a minimum ratio of total capital to risk adjusted assets of 9.0%, with a minimum Tier I capital ratio of 6.0%.

In order to comply with prudential floor prescribed by RBI under the new guidelines (100% of minimum capital requirement computed as per Basel I framework as on March 31, 2008), the Bank has computed and reported the capital adequacy position as per Basel I and Basel II norms. Since the capital charge as per the new capital adequacy framework (Basel II) is higher than the Basel I framework, the Bank has maintained capital as per Basel II norms.

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, 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 Bank’s 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 sensitivity measures 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 purposes 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.

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. Derivative transactions are covered under International Swap Dealers Association (“ISDA”) master agreements with the respective counter parties. The exposure on account of derivative transactions is computed as per RBI guidelines and is marked against the credit limits approved for the respective counter parties.

FINANCIAL SECTOR OVERVIEW 

The financial sector mirrored the developments in the Indian economy. Credit growth during fiscal 2008 moderated, given the tightening of interest rates in the economy. Non-food credit increased by 22.3% in fiscal 2008 compared to 28.0% in fiscal 2007. Based on data published by RBI, at February 15, 2008, industry accounted for 39.6% of non-food gross bank credit, retail credit for 24.5%, agriculture and allied activities for 11.7%, trade for 5.8%, real estate for 2.6% and other sectors for the balance 15.8%. The credit-deposit ratio remained within the range of 69.0%-74.0% during fiscal 2008 and was about 73.0% in March 2008. The incremental credit-deposit ratio was about 71.9% for fiscal 2008 compared to about 86.0% for fiscal 2007. Deposits of the banking system grew by Rs. 6,029.54 billion, or 22.9%, in fiscal 2008 compared to 24.2% in fiscal 2007. In response to the increase in the cash reserve ratio and the liquidity conditions, banks have increased their lending rates. The average yield on 10-year Government securities increased relatively moderately from 7.8% in fiscal 2007 to 7.9% in fiscal 2008, given the continued demand for government securities on account of the mandated holding requirement for banks and other financial intermediaries. 

First year retail premium underwritten in the life insurance sector recorded a growth of 30.7% (on weighted received premium basis) to reach Rs. 526.59 billion in fiscal 2008 with the private sector's retail market share (on weighted received premium basis) increasing from 35.5% in fiscal 2007 to 50.5% in fiscal 2008. The non-life insurance industry was de-tariffed with effect from January 1, 2007, whereby insurance premiums were freed from price controls, resulting in a reduction in premium rates and a negative impact on industry growth. Gross premium in the non-life insurance sector (excluding specialised insurance institutions) grew by 12.6% to Rs. 281.31 billion in fiscal 2008 as compared to 22.4% growth in fiscal 2007 with the private sector's market share increasing from 34.9% in fiscal 2007 to 39.9% in fiscal 2008. Total assets under management (on average assets basis) of mutual funds grew by 50.0% from Rs. 3,590.97 billion in March 2007 to Rs. 5,385.08 billion in March 2008. 

Equity markets remained stable and buoyant during the first half of fiscal 2008, followed by a period of significant decline in the BSE Sensex on account of developments in global financial markets. The Sensex continues to remain volatile, due to global concerns as well as inflationary pressures and other downside risks to growth. 

There were a number of key policy developments in the banking sector during fiscal 2008. Price stability, management of inflation expectations and stability of financial markets remain the key monetary policy objectives of RBI. In August 2007, RBI issued guidelines on external commercial borrowings. The guidelines permit external commercial borrowings of more than US$ 20 million per company only for foreign currency expenditure. For rupee expenditure, external commercial borrowings were permitted only up to US$ 20 million with the prior approval of RBI. Subsequently in May 2008, RBI increased the limit on external commercial borrowings for rupee expenditure to US$ 100 million for the infrastructure sector and US$ 50 million for other sectors. The Basel II capital adequacy framework became applicable to certain banks including ICICI Bank from fiscal 2008. The guidelines include an increase in the minimum Tier-1 CAR from 4.5% to 6.0% and the introduction of capital for operational risk. In November 2007, RBI issued guidelines for banks engaging recovery agents asking them to put in place a due diligence process for engagement of recovery agents. In February 2008, the Government of India in its budget for fiscal 2009 has announced a debt waiver for small and marginal farmers. In respect of other farmers, the scheme proposes a one-time settlement of all overdue loans at 75% of the loan amount.

The Indian financial sector has remained resilient to the adverse developments in global markets. Given the long-term growth prospects of the Indian economy, the growth outlook of the financial sector in India continues to be robust. 

 ORGANISATION STRUCTURE 

The organisation structure is designed to be flexible and customer-focused. At the same time, they seek to ensure effective control and supervision and consistency in standards across the organisation. The organisation structure is divided into the following principal groups: 

 * Corporate Centre, comprising financial reporting; planning and strategy; asset liability management; investor relations; secretarial; corporate communications; risk management; compliance; internal audit; legal; financial crime prevention and reputation risk management; and the Bank's proprietary trading operations across various markets. 

 * Retail Banking Group, comprising the retail liabilities, retail assets and small enterprises businesses. 

 * Rural, Micro-banking and Agri-business Group, comprising the rural and agricultural lending and other banking businesses. 

 * Wholesale Banking Group, comprising the corporate and investment banking, project finance and government banking businesses. 

 * International Banking Group, comprising the Bank's international operations, including operations in various overseas markets as well as products and services for non-resident Indians, international trade finance, correspondent banking and wholesale resource mobilisation. 

 * Global Markets Group, comprising the global client-centric treasury operations. 

 * Global Operations and Middle Office Groups, which are responsible for back-office operations, controls and monitoring of the domestic and overseas operations. 

 * The Human Resources Management Group is responsible for the Bank's recruitment, training, leadership development and other personnel management functions and initiatives. 

 * The Technology Management Group (TMG) is responsible for enterprise-wide technology initiatives, with dedicated technology teams serving individual business groups and managing information security and shared infrastructure. 

 * The Facilities Management and Administration Group is responsible for management of corporate facilities and administrative support functions. 

 * The Organisational Excellence Group is responsible for enterprise-wide quality and process improvement initiatives. 

 BUSINESS REVIEW 

During fiscal 2008, the Bank continued to grow and diversify its asset base and revenue streams by leveraging the growth platforms created over the past few years. They maintained the leadership position in retail credit, achieved robust growth in the fee income from both corporate and retail businesses, strengthened the deposit franchise and significantly scaled up the corporate and international banking operations.

Retail Banking 

They were among the first banks to identify the growth potential of retail credit in India. Between 2003 and 2006 the banking system as a whole saw significant expansion of retail credit, with retail loans accounting for a major part of overall systemic credit growth. However, due to the increase in interest rates following inflationary pressures, retail credit growth in the banking system has moderated from about 30% over the last few years to about 10-15% currently. They continue to believe that retail credit has robust long-term growth potential, driven by sound fundamentals, namely, rising income levels and favourable demographic profile. At the same time, the retail credit business requires a high level of credit and analytical skills and strong operations processes backed by technology. The retail strategy is centred around a wide distribution network, comprising the branches and offices, direct marketing agents and dealer and real estate developer relationships; a comprehensive and competitive product suite; technology-enabled back-office processes; and a robust credit and analytical framework. 

They are the largest provider of retail credit in India. The total retail portfolio was Rs. 1,316.63 billion at March 31, 2008, constituting 58% of the total loans at that date. 

During fiscal 2008, they continued the focus on strengthening the retail deposit franchise to create a stable funding base. The current and savings account (CASA) deposits as a percentage of total deposits increased from 22% at March 31, 2007 to 26% at March 31, 2008, with savings account deposits increasing by 36% during fiscal 2008. During the year, they have expanded the branch network substantially. At March 31, 2008, they had 1,262 branches and extension counters compared to 755 branches and extension counters at March 31, 2007, including the addition of about 200 branches through the merger of Sangli Bank. The branch network has further increased to 1,367 as of May 31, 2008. They continued to expand the electronic channels, namely internet banking, mobile banking, call centres, point of sale terminals and ATMs, and migrate customer transaction volumes to these channels. 

They increased the ATM network to 3,881 ATMs at March 31, 2008 from 3,271 ATMs at March 31, 2007. The call centres have a total seating capacity of approximately 6,375 sales and service workstations. Transaction volumes on internet and mobile banking have grown significantly, constituting an increasing percentage of total customer transactions. During the year, they launched a mobile banking service enabling a wide range of banking transactions using the mobile phone. 

Cross-selling new products and also the products of the life and general insurance subsidiaries to the existing customers is a key focus area for the Bank. Cross-sell allows them to deepen the relationship with the existing customers and helps them reduce origination costs as well as earn fee income. The branches and other channels are increasingly becoming important points of sale for the insurance subsidiaries. In fiscal 2008, about 19% of ICICI Prudential Life Insurance Company's new business was generated through ICICI Bank. They will continue to focus on cross-sell as a means to improve profitability and offer a complete suite of products to the customers. They continue to leverage the multi-channel network for distribution of other third party products like mutual funds, Government of India relief bonds and initial public offerings of equity. 

Customer service is a key focus area for the Bank and they have adopted a multi-pronged approach to continuously monitor and enhance customer service levels. The Customer Service Council comprising wholetime directors and senior management meets regularly to review the customer service initiatives. They have implemented a structured customer feedback process where feedback is received from customers through e-mail, mobile messaging and telephone. They conduct regular training programmes for employees to improve customer handling and interaction and have incorporated customer service metrics in performance evaluation. The service quality team is also responsible for tracking resolution and turn-around times for service requests, identifying root causes to be addressed through process improvements, rewarding achievements in customer service and institutionalising learnings from customer feedback. The Customer Service Committee of the Board of Directors periodically reviews the initiatives taken by the Bank in this area. 

Small Enterprises 

During fiscal 2008, the small enterprises customer base increased by 26% to about 1.1 million accounts. They have introduced the service offerings in over 400 new branches, increasing the coverage to over 1,000 branches. During the year, they have focused on product specialisation including investment banking for SMEs. They have continued to focus on shaping the small and medium enterprises sphere in India through initiatives such as the 'Emerging India Awards', the SME CEO Knowledge Series - a platform to mentor and assist SME entrepreneurs, and the 'SME Dialogue' - a weekly feature in a leading financial newspaper sharing SME best practices and success stories. During the year, they have launched several new products and services like the SME toolkit - an online business and advisory resource for SMEs. 

Corporate Banking 

The corporate banking strategy is based on providing comprehensive and customised financial solutions to the corporate customers. They offer a complete range of corporate banking products including rupee and foreign currency debt, working capital credit, structured financing, syndication and transaction banking products and services. 

The corporate and investment banking franchise is built around a core relationship team that has strong relationships with almost all of the country's corporate houses. The relationship team is product agnostic and is responsible for managing banking relationships with clients. They have also put in place product specific teams with a view to focus on specific areas of expertise in designing financial solutions for clients. Through the relationship teams working in tandem with product solution teams, they have deepened the client relationships across the product portfolio resulting in significant growth in income and wallet share among all the top corporate clients, as compared to the previous year. 

They have created an integrated Global Investment Banking Group, which is responsible for working with the relationship team in India and the international subsidiaries and branches, for origination, structuring and execution of investment banking mandates on a global basis. They have also restructured the delivery team for transaction banking products by creating dedicated sales teams for trade services and transaction banking products. This has been done with the intent to increase the market share from transaction banking products, which will translate into recurring fee income for the Bank. They have also focused on increasing market share in trade finance by leveraging and further strengthening correspondent banking relationships. 

Fiscal 2008 saw continued demand for credit from the corporate sector, with growth and additional investment demand across all sectors. They were able to leverage the international presence and deep corporate relationships to work on overseas acquisitions made by Indian companies and infrastructure projects in India. During fiscal 2008 they were involved in 75% of outbound mergers and acquisitions deals from India. They are now a preferred partner for Indian companies for syndication of external commercial borrowings and other fund raising in international markets and have been ranked number one in offshore loan syndications of Indian corporates in calendar year 2007. 

The resurgence of the Indian economy, the need for infrastructure development and the international expansion of Indian companies provide exciting opportunities for the corporate banking business. They believe that they are well-placed to capitalise on these opportunities by combining the domestic and international balance sheets, and the credit and structured financing expertise.

 Project Finance 

The Indian economy is witnessing significant investments with the investment pipeline projected at US$ 700.0 billion over the next few years. The project finance proposition is based on the constant endeavour to contribute to the project framework and enhance the bank-ability of projects through the innovative structuring skills, sectoral knowledge and robust due diligence techniques. In fiscal 2008, they consolidated the lead arranger position across a variety of signature project finance transactions in diverse sectors and also forayed into select international project finance transactions. 

They believe that there is significant potential in the infrastructure and manufacturing sectors. The power sector is expected to witness large investments involving significant capacity additions of more than 70 gigawatts over the next five years predominantly driven by increased private sector participation. The ultra mega power projects, increasing interest in hydroelectric generation, and offering of transmission projects through competitive bidding are expected to provide attractive funding opportunities. 

In the transportation sector, road development is being undertaken across both the national highways (through the National Highway Development Programme) and the state highways. The port sector has been witnessing traffic growth of over 14% per annum for the last few years with increased participation of the private sector and international players. There is an increased focus on the railways sector with investments expected in modernisation of railway stations, logistic parks and dedicated freight corridors. 

The modernisation, upgradation and expansion of metro and non-metro airports are underway and are expected to provide significant business opportunities in the future. In addition to the Delhi and Mumbai airports, which have already been transferred to private developers, the airports at Kolkata and Chennai are also proposed to be modernised through a suitable model. Greenfield airports are also proposed to be set up at key business and tourist destinations, such as Bangalore and Hyderabad, which have already seen project completion under private management. 

The telecom sector is expected to see continued growth given the relatively low teledensity and the fresh impetus provided by the issuance of new licenses, which would result in large investments in rollout of new networks alongside the network expansion of existing service providers. The oil and gas sector is witnessing activity across the entire value chain, from exploration and production through increased private sector participation under the New Exploration Licensing Policy, to setting up of large-scale refineries by both public sector and private sector players. 

The manufacturing sector has seen significant capacity additions being undertaken and planned including greenfield projects in steel, aluminium and cement. Strong growth in infrastructure, real estate and demand for consumer goods and automobiles is expected to increase the demand for steel, aluminium and cement. India's advantage in terms of low cost of manufacturing and availability of talent has led to several foreign majors setting up large capacities in auto, auto ancillaries and engineering industries to meet the growing domestic demand and also as a manufacturing hub to serve global markets. 

 International Banking 

In 2001, they identified international banking as a key opportunity, aiming to cater to the cross-border needs of clients and leveraging the domestic banking strengths to offer products internationally. They have made significant progress in the international business since they set up the first overseas branch in Singapore in 2003. ICICI Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Singapore, Bahrain, Hong Kong, Sri Lanka, Dubai International Finance Centre, Qatar Financial Centre and the United States and representative offices in the United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The Bank's wholly owned subsidiary ICICI Bank UK PLC has nine branches in the United Kingdom and a branch each in Belgium and Germany. ICICI Bank Canada has eight branches including three in Toronto. ICICI Bank Eurasia LLC has six branches including three branches in Moscow and one in St. Petersburg.

The international strategy is focused on building a retail deposit franchise, diverse wholesale funding sources and strong syndication capabilities to support the corporate and investment banking business; achieving the status of a non-resident Indian (NRI) community bank in key markets; and expanding private banking operations for India-centric asset classes. During fiscal 2008, they focused on deepening the presence in existing overseas locations and expanding the operations in key markets. In line with the strategy to establish a presence in large markets with significant savings pools, they entered into Germany through a branch established by ICICI Bank UK PLC. They have been able to successfully leverage the technology advantage to create a growing international deposit base. Total deposits of ICICI Bank UK PLC and ICICI Bank Canada increased by 76.0% from Rs. 191.28 billion at March 31, 2007 to Rs. 335.86 billion at March 31, 2008. They also received approval for and commenced branch operations in the United States. 

They have established a strong franchise among NRIs by offering a comprehensive product suite, technologyenabled access, a wide distribution network in India and alliances with local banks in various markets. Currently, they have over 500,000 NRI customers. They have undertaken significant brand-building initiatives in international markets and have emerged as a well-recognised financial services brand for NRIs. They continue to maintain a market share of 25% in inward remittances to India. During fiscal 2008, they launched innovative products like instant money transfer and enhanced the focus on customer relationship management and process automation. Additionally, they also undertook the development of low cost remittance products in non-India geographies with correspondent tie-ups for disbursements in over 100 such geographies.

Through the international private banking services, they offer various products to mass affluent and high networth clients based on their financial needs and risk appetite. The offerings range from simple deposits and loans to more sophisticated structured products, private equity and products giving exposure to the real estate sector in India. 

 Rural banking and agri-business 

They believe the rural economy has high growth potential and offers large credit growth opportunities. Towards this end, the suite of products and services is targeted to address the needs of both the farm and non-farm sectors. The retail product suite encompasses loans for crop production, purchase of farm equipment, commodity based finance as well as various savings, investment and insurance products. They also offer micro-finance and jewel loans. They have also focused on enhancing credit to farmers by leveraging on corporate partnerships. For example, they have partnered with various dairies to provide financing to farmers for purchase of milch cattle. They also provide credit and banking services to SMEs active in the agricultural value chain. To enhance the service quality and product delivery capabilities they have developed a large network of rural branches which is further augmented by non-branch channels. 

Rural banking in India is still at a nascent stage and the deployment of technology channels and modern banking methods for rural lending continues to be an evolving process. In line with the learnings from the rural banking operations, they undertook a comprehensive review of and realigned the channel architecture, credit underwriting processes and account management systems. They have put in place a robust risk management structure to mitigate and manage credit, operational and fraud risks. Through this, they aim to create a strong foundation for scaling up of the rural business. 

 RISK MANAGEMENT 

Risk is an integral part of the banking business and they aim at delivering superior shareholder value by achieving an appropriate trade-off between risk and returns. The key risks are credit risk, market risk and operational risk. The risk management strategy is based on a clear understanding of various risks, disciplined risk assessment and measurement procedures and continuous monitoring. The policies and procedures established for this purpose are continuously bench marked with international best practices. 

 They have four dedicated groups, the Global Risk Management Group (GRMG), the Compliance Group, Internal Audit Group and the Financial Crime Prevention and Reputation Risk Management Group (FCPRRMG) which are responsible for assessment, management and mitigation of risk in ICICI Bank. During fiscal 2008, they formed the FCPRRMG to design and implement appropriate internal controls in respect of anti-money laundering, fraud prevention and reputation risk management. In addition, the Credit and Treasury Middle Office Groups and the Global Operations Group monitor operational adherence to regulations, policies and internal approvals. These groups are completely independent of all business operations. GRMG is further organised into the Global Credit Risk Management Group, the Global Market Risk Management Group and the Operational Risk Management Group. The internal audit and compliance function are responsible to the Audit Committee of the Board. 

 Credit Risk 

Credit risk is the risk that a borrower is unable to meet its financial obligations to the lender. They measure, monitor and manage credit risk for each borrower and also at the portfolio level. They have standardised credit approval processes, which include a well-established procedure of comprehensive credit appraisal and rating. They have developed internal credit rating methodologies for rating obligors. The rating factors in quantitative and qualitative issues and credit enhancement features specific to the transaction. The rating serves as a key input in the approval as well as post-approval credit processes. Credit rating, as a concept, has been well internalised within the Bank. The rating for every borrower is reviewed at least annually. Industry knowledge is constantly updated through field visits and interactions with clients, regulatory bodies and industry experts.

In the retail credit operations, all products, policies and authorisations are approved by the Board or a Board Committee or pursuant to authority delegated by the Board. Credit approval authority lies only with the credit officers who are distinct from the sales teams. The credit officers evaluate credit proposals on the basis of the approved product policy and risk assessment criteria. Credit scoring models are used in the case of certain products like credit cards. External agencies such as field investigation agencies are used to facilitate a comprehensive due diligence process. Before disbursements are made, the credit officer conducts a centralised check on the delinquencies database and review of the borrower's profile. They continuously refine the retail credit parameters based on portfolio analytics. They also draw upon reports from the Credit Information Bureau (India) Limited (CIBIL). 

Market Risk 

Market risk is the possibility of loss arising from changes in the value of a financial instrument as a result of changes in market variables such as interest rates, exchange rates, credit spreads and other asset prices. The exposure to market risk is a function of the trading and asset-liability management activities and the role as a financial intermediary in customer-related transactions. The objective of market risk management is to minimise the impact of losses on earnings and equity capital due to market risk. 

Market risk policies include the Investment Policy and the Asset-Liability Management (ALM) Policy. The policies are approved by the Board of Directors. The Asset-Liability Management Committee (ALCO) stipulates liquidity and interest rate risk limits, monitors adherence to limits, articulates the organisation's interest rate view and determines the strategy in light of the current and expected environment. These policies and processes are articulated in the ALM Policy. The Investment Policy addresses issues related to investments in various trading products. The Global Market Risk Management Group exercises independent control over the process of market risk management and recommends changes in processes and methodologies for measuring market risk. 

Interest rate risk is measured through the use of re-pricing gap analysis and duration analysis. Liquidity risk is measured through gap analysis. They ensure adequate liquidity at all times through systematic funds planning and maintenance of liquid investments as well as by focusing on more stable funding sources such as retail deposits. 

They limit the exposure to exchange rate risk by stipulating position limits. 

The Treasury Middle Office Group monitors the asset-liability position under the supervision of the ALCO. It also monitors the treasury activities and adherence to regulatory / internal policy guidelines. The Treasury Middle Office Group is also responsible for processing treasury transactions, tracking the daily funds position and complying with all treasury-related management and regulatory reporting requirements.

Operational Risk 

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. Operational risks in the Bank are managed through a comprehensive internal control framework. The control framework is designed based on categorisation of all functions into front-office, comprising business groups; mid-office, comprising credit and treasury mid-offices; back-office, comprising operations; and corporate and support functions. 

RBI has mandated all banks to develop an operational risk management framework. In accordance with these guidelines, the board of directors has approved an Operational Risk Management Policy. The policy is applicable across the Bank including overseas offices and aims to ensure clear accountability, responsibility and mitigation of operational risk. They have constituted an Operational Risk Management Committee (ORMC) to oversee the implementation of the Operational Risk Management framework. The framework comprises identification of risks, assessment of controls to mitigate these risks, risks measurement, risks monitoring and mitigation. They have formed an independent Operational Risk Management Group to facilitate its implementation. 

 TREASURY

The treasury operations comprise the balance sheet management function, the client-related corporate markets business and the proprietary trading activity. 

Fiscal 2008 saw the continuation of volatility in interest rates, varying liquidity conditions, global credit tightening and inflationary concerns resulting in significant movement in the yield curve at various points in time. The government bond markets witnessed significant volatility in yields. The balance sheet management function continued to actively manage the government securities portfolio held for compliance with SLR norms to optimise the yield on this portfolio, while maintaining an appropriate portfolio duration given the volatile interest rate environment. The focus of the proprietary trading operations was to maximise profits from positions across key markets including corporate bonds, government securities, interest rate swap, equity and foreign exchange markets. While the adverse market conditions in the last quarter of fiscal 2008 had an adverse impact on equity proprietary trading operations, the Bank capitalised on the opportunities in the fixed income markets realizing gains on its portfolio. 

The Bank's overseas branches and subsidiaries also invest in credit derivatives with a majority of exposures in this portfolio being to Indian corporates. 

They provide foreign exchange and derivative products and services to the customers through the Global Markets Group. These products and services include foreign exchange products for hedging currency risk, foreign exchange and interest rate derivatives like options and swaps and bullion transactions. They also hedge the own exchange rate and commodity risks related to these products with banking counterparties.

In line with the international expansion of the bank, treasury functions have been set up in United States, Hong Kong, Sri Lanka, Bahrain, Singapore and the Offshore Banking Unit in Mumbai to support the operations of these branches. 

PUBLIC RECOGNITION 

 The Bank received several awards during fiscal 2008, including the following: 

 * 'Best Bank in Asia' by Euromoney 

 * 'Best Bank in India' by Euromoney 

 * 'Fabulous 50 companies in Asia' by Forbes Asia 

 * 'Best Domestic Bank in India' by Asset Triple A 

 * 'Best Bank of the Year (India)' by The Banker 

 * 'Best Private Sector Bank' by Outlook Money NDTV Profit Awards 2007 

 * 'Asia's Best Financial Borrower 2007' by Euromoney 

 * 'Excellence in Remittance Business' by Asian Banker 

 * 'Most Preferred Brand' for home loans, auto loans, credit cards and financial advisory services by CNBC Awaaz 

 * 'Innovative Technology Award' by CIO 

 * 'Best Regional Private Bank' by The Banker 

 * 'Excellence in Financial Reporting' by Institute of Chartered Accountants of India (ICAI) 

 Promoting Inclusive Growth 

India's economic outlook is buoyant but there are millions of Indians who are currently not integrated into the economic mainstream. Engaging them in the growth process is crucial for India's sustainable growth and social development. This would address existing inequalities and drive GDP growth to an even higher level. 

 The ICICI Group's financial inclusion initiatives 

Access to financial services is one of the key enablers for participation in the nation's economy. The ICICI Group is seeking to combine a sustainable business model with a social and human development agenda through a range of initiatives aimed at providing access to financial services to those who are currently not within the ambit of formal financial services. The aim is to build a business model that can provide financial services effectively across rural India and deliver value to this market at a low cost. The ICICI Group is working with key stakeholders including agri-based industries, government authorities and micro finance institutions in this direction. Technology, including biometric authentication tools, forms a core element of the strategy to accelerate the penetration of financial services. 

The ICICI Group's key initiatives towards financial inclusion include:

Microfinance: ICICI Bank's microfinance programme facilitates extension of credit to low income households. With a portfolio of Rs. 9.6 billion and having touched the lives of about 3.5 million people, this microfinance programme is one of the largest among private sector banks in India. ICICI Bank was able to scale up this programme through the innovative 'Partnership model'. ICICI Bank's participation has catalysed the growth of smaller micro-finance institutions (MFIs) in India. 

The Bank has focused on development and capacity-building in the MFI sector. In 2007, there were only five MFIs in India with 500,000 or more customers. The ICICI Group has worked to significantly expand the sector by developing new MFIs. The Bank's Emerging MFI team, its Social Initiatives Group and the Centre for Microfinance at the Institute of Financial Management and Research (IFMR) worked in collaboration in this area. The Bank's Social Initiatives Group acted as a catalyst for the development of appropriate channels and products that make basic financial services accessible to the poorest clients. This has resulted in partnership with venture capital funds engaged in identifying opportunities, providing equity finance, mentoring new entrepreneurs and facilitating product development. The Centre for Microfinance at IFMR worked with large MFIs, whose volumes required stronger planning and processes at different levels to expand or consolidate their operations, refine their risk assessment and manage an increasing inflow and outflow of funds. The Emerging MFI team in the Bank identified and developed organisations or individuals at varying stages of readiness to take up micro-finance as a viable business. It also worked to resolve the geographical asymmetry of micro finance in India.

ICICI Bank's other innovations in the field of micro-finance include the first securitisation deals in the micro finance industry in India in 2004. The Bank's current major initiatives include introduction of biometric smart cards towards ensuring Know The Customer (KYC) compliance and roll out of the banking correspondent model.

Other micro-financial services: To provide easy savings for low-income customers, ICICI Bank has launched a micro-savings facility. A state-of-the-art solution based on a biometric-enabled smart card and a battery-operated authentication device developed by Financial Innovation and Network Operations (FINO), a partner organisation, this micro-savings product provides access to a savings account with convenient features. Apart from this savings account, the Bank also offers recurring and fixed deposits to enable customers to avail higher return on their savings. 

The perpetual uncertainties in the income cycle of the poor increases their vulnerability to economic shocks. ICICI Prudential Life Insurance (ICICI Life) provides micro insurance services which have promoted financial security among the rural poor and improved their ability to avail credit facilities for undertaking income generating activities. Similarly, ICICI Lombard General Insurance (ICICI General) provides a range of non-life insurance products, including health, weather and cattle insurance to help mitigate the impact of other contingencies such as illness and crop failure. ICICI Prudential Asset Management Company (ICICI AMC) has launched India's first Micro Systematic Investment Plan (MSIP), a mutual fund targeted for the poor, with a minimum investment amount as low as US$1. 

Government welfare schemes: Implementation of several of the governments' social and welfare initiatives can be outsourced for better results. ICICI General has structured need-based, cost effective insurance solutions for a number of state governments and ministries of the Government of India covering around 36 million lives for personal accident insurance and health insurance. The benefit for the government has been the transfer of risk to ICICI General, greater accountability and transparency and streamlined reporting. 

Innovative farmer finance: ICICI Bank has sought to introduce several new products to meet the farmer's need for credit. Soon after harvest, prices for all commodities are at their lowest. The smaller and marginal farmers are most likely to succumb to a low price since their need for realisation of funds is the most acute. Availability of finance at the right time strengthens farmers' inventory holding capacity. ICICI Bank launched warehouse receipt based financing to address this need. This allows the farmer to take a loan against the produce (stored in a warehouse) and avoid distress sale. The Bank has also focused on enhancing credit to farmers by leveraging on corporate partnerships. For example, it has partnered with various dairies to provide financing to farmers for purchase of milch cattle. 

Scaling up inclusive growth initiatives 

Committed to improving social, economic and human development outcomes at the national level, the ICICI Group has established The ICICI Foundation for Inclusive Growth (www.icicifoundation.org). ICICI Bank and its subsidiaries will contribute 0.75%-1.0% of their annual profits to the Foundation and work with it closely to help it achieve its mission.

The Foundation's mission is to improve the incomes of the low-income households in India. It believes that improving market access for low income households is the only sustainable way to bring about increase in their incomes and therefore it principally focuses its attention on redressing market failures which constrain them. However, low income households are often not able to access even well functioning markets because they lack the necessary physical capacity and education due to lack of access to healthcare and schooling. It is also possible that even well-developed markets may not provide a level playing field for low income households. Also in the long-run markets may pursue strategies that are not environmentally sustainable. Driven by these concerns, the Foundation's is actively mentoring institutions that work on these defined focus areas: 

Markets: The Foundation focuses on facilitating universal access to finance to make markets more responsive to the needs of the poor and to link with low-income households both as producers and consumers. This is done through developing appropriate channels, business models and back-ends for financial services access. It also supports research and model building for expanding financial services access. The Foundation works closely with and mentors the IFMR Foundation (www.ifmrfoundation.org.in) and its partners to fulfil its own mission of increasing the incomes of low income households in a sustainable manner. It is the Foundation's belief that addressing financial market failures substantively will have an impact on the access of low income households to a variety of other markets including healthcare, schooling and drinking water. 

Human Capacity: A focus on fundamental human capacities such as health and education is crucial for people to reach their full potential and lead productive lives. Child survival and early childhood development are amongst the most development challenges facing India today. 

The Foundation works closely with the ICICI Centre for Child Health and Nutrition (ICCHN) (www.icchn.org.in), an interdisciplinary funding and research centre focused on the health and nutrition of vulnerable women, infants and young children in India. Working in partnership with governments, Civil Society Organisations (CSOs)/ Non-Governmental Organisation (NGOs), research institutions and the private sector, ICCHN concentrates on developing, evaluating and mainstreaming a range of community based and health system strategies to achieve scaled and sustainable improvements in health and nutrition. A population of 2.7 million has been impacted through ICCHN's partners and interventions. Further, through its partnerships, ICCHN has supported state-wide public-health capacity building efforts in Chhattisgarh, Bihar, Jharkhand and Orissa for quality improvements under the National Rural Health Mission (NRHM), as well as a city-wide effort in Mumbai. ICCHN's support has enabled five of its partners to grow into important resource institutions for the health sector. 

In the field of education the ICICI Foundation supports the ICICI Centre for Elementary Education (ICEE) (www.icee. org.in), which strives to play a catalytic role in improving the provision and quality of elementary education. It enters into partnerships with voluntary organisations working in education that have experience in teachers education, curriculum development, material development, educational research and running schools for marginalised communities and implementing large programmes. Working with these CSOs/NGOs, ICEE seeks to energise the existing government network of educational institutions at the district, state and national levels. Bodies like the State Councils of Educational Research and Training (SCERTs) and the District Institutes of Education and Training (DIETs) in several parts of the country form a part of this engagement. In its endeavour to improve the quality of elementary education, ICEE has reached out to nearly 6 million children through curricular reform. About 45,000 teachers have been trained. It has partnerships with state governments of Bihar, Rajasthan, Chhattisgarh, Madhya Pradesh and Gujarat.

Sustainability: Promoting environmental sustainability and the growth of a strong civil society are crucial requisites for inclusive growth. 

Towards this end, the Foundation has partnered with the Environmentally Sustainable Project Finance (ESPF) (http://ifmr.ac.in/cdf/project_finance.htm) research team at the Centre for Development Finance at IFMR, in order to foster markets for delivering high quality, environmentally sustainable infrastructure, goods and services. Its work is focussed on the areas of sustainable development, climate change, responsible investment and accountability. 

Towards building an effective civil society, the Foundation is actively mentoring CSO Partners (www. csopartners.org.in), a resource centre to strengthen CSOs which includes NGOs engaged in the task of social change and economic development and local self government organisations such as Gram Panchayats. CSO Partners seeks to facilitate strategic partnerships between CSOs and experienced service providers with whom it is in the process of building partnerships, in various areas, including fund-raising, financial management, volunteering, organisational governance, communications, accounting, human resources, legal aid and accounting. Its current partners include: GiveIndia (www.giveindia.org), Mitra (www.mitra.org.in), Infochange (www.infochangeindia.org), Governance Matters (www.governancematters.in) and MAM movies www.mammovies.com ). 

 The ICICI Group believes that inclusive growth is essential to the sustainable and healthy growth of the economy. 

 The ICICI Group is committed to create conditions for the empowerment of low-income Indians and to facilitate inclusive growth. 

Organisational Excellence: 

The Organisational Excellence Group (OEG) was set up in 2002 with the mandate to build and institutionalise quality across the ICICI Group. OEG has over the years worked towards integrating the local efforts of business units on a common platform and building a quality strategy and roadmap to meet the growing needs of the Group. 

 The following have been the major focus areas of OEG: 

 * Institutionalise quality across the ICICI Group; 

 * Work with business units to catalyse improvements; 

 * Create a culture of quality and continual improvement; 

 * Build knowledge capability in the domain of quality in business groups; 

 * Develop and implement quality practices for the Bank; 

 * Cross-pollinate best practices among group companies; and 

 * Remain at the cutting edge in the global search for quality practices. 

ICICI Bank was among the first services sector organisation to undertake enterprise-wide deployment of Five S, an industrial quality methodology in a services organisation. Today ICICI Bank has more than 1,300 locations which regularly practice Five S. This simple, yet extremely powerful technique, has helped in building workplace efficiency and engage teams in local level improvements. 

The Bank has developed its own Process Management Framework (PMF) which is built around the foundations of leadership, process thinking, training, continual improvement and results. The processes of the Bank have well-defined metrics and performance is tracked through dashboards on an ongoing basis. The leadership of each business unit continuously reviews existing processes, drives improvements and works towards instilling process thinking among employees. 

The organisation believes that Five S and process management would form the basis of the larger excellence journey of the Bank and significant efforts continue in instilling and sustaining the practices of Five S and PMF. 

The Bank has an improvement engine branded War on Waste (WoW) under which quality techniques such as Lean and Six Sigma are used for business improvement. These projects are targeted towards resolving chronic business difficulties and helping to meet the strategic objectives of the business units. In FY 2008, 60 WoW projects were taken up which delivered significant financial benefits. 

ICICI Bank is the first financial services company in the Indian sub-continent to have leveraged 'Lean' for operational excellence. They began the developmental work of applying Toyota principles to a services context as early as 2003 when it was still at its infancy globally. Today they have attained expertise in applying lean principles for operational excellence. These are accomplished through value stream mapping which identifies inefficiencies in processes and is followed by project execution vehicles called 'Lean Breakthroughs' which focus on delivering improvements within a period of a week. So far more than 150 lean breakthroughs have been executed in the Bank and they believe that this will be one of the major improvement vehicles going forward for the ICICI Group.  

Over the years, OEG has evaluated and drawn upon quality techniques practiced by world class companies in the automobiles, hospitality, financial services, heavy engineering and aviation sectors. The focus has been to adapt these practices at the ICICI Group. 

The Bank recently won the award for the best six sigma project at the improvement colloquium organised by the Indian Statistical Institute. The Bank also won two awards at the Five S Excellence competition organised by the Confederation of Indian Industry. 

 Management's Discussion and Analysis 

FINANCIALS AS PER INDIAN GAAP

 Summary 

Profit before provisions and tax increased by 35.5% to Rs. 79.61 billion in fiscal 2008 from Rs. 58.74 billion in fiscal 2007 primarily due to an increase in net interest income by 29.6% to Rs. 73.04 billion in fiscal 2008 from Rs. 56.37 billion in fiscal 2007 and an increase in non-interest income by 27.2% to Rs. 88.11 billion in fiscal 2008 from Rs. 69.28 billion in fiscal 2007, offset, in part, by an increase in non-interest expenses by 21.9% to Rs. 81.54 billion in fiscal 2008 from Rs. 66.91 billion in fiscal 2007. Provisions and contingencies (excluding provision for tax) increased by 30.5% during fiscal 2008 primarily due to a higher level of specific provisioning on non-performing loans, offset, in part by a reduction in general provision on loans. Profit before tax increased by 38.6% to Rs. 50.56 billion in fiscal 2008 from Rs. 36.48 billion in fiscal 2007. Profit after tax increased by 33.7% to Rs. 41.58 billion in fiscal 2008 from Rs. 31.10 billion in fiscal 2007. 

Net interest income increased by 29.6% to Rs. 73.04 billion in fiscal 2008 from Rs. 56.37 billion in fiscal 2007, reflecting an increase of 27.6% or Rs. 711.07 billion in the average volume of interest-earning assets and an increase in net interest margin to 2.22% in fiscal 2008 compared to 2.19% in fiscal 2007.

Non-interest income increased by 27.2% to Rs. 88.11 billion in fiscal 2008 from Rs. 69.28 billion in fiscal 2007

primarily due to a 32.2% increase in fee income and a 14.0% increase in treasury and other non-interest income. 

Non-interest expenses increased by 21.9% to Rs. 81.54 billion in fiscal 2008 from Rs. 66.91 billion in fiscal 2007

primarily due to a 28.6% increase in employee expenses and a 31.6% increase in other administrative expenses. 

Provisions and contingencies (excluding provision for tax) increased to Rs. 29.05 billion in fiscal 2008 from Rs. 22.26 billion in fiscal 2007 primarily due to higher level of specific provisioning on retail loans due to change in the portfolio mix towards non-collateralised loans and seasoning of the loan portfolio, offset in part by a reduction in general provision on loans due to lower growth in the loan portfolio relative to fiscal 2007. 

Total assets increased by 16.0% to Rs. 3,997.95 billion at year-end fiscal 2008 from Rs. 3,446.58 billion at year-end fiscal 2007 primarily due to an increase in advances by 15.2% and an increase in investments by 22.1%. 

During the year, they made a follow-on public offering of equity shares in India and an issuance of American Depository Shares (ADSs) aggregating to Rs. 199.67 billion. 

The Sangli Bank Limited (Sangli Bank) was amalgamated with ICICI Bank with effect from April 19, 2007 in terms of the scheme of amalgamation approved by Reserve Bank of India (RBI) vide its order DBOD No. PSBD 10268/16.01.128/2006-07 dated April 18, 2007 under section 44A (4) of the Banking Regulation Act, 1949. Sangli Bank was a banking company incorporated under the Companies Act, 1956 and licensed by RBI under the Banking Regulation Act, 1949. The consideration for the amalgamation was 100 equity shares of ICICI Bank of face value Rs. 10 each fully paid-up for every 925 equity shares of face value of Rs. 10 each of Sangli Bank. Accordingly, on May 28, 2007, ICICI Bank allotted 3,455,008 equity shares of Rs. 10 each, credited as fully paid up, to the shareholders of Sangli Bank. The excess of the paid-up value of the shares issued over the fair value of the net assets acquired (including reserves) of Rs. 3.26 billion and amalgamation expenses of Rs. 0.22 billion have been deducted from the securities premium account. 

SEGMENTAL INFORMATION

Till fiscal year 2007, ICICI Bank reported segment-wise information for the following two business segments:

· Consumer and Commercial Banking’, comprising retail and corporate banking operations of the Bank.

· ‘Investment Banking’ comprising treasury operations of the Bank.

RBI issued revised guidelines on segment reporting applicable from fiscal 2008. Accordingly, the Bank has adopted a new basis of segment reporting and hence figures for previous year are not comparable. As per the new guidelines, the business operations of the Bank have following segments:

· Retail Banking includes exposures which satisfy the four criteria of orientation, product, granularity and low value of individual exposures for retail exposures laid down in Basel Committee on Banking Supervision document “International Convergence of Capital Measurement and Capital Standards: A Revised Framework”.

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

· Treasury includes the entire investment portfolio of the Bank.

· Other Banking includes hire purchase and leasing operations and also includes gain/loss on sale of banking and non-banking assets and other items not attributable to any particular business segment.

Retail Banking segment reported segment revenue of Rs. 244.18 billion and profit before tax of Rs. 10.83 billion, wholesale banking segment reported segment revenue of Rs. 249.49 billion and profit before tax of Rs. 36.24 billion, treasury banking segment reported segment revenue of Rs. 290.98 billion and profit before tax of

Rs. 5.16 billion and other banking segment reported segment revenue of Rs. 2.75 billion and profit before tax of Rs. 0.25 billion.

AS PER WEBSITE

Overview

ICICI Bank is India's second-largest bank with total assets of Rs. 3,997.95 billion (US$ 100 billion) at March 31, 2008 and profit after tax of Rs. 41.58 billion for the year ended March 31, 2008. ICICI Bank is second amongst all the companies listed on the Indian stock exchanges in terms of free float market capitalisation*. The Bank has a network of about 1,308 branches and 3,950 ATMs in India and presence in 18 countries. ICICI Bank offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries and affiliates in the areas of investment banking, life and non-life insurance, venture capital and asset management. The Bank currently has subsidiaries in the United Kingdom, Russia and Canada, branches in Unites States, Singapore, Bahrain, Hong Kong, Sri Lanka, Qatar and Dubai International Finance Centre and representative offices in United Arab Emirates, China, South Africa, Bangladesh, Thailand, Malaysia and Indonesia. The UK subsidiary has established branches in Belgium and Germany.

ICICI Bank's equity shares are listed in India on Bombay Stock Exchange and the National Stock Exchange of India Limited and its American Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

History

ICICI Bank was originally promoted in 1994 by ICICI Limited, an Indian financial institution, and was its wholly-owned subsidiary. ICICI's shareholding in ICICI Bank was reduced to 46% through a public offering of shares in India in fiscal 1998, an equity offering in the form of ADRs listed on the NYSE in fiscal 2000, ICICI Bank's acquisition of Bank of Madura Limited in an all-stock amalgamation in fiscal 2001, and secondary market sales by ICICI to institutional investors in fiscal 2001 and fiscal 2002. ICICI was formed in 1955 at the initiative of the World Bank, the Government of India and representatives of Indian industry. The principal objective was to create a development financial institution for providing medium-term and long-term project financing to Indian businesses. In the 1990s, ICICI transformed its business from a development financial institution offering only project finance to a diversified financial services group offering a wide variety of products and services, both directly and through a number of subsidiaries and affiliates like ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or financial institution from non-Japan Asia to be listed on the NYSE.

After consideration of various corporate structuring alternatives in the context of the emerging competitive scenario in the Indian banking industry, and the move towards universal banking, the managements of ICICI and ICICI Bank formed the view that the merger of ICICI with ICICI Bank would be the optimal strategic alternative for both entities, and would create the optimal legal structure for the ICICI group's universal banking strategy. The merger would enhance value for ICICI shareholders through the merged entity's access to low-cost deposits, greater opportunities for earning fee-based income and the ability to participate in the payments system and provide transaction-banking services. The merger would enhance value for ICICI Bank shareholders through a large capital base and scale of operations, seamless access to ICICI's strong corporate relationships built up over five decades, entry into new business segments, higher market share in various business segments, particularly fee-based services, and access to the vast talent pool of ICICI and its subsidiaries. In October 2001, the Boards of Directors of ICICI and ICICI Bank approved the merger of ICICI and two of its wholly-owned retail finance subsidiaries, ICICI Personal Financial Services Limited and ICICI Capital Services Limited, with ICICI Bank. The merger was approved by shareholders of ICICI and ICICI Bank in January 2002, by the High Court of Gujarat at Ahmedabad in March 2002, and by the High Court of Judicature at Mumbai and the Reserve Bank of India in April 2002. Consequent to the merger, the ICICI group's financing and banking operations, both wholesale and retail, have been integrated in a single entity.

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.48.72
UK Pound	1	Rs.82.17
Euro	1	Rs.65.90

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	9
PAID-UP CAPITAL	1~10	9
OPERATING SCALE	1~10	8
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	9
--PROFITABILIRY	1~10	7
--LIQUIDITY	1~10	9
--LEVERAGE	1~10	9
--RESERVES	1~10	9
--CREDIT LINES	1~10	9
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	NO
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		78

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Unfavourable & favourable factors carry similar weight in credit consideration. Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
NR		In view of the lack of information, we have no basis upon which to recommend credit dealings	No Rating

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions