Part -1 Corporate Governance for ICICI Bank

Banking Industry has gone through tremendous changes. This is fast growing service industry. Indian
banks are aggressively competing in foreign markets. ICICI Bank is leading private sector banks in
India.

Recently, private sector banks have started laying emphasis on better and more effective corporate
governance. ICICI Bank Ltd. is one of the private sector bank of India, practices good corporate
governance and it is the leading private sector bank among the country. ICICI bank ltd. believes that
good corporate governance practices lead to efficient running of the bank and help in optimizing
value for all its stakeholders

At ICICI Bank, our constant endeavour is to work towards fulfilling the banking needs of every Indian.
Our products and services empower our customers to achieve their dreams and aspirations in this
dynamic and digital world. We are relentlessly pursuing our goal of making banking for every Indian
more convenient, personalised, accessible, and intuitive. Our commitment to continuously create
new solutions and reimagine existing products and services for our retail customers ensured that we
won the award for the ‘Best Retail Bank’ in India at The Asian Banker Awards, 2018 for the fifth year
in a row.

Tone at the Top

Board of Director:

Mr. Girish Chandra Chaturvedi, Chairman

Ms. Rama Bijapurkar, Independent Director

Mr. Uday Chitale, Independent Director

Ms. Neelam Dhawan, Independent Director

Mr. S. madhavan, Independent Director

Mr. Hari L. Mundra, Independent Director

Mr. Radhakrishnan Nair, Independent Director

Mr. B. Sriram, Independent Director

Mr. Lalit Kumar Chandel, Govt Nominee Director

Mr. Sandeep Bakhshi, Managing Director and CEO

Ms. Vishaka Mulye, Executive director

Mr. Anup Bagchi, Executive director

Audit Committee:

Uday Chitale, Chairperson

Dileep Choksi, Alternate Chairperson

Radhakrishnan Nair

Senior Management

Mr. Sandeep Bakhshi

Ms. Vishakha Mulye
Mr. Anup Bagchi

Behaviour and experience

ICICI Bank has a broad-based Board of Directors, constituted in compliance with the Banking
Regulation Act, 1949, the Companies Act, 2013 and Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 and in accordance with good corporate
governance practices. The Board functions either as a full Board or through various committees
constituted to oversee specific operational areas. The Board has constituted various committees,
namely, Audit Committee, Board Governance, Remuneration & Nomination Committee, Corporate
Social Responsibility Committee, Credit Committee, Customer Service Committee, Fraud Monitoring
Committee, Information Technology Strategy Committee, Risk Committee, Stakeholders
Relationship Committee and Review Committee for Identification of Wilful Defaulters/Non Co-
operative Borrowers. At March 31, 2018, independent Directors constituted a majority most of the
Board Committees and all Committees except Review Committee for Identification of Wilful
Defaulters/Non Co-operative Borrowers were chaired by independent Directors.

Executive compensation

RBI vide its guidelines dated June 1, 2015 regarding Compensation of nonexecutive Directors (NEDs)
(except part-time Chairman) of Private Sector Banks has permitted payment of profit related
commission up to ` 1,000,000 per annum for non-executive Directors (other than part-time
Chairman). The Members at their Meeting held on July 11, 2016 approved the payment of profit
related commission upto ` 1,000,000 per annum to non-executive Directors (other than the non-
executive Chairman and the Government Nominee Director), for each year effective from the
financial year ended March 31, 2016.

Lead by example

Chanda Kochhar is the former MD and chief executive officer of ICICI Bank. She is widely
recognised for her role in shaping retail banking in India. However, on 4th October 2018 she
stepped down from her position following allegations of corruption.
Corporate communication

Every month corporate communication releases press notes and announcements

  Organization Culture
HR policies and procedures

ICICI Bank had launched #ICICI Lead the New last year, embarking on a journey of renewed
commitment to make itself more agile and ensure that it is future ready. The Bank’s investment in
capability building is focussed on exploring various themes such as cultivating deep domain skills,
building a culture of data-enabled decision making and enabling its employees to deliver customer-
centric solutions by training them on aspects of design thinking

ICIC lead the new:

In line with our ethos of empowering employees, we embarked on a journey of becoming ready for a
dynamic future by launching an umbrella initiative - #ICICI Lead the New. In fiscal 2018, we
undertook various initiatives under this umbrella to reinforce our DNA, DYNAMIC - Digital, Young,
Nurturing, Agile, Mindful, Inclusive and Connected.

Leadership Development and Capability Building:

At ICICI Bank, we are constantly investing in enabling our employees to deliver customer-centric
solutions, nurturing leaders, cultivating deep domain skills, and building a culture of data-enabled
decision-making. At ICICI Bank, we have identified three emerging capabilities as key to leveraging
the opportunities in the transforming business landscape – Design Thinking, Data Analytics and
Advisory Skills. By investing in equipping our employees with these capabilities, we are ensuring that
ICICI Bank continues to be future-ready

Number of branches of the bank was increased from 3753 in the year 2014 to 4850 in the year 2017.
Number of employees also increased from 72226 in the year 2014 to 81129 in the year 2017

Open door

ICICI Bank’s corporate governance philosophy encompasses regulatory and legal requirements,
which aims at a high level of business ethics, effective supervision and enhancement of value for all
stakeholders.

Whistle blower

The Bank has formulated a Whistle Blower Policy. The policy comprehensively provides an
opportunity for any employee/ Director of the Bank to raise any issue concerning breaches of law,
accounting policies or any act resulting in financial or reputation loss and misuse of office or
suspected or actual fraud. The policy provides for a mechanism to report annual report 2017-2018
30 such concerns to the Audit Committee through specified channels. The policy has been
periodically communicated to the employees and also posted on the Bank’s intranet. The Whistle
Blower Policy complies with the requirements of Vigil mechanism as stipulated under Section 177 of
the Companies Act, 2013. The details of establishment of the Whistle Blower Policy/Vigil mechanism
have been disclosed on the website of the Bank.
Transparency in decision making:

Decision making process at managing director level came to scrutiny last year when Chandra
Kochar’s allegation of corruption came to light when an independent director blown the whistle.

Employee communication and Town Hall meetings

Close to 81,000 employees work in ICICI bank. The communication happens at the regional levels as
the employee strength is massive and most of the communication happens over emails.

 Corporate Ethics
Code of Conduct

ICICI Group expects all its employees, officers and directors to act in accordance with high
professional and ethical standards.

In accordance with the requirements of the Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015, ICICI Bank has instituted a comprehensive code of conduct to
regulate, monitor and report trading by its directors, employees and other connected persons.
Group Code of Business Conduct and Ethics. The Group Code of Business Conduct and Ethics for
Directors and employees of the ICICI Group aims at ensuring consistent standards of conduct and
ethical business practices across the constituents of the ICICI Group. This Code is reviewed on an
annual basis and the latest Code is available on the website of the Bank (www.icicibank.com).
Pursuant to Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015, a confirmation from Chief Operating Officer along with one
Executive Director regarding compliance with the Code by all the Directors and senior management
forms part of the Annual Report. The above mentioned confirmation is as per the letter filed by the
Bank with the stock exchanges on July 23, 2018 and the authorisation for the said confirmation has
been granted by the Board at its Meeting held on July 27, 2018.

It should constitute corporate governance committee, nomination committee, R&D committee

Code of Ethics

Banks should constitute of ethics committee and investment committee for effective governance
  Corporate Social Responsibility
CSR Initiatives:

The Composition of the CSR Committee. The Bank’s CSR Committee comprises two independent
Directors and the Managing Director & CEO of the Bank, and is chaired by an independent Director.
The composition of the Committee is set out below: • Mr. Radhakrishnan Nair, Chairman (Chairman
effective July 1, 2018) • Mr. Dileep Choksi • Mr. Anup Bagchi (inducted as a member effective July 1,
2018) The functions of the Committee include: review of CSR initiatives undertaken by the ICICI
Group and ICICI Foundation; formulation and recommendation to the Board of a CSR Policy
indicating the activities to be undertaken by the company and recommendation of the amount of
the expenditure to be incurred on such activities; reviewing and recommending the annual CSR plan
to the Board; making recommendations to the Board with respect to the CSR initiatives, policies and
practices of the ICICI Group; monitoring the CSR activities, implementation of and compliance with
the CSR Policy; and reviewing and implementing, if required, any other matter related to CSR
initiatives as recommended/suggested by RBI or any other body.

B. Scope of Corporate Social Responsibility policy would pertain to all activities undertaken by the
Bank towards fulfilling its corporate social responsibility objectives. The policy would also ensure
compliance with section 135 of the Companies Act, 2013 (CA2013/Act) and would include the
activities as covered under Schedule VII to the Act and the Companies (Corporate Social
Responsibility Policy) Rules, 2014 and as amended from time to time. C. Governance structure The
Corporate Social Responsibility Committee (CSR Committee) is the governing body that will
articulate the scope of CSR activities for the Bank and ensure compliance with the CSR Policy. The
CSR Committee would comprise of three or more Directors including at least one independent
Director. The Bank has a CSR Committee which is duly constituted in accordance with the provisions
of the Act with respect to its composition and terms of reference. D. Operating framework 1. The
CSR Committee has duly formulated the CSR policy which has been approved by the Board as
prescribed under CA2013. The CSR plan would operate as prescribed by the CSR Committee and
under its supervision. 4 2. Activities undertaken by the Bank may include projects being
implemented directly by the Bank as well as contributions to ICICI Foundation and other eligible
entities with track record and standing in line with regulation and as may be decided by the CSR
Committee from time to time. 3. The responsibility for implementation of identified activities/
projects shall be as per the organisational structure approved by the Managing Director & CEO. 4.
Funds would be disbursed in accordance with the directions of the CSR Committee. E. Monitoring
CSR Committee shall ensure a transparent monitoring mechanism for CSR activities. 1. The CSR
Committee shall review the progress of CSR activities at least twice a year, including the annual
review. 2. The Board of Directors shall review the progress of CSR activities at least annually. 3. The
activities of ICICI Foundation for Inclusive Growth (ICICI Foundation) would also be overseen by the
Governing Council of ICICI Foundation.

Social responsibility accounting

The prescribed CSR expenditure requirement for FY2018 is ` 1,702.0 million.

Pollution control

Being banking sector there is no much pollution related concerns.

Green initiatives:

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

Human Resource Management:

At ICICI Bank, capability building is about creating a culture that promotes continuous learning,
unlearning and relearning and fosters an enabling environment for innovation. With this vision, a
new Learning and Development approach for ‘Capability Building’ was introduced. It helps to
enhance in-house capabilities to build employee skillsets which are aligned to customer needs. It
also enables the employees to respond to the changing needs of the customers by constantly
upskilling themselves. Some of the new programmes introduced are as follows:

• Self Employed Segment (SES) Academy: The SES Academy has developed programmes for
relationship managers for loan groups, a programme on the Self Employed Segment for senior
branch managers & regional heads in Retail Banking and a programme for relationship managers in
Elite Trade Relations Group (ETRG). The modules are designed to enhance understanding and
improve the application of knowledge using practical case studies and videos. Over 1,800 employees
have been trained in this academy.

• Mortgage Academy: The Mortgage Academy introduced programmes like Mortgage Specialist,
Mortgage Affinity and Mortgage Expert Connect in response to the focus on the mortgage segment.
The training initiatives help enhance the capability of employees in the mortgage team to offer
effective solutions and service experience to customers.

• SMEAG Academy: The SMEAG Selling Skills Programme aims to enhance sales capability of
relationship managers and solution managers for SME clients. It enables participants to add value to
every client interaction they undertake. The courses include self-learning videos, case studies and
client videos.

• Wealth Academy: A new programme was launched for investment specialists which enables them
to appreciate the nuances of equity and debt markets, understand market dynamics and macro and
micro economics. It aims to enhance the agility in service delivery and customise offerings to our
clients including advising businesses on crossborder trade, leveraging current market positions and
working capital cycles.

• Internal Controls Workshop: This was conducted to equip senior officials in business groups and
control functions to provide resolutions to internal and external stakeholders. The workshop
focusses on internal controls and risk mitigation. It also emphasises on the robustness of processes
and internal controls followed at the Bank along with the safeguards that are in place to protect the
system against any possible frauds. • Relationship Manager-Wheels programme: This programme
was launched for senior relationship managers to enable them to engage with customers and
dealers effectively by enhancing their understanding of the auto industry, the channels and
regulatory, credit and operational norms.

• Building a Design Thinking culture: The Bank conducted workshops on using Design Thinking as a
framework for problem solving and providing solutions. Design Thinking is a process for creative
problem solving. The entire senior leadership of the ICICI Group – participated in multiple
workshops. The Design Thinking approach is now an integral part of human-centred design at the
Bank.

• Building a Data-smart culture: We are investing in capability building through new training
interventions in Data Analytics. The Bank offered this programme to over 400 senior managers
through classroom as well as online e-learning modules.

Abiding the law of the land:

In June 2017, RBI issued directions to banks to file for resolution under the Insolvency and
Bankruptcy Code (IBC) with the National Company Law Tribunal (NCLT) in respect of 12 large
stressed accounts.

 360 degree feedback

Customer: Customer First.

At ICICI Bank, believe in providing the best of services to our customers. We provide customers with
easy access to information, products and services, as well the means to get their grievances
redressed.

Vendor

Being banking sector vendor management is not much focussed being banking + service industry.

Investor and Employee feedback

ICICI Bank disseminates information on its operations and initiatives on a regular basis. The ICICI Bank
website serves as a key investor awareness facility, allowing stakeholders to access information on
ICICI Bank at their convenience. ICICI Bank's dedicated investor relations personnel play a proactive
role in disseminating information to both analysts and investors and respond to specific queries.

 Below links can be directly accessed by investors.

 To register to receive alerts from ICICI Bank Investor Relations.
 To unsubscribe from receiving alerts from ICICI Bank Investor Relations.
 For Viewing Basel III – Pillar 3 disclosures.
 For Viewing the Notice advertisement relating to transfer of equity shares of the Bank to
Investor Education and Protection Fund (IEPF) suspense account.
 Restriction on transfer of physical.
 For ICICI Prudential Life Insurance Company Investor Relations.
Proof and audit of the CG activities and initiatives

ICICI Foundation will continue to promote incubation of expertise for implementing corporate social
responsibility initiatives. It will also work towards providing a platform for organisations engaged in
social initiatives, and discussion & thought leadership on critical challenges to inclusive growth. The
Bank and ICICI Foundation will continue to support initiatives that promote individual and corporate
philanthropy.

The Audit committee report should be disclosed.

 Risk Management

Risk management framework

The Bank’s risk management framework is based on a clear understanding of various risks,
disciplined risk assessment and measurement procedures and continuous monitoring. The policies
and procedures established for this purpose are continuously benchmarked with international best
practices. The Board of Directors has oversight on all the risks assumed by the Bank. Specific
Committees have been constituted to facilitate focused oversight of various risks, as follows:  The
Risk Committee of the Board reviews risk management policies of the Bank pertaining to credit,
market, liquidity, operational and outsourcing risks and business continuity management. The
Committee also reviews the Risk Appetite and Enterprise Risk Management frameworks, Internal
Capital Adequacy Assessment Process (ICAAP) and stress testing. The stress testing framework
includes a range of Bank-specific, market (systemic) and combined scenarios. The ICAAP exercise
covers the domestic and overseas operations of the Bank, banking subsidiaries

Risk mitigation

ICIICI faces following Risks

1. Operational Risk
The operational risk management framework comprises identification and assessment of
risks and controls, new products and process approval framework, measurement through
operational risk incidents, monitoring through key risk indicators and mitigation through
process and control enhancement and insurance. The Board-level Committees that
undertake supervision and review of operational risk aspects are the Risk Committee, Fraud
Monitoring Committee.

2. Information technology risk

To regularly review the effectiveness of key IT controls, the Bank has empanelled auditing firms to
conduct Statutory Audit of IT systems and controls on quarterly basis. The Bank has laid down
processes for change management, identity management, access management and security
operations and these processes are periodically reviewed and refined to keep abreast of emerging
risks and to ensure that commensurate controls to mitigate such risks are put in place
Risk appetite

Description of the ways in which current and future risks are taken into account in the remuneration
processes.

3. Overview of the key risks that the Bank takes into account when implementing
remuneration measures The Board approves the risk framework for the Bank and the
business activities of the Bank are undertaken within this framework to achieve the financial
plan. The risk framework includes the Bank’s risk appetite, limits framework and policies and
procedures governing various types of risk. KPIs of WTDs & equivalent positions, as well as
employees, incorporate relevant risk management related aspects. For example, in addition
to performance targets in areas such as growth and profits, performance indicators include
aspects such as the desired funding profile and asset quality. The BGRNC takes into
consideration all the above aspects while assessing organisational and individual
performance and making compensation related recommendations to the Board.
4. Overview of the nature and type of key measures used to take account of these risks,
including risk difficult to measure The annual performance targets and performance
evaluation incorporate both qualitative and quantitative aspects including asset quality,
provisioning, increase in stable funding sources, refinement/improvement of the risk
management framework, effective management of stakeholder relationships and mentoring
key members of the top and senior management.
5. Discussion of the ways in which these measures affect remuneration Every year, the
financial plan/targets are formulated in conjunction with a risk framework with limit
structures for various areas of risk/lines of business, within which the Bank operates to
achieve the financial plan. To ensure effective alignment of compensation with prudent risk
taking, the BGRNC takes into account adherence to the risk framework in conjunction with
which the financial plan/targets have been formulated. KPIs of WTDs and equivalent
positions, as well as employees, incorporate relevant risk management related aspects. For
example, in addition to performance targets in areas such as growth and profits,
performance indicators include aspects such as the desired funding profile and asset quality.
The BGRNC takes into consideration all the above aspects while assessing organisational and
individual performance and making compensation-related recommendations to the Board.
6. Discussion of how the nature and type of these measures have changed over the past year
and reasons for the changes, as well as the impact of changes on remuneration. The nature
and type of these measures have not changed over the past year and hence, there is no
impact on remuneration

Internal Controls framework and Audit

Terms of Reference The Committee monitors and reviews all the frauds involving an amount of `
10.0 million and above with the objective of identifying the systemic lacunae, if any, that facilitated
perpetration of the fraud and put in place measures to rectify the same. The functions of this
Committee include identifying the reasons for delay in detection, if any, and reporting to top
management of the Bank and RBI on the same. The progress of investigation and recovery position is
also monitored by the Committee. The Committee also ensures that staff accountability is examined
at all levels in all the cases of frauds and action, if required, is completed quickly without loss of
time. The role of the Committee is also to review the efficacy of the remedial action taken to prevent
recurrence of frauds, such as strengthening of internal controls and put in place other measures as
may be considered relevant to strengthen preventive measures against frauds.

Management and financial reporting and MIS

ICICI bank reports the financial performance quarterly on public domain.

Conclusion:
Due to Chanda Kochar allegation of corruption being managing director of the company for more
than 8 years. ICICI banks corporate governance is under question, scanner and in high light.

Although, ICICI Bank has adopted corporate governance with the adoption of code of conduct for
directors and senior management personnel and for prevention of insider trading, policy on risk
assessment and minimizing procedures. The ICICI Bank has also adopted, integrity pact to enhance
transparency in business, whistle blower policy, conduct discipline and appeal rules for employees.
This shows good sign of the bank. From the study, it concludes that ICICI is having highest growth of
net profit. ICICI should try to maintain this profitability hence management should try to reduce its
current liabilities also. Now it is becoming the today’s oath to implement standard practices on Good
Corporate Governance for ICICI bank to improve their administration, business and control system
and as a result this will ensure them a competitive edge in the changed scenario under open market
economy.