Name: Vikrant Singh Tomar

USN: 19MBAR0331
Sec: MF2
Sub: Banking
Introduction:

ICICI Bank Limited is an Indian multinational banking and financial services company with its

registered office in Vadodara, Gujarat and corporate office in Mumbai, Maharashtra. It
offers a wide range of banking products and financial services for corporate and retail
customers through a variety of delivery channels and specialised subsidiaries in the areas
of investment banking, life, non-life insurance, venture capital and asset management. The
bank has a network of 5,275 branches and 15,589 ATMs across India and has a presence in
17 countries.

ICICI Bank is India's second-largest bank with total assets of about Rs.1,67,659 crore at
March 31, 2005 and profit after tax of Rs. 2,005 crore for the year ended March 31, 2005
(Rs. 1,637 crore in fiscal 2004). ICICI Bank has a network of about 560 branches and
extension counters and over 1,900 ATMs. ICICI Bank offers a wide range of banking products
and financial services to corporate and retail customers through a variety of delivery
channels and through its specialized subsidiaries and affiliates in the areas of investment
banking, life and non-life insurance, venture capital and asset management. ICICI Bank set
up its international banking group in fiscal 2002 to cater to the cross border needs of clients
and leverage on its domestic banking strengths to offer products internationally. ICICI Bank
currently has subsidiaries in the United Kingdom, Canada and Russia, branches in Singapore
and Bahrain and representative offices in the United States, China, United Arab Emirates,
Bangladesh and South Africa. ICICI Bank's equity shares are listed in India on the Stock
Exchange, Mumbai and the National Stock Exchange of India Limited and its American
Depositary Receipts (ADRs) are listed on the New York Stock Exchange (NYSE).

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. 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.

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 Ahmadabad 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.

Financial Analysis
Ratios:

1. Capital Adequacy Ratio:

2014
Ratios 2018 2017 2016 2015

18.7
Capital Adequacy Ratios 17.02 17.70 18.52 19.54
4
Debt Equity Ratio 4.50 4.53 4.39 4.23 4.10
54.0 53.26
Advances to asset ratio 59.97 56.96 53.57
7
54.2
Government Securities to total investments 57.56 54.17 54.77 48.27
8

From the above table, it is found that ICICI Capital adequacy ratio was highest in the year 2016, Debt
equity ratio was highest in the year 2017, Advance to asset ratio was highest in the year 2018 and
Government Securities to total investments was highest in the year 2018

2. Assets Quality Ratio:

Ratios 2018 2017 2016 2015 2014
Net NPA to total advances ratio 1.61 0.97 0.77 0.73 1.11
28.8 29.7 31.9
Total investments to total assets ratio 33.68 33.15
7 6 2
Net NPA to total assets ratio 0.99 0.55 0.41 0.39 0.59

From the above table, it is found that ICICI Net NPA to total advances ratio was highest in the year
2018, Total investments to total assets ratio was highest in the year 2015 and Net NPA to total assets
ratio was highest in the year 2018.

3. Liquidity Ratio:
Ratios 2018 2017 2016 2015 2014
Liquid asset to total asset ratio 6.55 6.98 7.71 7.65 8.39
11.7
Liquid asset to total deposit ratio 12.51 14.15 14.18 15.11
0
85.4
Liquid asset to demand deposit ratio 96.03 112.16 103.59 98.02
3
16.6
Government securities to total asset ratio 16.12 17.33 18.45 16.00
2

From the above table, it is found that ICICI Liquid asset to total asset ratio was highest in the year
2016, Liquid asset to total deposit ratio was highest in the year 2016, Liquid asset to demand deposit
ratio was highest in the year 2016 and Government securities to total asset ratio was highest in the
year 2015.
CONCLUSION:
The overall financial performance of ICICI banks in India for the period of 2014-2018. It is found that
under the capital adequacy ratio parameter bank was at the average, asset quality parameter ICICI
bank was moderate, management efficiency parameter ICICI bank was in an increasing trend,
earning quality parameter the ICICI bank was in an growing trend and liquidity parameter ICICI bank
were on the top position.
Asset Liability Management

Asset Liability Management (ALM) is a strategic approach of managing the balance sheet
dynamics in such a way that the net earnings are maximized. This approach is concerned
with management of net interest margin to ensure that its level and riskiness are
compatible with the risk return objectives of the.
If one has to define Asset and Liability management without going into detail about its need
and utility, it can be defined as simply “management of money” which carries value and can
change its shape very quickly and has an ability to come back to its original shape with or
without an additional growth. The art of proper management of healthy money is ASSET
AND LIABILITY MANAGEMENT (ALM).
The Liberalization measures initiated in the country resulted in revolutionary changes in the
sector. There was a shift in the policy approach of s from the traditionally administered
market regime to a free market driven regime. This has put pressure on the earning capacity
of co-operative s, which forced them to foray into new operational areas thereby exposing
themselves to new risks.
As major part of funds at the disposal of assets come from outside sources, the
management are concerned about RISK arising out of shrinkage in the value of asset, and
managing such risks became critically important to them. Although co-operatives are able to
mobilize deposits, major portions of it are high cost fixed deposits. Maturities of these fixed
deposits were not properly matched with the maturities of assets created out of them. The
tool called ASSET AND LIABILITY MANAGEMENT provides a better solution for this.
ASSET LIABILITY MANAGEMENT (ALM) is a portfolio management of assets and liability of an
organization. This is a method of matching various assets with liabilities on the basis of
expected rates of return and expected maturity patter
In the context of assets, ALM is defined as
“A process of adjusting liability to meet loan demands, liquidity needs and safety
requirements”. This will result in optimum value of the assets at the same time reducing the
risks faced by them and managing the different types of risks by keeping it within acceptable
levels.

STEPS IN RISK MANAGEMENT:

o Risk identification
o Risk evaluation
o Risk management technique
o Risk measurement
o Risk review decisions
TYPES OF RISK:
o Business Risk
 Credit
 Strategic
 Regulatory
 Operating
 Human resources
o Financial Risk
 Interest rate
 Liquidity
 Currency
 Settlement Risk

RISK MANAGEMENT IN ICICI:

These were required by the to introduce effective risk management systems to cover Credit
risk, market risk and Operations risk on priority. Narasimham committee II, advised s to
address market risk in a structured manner by adopting Asset and Liability Management
practices with effect from April 1st 1989. Asset and liability management (ALM) is “the Art
and Science of choosing the best mix of assets for the firm’s asset portfolio and the best mix
of liabilities for the firm’s liability portfolio”. It is particularly critical for Financial Institutions.
For a long time it was taken for granted that the liability portfolio of financial firms was
beyond the control of the firm and so management concentrated its efforts on choosing the
asset mix. Institutions treasury department used the funds provided by deposits to structure
an asset portfolio that was appropriate for the given liability portfolio.

With the advent of Certificate of Deposits (CDs), s had a tool by which to manipulate the mix
of liabilities that supported their Asset portfolios, which has been one of the active
management of assets and liabilities.
Asset and liability management program evolve into a strategic tool for management, the
main elements of the ALM system are :
 ALM INFORMATION
 ALM ORGANISATION

 ALM INFORMATION:

ALM is a risk management tool through which Market risk associated with business are
identified, measured and monitored to maintain profits by restructuring Assets and
Liabilities. The ALM framework needs to be built on sound methodology with necessary
information system as back up. Thus the information is key element to the ALM process.
There are various methods prevalent worldwide for measuring risks. These range from the
simple Gap statement to extremely sophisticate and data intensive Risk adjusted
profitability measurement (RAPM) methods. The central element for the entire ALM
exercise is the availability of adequate and accurate information.
However, the existing systems in many Indian s do not generate information in manner
required for the ALM. Collecting accurate data is the biggest challenge before the s,
particularly those having wide network of branches, but lacking full-scale computerization.
Therefore the introduction of these information systems for risk measurement and
monitoring has to be addressed urgently.
The large network of branches and the lack of support system to collect information
required for the ALM which analysis information on the basis of residual maturity and
behavioural pattern, it would take time for s in the present state to get the requisite
information.

 ALM ORGANISATION:

Successful implementation of the risk management process requires strong commitment on

the part of senior management in the to integrate basic operations and strategic decision
making with risk management.
The Board of Directors should have overall responsibility for management of risk and should
decide the risk management policy of the, setting limits for liquidity, interest rate, foreign
exchange and equity / price risk.
The Asset Liability Management Committee (ICICI) consisting of the s senior management,
including CEO/CMD should be responsible for ensuring adherence to the limits set by the
Board
of Directors as well as for deciding the business strategy of the (on the assets and liabilities
sides) in line with the s budget and decided risk management objective.
The ALM support group consisting of operation staff should be responsible for analyzing,
monitoring and reporting the risk profiles to the ICICI. The staff should also prepare
forecasts (simulations) showing the effects of various possible changes in market condition
related to the balance sheet and recommend the action needed to adhere to s internal
limits,

The ICICI is a decision-making unit responsible for balance sheet planning from a risk- return
perspective including the strategic management of interest rate and liquidity risks. Each has
to decide on the role of its ICICI, its responsibility as also the decision to be taken by it. The
business and risk management strategy of the should ensure that the operates within the
limits / parameters set by the Board. The business issues that an ICICI would consider, inter
alia, will include product pricing for deposits and advances, desired maturity profile and mix
of the incremental Assets and Liabilities, etc. in addition to monitoring the risk levels of the ,
the ICICI should review the results of and progress in implementation of the decisions made
in the previous meetings. The ICICI would also articulate the current interest rate view of
the and base its decisions for future business strategy on this view. In respect of this funding
policy, for instance, its responsibility would be to decide on source and mix of liabilities or
sale of assets. Towards this end, it will have to develop a view on future direction of interest
rate movements and decide on funding mixes between fixed vs. floating rate funds,
wholesale vs. retail deposits, Money markets vs. Capital market funding, domestic vs.
foreign currency funding etc. Individual s will have to decide the frequency for holding their
ICICI meetings.

ICICI Committee
The Bank has constituted an Asset- Liability committee (ICICI). The committee may consists
of the following members.

i) General Manager {Head of Committee}

ii) General Manager (Loans & Advances) {Member}
iii) General Manager (CMI & AD) {Member}
iv) AGM / Head of the ALM Cell {Member}

ALM CELL

The ALM desk /cell consisting of operating staff should be responsible for analysing,
monitoring and reporting the profiles to the ICICI. The staff should also prepare forecasts
(simulations) showing the effects of various possible changes in market conditions related to
the balance sheet and recommend the action needed to adhere to s internal limits.

KYC Compliance
KYC in Banking: Why Financial Institutions Must Perform Due Diligence

Know Your Customer" or KYC is an important term used by businesses and refers to the
process of verification of the identity of the customers and clients either before or during
the start of doing business with them. Banks, digital payment companies or any kind of
financial institutions are now required by the RBI norms to have their customers KYC
process completed before allowing them complete access to all services.

KYC is done as a precaution against illegal activities like money laundering, bribery or
corruption. It helps the government and businesses keep track of such activities or suspect
them beforehand. Apart from being a legal requirement, completing the procedure will also
help you gain access to many of the financial company's premium products and get
transactions done faster.
he Government of India has notified six documents as 'Officially Valid Documents (OVDs) for
the purpose of producing proof of identity.
Even when you already submit the KYC documents once, the banks can ask again as they are
required to periodically update KYC records.
This is a part of their ongoing due diligence on bank accounts. The periodicity of such
updating would vary from account to account or categories of accounts depending on the
bank's perception of risk.
Opening bank account, mutual fund account, bank locker, online investing in the mutual
fund or gold your KYC should be updated with bank.

Why Is KYC Important?

KYC is important because it helps the banker to ensure that the application and other details
are real. There have been instances of fraud and siphoning off of money from accounts. By
ensuring the identity of individuals, it would help to prevent fraud. The Know Your Customer
practice has been in vogue for many years now. It is a must and all individuals have to
comply, if they wish to open account. It is not possible to open a back account or account
for mutual funds without KYC compliance.

KYC In ICICI Bank

As per the Prevention of Money Laundering Act, 2002 and the rules mentioned therein,
every banking company, financial institution and intermediary, as the case may be, are
required to, at the time of commencement of an account-based relationship and/or carrying
out a financial transaction as specified under regulations, identify its clients, verify their
identity and obtain information on the purpose and intended nature of the business
relationship. Accordingly, Reserve Bank of India (RBI) has advised banks to follow the (KYC)
'Know Your Customer guidelines', wherein certain personal information of the account-
opening prospect or the customer is obtained. Objective of doing so is to enable the Bank to
have positive identification of its customers. KYC also ensures making reasonable efforts to
determine true identity and beneficial ownership of accounts, source of funds, the nature of
customer’s business, reasonableness of operations in the account in relation to the
customer’s business, etc. which in turn helps the banks to manage their risks prudently.
Objective of the KYC guidelines is to prevent banks being used, intentionally or
unintentionally by criminal elements for money laundering.

elements for money laundering. KYC guidelines of RBI mandate banks to collect three type
of proofs from their customers. They are:

a) Recent Photograph
b) Proof of identity
c) Proof of address

ICICI Bank's KYC procedure specifies certain commonly available documents as proof of
personal identification and address proof, so as not to cause inconvenience to those
intending to open bank accounts with us.