ICICI Group

A financial market is an organized trading platform for exchanging financial instruments under a regulated framework[1]. The participants of the financial markets are borrowers (issuers of financial instruments or securities), lenders (investors or buyers of financial instruments) and financial intermediaries that facilitate investment in financial instruments or securities. The financial markets comprise two markets[2] – (A) Money markets, which are regulated by the Reserve Bank of India (RBI) and (B) Capital markets, which are regulated by the Securities Exchange Board of India (SEBI) and.

Financial Markets

(A) Money Markets

Money markets is “… the collective name given to the various firms and institutions that deal in the various grades in near money”[3]. The definition implies that the money market caters to short-term demand and supply of funds. The major participants of the money market are as follows:

Lenders: Lenders include the regulator RBI, commercial banks and brokers. These participants facilitate the expansion or contraction of money in the market

Borrowers: Borrowers include commercial banks, stock brokers, other financial institutions, businesses houses and governments provide financial instruments to other investors depending upon the money borrowed from lenders

Accordingly, the characteristics of money market include the following:

1. Short-term – The instruments in the money market have maturities mostly less than a year and cater to short-term demand and supply of funds.

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2. Highly liquid – The money market is considered highly liquid wherein securities (financial instruments) are purchased and sold in large denominations to reduce transaction costs[4] (because they are a close substitute to cash)[5]. The market distributes and redistributes cash balances in accordance to the liquidity needs of the participants

3. Safe – The instruments are considered safe with RBI playing a pivotal role in monitoring regulating and managing monetary requirements of all participants.

4. Lower returns – The transactions are on a same-day-basis and the returns on these investments accordingly, are low.

5. Institutional investors – Retail or individuals investors cannot directly participate in money markets. The money market mainly caters to institutional investors who require instant cash for running their operations in the financial system. However, retail or individual investors indirectly participate in money markets by lending money to institutions (large corporations and government) through bonds to gain high returns.

6. Monetary policy – The money markets are governed and influenced by changes in the monetary policy. For example, changes in interest rates announced by RBI play a critical role in determining liquidity requirements in the overall financial system

7. Interrelated sub-markets – The money market consists of the following interrelated markets[6]:

1. Call money market

2. Commercial bill or ‘Bill’ market

3. Treasury bill market

4. Commercial Paper (CP) market

5. Certificates of Deposits (CD) market

Each and every abovementioned sub-market is characterised with different money market instruments with different maturities offered in mostly different trading platforms and cater to different borrowers/ lenders with the objective of maintainingdifferent liquidity requirements. For example, in the call money market, banks borrow call money / notice money from other banks and non-banks to maintain CRR[7]requirements[8]. The exchange occurs in Over-the-Counter (OTC) market (without brokers) and the maturity period of call money instruments vary between one day and a fortnight.(B) Capital Markets

Capital market is an organized mechanism for effective and smooth transfer of long-term capital money or financial resources from borrowers (corporates / government) to lenders. This market enables channelizing of savings from investors to raise productive capital for borrowers, which in turn provides higher returns to investors for their investments through relevant profits.

The securities or issues or instruments in capital markets include equity and debt securities. Capital markets (equity and corporate debt) in India are predominantly

regulated by the SEBI[9]. However, government securities (in the debt market) are regulated by the RBI. Based on the aforementioned description, following are some characteristics identified for the capital markets:1. Primary and secondary securities – To raise productive capital, lenders issue and/or

trade financial securities (instruments) through primary and secondary markets. Primary markets deal with issuance of new capital (or financial securities), whereas the secondary market (or stock market) deals with buying and selling of already existing securities that are listed on the stock exchanges[10]. Primary and secondary markets are inter-dependent and important for creation of long-term funds in the capital markets. For the new issues or securities introduced and sold by the lenders in the primary markets, the proceeds of the same go directly to the lenders (to raise capital). These proceeds are however, dependent upon favourable macroeconomic conditions of an economy. Subsequently, these issues are traded in the secondary market (or stock exchanges) that also provide the basis for determining possible prices of primary issues. Thus, depth and performance of the secondary markets depends upon the new issues / securities in the primary markets because the larger number of new securities issued in primary markets lead to availability of larger number of instruments for trading in secondary markets. Thus, the primary markets facilitate liquidity in the secondary markets further leading capital formation. The secondary market can also divert funds to the primary market for new issues of large size and bunching of large issues also affecting the stock prices. Lenders can raise its capital in primary markets either through any of the following – public issue, rights issue, bonus issue and private placement (Private placement is securities to sold to few select investors like large banks, insurance companies, mutual fund companies, etc). The interrelationship between primary and secondary markets lead to provision of long-term securities to raise capital.

2. Risk-returns – Capital markets are characterised with equity and debt instruments that allow diversification of risks between high-risk equity instruments and low-risk debt instruments. Nevertheless, capital markets are considered as high-risk markets in comparison to money markets.

3. Low-information and transaction costs[11] – The capital markets are mostly transparent and information about the trends in the market is available and accessible in comparison to money markets. Also, due to ease in availability and accessibility of long-term securities, transaction costs are comparatively lower than money markets. For example, retail investors can invest in stock markets through a dematerialised account provided by banks.

4. Retail & institutional – The capital markets is an inclusive market that enables all kinds of investors to invest and gain higher returns. The investors include – individual or retail investors, small-medium-large businesses, financial or non-financial institutions and government

5. Capital allocation – Capital markets are a medium of efficiently allocating capital in the system through a competitive pricing mechanism

(C) Linkages between money and capital marketsThere are significant linkages between money and capital markets and are discussed as follows[12]:1. Involvement of financial institutions (and regulators) exists in both the markets.

Financial institutions act as intermediaries and facilitators of short-term and long-term liquidity requirements of all kinds of investors (individual, corporations and governments)

2. Capital and money markets involve trading of a variety of financial instruments for a specific time period and investors depending upon the nature of investment and risks further leading to risk diversification

3. Short-term funds raised in the money market are used to provide liquidity for long-term investments and redemption of funds raised in the capital market

4. For the development of financial markets, development of money markets generally precedes the development of capital market

Characteristics of financial markets


Financial Markets

The description of capital and money markets leads to understanding the following characteristics of financial markets:

1. Financial markets enable large volume of transactions and mobilize financial (short-term and long-term) resources at real-time basis through investments in stocks, bonds and money

2. Financial markets generate a scope of arbitrage across different markets. This implies, that investors can take advantage of price differences across different markets and diversify risks

3. Financial markets are characterised with volatility directed by trade of large volume of securities. Mostly, these markets are influenced by macroeconomic and political changes in India and the world

4. Markets are dominated by financial intermediaries who take investment decisions as well as risks on behalf of depositors (savers)

5. Financial markets are also characterised by externalities. An externality refers to cost or benefit that are not transmitted by prices but influenced by a stakeholder’s actions in the financial markets leading to market failures. For example, speculation in prices of stock markets could affect the workings of the money market

6. Domestic financial markets are also becoming integrated with global financial markets that not only enables capital mobility at a global level but spread of risks across the globe

FINANCIAL SYSTEM & THE ECONOMY


An economy consists of two kinds of economic structures that encompasses the financial system – Savings structure and Borrowing Structure

Savings structureThe savings structure in an economy consists of savers or entities that save in the form of financial assets (deposits, life insurance, etc) or cash balances. Savings can be estimated as the remainder or surplus from incomes earned after expenditures (food, rent, home supplies, etc). This surplus or savings can be directed in the form of financial assets or withheld as cash.

Savers or entities that save can be further categorised into the following:

1. Household sector – The household sector include individuals, unincorporated businesses, farm production units and non-profit businesses. Savings for the household sector is mostly in financial such as includes deposits, life insurance, shares & debentures, provident and pension fund, loans for durables and real estate.


Savings Structure: Household Sector

Savings are mostly considered synonymous to deposit accounts (offered by banks) though savings can be directed towards life insurance, provident and pension funds or loans on durables / real estate that are regarded as productive investments. Thus, household sector demand for financial assets to make productive use of their savings. The household sector contributes to a majority of the savings in India in comparison to the private and government sector

2. Private sector – This sector includes non-government, non-financial companies, private financial institutions and co-operative institutions that are involved in production and/or distribution of goods and services. The sector mostly includes profit-making companies that are driven by various social, political, economic, technological, legal and demographic factors. Savings in this sector are in the form of net profit generated by businesses

3. State and Government sector – This sector includes government, administrative departments and enterprises both departmental and non-departmental. Savings for this sector is the difference between government receipts and government expenditure. Receipts of government are classified into the following[13]:

1. Revenue receipts such as tax revenues (corporate tax, income tax, other taxes on incomes & expenditure, taxes on wealth, customs, excise duties, service tax, other taxes / duties on commodities and services and surcharge transferred to national calamity and contingency fund) and non-tax revenues (consisting of interest receipts[14], dividends[15], profit from public enterprises and fees/charges for providing various services)

2. Non-debt capital receipts such as recoveries of loans and disinvestment of government’s equity holdings in Public Sector Undertakings (PSUs)

Expenditures of government are classified into the following:

1. Non-plan expenditures that include interest, subsidies, defence, pensions, police, grants-in-aid, loans, etc


2. Plan expenditures include expenditures as per the Central plan and central assistance to state and Union Territories’ (UT) plans

Borrowing structureThe borrowing structure in an economy comprises of “borrowers” or entities that finance their needs through borrowing. The needs of borrowers could involve incurring expenditures on labour, plant and equipment, constructing residential, industrial or commercial sites and building additions to inventories. The borrowers include the government sector (central and state level), public sector and private sector corporations. The borrowers provide or supply financial assets to savers by issuing primary securities in financial markets, which in turn are reissued by financial intermediaries as secondary securities (in financial markets) for the savers as investments. The flow of savings (from the savings structure) to the flow of investments (to the borrowing structure) leads to capital formation or long-term investments

Capital Formation

Capital formationThe flow of money from savings to investments leads to formation of capital stock in the form of equipment, buildings, intermediate goods and inventories. Capital formation reflects the country’s capability of producing and distributing goods and services across different sectors and industries thus leading to an increase in the country national incomes of economic growth. National income of a country or economic growth can be measured by calculating the Gross Domestic Product (GDP) or Gross National Product (GNP) that comprises economic activities in sectors like agriculture, industry and services requiring financial resources to allocate labour, capital and other factors of production.

Economic Growth


Circular Flow of the Economy

The savings and borrowing structure converge to build up capital in the country, which in turn leads to economic growth. The economic growth of an economy can be explained based on the association between household sector and the private/government sector[16]. The household sector contributes to the market of factors of production (land, labour and capital) which act as expenses for firms in private and government sector incurred for production and distribution of goods and services in a market. This market is the common platform where the household sector can purchase finished products / services for consumption. The returns from consumption are translated as profits to the firms which in turn are redistributed as wages and/or rent in the market of factors of production to the household sector. This circular flow of money between the household and firms in private / government sector characterises the development of national incomes of an economy which is measured as Gross Domestic Product or GDP that encompasses consumption, investments, government spending or expenditures and net exports (exports minus imports). GDP can also be calculated as the sum of capital formation, consumption expenditure and net exports.


Size of Financial Services in IndiaMutual fund AUMsTotal AUM of the mutual fund industry clocked a CAGR of 16.8 per cent over FY07–13 to US$ 150 billion.

Investor breakupCorporate investors account for around 49 per cent of total AUM in India.

Industry

AGRICULTURE AUTOMOBILES AUTO COMPONENTS AVIATION BANKING BIOTECHNOLOGY CEMENT CONSUMER MARKETS EDUCATION AND TRAINING ENGINEERING FINANCIAL SERVICES

FOOD INDUSTRY GEMS AND JEWELLERY HEALTHCARE INFRASTRUCTURE INSURANCE MANUFACTURING MEDIA AND ENTERTAINMENT OIL AND GAS PHARMACEUTICALS REAL ESTATE RESEARCH AND DEVELOPMENT RETAIL SCIENCE AND TECHNOLOGY

IntroductionIndia's services sector has always served the Indian economy well, accounting for nearly 57 per cent of the gross domestic product (GDP). Here, the financial services segment has been a significant contributor.The financial services sector in India is dominated by commercial banks which have more than 60 per cent share of the total assets; other segments include mutual funds, insurance firms, non-banking institutions, cooperatives and pension funds.The Government of India has introduced reforms to liberalise, regulate and enhance the country's financial services industry. Presently, the country can claim to be one of the world's most vibrant capital markets. In spite of the challenges that are still there, the sector's future looks good.Market sizeThe size of banking assets in India reached US$ 1.8 trillion in FY 13 and is projected to touch US$ 28.5 trillion by FY 25.Information technology (IT) services, the largest spending segment of India's insurance industry at Rs 4,000 crore (US$ 665.78 million) in 2014, is anticipated to continue enjoying strong growth at 16 per cent. Category leaders are business process outsourcing (BPO) at 25 per cent and consulting at 21 per cent.InvestmentsDuring FY 14, foreign institutional investors (FIIs) invested a net amount of about Rs 80,000 crore (US$ 13.31 billion) in India's equity market, according to data by Securities and Exchange Board of India (SEBI).Insurance companies in India will spend about Rs 12,100 crore (US$ 2.01 billion) on IT products and services in 2014, a 12 per cent increase over the previous year, according to Gartner Inc. The forecast includes spending by insurers on segments such as internal IT (including personnel), telecommunications, hardware, software, and external IT services. The Rs 1200 crore (US$ 202.47 million) software segment is predicted to be the fastest growing external segment, with overall growth of 18 per cent in 2014.The following are some of the key developments and investmentsin the Indian financial services sector:

About 75 per cent of the insurance policies sold by 2020 would be in one way or another influenced by digital channels during the pre-purchase, purchase or

renewal stages, according to a report by Boston Consulting Group (BCG) and Google India. This report, Digital@Insurance-20X By 2020, predicts that insurance sales from online channels will increase 20 times from present-day sales by 2020, and overall internet influenced sales will reach Rs 300,000-400,000 crore (US$ 49.9-66.54 billion).

Export-Import Bank of India (Exim Bank) will focus more on supporting project exports from India to South Asia, Africa and Latin America, as per Mr Yaduvendra Mathur, Chairman and MD, Exim Bank. The bank has moved up the value chain by lending support to project exports so that India earns foreign exchange. In 2012-13, Exim Bank had supported 85 project export contracts valued at Rs 24,255 crore (US$ 4.03 billion) secured by 47 companies in 23 countries.

Private-sector lender IndusInd Bank will soon begin its asset reconstruction business. It plans to partner asset reconstruction companies (ARCs) for this venture. "I think our new initiative, which is going to launch in the next two months, is about asset reconstruction. We will do asset reconstruction within the bank but in tie-ups with ARCs. The business plan is ready. We believe a huge stock of assets is coming into the ARCs as a business area that we need to look at and we will exploit," said Mr Romesh Sobti, CEO and MD, IndusInd Bank.

Association of Mutual Funds in India (AMFI) has reported that the mutual fund industry's assets under management (AUM) have gone past the Rs 10 trillion (US$ 166.37 billion) mark in May, 2014. The AUM of the Indian mutual fund industry rose to Rs 10.11 trillion (US$ 168.19 billion) in May from Rs 9.45 trillion (US$ 157.21 billion) in April.

Government InitiativesIn an effort to enable banks to provide greater choice in insurance products through their branches, a proposal could be made which will allow banks to act as corporate agents and tie up with multiple insurers. A committee set up by the Finance Ministry of India is likely to suggest this model as an alternative to the broking model.The Reserve Bank of India (RBI) has simplified the rules for credit to exporters. Exporters can now receive long-term advance credit from banks for up to 10 years to service their contracts. They have to have a satisfactory record of three years to get payments from banks, who can adjust the payments against future exports.The RBI has enabled foreign investors, including foreign portfolio investors (FPIs) and non-resident Indians (NRIs), to invest up to 26 per cent in insurance and related activities via the automatic route. "Effective from February 4, 2014, foreign investment by way of FDI, investment by FIIs/FPIs and NRIs up to 26 per cent under automatic route shall be permitted in insurance sector," as per the RBI.Road AheadIndia is among the world's top 10 economies, driven by its strong banking and insurance sectors. The country is expected to become the fifth largest banking sector in the world by 2020, as per a joint report by KPMG-CII. The report anticipates bank credit to increase at a compound annual growth rate (CAGR) of 17 per cent in the medium term which will lead to better credit penetration.Life Insurance Council, the industry body of life insurers in India, has also estimated a CAGR of 12-15 per cent over the next few years for the segment.

Types of Financial Intermediaries

Deposit-type institutions

– Depository-type institutions are the most commonly used types of financial intermediaries because people use their services on a daily basis. Depository institutions offer different types of checking or savings accounts and Time Deposit s. Depository Institutions use the deposits to make loans such as mortgages, consumer loans and business loans. The deposits and interest paid on deposit accounts are insured by federally sponsored insurance agencies and therefore are considered risk-free. These deposits are also highly liquid and can usually be withdrawn on demand. Types of depository institutions are listed and briefly explained below.

o Commercial Bank s

– Commercial Banks are the largest among all financial intermediaries and are also the most diversified due to the large range of assets and Liabilities they hold. Their liabilities are in the form of checking and savings deposits, and various types of time deposits. Bank deposits are insured by the FDIC up to $100,000. The assets that commercial banks hold are securities of various forms and denominations such as mortgage loans, consumer loans, business loans and loans to state and local governments. Commercial banks are among the most regulated forms of business due to their vital role in the well-being of the economy.

o Thrift Institution s

– Savings and loans associations and mutual savings banks are often called thrift institutions. Thrift institutions offer checking and savings accounts and other various types of time-deposits and use these funds to purchase long-term mortgages. Savings and loans are the largest residential mortgage lenders. Thrift Institutions specialize in maturity interMediation since they take liquid deposits and lend the out in the form of long-

termCollateral ized loans. Thrift institution deposits are insured by the FDIC up to $100,000.

o Credit Union s

– Credit Unions are small non-profit depository institutions that are owned by their members who are also their customers. Members of credit unions all have a common Bond such as military service, occupation etc... Credit union’s primary liabilities are checking deposits (share drafts) and savings accounts (share accounts) and credit unions usually make theirInvestment s in the form of short-term installment consumer loans. Deposits made to credit unions are insured by the FDIC up to $100,000. The most significant difference between credit unions and commercial banks are the restrictions that most loans are made to consumers only, the common bond requirement for members, the non-profit nature and the tax exemptions due to their cooperative nature.

Contractual Savings Institutions

– These are savings institutions that obtain their funds through long-term contractual arrangements and invest these funds on the capital markets. Insurance companies and Pension Funds are contractual savings institutions. They usually have a steady inflow of funds from their contractual arrangements therefore they usually don’t experience difficulties with Liquidity and can make long-term investments in securities such as bonds and sometimes common stock.

o Life Insurance Companies

– Life insurance companies issues securities which are claims meant to protect individuals and families from events such as premature death or early retirement. In the event of early death or retirement the beneficiaries receive benefits that were promised in the contract. Many life insurance companies also offer some savings to their policy holders. Since their cash-flows are predictable they are able to invest in long-term securities that provide higher yields. Life Insurance companies are regulated by the states they operate in unlike depository institution which are regulated by they federal government.

o Casualty Insurance Companies

– These types of insurance companies sell policies that protect individuals or businesses against loss of property from fire, theft, accidents or other causes that can be predicted through statistical models. Casualty insurance companies' primary source of funds come from premiums charged to the policyholders. Unlike life insurance companies, the cash outflows of casualty insurance companies are not as predictable; therefore they invest their funds in short-term, highly marketable securities. Since short-term securities usually offer lower returns, casualty insurance companies invest in higher risk securities such as stocks to earn higher returns. To reduce taxes, casualty insurance companies often also invest in municipal bonds.

o Pension Funds

– Pension funds generally acquire funds from employer and employee contributions while the employee is still working and provide the employee with payments during retirement. Pension funds usually invest funds in corporate bonds and equities. Pension funds are beneficial to individuals because they help employees plan and save for retirement. Because of the long-term investment nature, pension funds generally invest in long-term, higher yield securities.

Investment Funds

o Mutual Fund s

– Mutual funds pool together funds from investors and then build a Portfolio consisting of equities and bonds. The investors own shares which represent a portion of the mutual fund pie. The amount of shares an investor owns is dependent on the amount of money he or she contributed. Mutual funds are beneficial to small investors because they offer diversification, Economies of Scale for transaction costs, and professional portfolio management. The value of a mutual fund’s share is not fixed; it

fluctuates with the change in value of the mutual fund's portfolio. Different mutual funds specialize in different sectors. Some mutual funds specialize in high-risk growth stocks which are good for young and risk tolerant investors while others specialize in income type securities which are better for older retired individuals who need income to pay for their living expenses.

o Money Market Mutual Funds

– A Money Market Mutual Fund (MMMF) is simply a mutual fund that strictly invests its pool of funds in money market securities which are short-term securities with low default-risk. These securities are usually sold in denominations starting at $1-million therefore most investors don’t have enough money to purchase them directly. MMMF’s offer small investors the opportunity to invest in these short-term securities without taking on huge financial risks. MMMF’s generally allow investors to write checks and make withdraws making them competitive with checking and savings accounts. However, there are usually limits on how many withdraws can be made and the accounts are not insured.

Other Types of Financial Intermediaries

o Finance Companies

– Finance companies obtain most of their money by issuing commercial paper (short-term IOU’s) to investors, and the rest is obtained from the sale of Equity capital and long-term debt obligations. Finance companies then take this money and make loans to consumers and businesses. There are three basic types of finance companies: (1) consumer finance companies which specialize in loans made to households, (2) business finance companies which make loans and leases to businesses, and (3) sales finance companies which finance the items that are sold by retail stores. Finance companies are regulated by the states they operate in but are also subject to regulation by the federal government.

o Federal Agencies

– The U.S. government acts as a Financial Intermediary through its agencies which take part in financial intermediary type transactions. The goal of federal agencies is to reduce the costs of borrowing funds in order to increase the flow of funds in certain sectors of the economy. Government agencies achieve this by selling Debt securities called agency securities and then lending the funds from the sale to the economic sectors they serve. These agencies usually serve the housing sector and agriculture sector because many argue that these sectors would not be able to obtain credit at a reasonable cost if the government did not take direct intervention.

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History of ICICI bank

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.

ICICI Group 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 group companies and subsidiaries in the areas of personal banking, investment banking, life and general insurance, venture capital and asset management. With a strong customer focus, the ICICI Group Companies have maintained and enhanced their leadership positions in their respective sectors.

ICICI Bank is India's second-largest bank with total assets of Rs. 4,736.47 billion (US$ 93 billion) at March 31, 2012 and profit after tax Rs. 64.65 billion (US$ 1,271 million) for the year ended March 31, 2012. The Bank has a network of 2,791 branches and 10,021 ATMs in India, and has a presence in 19 countries, including India.

ICICI Prudential Life Insurance is a joint venture between ICICI Bank, a premier financial powerhouse, and Prudential plc, a leading international financial services group headquartered in the United Kingdom. ICICI Prudential Life was amongst the first private sector insurance companies to begin operations in December 2000 after receiving approval from Insurance Regulatory Development Authority (IRDA). ICICI Prudential Life's capital stands at Rs. 47.91 billion (as of March 31, 2012) with ICICI Bank and Prudential plc holding 74% and 26% stake respectively. For FY 2012, the company garnered Rs.140.22 billion of total premiums and has underwritten over 13 million policies since inception. The company has assets held over Rs. 707.71 billion as on March 31, 2012.

ICICI Lombard General Insurance Company, is a joint venture between ICICI Bank Limited, India's second largest bank with consolidated total assets of over USD 91 billion at March 31, 2012 and Fairfax Financial Holdings Limited, a Canada based USD 30 billion diversified financial services company engaged in general insurance, reinsurance, insurance claims management and investment management. ICICI Lombard GIC Ltd. is the largest private sector general insurance company in India with a Gross Written Premium (GWP) of Rs. 5,358 crore for the year ended March 31, 2012. The company issued over 76 lakh policies and settled over 44 lakh claims and has a claim disposal ratio of 99% (percentage of claims settled against claims reported) as on

March 31, 2012.

ICICI Securities Ltd is the largest integrated securities firm covering the needs of corporate and retail customers through investment banking, institutional broking, retail broking and financial product distribution businesses. Among the many awards that ICICI Securities has won, the noteworthy awards for 2012 were: Asiamoney `Best Domestic Equity House for 2012; 'BSE IPF D&B Equity Broking Awards 2012' under two categories:- Best Equity Broking House - Cash Segment and Largest E-Broking House; the Chief Learning Officer Award from World HRD Congress for Innovation in Learning category. IDG India's CIO magazine has recognized ICICI Securities as a recipient of CIO 100 award in 2009, 2010, 2011 and 2012. I-Sec won this awards 4 times in a row for which the CIO Hall of Fame award was additionally conferred in 2012.

ICICI Securities Primary Dealership Limited (‘I-Sec PD’) is the largest primary dealer in Government Securities. It is an acknowledged leader in the Indian fixed income and money markets, with a strong franchise across the spectrum of interest rate products and services - institutional sales and trading, resource mobilisation, portfolio management services and research. One of the first entities to be granted primary dealership license by RBI, I-Sec PD has made pioneering contributions since inception to debt market development in India. I-Sec PD is also credited with pioneering debt market research in India. It is one of the largest portfolio managers in the country and amongst PDs, managing the largest AUM under discretionary portfolio management.I-Sec PD’s leadership position and research expertise have been consistently recognised by domestic and international agencies. In recognition of our performance in the Fixed Income market, we have received the following awards:

“Best Domestic Bond House” in India - 2007, 2005, 2004, 2002 by Asia Money “Best Bond House” - 2009, 2007, 2006, 2005, 2004, 2001 by Finance Asia “Best Domestic Bond House” – 2009 by The Asset Magazine’s annual Triple A

Country Awards Ranked volume leader - by Greenwich Associates in 2010 Asian Fixed-Income

Investors Study. Ranked 5th in ‘Domestic Currency Asian Credit’ with market share of 4.5%, Only Domestic entity to be ranked.

“Best Debt House in India” – 2012 by EUROMONEY

ICICI Prudential Asset Management is the third largest mutual fund with average asset under management of Rs. 688.16 billion and a market share ( mutual fund ) of 10.34% as on March 31, 2012. The Company manages a comprehensive range of mutual fund schemes and portfolio management services to meet the varying investment needs of its investors through117 branches and 196 CAMS official point of transaction acceptance spread across the country.

ICICI Venture is one of the largest and most successful alternative asset managers in India with funds under management of over US$ 2 billion. It has been a pioneer in the Indian alternative asset industry since its establishment in 1988, having managed

several funds across various asset classes over multiple economic cycles. ICICI Venture is a wholly owned subsidiary of ICICI Bank.

Products offered by ICICI Group

Funds & InvestmentsWe understand that your investment goals and risk appetite change over time. To meet these evolving financial needs, we offer you a diverse range of investment products.

Mutual FundsInvestment in Mutual Funds* is important to build an ideal and balanced portfolio. We help you identify the appropriate mix of Mutual Fund Schemes as per your risk appetite and financial goals, be it equity funds, where you look for growth and capital appreciation, or debt funds for capital *Mutual Fund investments are subject to market risks. Please read the offer documents of respective schemes carefully before investing.Portfolio Management Services*ICICI Bank Wealth Management will assist you for Portfolio Management Services (PMS) like Equity based Products, Commodity based Products, Index linked Products etc. by referring to our partner Asset Management companies. Alternative InvestmentsWe help you broaden your investment avenues by offering you Alternative Investment products like Residential & Commercial Real estate services**, Real Estate Funds & Private Equity*, through our partners. DepositsICICI Bank Wealth Management brings you a wide range of competitively priced deposit products that offer you safety of investment and steady growth of your portfolio. What's more, you can now invest in Deposits through our 24x7 channels: Internet Banking, Phone Banking & at select ATMs.

Product Offered by ICICI Prudential Asset Management Company Ltd

Equity Funds

Balanced/Hybrid Fund

Debt Funds

Fund of Funds

Exchange Traded Funds

Equity Funds

ICICI Prudential Dynamic PlanICICI Prudential Dynamic Plan is an Open-ended Diversified Equity Fund that aims to make the most of market changes. Given the dynamic nature of the markets, the fund has the ability to attack by taking aggressive asset calls in equity and equity related securities. On the flip side it

may also adopt a defensive strategy by investing in debt, money market instruments and derivatives as and when markets get overvalued.

1 mth (%) 3 mth (%) 6 mth (%) 1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns 1.8 5.6 24.5 48.9 26.4 22.1 16.2

ICICI Prudential Focused Bluechip Equity Fund

ICICI Prudential Focused Bluechip Equity Fund is an Open-ended equity scheme that aims for growth from a focused and optimally diversified portfolio.It invests in equity and equity related securities of companies belonging to the large cap domain.


Fund Returns 1.6 7.9 25.7 44.9 24.3 20.8 16.1

ICICI Prudential Value Discovery Fund

ICICI Prudential Value Discovery Fund is an Open-ended Diversified Equity Fund, which aims to invest stocks available at a discount to their intrinsic value, through a process of ‘Discovery’. The process involves identifying companies that are well managed, fundamentally strong, and are available at a price, which can be termed as a bargain.


Fund Returns 1.7 11.4 46.5 86.8 36.9 31.5 21.8

ICICI Prudential MidCap Fund

ICICI Prudential Midcap Fund is an open-ended diversified equity fund that selects Emerging Stocks in the mid-cap space, targeted at returns over a long term investment horizon. It aims at bringing you the benefit of investing in the leaders of tomorrow.


Fund Returns 2.5 11.5 53.4 108.5 37.8 27.7 18.0

ICICI Prudential Tax Plan

There are various opportunities that individuals can avail, to save tax u/s 80C of Income tax Act like Public Provident Fund, National Savings Certificate.

When compared to these traditional tax savings instruments, an Equity Linked Savings Scheme is more opportunistic for individuals, as it provides a shorter lock-in period of three years and potential for higher returns, which are exempt from taxes.

ICICI Prudential Tax Plan, an open-ended equity linked savings scheme, is an opportunity aimed at harnessing the benefits of investing in equity and also providing tax benefits.


Fund Returns 2.0 7.8 35.2 65.2 30.5 24.6 18.3

ICICI Prudential US Bluechip Equity Fund

ICICI Prudential US Bluechip Equity Fund is an open-ended equity scheme primarily investing in select ‘Bluechip Companies’ listed on stock exchanges of the United States of America. It aims to bring you the benefit of investing in well established companies and targets growth, over a long term investment horizon.


Fund Returns -1.1 3.5 8.9 12.3 26.9 -- --

This Fund was launched on 11th July 2012.

ICICI Prudential Top 200 Fund

A multitude of choice could make it difficult to settle on anything. What looks excellent today may not be that fruitful tomorrow, and what seems to be hopeless today could be terrific tomorrow.

In this situation, after understanding the fundamentals of various opportunities, the smartest move would be to focus small amounts across everything that seems promising. As a cautious investor, you would do well to expose yourself to the idea of capturing market opportunities and seeking out the optimum sectors to invest in.

ICICI Prudential Top 200 Fund, an open-ended diversified equity fund allows you to capture growth opportunities by constantly being on the lookout for out the best sectors to invest in across multiple regions in the market.


Fund Returns 2.2 8.6 30.7 56.0 26.1 21.8 14.0

Balanced/Hybrid funds

ICICI Prudential Child Care Plan(Study)

All our dreams can come true, if we plan for and pursue them. And we need to remember that our dreams are linked to our children's aspirations. A surgeon today, an astronaut tomorrow and may be a fashion designer the day after. We must always encourage them to dream big.

ICICI Prudential Child Care Plan, an open-ended fund, is an investment instrument specially designed to help you give your child a head start in life by leveraging the opportunities and dynamism of equity and debt markets. It offers two options - Gift Option - (Suitable if your child is in age group of 1-13 years.) Study Option - (Suitable if your child is in age group of 13-17 years.)

ICICI Prudential Child Care Plan - Gift Plan


Fund Returns 0.7 6.4 36.1 70.9 26.9 22.7 16.6

ICICI Prudential Child Care Plan - Study Plan


Fund Returns 3.0 7.8 18.2 32.9 19.5 17.0 13.9

ICICI Prudential MIP 25

Although there are those who would like to leverage the benefits of equity investing, several investors are focused on conservative growth and regular income. This is reflected through portfolio's that are predominantly invested in fixed income securities.

However, these investors have the option add a 'spark' to their returns, by looking for a measured and limited exposure to equity.

ICICI Prudential Income Multiplier Fund, an open-ended debt fund that invests upto 30% in equity, adds a pinch of equity to your debt portfolio, so that you can benefit from the dynamism of equity markets, with peace of mind.


Fund Returns 1.5 4.1 12.2 21.5 12.7 12.1 9.4

ICICI Prudential Monthly Income Plan

Investing has always meant seeking a stable, regular return. Although there are those who would sway towards leveraging the benefits of equity investing, several investors are focused on conservative growth and regular income.

However, inflation tends to impact conservative returns, so a limited exposure to equity has the potential to add a spark to your returns, while treading along cautiously.

ICICI Prudential Monthly Income Plan (MIP), (Monthly Income is not assured and is subject to availability of distributable surplus), an open-ended fund, is designed to be a low risk income-generating product for an investor who likes to earn the short term debt market return enhanced by a small equity component that does not significantly add to the risk of the portfolio.


Fund Returns 1.9 4.0 11.4 19.4 11.4 10.9 8.7

ICICI Prudential Balanced Fund

Asset allocation is the key to investing success as it helps you reduce the volatility of returns. By investing in equity for capital appreciation and debt for stable returns, you can reduce instability of returns by increasing / decreasing exposure to various markets, based on in-depth research and analysis.

ICICI Prudential Balanced Fund, an open-ended balanced fund, does just that. It takes care of this asset allocation by constantly investigating market outlook and performance and accordingly by increasing / decreasing equity exposure based on the market outlook and using a core debt portfolio to do the rebalancing.


Fund Returns 2.4 8.2 26.9 49.6 26.2 22.1 17.2

Debt Funds

ICICI Prudential Flexible Income Plan

The debt market offers its own risk-to-return tradeoff, which is triggered by changes in interest rates and the impact they have on debt securities. To a fund manager, however, the changes in the yield curve not only offers risk, but also opportunities to benefit by actively managing these risks and making use of an opening to increase returns.

ICICI Prudential Flexible Income Plan, an open-ended income fund, seeks to actively manage such risks as a conscious investment strategy by allowing the fund manager to switch the allocation from a 100% debt stance to a 100% cash stance, which provides the flexibility to implement yield curve strategies, or manage interest rate volatility better.


Fund Returns 0.7 2.1 4.6 9.8 9.5 9.6 8.5

ICICI Prudential Savings Fund

There are many factors that determine the rate of interest of securities, and constant changes in these underlying fundamentals, cause fluctuations in the interest rates, which has a direct impact on the value of our portfolio. An increase in rates reduces the value of our holdings and vice-versa.

If interest rates on instruments in the portfolio were to keep getting reset according to the prevailing market rates, then, we may be able to focus on the interest income without worrying too much about its impact on the portfolio.

ICICI Prudential Floating Rate Plan, an open-ended income fund, focuses primarily on dynamic interest rates, and takes rapid action when necessary to minimize the impact of these fluctuations on your portfolio.


Fund Returns 0.7 2.0 4.3 8.8 8.5 8.6 7.5

ICICI Prudential Ultra Short Term Plan

Sometimes we overestimate our need to have instant access to our money. This leads to our hard earned money lying idle in the bank account, while we keep planning to deploy our money in a way that will earn higher interest. At the same time we may not want to lock our money into a long term investment because we might require it in the near future.

ICICI Prudential Ultra Short Term Plan, an open-ended income fund, is designed for such short-term requirement, as it enables deploying of funds for shorter periods of time, from 3 to 6 months, to generate regular income while cautiously monitoring the rate of interest.


Fund Returns 0.8 1.9 4.5 9.2 8.7 8.9 5.9

ICICI Prudential Liquid Plan

There are times when we need our money to be easily accessible and safe, for planned or unforeseen events. We can achieve this security and liquidity by depositing our funds in a bank account, but the interest that we would earn would most often than not be quite low.

ICICI Prudential Liquid Plan, an open-ended liquid income fund, offers a potentially rewarding parking facility for short-term, idle cash. It provides the flexibility of withdrawing cash as and when required, and proves to be an investment through its earnings, while it is parked in the fund.


Fund Returns 0.7 2.1 4.5 9.4 9.2 9.4 8.3

ICICI Prudential Money Market Fund

There are times when we need our money to be easily accessible and safe, for planned or unforeseen events. We can achieve this security and liquidity by depositing our funds in a bank account, but the interest that we would earn would most often than not be quite low.

ICICI Prudential Money Market Fund, an open-ended Money Market fund, offers a potentially rewarding parking facility for short-term, idle cash. It provides the flexibility of withdrawing cash as and when required, and proves to be an investment through its earnings, while it is parked in the fund.


Fund Returns 0.7 2.1 4.5 9.2 9.1 9.4 7.8

ICICI Prudential Corporate Bond Fund

ICICI Prudential Corporate Bond Fund, an open-ended debt fund, which invests in corporate bonds of 3 to 7 years tenure. The scheme focuses on accrual income by investing into medium to long term corporate papers available at a spread over market yields. The fund aims to cater to retail investors with emphasis on higher carry (interest income) with due emphasis on credit quality and liquidity. The ideal investment horizon of this fund is around 3 years.


Fund Returns 1.3 2.4 5.9 11.7 8.4 8.7 7.8

Fund Of Funds

ICICI Prudential Global Stable Equity Fund

An open-ended fund of funds scheme that provides an opportunity to invest in international companies that are stable and consistent in nature. The fund invests units / shares of Nordea 1 - Global Stable Equity Fund - Unhedged (N1 - GSEF - U).

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns -0.5 2.1 6.4 10.3 -- -- --

Fund was launched on 17th September 2013

ICICI Prudential Advisor Series - Long Term Savings Plan

ICICI Prudential Advisor Series - Aggressive Plan seeks to generate long term capital appreciation by making active allocation to the various equity, debt & money market schemes & the gold exchange traded fund of domestic or offshore mutual funds based on the asset valuations, interest rate outlook, the credit spreads and other such parameters.

The plan seeks to generate long term capital appreciation from a portfolio that is invested predominantly in ICICI Prudential Mutual Fund schemes, mainly having asset allocation as follows:

Equity oriented schemes (Maximum 80%, Minimum 50%) Debt oriented schemes (Maximum 50%, Minimum 20%) Money market schemes (Maximum 10%, Minimum 0%) Gold Exchange Traded Funds (Maximum 30%, Minimum 0%)

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns 0.3 0.6 12.0 32.7 12.2 12.8 11.2

ICICI Prudential Regular Gold Savings Fund

ICICI Prudential Regular Gold Savings Fund is an open-ended fund of fund scheme investing in units of ICICI Prudential Gold Exchange Traded Fund.

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns -3.4 -4.4 -8.3 -11.4 -8.6 -1.7 --

ICICI Prudential Advisor Cautious

ICICI Prudential Advisor Series - Cautious Plan seeks to provide regular income, by making active allocation to the various debt, money market schemes & gold exchange traded funds of domestic & offshore Mutual Funds, as highly rated debt instruments generally provide safety and regular income to the portfolio and the potential for capital appreciation through active management

The plan seeks to generate regular income through investments made primarily in the schemes of ICICI Prudential Mutual Fund as follows:

Debt oriented schemes (Maximum 100%, Minimum 50%) Money market schemes (Maximum 30%, Minimum 0%) To a lesser extent (Maximum 35%, Minimum 0%) in equity oriented schemes so as to

generate long term capital appreciation Gold Exchange Traded fund (Maximum 20%, Minimum 0%)

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns 0.6 0.5 9.0 20.9 9.4 9.7 8.4

ICICI Prudential Advisor Moderate

ICICI Prudential Advisor Series - Moderate Plan seeks to generate long term capital appreciation and current income, by making active allocation to the various equity, debt & money market schemes of domestic or offshore mutual funds based on the asset valuations, interest rate outlook, the credit spreads and other such parameters & in gold exchange traded funds, which invests in gold bullion and instruments with gold as underlying.

The Plan seeks to generate long term capital appreciation and current income by creating a portfolio that is invested in the ICICI Prudential Mutual Fund schemes as follows:

Equity oriented schemes (Maximum 60%, Minimum 40%) Debt oriented schemes (Maximum 60%, Minimum 30%) Money Market schemes (Maximum 30, Minimum 0%) Gold Exchange Traded fund (Maximum 20%, Minimum 0%)

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns 0.5 1.0 10.0 27.3 11.5 12.4 10.2

Exchange Traded Funds

ICICI Prudential NIFTY ETF

ICICI Prudential Nifty ETF, an open-ended Index Exchange Traded Fund offers a passive choice to investors, who prefer that their portfolio closely maps the market index, the CNX Nifty Index. It is an ETF (Exchange traded fund), which means investors can buy and sell at any time during the market hours, through their brokers, just like any other equity share thereby offering a greater degree of flexibility for monitoring price and reducing the time gap between investment decision and trade execution.

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns -0.9 5.0 19.5 39.8 -- -- --

This Fund was Launched on 22nd March 2013

ICICI Prudential CNX 100 ETF

ICICI Prudential CNX 100 ETF, an open-ended Index Exchange Traded Fund offers a passive choice to investors, who prefer that their portfolio closely maps CNX 100 Index. It is an ETF (Exchange traded fund), which means investors can buy and sell at any time during the market hours, through their brokers, just like any other equity share thereby offering flexibility for monitoring price and reducing the time gap between investment decision and trade execution.

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns -0.8 4.8 20.5 41.5 -- -- --

This Fund was Launched on 1st October 2013

ICICI Prudential Gold Exchange Traded Fund

ICICI Prudential Gold Exchange Traded Fund, an open-ended exchange traded fund, aims to provide investment returns that, before expenses, closely track the performance of domestic prices of Gold.

1 mth (%) 3 mth (%)

6 mth (%)

1 yr (%) 2 yr (%) 3 yr (%) 5yr (%)

Fund Returns -3.9 -4.9 -4.4 -11.6 -8.3 -- --

Documents

ICICI Group