ICICI ESG Report - Corporate Governance

Corporate Governance

Governance Philosophy

At ICICI Bank, we are committed to maintain the highest standards of governance in the conduct of our business and continuously strive to create lasting value for all our stakeholders. We focus on maintaining comprehensive compliance with the laws, rules and regulations that govern our business and promote a culture of accountability, transparency and ethical conduct across the Bank.

Competency and Diversity Matrix of the Board of Directors

The corporate governance framework at ICICI Bank is based on an effective independent Board, the separation of the Board’s supervisory role from the executive management and the constitution of Board Committees to oversee critical areas.

Independent Directors constitute an overwhelming majority on most Board Committees
The Chairman of the Board is an Independent Director. Most Board Committees are chaired by Independent Directors too
Composition of the Board and Committees fulfil all applicable regulatory and legal requirements

Expertise of the Independent Directors

	Girish Chandra Chaturvedi M.Sc. (Social Policy in Developing Countries), M.Sc., B.Sc.	Hari L. Mundra B.A. (Hons.), MBA	S. Madhavan B.Com., CA, MBA	Neelam Dhawan B.A. (Hons.), MBA	Radhakrishnan Nair M.Sc., LLB, MBA, Diploma in Securities Law	Rama Bijapurkar B.Sc. (Hons.), PGDM	B. Sriram M.Sc., AIMA Diploma in Management, CAIIB	Uday Chitale B.Com., CA
Banking
Accounting, Audit, Business, Management & Consultancy
Government and Regulatory Experience
Information Technology

Composition and Diversity of the Board of Directors

Composition

3

Executive Directors

8

Independent Directors

1

Government Nominee Director

Gender

75%

Men

25%

Women

Age

25%

50-59 years

75%

60-70 years

Tenure with Bank

67%

Less than 2 years

25%

2-4 years

8%

More than 4 years

Experience of Independent Directors

50%

36-40 years

37.5%

41-45 years

12.5%

46+ years

Anchor Role of the Board Governance, Remuneration and Nomination Committee (BGR&NC) in Preserving and Enhancing Governance

Beyond the critical role played in recommending Board nominations including selection of Independent Directors, supporting optimal Board and Senior Management composition and other statutory duties that it performs and delivers, the distinctive feature of the BGR&NC of the Bank is its focus to achieve alignment of compensation philosophy with prudent risk taking. Under its guidance, a regulatorily aligned Compensation Policy has been implemented, which is intended to drive meritocracy within the framework of prudent risk management. This approach has been incorporated in the Compensation Policy.

The key elements of the Policy are:

Key Performance Indicators (KPIs) for Wholetime Directors (WTDs) and equivalent positions, along with the organisational performance norms for bonus based on the financial and strategic plan, are approved by the Board. The KPIs include both quantitative and qualitative aspects. The BGR&NC assesses organisational performance and based on its assessment, it makes recommendations to the Board regarding compensation for WTDs, senior management and equivalent positions and bonus for employees, including senior management and key management personnel.

The Bank seeks to achieve a prudent mix of fixed and variable pay, with a higher proportion of variable pay at senior levels and no guaranteed bonuses. Compensation is sought to be aligned to both financial and non-financial indicators of performance including aspects like risk management and customer service. In addition, the Bank has an employee stock option scheme aimed at aligning compensation to long term performance through stock option grants that vest over a period of time. Compensation of staff in financial and risk control functions is independent of the business areas they oversee and depends on their performance assessment.

The Board approves the risk framework for the Bank. 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 and employees incorporate relevant risk management related aspects. For example, in addition to performance targets in areas such as risk calibrated core operating profit (profit before provisions and tax excluding treasury income), performance indicators include aspects such as asset quality. The BGR&NC takes into consideration all these aspects while assessing organisational and individual performance and making compensation-related recommendations to the Board.

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 and non-banking subsidiaries. The Committee reviews setting up of limits on any industry or country, migration to the advanced approaches under Basel II and implementation of Basel III and the activities of the Asset Liability Management Committee. The Committee reviews the level and direction of major risks pertaining to credit, market, liquidity, operational, reputation, technology, information security, compliance, group and capital at risk as a part of the risk dashboard. In addition, the Committee has oversight on risks of subsidiaries covered under the Group Risk Management Framework. The Risk Committee also reviews the Liquidity Contingency Plan for the Bank and the various thresholds set out in the Plan.

The Credit Committee of the Board, apart from sanctioning credit proposals based on the Bank’s credit approval authorisation framework, reviews developments in key industrial sectors and the Bank’s exposure to these sectors as well as to large borrower accounts and borrower groups. The Credit Committee also reviews major credit portfolios, non-performing loans, accounts under watch, overdues and incremental sanctions.

The Audit Committee of the Board provides direction to and monitors the quality of the internal audit function, oversees the financial reporting process and also monitors compliance with inspection and audit reports of RBI, other regulators and statutory auditors.

The Asset Liability Management Committee provides guidance for management of liquidity of the overall Bank and management of interest rate risk in the banking book within the broad parameters laid down by the Board of Directors/ Risk Committee.

Summaries of reviews conducted by these Committees are reported to the Board on a regular basis.

Policies approved from time to time by the Board of Directors/Committees of the Board form the governing framework for each type of risk. The business activities are undertaken within this policy framework. Independent groups and subgroups have been constituted across the Bank to facilitate independent evaluation, monitoring and reporting of various risks. These groups function independently of the business groups/subgroups.

The Bank has dedicated groups, namely, the Risk Management Group, Compliance Group, Corporate Legal Group, Internal Audit Group and the Financial Crime Prevention & Reputation Risk Management Group, with a mandate to identify, assess and monitor all of the Bank’s principal risks in accordance with well-defined policies and procedures. The Risk Management Group is further organised into Credit Risk Management Group, Market Risk Management Group, Operational Risk Management Group and Information Security Group. The Chief Risk Officer (CRO) reports to the Risk Committee constituted by the Board which reviews risk management policies of the Bank. The CRO, for administrative purpose reports to President in the Bank. The above mentioned groups are independent of all business operations and coordinate with representatives of the business units to implement the Bank’s risk management policies and methodologies. The Internal Audit and Compliance groups are responsible to the Audit Committee of the Board.

Read Less

Board Monitored Policies

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

To engender this philosophy, the Bank’s Corporate Governance Framework has been designed. The framework encompasses a large spectrum of policies, codes and procedures which have been implemented through Board Committees, well supported by people, process and technology. There is a continuous mechanism of communication aimed to achieve effective permeation and implementation both, within the organisation and through web based public disclosures where required, underlining the culture of disclosure and transparency, reflecting global best practices. This is actively monitored by a robust system of compliance monitoring, risk oversight and performance management, all backed by comprehensive audit supervision.

The policies, codes and procedures that define our Corporate Governance Framework are depicted below:

The Bank is committed to socially responsible conduct and ensure highest standards of integrity and ethics in its engagement with stakeholders, including customers, shareholders, employees and society. The Bank follows a no-discrimination policy towards employees and has a strong mechanism for dealing with complaints on harassment or discrimination. It has special policies for its women employees extending support to meet their life-stage needs. The Bank’s relationship with customers is based on the principle of “Fair to Bank, Fair to Customer” and strives to ensure fair features and pricing in the products and follows strong governance standards in addressing customer complaints and redressal.