ICICI Bank Limited 20F 2005 Annual report

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 20-F

(Mark One)
[ ] Registration statement pursuant to section 12(b) or (g) of the Securities
Exchange Act of 1934

[x] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the fiscal year ended March 31, 2005

[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ______________ to
_____________

Commission File Number 001-15002

ICICI BANK LIMITED
(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant's name into English)

Vadodara, Gujarat, India
(Jurisdiction of incorporation or organization)

ICICI Bank Towers
Bandra-Kurla Complex
Mumbai 400051, India
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act.

Title of Each Class Name of Each Exchange on Which Registered
None Not Applicable

Securities registered pursuant to Section 12(g) of the Act.

American Depositary Share
each represented by 2 Equity Shares, par value Rs. 10 per share.
(Title of Class)

Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act.
Not Applicable
(Title of Class)

Indicate the number of outstanding shares of each of the issuer's classes
of capital or common stock as of the close of the period covered by the annual
report - 736,716,094 Equity Shares

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 month (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

Yes.........x.......... No....................

Indicate by check mark which financial statement item the registrant has
elected to follow.

Item 17.................. Item 18........x......

TABLE OF CONTENTS

Page

Cross Reference Sheet

Certain Definitions
6

Forward-Looking Statements

Exchange Rates
8

Risk Factors

Business

Overview

History

Shareholding Structure and Relationship with the Government of India

Strategy

Overview of Products and Services

Funding

Risk Management

Loan Portfolio

Impaired Loans

Subsidiaries and Affiliates

Technology

Competition

Employees

Properties

Legal and Regulatory Proceedings

Selected Consolidated Financial and Operating Data

Operating and Financial Review and Prospects

Management

118

Overview of the Indian Financial Sector

139

Supervision and Regulation

150

Exchange Controls

170

Market Price Information

173

Restriction on Foreign Ownership of Indian Securities

175

Dividends

178

Taxation

180

Presentation of Financial Information

185

Additional Information

186

Index to Consolidated Financial Statements

F-1

Exhibit Index

187

CROSS REFERENCE SHEET

Form 20-F

Item Number and Caption

Location

Page

Part - I

Identity of Directors, Senior

Management and Advisers

Not applicable

Offer Statistics and Expected

Timetable

Not applicable

Key Information

Selected Consolidated Financial and Operating

Data
73

Exchange Rates

Risk Factors

Information on the Company

Business

Operating and Financial Review and Prospects—

Capital Expenditure

109

Operating and Financial Review and Prospects—

Effect of Other Acquisitions

Operating and Financial Review and Prospects—

Segment Revenues and Assets

110

Overview of the Indian Financial Sector

139

Supervision and Regulation

150

Operating and Financial

Review and Prospects

Operating and Financial Review and Prospects

Business—Risk Management

Directors, Senior Management and

Employees

Management

118

Business—Employees

Major Shareholders and

Business—Shareholding Structure and Relationship

Related Party Transactions

with the Government of India

Operating and Financial Review and Prospects—

Related Party Transactions

111

Management—Compensation and Benefits to

Directors and Officers—Interest of Management in

Certain Transactions

138

Management—Compensation and Benefits to

Directors and Officers—Loans

136

Market Price Information

173

Note 30 in Notes to Consolidated Financial

Statements

F-53

Financial Information

Report of Independent Registered Public

Accounting Firm

F-2

Consolidated Financial Statements and the notes

thereto

F-3

Operating and Financial Review and Prospects—

Results of Operations

Business—Legal and Regulatory Proceedings

Dividends

The Offer and Listing

Market Price Information

173

Restriction on Foreign Ownership of Indian

Securities

175

Additional Information

186

Exchange Controls

170

Taxation

180

Restriction on Foreign Ownership of Indian

Securities

175

Dividends

178

Quantitative and Qualitative

Business—Risk Management—Quantitative and

Disclosures About Market Risk

Qualitative Disclosures About Market Risk

Description of Securities Other

than Equity Securities

Not applicable

Part - II

Defaults, Dividend Arrearages and

Delinquencies

Not applicable

Material Modifications to the

Rights of Security Holders and Use

of Proceeds

Not applicable

Controls and Procedures

Business—Risk Management—Controls and

Procedures

[Reserved]

Not applicable

16A

Audit Committee Financial Expert

Management—Corporate Governance—Audit

Committee

129

16B

Code of Ethics

Management—Corporate Governance—Code of

Ethics
130

16C

Principal Accountant Fees and

Management—Corporate Governance—Principal

Services

Accountant Fees and Services

131

16D

Exemptions from the Listing

Standards for Audit Committees

Not applicable

16E

Purchases of Equity Securities by

Business—Shareholding Structure and Relationship

the Issuer and Affiliated Purchasers

with the Government of India

Part - III

Financial Statements

See Item 18

Financial Statements

Report of Independent Registered Public

Accounting Firm

F-2

Consolidated Financial Statements and the notes

thereto

F-3

Exhibits

Exhibit index and attached exhibits

188

CERTAIN DEFINITIONS

ICICI Limited, ICICI Personal Financial Services Limited and ICICI Capital
Services Limited amalgamated with and into ICICI Bank Limited, effective April
1, 2002 for accounting purposes under US GAAP. In this annual report, all
references to "we", "our" and "us" are, as the context requires, to ICICI Bank
Limited and its consolidated subsidiaries and other consolidated entities
subsequent to the amalgamation. References to specific data applicable to
particular subsidiaries or other consolidated entities are made by reference to
the name of that particular company. References to "ICICI Bank" are, as the
context requires, to ICICI Bank Limited on an unconsolidated basis subsequent to
the amalgamation, to ICICI Bank Limited on an unconsolidated basis prior to the
amalgamation, or to both. References to "ICICI" are to ICICI Limited and its
consolidated subsidiaries and other consolidated entities prior to the
amalgamation. References to "ICICI Personal Financial Services" are to ICICI
Personal Financial Services Limited. References to "ICICI Capital Services" are
to ICICI Capital Services Limited. References to the "amalgamation" are to the
amalgamation of ICICI, ICICI Personal Financial Services and ICICI Capital
Services with and into ICICI Bank. References to "the Scheme of Amalgamation"
are to the Scheme of Amalgamation of ICICI, ICICI Personal Financial Services
and ICICI Capital Services with ICICI Bank sanctioned by the High Court of
Gujarat at Ahmedabad on March 7, 2002 and by the High Court of Judicature at
Bombay on April 11, 2002 and approved by the Reserve Bank of India on April 26,
2002.

Statement on Financial Accounting Standards No. 141 on "Business
Combinations", issued by the Financial Accounting Standards Board, requires that
business combinations be accounted for in the period in which the combination is
consummated. The effective date of the amalgamation for accounting purposes
under US GAAP was April 1, 2002. Accordingly, under US GAAP, the amalgamation
has been reflected in the financial statements contained in this annual report
for fiscal 2003, as it was consummated in April 2002. Under US GAAP, the
amalgamation was accounted for as a reverse acquisition. This means that ICICI
was recognized as the accounting acquirer in the amalgamation, although ICICI
Bank was the legal acquirer. Accordingly, the financial statements and other
financial information contained in this annual report for fiscal 2002 and prior
years, except where specifically stated otherwise, present the assets,
liabilities and results of operations of ICICI.

In the financial statements contained in this annual report and the notes
thereto, all references to "the Company" are to ICICI Bank Limited and its
consolidated subsidiaries and other consolidated entities subsequent to the
amalgamation, all references to the "acquiree" are to ICICI Bank Limited prior
to the amalgamation and all references to the "acquirer" are to ICICI Limited
and its consolidated subsidiaries and other consolidated entities prior to the
amalgamation.

All references to the "Companies Act" and the "Banking Regulation Act" are
to the Companies Act, 1956 and the Banking Regulation Act, 1949 as passed by the
Indian Parliament and subsequently amended

Under Indian GAAP, the amalgamation was accounted for on March 30, 2002,
the Appointed Date specified in the Scheme of Amalgamation, with ICICI Bank
recognized as the accounting acquirer.

FORWARD-LOOKING STATEMENTS

We have included statements in this annual report which contain words or
phrases such as "will", "would", "aim", "aimed", "will likely result", "is
likely", "are likely", "believe", "expect", "expected to", "will continue",
"will achieve", "anticipate", "estimate", "estimating", "intend", "plan",
"contemplate", "seek to", "seeking to", "trying to", "target", "propose to",
"future", "objective", "goal", "project", "should", "can", "could", "may", "will
pursue", "our judgment" and similar expressions or variations of such
expressions, that are "forward-looking statements". Actual results may differ
materially from those suggested by the forward-looking statements due to certain
risks or uncertainties associated with our expectations with respect to, but not
limited to, the actual growth in demand for banking and other financial products
and services, our ability to successfully implement our strategy, including our
use of the Internet and other technology, our ability to integrate recent or
future mergers or acquisitions into our operations, future levels of impaired
loans, our growth and expansion in domestic and overseas markets, the adequacy
of our allowance for credit and investment losses, technological changes,
investment income, our ability to market new products, cash flow projections,
the outcome of any legal or regulatory proceedings we are or become a party to,
the future impact of new accounting standards, our ability to implement our
dividend policy, the impact of Indian banking regulations on us, which includes
the assets and liabilities of ICICI, a former financial institution not subject
to Indian banking regulations, our ability to roll over our short-term funding
sources and our exposure to market risks. By their nature, certain of the market
risk disclosures are only estimates and could be materially different from what
actually occurs in the future. As a result, actual future gains, losses or
impact on net interest income and net income could materially differ from those
that have been estimated.

In addition, other factors that could cause actual results to differ
materially from those estimated by the forward-looking statements contained in
this annual report include, but are not limited to, the monetary and interest
rate policies of India and the other markets in which we operate, natural
calamities, general economic, financial or political conditions, instability or
uncertainty in India, southeast Asia, or any other country which have a direct
or indirect impact on our business activities or investments, caused by any
factor including terrorist attacks in India, the United States or elsewhere,
anti-terrorist or other attacks by the United States, a United States-led
coalition or any other country, tensions between India and Pakistan related to
the Kashmir region, military armament or social unrest in any part of India,
inflation, deflation, unanticipated turbulence in interest rates, changes or
volatility in the value of the rupee, foreign exchange rates, equity prices or
other market rates or prices, the performance of the financial markets in
general, changes in domestic and foreign laws, regulations and taxes, changes in
the competitive and pricing environment in India, and general or regional
changes in asset valuations. For a further discussion on the factors that could
cause actual results to differ, see the discussion under "Risk Factors"
contained elsewhere in this annual report.

EXCHANGE RATES

Fluctuations in the exchange rate between the Indian rupee and the US
dollar will affect the US dollar equivalent of the Indian rupee price of our
equity shares on the Indian stock exchanges and, as a result, will affect the
market price of our ADSs in the United States. These fluctuations will also
affect the conversion into US dollars by the depositary of any cash dividends
paid in Indian rupees on our equity shares represented by ADSs.

On an average annual basis, the Indian rupee has declined against the
dollar since 1980. In early July 1991, the government adjusted the Indian rupee
downward by an aggregate of approximately 20.0% against the dollar. The
adjustment was effected as part of an economic package designed to overcome
economic and foreign exchange problems. After the Indian rupee was made
convertible on the current account in March 1993, it depreciated on an average
annual basis at a rate of approximately 5-6%. During fiscal 2003 and fiscal
2004, however, the rupee appreciated against the US dollar, from Rs. 49.06 per
US$ 1.00 at May 31, 2002 to Rs. 43.40 per US$ 1.00 at March 31, 2004. The rupee
again depreciated against the dollar during fiscal 2005 by 0.5% and during
fiscal 2006 (through September 23, 2005) by 0.4%. The following table sets
forth, for the periods indicated, certain information concerning the exchange
rates between Indian rupees and US dollars based on the noon buying rate.

Fiscal Year Period End(1) Average(1)(2)
- --------------------------------------------------------------------------------
2000............................................... 43.65 43.46
2001 .............................................. 46.85 45.88
2002............................................... 48.83 47.80
2003 .............................................. 47.53 48.43
2004 ............................................. 43.40 45.78
2005 .............................................. 43.62 44.86
2006 (through September 23, 2005) ................. 43.80 43.64

Month High Low
- --------------------------------------------------------------------------------
March 2005......................................... 43.70 43.44
April 2005......................................... 43.72 43.48
May 2005........................................... 43.62 43.21
June 2005 ......................................... 43.71 43.44
July 2005.......................................... 43.59 43.05
August 2005 ....................................... 44.00 43.36
(September
2005 through September 23, 2005) ................. 43.94 43.75
- ----------
(1) The noon buying rate at each period end and the average rate for each
period differed from the exchange rates used in the preparation of our
financial statements.

(2) Represents the average of the noon buying rate on the last day of each
month during the period.

Although certain rupee amounts in this annual report have been translated
into dollars for convenience, this does not mean that the rupee amounts referred
to could have been, or could be, converted into dollars at any particular rate,
the rates stated below, or at all. Except in the section on "Market Price
Information", all translations from rupees to dollars are based on the noon
buying rate in the City of New York for cable transfers in rupees at March 31,
2005. The Federal Reserve Bank of New York certifies this rate for customs
purposes on each date the rate is given. The noon buying rate at March 31, 2005
was Rs. 43.62 per US$ 1.00 and at August 31, 2005 was Rs. 44.00 per US$ 1.00.

RISK FACTORS

You should carefully consider the following risk factors as well as the
other information contained in this annual report in evaluating us and our
business.

Risks Relating to India

A slowdown in economic growth in India could cause our business to suffer.

Any slowdown in the Indian economy or volatility of global commodity
prices, in particular oil and steel prices, could adversely affect our borrowers
and contractual counterparties. Because of the importance of our commercial
banking operations for retail customers and the increasing importance of our
agricultural loan portfolio to our business, any slowdown in the growth of the
housing, automobiles and agricultural sectors could adversely impact our
business, including our ability to grow our asset portfolio, the quality of our
assets, our financial performance, our stockholders' equity, our ability to
implement our strategy and the price of our equity shares and ADSs.

A significant increase in the price of crude oil could adversely affect the
Indian economy, which could adversely affect our business.

India imports approximately 70.0% of its requirements of crude oil, which
constituted approximately 27.9% of total imports in fiscal 2005. The sharp
increase in global crude oil prices during fiscal 2001 adversely affected the
Indian economy in terms of volatile interest and exchange rates. This adversely
affected the overall state of liquidity in the banking system leading to
intervention by the Reserve Bank of India. Over the last year, there has been a
sharp increase in global crude oil prices which was due to both increased demand
and pressure on production and refinery capacity. The full burden of the oil
price increase has not yet been passed to Indian consumers and has been largely
absorbed by the government and government-owned oil marketing companies.
Sustained high levels, further increases or volatility of oil prices and the
pass-through of recent increases to Indian consumers could have a material
negative impact on the Indian economy and the Indian banking and financial
system in particular, including through a rise in inflation and market interest
rates and a higher trade deficit. This could adversely affect our business
including our liquidity, our ability to grow, the quality of our assets, our
financial performance, our stockholders' equity, our ability to implement our
strategy and the price of our equity shares and ADSs.

A significant change in the Indian government's economic liberalization and
deregulation policies could adversely affect our business and the price of
our equity shares and ADSs.

Our assets and customers are predominantly located in India. The Indian
government has traditionally exercised and continues to exercise a dominant
influence over many aspects of the economy. Government policies could adversely
affect business and economic conditions in India, our future financial
performance, our stockholders' equity and the price of our equity shares and
ADSs.

Financial instability in other countries, particularly emerging market
countries and countries where we have established operations, could
adversely affect our business and the price of our equity shares and ADSs.

The Indian economy is influenced by economic and market conditions in other
countries, particularly emerging market countries in Asia. We have also
established operations in several other countries. A loss of investor confidence
in the financial systems of other emerging markets and countries where we have
established operations or any worldwide financial instability may cause
increased volatility in the Indian financial markets and, directly or
indirectly, adversely affect the Indian economy and financial sector, our
business, our future financial performance, our stockholders' equity and the
price of our equity shares and ADSs.

If regional hostilities, terrorist attacks or social unrest in some parts
of the country increase, our business and the price of our equity shares
and ADSs could be adversely affected.

India has from time to time experienced social and civil unrest and
hostilities both internally and with neighboring countries. In the past, there
have been military confrontations between India and Pakistan. India has also
experienced terrorist attacks in some parts of the country. These hostilities
and tensions could lead to political

or economic instability in India and adversely affect our business, our future
financial performance and the price of our equity shares and ADSs.

Trade deficits could adversely affect our business and the price of our
equity shares and ADSs.

India's trade relationships with other countries and its trade deficit,
driven to a major extent by global crude oil prices, may adversely affect Indian
economic conditions. If trade deficits increase or are no longer manageable
because of the rise in global crude oil prices or otherwise, the Indian economy,
and therefore our business, our financial performance, our stockholders' equity
and the price of our equity shares and our ADSs could be adversely affected.

Natural calamities could adversely affect the Indian economy, our business
and the price of our equity shares and ADSs.

India has experienced natural calamities like earthquakes, floods and
drought in the past few years. The extent and severity of these natural
disasters determine their impact on the Indian economy. For example, in fiscal
2003, many parts of India received significantly less than normal rainfall. As a
result of the drought conditions in the economy during fiscal 2003, the
agricultural sector recorded a negative growth of 7.0%. Also, the erratic
progress of the monsoon in fiscal 2005 adversely affected sowing operations for
certain crops and resulted in a decline in the growth rate of the agriculture
sector from 9.1% in fiscal 2004 to 1.1% in fiscal 2005. Further prolonged spells
of below or above normal rainfall or other natural calamities could adversely
affect the Indian economy, our business and the price of our equity shares and
ADSs.

Financial difficulty and other problems in certain financial institutions
in India could adversely affect our business and the price of our equity
shares and ADSs.

As an Indian bank, we are exposed to the risks of the Indian financial
system which may be affected by the financial difficulties faced by certain
Indian financial institutions because the commercial soundness of many financial
institutions may be closely related as a result of credit, trading, clearing or
other relationships. This risk, which is sometimes referred to as "systemic
risk", may adversely affect financial intermediaries, such as clearing agencies,
banks, securities firms and exchanges with whom we interact on a daily basis.
Any such difficulties or instability of the Indian financial system in general
could create an adverse market perception about Indian financial institutions
and banks and adversely affect our business, our future financial performance,
our Stockholders' equity and the price of our equity shares and ADSs. See also
"Overview of the Indian Financial Sector". As the Indian financial system
operates within an emerging market, it faces risks of a nature and extent not
typically faced in more developed economies, including the risk of deposit runs
notwithstanding the existence of a national deposit insurance scheme. For
example, in April 2003, unsubstantiated rumours, believed to have originated in
Gujarat, a state in India, alleged that we were facing liquidity problems.
Although our liquidity position was sound, we witnessed higher than normal
deposit withdrawals on account of these unsubstantiated rumours for several days
in April 2003. We successfully controlled the situation in this instance, but
any failure to control such situations in the future could result in high
volumes of deposit withdrawals which would adversely impact our liquidity
position.

A decline in India's foreign exchange reserves may affect liquidity and
interest rates in the Indian economy which could adversely impact us.

A decline in India's foreign exchange reserves could result in reduced
liquidity and higher interest rates in the Indian economy, which could adversely
affect our business, our future financial performance, our stockholders' equity
and the price of our equity shares and ADSs. See also "-- Risks Relating to Our
Business".

Any downgrading of India's debt rating by an international rating agency
could adversely affect our business and the price of our equity shares and
ADSs.

Any adverse revisions to India's credit ratings for domestic and
international debt by international rating agencies may adversely affect our
business, our future financial performance, our stockholders' equity and the
price of our equity shares and ADSs.

Risks Relating to Our Business

Our business is particularly vulnerable to interest rate risk and
volatility in interest rates could adversely affect our net interest
margin, the value of our fixed income portfolio, our income from treasury
operations and our financial performance.

As a result of certain reserve requirements of the Reserve Bank of India,
we are more structurally exposed to interest rate risk than banks in many other
countries. See "Supervision and Regulation - Legal Reserve Requirements". These
requirements result in our maintaining a large portfolio of fixed income
government of India securities, and we could be materially adversely impacted by
a rise in interest rates, especially if the rise were sudden or sharp. These
requirements also have a negative impact on our net interest income and net
interest margin because we earn interest on a portion of our assets at rates
that are generally less favorable than those typically received on our other
interest-earning assets. If our cost of funds does not decline at the same time
or to the same extent as the yield on our interest-earning assets, or if the
yield on our interest-earning assets does not increase at the same time or to
the same extent as our cost of funds, our net interest income and net interest
margin would be adversely impacted. We are also exposed to interest rate risk
through our treasury operations and our subsidiary ICICI Securities, which is a
primary dealer in government of India securities. A rise in interest rates or
greater interest rate volatility could adversely affect our income from treasury
operations or the value of our fixed income securities trading portfolio.

A large proportion of ICICI's loans consisted of project finance
assistance, a substantial portion of which is particularly vulnerable to
completion and other risks.

Long-term project finance assistance constituted a significant proportion
of ICICI's asset portfolio and, despite the growth of our retail loan portfolio,
continues to be a significant proportion of our loan portfolio. The viability of
these projects depends upon a number of factors, including market demand,
government policies and the overall economic environment in India and the
international markets. These projects are particularly vulnerable to a variety
of risks, including completion risk and counterparty risk, which could adversely
impact their ability to generate revenues. We cannot be sure that these projects
will perform as anticipated. Over the last several years, we experienced a high
level of impaired loans in our project finance loan portfolio as a result of the
downturn in certain global commodity markets and increased competition in India.
Future project finance losses or high levels of loan impairment could have a
materially adverse effect on our profitability and the quality of our loan
portfolio.

We have a high concentration of loans to certain customers and sectors and
impairment of a substantial portion of these loans could adversely affect
the overall quality of our loan portfolio, our business and the price of
our equity shares and ADSs.

Our loan portfolio, gross restructured loan portfolio and gross other
impaired loan portfolio have a high concentration in certain customers and
sectors. See "Business - Loan Portfolio". In the past, these borrowers and
sectors have been adversely affected by economic conditions in varying degrees.
Credit losses or financial difficulties of these borrowers and sectors in the
future could adversely affect our business, our financial performance, our
stockholders' equity and the price of our equity shares and ADSs.

If we are not able to control or reduce the level of impaired loans in our
portfolio, our business will suffer.

We have experienced rapid growth in our retail loan portfolio. See
"Business - Loan Portfolio". Various factors, including a rise in unemployment,
prolonged recessionary conditions, a sharp and sustained rise in interest rates,
developments in the Indian economy, movements in global commodity markets and
exchange rates and global competition could cause an increase in the level of
impaired loans on account of these retail loans and have a material adverse
impact on the quality of our loan portfolio. In addition, under the directed
lending norms of the Reserve Bank of India, we are required to extend 50.0% of
our residual net bank credit (excluding the advances of ICICI at year-end fiscal
2002) to certain eligible sectors, which are categorized as "priority sectors".
See "Business - Loan Portfolio - Directed Lending". We may experience a
significant increase in impaired loans in our directed lending portfolio,
particularly loans to the agriculture sector and small-scale industries, where
we are less able to control the portfolio quality and where economic
difficulties are likely to affect our borrowers more severely. We may not be
able to control or reduce the level of impaired loans in our project and
corporate finance portfolio or

assure that troubled debt restructuring will be successful or that borrowers
will meet their obligations under the restructured terms. We may not be
successful in our efforts to improve collections and foreclose on existing
impaired loans.

If we are not able to control or reduce the level of impaired loans, the
overall quality of our loan portfolio may deteriorate and our business, our
future financial performance, our stockholders' equity and the price of our
equity shares and ADSs may be adversely affected.

Further deterioration of our impaired loan portfolio and an inability to
improve our allowance for loan losses as a percentage of impaired loans
could adversely affect the price of our equity shares and ADSs.

The level of our impaired loans is significantly higher than the average
percentage of impaired loans in the portfolios of banks in more developed
countries. Although we believe that our allowances for loan losses will be
adequate to cover all known losses in our asset portfolio, we cannot assure you
that there will be no deterioration in the allowance for loan losses as a
percentage of gross impaired loans or otherwise or that the percentage of
impaired loans that we will be able to recover will be similar to our and
ICICI's past experience of recoveries of impaired loans. In the event of any
further deterioration in our impaired loan portfolio, there could be an adverse
impact on our business, our future financial performance, our stockholders'
equity and the price of our equity shares and ADSs.

The value of our collateral may decrease or we may experience delays in
enforcing our collateral when borrowers default on their obligations to us
which may result in failure to recover the expected value of collateral
security exposing us to a potential loss.

A substantial portion of our loans to corporate and retail customers are
secured by collateral. See "Loan Portfolio - Collateral - Completion, Perfection
and Enforcement". We may not be able to realize the full value of our collateral
as a result of delays in bankruptcy and foreclosure proceedings, defects in the
perfection of collateral, fraudulent transfers by borrowers and other factors.

There can be no assurance that any legislation in this area will have a
favorable impact on our efforts to resolve non-performing assets. See also
"Overview of the Indian Financial Sector - Recent Structural Reforms -
Legislative Framework for Recovery of Debts Due to Banks." Failure to recover
the expected value of collateral could expose us to potential losses, which
could adversely affect our business, our future financial performance, our
stockholders' equity and the price of our equity shares and ADSs.

We face greater credit risks than banks in developed economies.

Our credit risk is higher because most of our borrowers are based in India.
Unlike several developed economies, a nationwide credit bureau has become
operational in India only recently. This may affect the quality of information
available to us about the credit history of our borrowers, especially
individuals and small businesses. In addition, the credit risk of our borrowers,
particularly small and middle market companies, is higher than borrowers in more
developed economies due to the greater uncertainty in the Indian regulatory,
political, economic and industrial environment and the difficulties of many of
our borrowers to adapt to global technological advances. Also, several of our
borrowers suffered from low profitability because of increased competition from
economic liberalization, a sharp decline in commodity prices, a high debt burden
and high interest rates in the Indian economy at the time of their financing,
and other factors. This may lead to an increase in the level of our impaired
loans, there could be an adverse impact on our business, our future financial
performance, our stockholders' equity and the price of our equity shares and
ADSs.

Our funding is primarily short-term and if depositors do not roll over
deposited funds upon maturity, our business could be adversely affected.

Most of our incremental funding requirements, including replacement of
maturing liabilities of ICICI (which generally had longer maturities), are met
through short-term funding sources, primarily in the form of deposits including
inter-bank deposits. Our customer deposits generally have a maturity of less
than one year. However, a large portion of our assets, primarily the assets of
ICICI and our home loan portfolio, have medium or long-term maturities, creating
the potential for funding mismatches. High volumes of deposit withdrawals or
failure of a

substantial number of our depositors to roll over deposited funds upon maturity
or to replace deposited funds with fresh deposits, could have an adverse effect
on our liquidity position, our business, our future financial performance, our
stockholders' equity and the price of our equity shares and ADSs. See also "-
Financial difficulty and other problems in certain financial institutions in
India could adversely affect our business and the price of our equity shares and
ADSs".

Regulatory changes or enforcement initiatives in India or any of the
jurisdictions in which we operate may adversely affect our business and the
price of our equity shares and ADSs.

We are subject to a wide variety of banking and financial services laws and
regulations and a large number of regulatory and enforcement authorities in each
of the jurisdictions in which we operate. The laws and regulations or the
regulatory or enforcement environment in any of those jurisdictions may change
at any time and may have an adverse effect on the products or services we offer,
the value of our assets or our business in general. Also, the laws and
regulations governing the banking and financial services industry have become
increasingly complex governing a wide variety of issues, including interest
rates, liquidity, capital adequacy, securitization, investments, ethical issues,
money laundering, privacy, record keeping, and marketing and selling practices,
with sometimes overlapping jurisdictional or enforcement authorities. In its
mid-term review of the annual policy statement for fiscal 2005, the Reserve Bank
of India increased the risk weight for the computation of capital adequacy from
50% to 75% in the case of housing loans and from 100% to 125% in the case of
consumer credit (including personal loans and credit cards) as a temporary
counter-cyclical measure. This had a negative impact of 104 basis points on our
capital adequacy ratio at year-end fiscal 2005. In April 2005, the Reserve Bank
of India issued draft guidelines on securitization of standard assets
implemented in their present form would require a significantly higher level of
capital to be maintained for securitized assets and may have an adverse impact
on our business, capital adequacy and financial performance. In July 2005, the
Reserve Bank of India increased the risk weight for capital market exposure and
exposure to commercial real estate from 100% to 125%. See "Supervision and
Regulation". Future changes in laws and regulations and failure or the apparent
failure to address any regulatory changes or enforcement initiatives could have
an adverse impact our business, our future financial performance and our
stockholders' equity, harm our reputation, subject us to penalties, fines,
disciplinary actions or suspensions of any kind, or increase our litigation risk
and have an adverse effect on the price of our equity shares and ADSs.

A determination against us in respect of disputed tax assessments may
adversely impact our financial performance.

We have been assessed a significant amount in additional taxes by the
government of India's tax authorities in excess of our provisions. See "Business
- - Legal and Regulatory Proceedings". We have appealed all of these demands.
While we expect that no additional liability will arise out of these disputed
demands, there can be no assurance that these matters will be settled in our
favor or that no further liability will arise out of these demands. Any
additional tax liability may adversely impact our financial performance and the
price of our equity shares and ADSs.

We are involved in various litigations and any final judgment awarding
material damages against us could have a material adverse impact on our
future financial performance, our stockholders' equity and the price of our
equity shares and ADSs.

We are often involved in litigations for a variety of reasons, which
generally arise because we seek to recover our dues from borrowers or because
customers seek claims against us. The majority of these cases arise in the
normal course and we believe, based on the facts of the cases and consultation
with counsel, that these cases generally do not involve the risk of a material
adverse impact on our financial performance or stockholders' equity. Where we
assess that there is a probable risk of loss, it is our policy to make
provisions for the loss. However, we do not make provisions or disclosures in
our financial statements where our assessment is that the risk is insignificant.
See "Business - Legal and Regulatory Proceedings". We cannot guarantee that the
judgments in any of the litigation in which we are involved would be favorable
to us and if our assessment of the risk changes, our view on provisions will
also change.

Our inability to grow further or succeed in retail products and services
may adversely affect our business.

We are a relatively new entrant in the retail loan business and have
achieved significant growth in this sector since the amalgamation. See "Business
- - Loan Portfolio". While we anticipate continued significant demand in this
area, we cannot assure you that our retail portfolio will continue to grow as
expected. Our inability to grow further or succeed in retail products and
services may adversely affect our business, our future financial performance,
our stockholders' equity and the price of our equity shares and ADSs. See also
"- If we are not able to control or reduce the level of impaired loans in our
portfolio, our business will suffer", "- There is operational risk associated
with our industry which, when realized, may have an adverse impact on our
results" and "- We depend on the accuracy and completeness of information about
customers and counterparties".

Our inability to succeed in our new business areas or to manage the new
challenges and risks that we face, may cause us to miss our projected
earnings and growth targets and may have a material adverse impact on our
future financial performance, our stockholders' equity and the price of our
equity shares and ADSs.

We provide a wide range of insurance products and services through our
subsidiaries ICICI Prudential Life Insurance Company and ICICI Lombard General
Insurance Company. Recently, we have also pursued an international expansion
strategy establishing subsidiaries or opening branches or representative offices
in various countries, including the United Kingdom, Canada, Russia, Singapore,
Bahrain and the United States. See "Business - Overview of Products and Services
- - Insurance" and "- Commercial Banking for International Customers". This
international expansion strategy exposes us to a new variety of regulatory and
business challenges and risks, including cross-cultural risk. The skills
required for this business could be different from those required for our Indian
business and we may not be able to attract the required talented professionals.
Our inability to manage these new challenges and risks, our failure to raise the
substantial capital required for our international expansion or our insurance
business or any adverse developments concerning our joint venture partners in
the insurance business, may cause us to miss our projected earnings and growth
targets and may have a material adverse effect on our business, our reputation,
our future financial performance, our stockholders' equity and the price of our
equity shares and ADSs.

We are exposed to fluctuations in foreign exchange rates.

As a financial intermediary we are exposed to exchange rate risk. See "Risk
Management - Quantitative and Qualitative Disclosures About Market Risk -
Exchange Rate Risk". Adverse movements and volatility in foreign exchange rates
may adversely affect our borrowers, the quality of our exposure to our
borrowers, our business, our future financial performance, our shareholders'
funds and the price of our equity shares and ADSs.

Our business is very competitive and our growth strategy depends on our
ability to compete effectively.

We face intense competition from Indian and foreign commercial banks in all
our products and services. Foreign banks also operate in India through
non-banking finance companies. Further liberalization of the Indian financial
sector, could lead to a greater presence or new entries of foreign banks
offering a wider range of products and services, which would significantly
toughen our competitive environment. In addition, the Indian financial sector
may experience further consolidation, resulting in fewer banks and financial
institutions, some of which may have greater resources than us. The Reserve Bank
of India has announced a roadmap for the presence of foreign banks in India that
would, after a review in 2009, allow foreign banks to acquire up to 74.0%
shareholding in an Indian private sector bank. See "Competition" and "Overview
of the Indian Financial Sector - Commercial Banks." Due to competitive
pressures, we may be unable to successfully execute our growth strategy and
offer products and services at reasonable returns and this may adversely impact
our business, our future financial performance, our stockholders' equity and the
price of our equity shares and ADSs.

Fraud and significant security breaches in our computer system and network
infrastructure could adversely impact our business.

Our business operations are based on a high volume of transactions.
Although we take adequate measures to safeguard against system-related and other
fraud, there can be no assurance that we would be able to prevent fraud. Our
reputation could be adversely affected by fraud committed by employees,
customers or outsiders. Physical or electronic break-ins, security breaches,
other disruptive problems caused by our increased use of the Internet or

power disruptions could also affect the security of information stored in and
transmitted through our computer systems and network infrastructure. Although we
have implemented security technology and operational procedures to prevent such
occurrences, there can be no assurance that these security measures will be
successful. A significant failure in security measures could have a material
adverse effect on our business, our future financial performance and the price
of our equity shares and ADSs.

System failures could adversely impact our business.

Given the increasing share of retail products and services and transaction
banking services in our total business, the importance of systems technology to
our business has increased significantly. Our principal delivery channels
include ATMs, call centers and the Internet. Any failure in our systems,
particularly for retail products and services and transaction banking, could
significantly affect our operations and the quality of customer service and
could result in business and financial losses and adversely affect the price of
our equity shares and ADSs.

There is operational risk associated with our industry which, when
realized, may have an adverse impact on our results.

We, like all financial institutions, are exposed to many types of
operational risk, including the risk of fraud or other misconduct by employees
or outsiders, unauthorized transactions by employees or operational errors,
including clerical or recordkeeping errors or errors resulting from faulty
computer or telecommunications systems. We use direct marketing associates for
marketing our retail credit products. We also outsource some functions to other
agencies. Given our high volume of transactions, certain errors may be repeated
or compounded before they are discovered and successfully rectified. In
addition, our dependence upon automated systems to record and process
transactions may further increase the risk that technical system flaws or
employee tampering or manipulation of those systems will result in losses that
are difficult to detect. We may also be subject to disruptions of our operating
systems, arising from events that are wholly or partially beyond our control
(including, for example, computer viruses or electrical or telecommunication
outages), which may give rise to a deterioration in customer service and to loss
or liability to us. We are further exposed to the risk that external vendors may
be unable to fulfill their contractual obligations to us (or will be subject to
the same risk of fraud or operational errors by their respective employees as
are we), and to the risk that its (or its vendors') business continuity and data
security systems prove not to be sufficiently adequate. We also face the risk
that the design of our controls and procedures prove inadequate, or are
circumvented, thereby causing delays in detection or errors in information.
Although we maintain a system of controls designed to keep operational risk at
appropriate levels, like all banks we have suffered losses from operational risk
and there can be no assurance that we will not suffer losses from operational
risks in the future that may be material in amount. For a discussion of how
operational risk is managed see "Risk Management - Operational Risk".

We are subject to credit, market and liquidity risk which may have an
adverse effect on our credit ratings and our cost of funds.

To the extent any of the instruments and strategies we use to hedge or
otherwise manage our exposure to market or credit risk are not effective, we may
not be able to mitigate effectively our risk exposures in particular market
environments or against particular types of risk. Our balance sheet growth will
be dependent upon economic conditions, as well as upon our determination to
securitize, sell, purchase or syndicate particular loans or loan portfolios. Our
trading revenues and interest rate risk are dependent upon our ability to
properly identify, and mark to market, changes in the value of financial
instruments caused by changes in market prices or rates. Our earnings are
dependent upon the effectiveness of our management of migrations in credit
quality and risk concentrations, the accuracy of our valuation models and our
critical accounting estimates and the adequacy of our allowances for loan
losses. To the extent our assessments, assumptions or estimates prove inaccurate
or not predictive of actual results, we could suffer higher than anticipated
losses. See also "- Further deterioration of our impaired loan portfolio and an
inability to improve our allowance for loan losses as a percentage of impaired
loans, could adversely affect the price of our equity shares and ADSs". The
successful management of credit, market and operational risk is an important
consideration in managing our liquidity risk because it affects the evaluation
of our credit ratings by rating agencies. Rating agencies may reduce or indicate
their intention to reduce the ratings at any time. See also "-Any downgrading of
India's debt rating by an international rating agency could adversely affect our
business and the price of our equity shares and ADSs". The rating agencies can
also decide to withdraw their ratings altogether,

which may have the same effect as a reduction in our ratings. Any reduction in
our ratings may increase our borrowing costs, limit our access to capital
markets and adversely affect our ability to sell or market our products, engage
in business transactions, particularly longer-term and derivatives transactions,
or retain our customers. This, in turn, could reduce our liquidity and
negatively impact our operating results and financial condition. For more
information relating to our ratings, see "Operating and Financial Review and
Prospects - Liquidity Risk".

We depend on the accuracy and completeness of information about customers
and counterparties.

In deciding whether to extend credit or enter into other transactions with
customers and counterparties, we may rely on information furnished to us by or
on behalf of customers and counterparties, including financial statements and
other financial information. We may also rely on certain representations as to
the accuracy and completeness of that information and, with respect to financial
statements, on reports of independent auditors. For example, in deciding whether
to extend credit, we may assume that a customer's audited financial statements
conform with generally accepted accounting principles and present fairly, in all
material respects, the financial condition, results of operations and cash flows
of the customer. Our financial condition and results of operations could be
negatively affected by relying on financial statements that do not comply with
generally accepted accounting principles or other information that is materially
misleading.

Any inability to attract and retain talented professionals may adversely
impact our business.

Attracting and retaining talented professionals is a key element of our
strategy and we believe it to be a significant source of competitive advantage.
See "Business - Employees." Our inability to attract and retain talented
professionals or the loss of key management personnel could have an adverse
impact on our business, our future financial performance and the price of our
equity shares and ADSs.

Risks Relating to the ADSs and Equity Shares

You will not be able to vote your ADSs and your ability to withdraw equity
shares from the depositary facility is uncertain and may be subject to
delays.

Our ADS holders have no voting rights unlike holders of our equity shares
who have voting rights. For certain information regarding the voting rights of
the equity shares underlying your ADSs, see "Business - Shareholding Structure
and Relationship with the Government of India". If you wish, you may withdraw
the equity shares underlying your ADSs and seek to vote the equity shares you
obtain from the withdrawal. However, for foreign investors, this withdrawal
process may be subject to delays and is subject to a cap of 49% on the total
shareholding of foreign institutional investors and non-resident Indians in us.
For a discussion of the legal restrictions triggered by a withdrawal of the
equity shares from the depositary facility upon surrender of ADSs, see
"Restriction on Foreign Ownership of Indian Securities".

US investors will be subject to special tax rules, including the possible
imposition of interest charges, if we are considered to be a passive
foreign investment company.

Based upon certain proposed US Treasury regulations which are proposed to
be effective for taxable years beginning after December 31, 1994 and upon
certain management estimates, we do not expect to be a Passive Foreign
Investment Company (a "PFIC"). However, since there can be no assurance that
such proposed Treasury regulations will be finalized in their current form, and
since the composition of our income and assets will vary over time, there can be
no assurance that we will not be considered a PFIC for any taxable year. If we
are a PFIC for any taxable year during which a US investor holds any of our
equity shares or ADSs, the US investor would be subject to special adverse tax
rules, including the possible imposition of interest charges (see "Taxation -
United States Tax - Passive Foreign Investment Company Rules").

Your ability to sell in India any equity shares withdrawn from the
depositary facility, the conversion of rupee proceeds from such sale into a
foreign currency and the repatriation of such foreign currency may be
subject to delays if specific approval of the Reserve Bank of India is
required.

ADS holders seeking to sell in India any equity shares withdrawn upon
surrender of ADSs, convert the rupee proceeds from such sale into a foreign
currency or repatriate such foreign currency may need the Reserve Bank of
India's approval for each such transaction. See "Restriction on Foreign
Ownership of Indian Securities". We cannot guarantee that any such approval will
be obtained in a timely manner or at terms favorable to the investor. Because of
possible delays in obtaining the requisite approvals, investors in equity shares
may be prevented from realizing gains during periods of price increases or
limiting losses during periods of price declines.

Restrictions on deposit of equity shares in the depositary facility could
adversely affect the price of our ADSs.

Under current Indian regulations, an ADS holder who surrenders ADSs and
withdraws equity shares may deposit those equity shares again in the depositary
facility in exchange for ADSs. An investor who has purchased equity shares in
the Indian market may also deposit those equity shares in the ADS program.
However, the deposit of equity shares may be subject to securities law
restrictions and the restriction that the cumulative aggregate number of equity
shares that can be deposited as of any time cannot exceed the cumulative
aggregate number represented by ADSs converted into underlying equity shares as
of such time. These restrictions increase the risk that the market price of our
ADSs will be below that of the equity shares.

Certain shareholders own a large percentage of our equity shares and their
actions could adversely affect the price of our equity shares and ADSs.

Life Insurance Corporation of India and General Insurance Corporation of
India, each of which is directly or indirectly controlled by the Indian
government, are among our principal shareholders. Our other large shareholders
include Allamanda Investments Pte. Limited, a subsidiary of Temasek Holdings
Pte. Limited, the government of Singapore, HWIC Asia Fund, an affiliate of
Fairfax Financial Holdings Limited, and Bajaj Auto Limited, an Indian private
sector company. See "Business - Shareholding Structure and Relationship with the
Government of India". Any substantial sale of our equity shares by these or
other large shareholders could adversely affect the price of our equity shares
and ADSs.

Conditions in the Indian securities market may adversely affect the price
or liquidity of our equity shares and ADSs.

The Indian securities markets are smaller and more volatile than securities
markets in developed economies. In the past, the Indian stock exchanges have
experienced high volatility and other problems that have affected the market
price and liquidity of the listed securities, including temporary exchange
closures, broker defaults, settlement delays and strikes by brokers. In March
1995, the Bombay Stock Exchange (the "BSE"), was closed for three days following
a default by a broker. In March 2001, the BSE dropped 667 points or 15.6% and
there were also rumors of insider trading in the BSE leading to the resignation
of the BSE president and several other members of the governing board. In the
same month, the Kolkata Stock Exchange suffered a payment crisis when several
brokers defaulted and the exchange invoked guarantees provided by various Indian
banks. In April 2003, the decline in the price of the equity shares of a leading
Indian software company created volatility in the Indian stock markets and
created temporary concerns regarding our exposure to the equity markets. On May
17, 2004, the BSE Sensex fell by 565 points from 5,070 to 4,505, creating
temporary concerns regarding our exposure to the equity markets. Both the BSE
and the National Stock Exchange (the "NSE") halted trading on the exchanges on
May 17, 2004 in view of the sharp fall in prices of securities. The Indian
securities markets have experienced rapid appreciation over the past few months
and relatively higher volatility recently. In addition, the governing bodies of
the Indian stock exchanges have from time to time imposed restrictions on
trading in certain securities, limitations on price movements and margin
requirements. Further, from time to time, disputes have arisen between listed
companies and stock exchanges and other regulatory bodies, which in some cases
had a negative effect on market sentiment. In recent years, there have been
changes in laws and regulations for the taxation of dividend income, which have
impacted the Indian equity capital markets. See "Dividends". Similar problems or
changes in the future could adversely affect the market price and liquidity of
our equity shares and ADSs.

An active or liquid trading market for our ADSs is not assured.

Although our ADSs are listed and traded on the New York Stock Exchange, we
cannot be certain that an active, liquid market for our ADSs will be sustained.
Indian legal restrictions may limit the supply of ADSs and a loss of liquidity
could increase the price volatility of our ADSs.

Settlement of trades of equity shares on Indian stock exchanges may be
subject to delays.

The equity shares represented by the ADSs are currently listed on the BSE
and the NSE. Settlement on those stock exchanges may be subject to delays and an
investor in equity shares withdrawn from the depositary facility upon surrender
of ADSs may not be able to settle trades on such stock exchanges in a timely
manner.

Changes in Indian regulations on foreign ownership, a change in investor
preferences or an increase in the number of ADSs outstanding could
adversely affect the price of our ADSs.

ADSs issued by companies in certain emerging markets, including India, may
trade at a discount or a premium to the underlying equity shares, in part
because of the restrictions on foreign ownership of the underlying equity
shares. See "Restriction on Foreign Ownership of Indian Securities".
Historically, our ADSs have generally traded at a premium to the trading price
of our underlying equity shares on the Indian stock exchanges. See "Market Price
Information". We believe that this price premium resulted from the limited
portion of our market capitalization represented by ADSs, restrictions imposed
by Indian law on the conversion of equity shares into ADSs and an apparent
preference for some investors to trade dollar-denominated securities. In fiscal
2005, we sponsored an offering of ADSs by our shareholders which increased the
number of outstanding ADSs and we may conduct similar offerings in the future.
Also, over time, some of the restrictions on the issuance of ADSs imposed by
Indian law have been relaxed and other restrictions may also be relaxed in the
future though the timing is uncertain. As a result, any premium enjoyed by the
ADSs as compared to the equity shares may be reduced or eliminated as a result
of offerings made or sponsored by us, changes in Indian law permitting further
conversion of equity shares into ADSs or a change in investor preferences.

Your holdings may be diluted by additional issuances of equity and any
dilution may adversely affect the market price of our equity shares and
ADSs.

We may conduct additional equity offerings to fund the growth of our
business, including our international operations, our insurance business or our
other subsidiaries. Any future issuance of equity shares would dilute the
positions of investors in equity shares and ADSs and could adversely affect the
market price of our equity shares and ADSs.

You may be unable to exercise preemptive rights available to other
shareholders.

A company incorporated in India must offer its holders of equity shares
preemptive rights to subscribe and pay for a proportionate number of shares to
maintain their existing ownership percentages prior to the issuance of any new
equity shares, unless these rights have been waived by at least 75.0% of the
company's shareholders present and voting at a shareholders' general meeting. US
investors in ADSs may be unable to exercise these preemptive rights for equity
shares underlying ADSs unless a registration statement under the Securities Act
of 1933, as amended (the "Securities Act") is effective with respect to such
rights or an exemption from the registration requirements of the Securities Act
is available. Our decision to file a registration statement will depend on the
costs and potential liabilities associated with any such registration as well as
the perceived benefits of enabling US investors in ADSs to exercise their
preemptive rights and any other factors we consider appropriate at such time. To
the extent that investors in ADSs are unable to exercise preemptive rights,
their proportional ownership interests in us would be reduced.

Because the equity shares underlying the ADSs are quoted in rupees in
India, you may be subject to potential losses arising out of exchange rate
risk on the Indian rupee.

Investors who purchase ADSs are required to pay for the ADSs in US dollars
and are subject to currency fluctuation risk and convertibility risks since the
equity shares underlying the ADSs are quoted in rupees on the Indian stock
exchanges on which they are listed. Dividends on the equity shares will also be
paid in rupees and then

converted into US dollars for distribution to ADS investors. Investors who seek
to convert the rupee proceeds of a sale of equity shares withdrawn upon
surrender of ADSs into foreign currency and repatriate the foreign currency may
need to obtain the approval of the Reserve Bank of India for each such
transaction. See also "- Your ability to sell in India any equity shares
withdrawn from the depositary facility, the conversion of the rupee proceeds
from such sale into a foreign currency and the repatriation of such foreign
currency may be subject to delays if specific approval of the Reserve Bank of
India is required" and "Exchange Rates".

You may be subject to Indian taxes arising out of capital gains.

Generally, capital gains, whether short-term or long-term, arising on the
sale of the underlying equity shares in India are subject to Indian capital
gains tax. Investors are advised to consult their own tax advisers and to
carefully consider the potential tax consequences of an investment in the ADSs.
See "Taxation - Indian Tax".

There may be less company information available in Indian securities
markets than in securities markets in the United States.

There is a difference between India and the United States in the level of
regulation and monitoring of the securities markets and the activities of
investors, brokers and other market participants. The Securities and Exchange
Board of India is responsible for improving disclosure and regulating insider
trading and other matters for the Indian securities markets. There may, however,
be less publicly available information about Indian companies than is regularly
made available by public companies in the United States.

BUSINESS

Overview

We offer a wide range of banking products and services to corporate and
retail customers through a variety of delivery channels. In fiscal 2005, we made
a net profit of Rs. 8.5 billion (US$ 196 million) compared to a net profit of
Rs. 5.2 billion (US$ 120 million) in fiscal 2004. At year-end fiscal 2005, we
had assets of Rs. 1,863.4 billion (US$ 42.7 billion) and stockholders' equity of
Rs. 128.0 billion (US$ 2.9 billion). At year-end fiscal 2005, ICICI Bank was the
second-largest bank in India and the largest bank in the private sector, in
terms of total assets.

We offer products and services in the areas of commercial banking,
investment banking and other financial services including insurance. Our
commercial banking operations for retail customers consist of retail lending and
deposits, private banking, distribution of third party investment products and
other fee-based products and services, as well as issuance of unsecured
redeemable bonds. We provide a range of commercial banking products and services
to India's leading corporations, growth-oriented middle market companies and
small and medium enterprises, including loan products, fee and commission-based
products and services, deposits and foreign exchange and derivatives products.
We also offer project finance and agricultural and rural banking products. We
offer investment banking services through our subsidiary, ICICI Securities,
including corporate advisory services, primary dealership in government
securities and equity underwriting and brokerage. In addition, we provide
venture capital funding to start-up companies and private equity to a range of
companies through our venture capital and private equity fund management
subsidiary ICICI Venture Funds Management Company. We provide a wide range of
insurance products and services through our subsidiaries ICICI Prudential Life
Insurance Company and ICICI Lombard General Insurance Company. We have an asset
management joint venture with Prudential plc of the United Kingdom through
Prudential ICICI Asset Management Company and Prudential ICICI Trust. At the end
of August 2005, Prudential ICICI Asset Management Company was the largest
private sector player in the Indian mutual fund industry with funds under
management of approximately Rs. 214.00 billion (US$ 4.9 billion) and a market
share of approximately 11%. Subsequent to year-end fiscal 2005, we acquired an
additional 6% of the share capital of the joint venture from Prudential, which
increased our shareholding in the joint venture to 51%. The value of this
transaction is not material to our overall results. ICICI Bank cross-sells the
products of our insurance and asset management subsidiaries to its corporate and
retail customers.

We believe that the international markets present a major growth
opportunity and have, therefore, expanded the range of our commercial banking
products to international customers in North America, the United Kingdom, the
Middle-East and South-East Asia. We currently have 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. In May 2005, we acquired Investitsionno-Kreditny Bank, a Russian bank
with total assets of approximately US$ 4.4 million at year-end fiscal 2005. The
value of this transaction is not material to our overall results. We have
received approvals to set-up a branch office in Sri Lanka and have applied for
branch licenses in the United States and Hong Kong.

We deliver our products and services through a variety of channels, ranging
from traditional bank branches and ATMs to call centers and the Internet. At
year-end fiscal 2005, we had a network of 510 branches and 52 extension counters
in 367 centers across several Indian states and 1,910 ATMs.

Our legal name is ICICI Bank Limited but we are known commercially as ICICI
Bank. We were incorporated on January 5, 1994 under the laws of India as a
limited liability corporation. The duration of ICICI Bank is unlimited. Our
principal corporate office is located at ICICI Bank Towers, Bandra-Kurla
Complex, Mumbai 400 051, India, our telephone number is +91 22 2653 1414 and our
web site address is www.icicibank.com. Our agent for service of process in the
United States is Mr. Madhav Kalyan, Joint General Manager, ICICI Bank New York
Representative Office, 500 Fifth Avenue, Suite 2830, New York, New York 10110.

History

ICICI was formed in 1955 at the initiative of the World Bank, the
government of India and Indian industry representatives. The principal objective
was to create a development financial institution for providing medium-term and
long-term project financing to Indian businesses. Until the late 1980s, ICICI
primarily focused its activities on

project finance, providing long-term funds to a variety of industrial projects.
With the liberalization of the financial sector in India in the 1990s, ICICI
transformed its business from a development financial institution offering only
project finance to a diversified financial services provider that, along with
its subsidiaries and other group companies, offered a wide variety of products
and services. As India's economy became more market-oriented and integrated with
the world economy, ICICI capitalized on the new opportunities to provide a wider
range of financial products and services to a broader spectrum of clients.

ICICI Bank was incorporated in 1994 as a part of the ICICI group. ICICI
Bank's initial equity capital was contributed for 75.0% by ICICI and for 25.0%
by SCICI Limited, a diversified finance and shipping finance lender of which
ICICI owned 19.9% at December 1996. Pursuant to the merger of SCICI into ICICI,
ICICI Bank became a wholly-owned subsidiary of ICICI. Effective March 10, 2001,
ICICI Bank acquired Bank of Madura, an old private sector bank, in an all-stock
merger.

The issue of universal banking, which in the Indian context means
conversion of long-term lending institutions such as ICICI into commercial
banks, had been discussed at length over the past few years. Conversion into a
bank offered ICICI the ability to accept low-cost demand deposits and offer a
wider range of products and services, and greater opportunities for earning
non-fund based income in the form of banking fees and commissions. ICICI Bank
also considered various strategic alternatives in the context of the emerging
competitive scenario in the Indian banking industry. ICICI Bank identified a
large capital base and size and scale of operations as key success factors in
the Indian banking industry. In view of the benefits of transformation into a
bank and the Reserve Bank of India's pronouncements on universal banking, ICICI
and ICICI Bank decided to merge.

At the time of the merger, both ICICI Bank and ICICI were publicly listed
in India and on the New York Stock Exchange. The amalgamation was approved by
each of the boards of directors of ICICI, ICICI Personal Financial Services,
ICICI Capital Services and ICICI Bank at the respective board meetings held on
October 25, 2001. The amalgamation was approved by ICICI Bank's and ICICI's
shareholders at their extraordinary general meetings held on January 25, 2002
and January 30, 2002, respectively. The amalgamation was sanctioned by the High
Court of Gujarat at Ahmedabad on March 7, 2002 and by the High Court of
Judicature at Bombay on April 11, 2002. The amalgamation was approved by the
Reserve Bank of India on April 26, 2002. The amalgamation became effective on
May 3, 2002 and the date of the amalgamation for accounting purposes under US
GAAP was April 1, 2002. Pursuant to the amalgamation, the shareholders of ICICI
were issued ICICI Bank equity shares in the ratio of one fully paid-up equity
share, par value Rs. 10 per share, of ICICI Bank for every two fully paid-up
equity shares, par value Rs. 10 per share, of ICICI. As there were five ICICI
equity shares underlying each ICICI ADS and two ICICI Bank equity shares
underlying each ICICI Bank ADS, holders of ICICI ADSs were issued five ICICI
Bank ADSs for every four ICICI ADSs.

Shareholding Structure and Relationship with the Government of India

The following table sets forth, at September 23, 2005, certain information
regarding the ownership of our equity shares.

--------------------------------
Percentage
of total
equity
shares Number of equity
outstanding shares held
--------------------------------
Government-controlled shareholders:
Life Insurance Corporation of India.................................... 9.39 69,535,046
General Insurance Corporation of India and government-owned general
insurance companies..................................................... 5.49 40,656,823
Other government-controlled institutions, corporations and banks......... 0.19 1,382,872
--------------------------------
Total government-controlled shareholders................................... 15.07 111,574,741
--------------------------------

Other Indian investors:
Individual domestic investors (1) (2).................................... 5.88 43,583,668
Bajaj Auto Limited ...................................................... 3.08 22,821,820
Indian corporates and others (excluding Bajaj Auto Limited).............. 0.73 5,408,092

Mutual funds and banks (other than government-controlled banks)......... 1.99 14,715,778
--------------------------------
Total other Indian investors............................................... 11.68 86,529,358
--------------------------------
Total Indian investors..................................................... 26.75 198,104,099
--------------------------------

Foreign investors:
Deutsche Bank Trust Company Americas, as depositary...................... 27.19 201,396,818
Allamanda Investments Pte. Limited....................................... 8.94 66,234,627
HWIC Asia Fund........................................................... 3.69 27,320,361
Government of Singapore.................................................. 3.42 25,335,159
Foreign institutional investors, foreign banks, overseas
corporate bodies and non-resident Indians (excluding
Allamanda Investments Pte. Limited, HWIC Asia
Fund and Government of Singapore)(1)(2)............................... 30.01 222,250,063
--------------------------------
Total foreign investors.................................................... 73.25 542,537,028
--------------------------------
Total ..................................................................... 100.00 740,641,127
================================
- ----------

(1) Executive officers and directors as a group held around 0.5% of the equity
shares as of this date.
(2) No single shareholder in this group owned 5.0% or more of ICICI Bank's
equity shares as of this date.

In April 2004, we issued 115,920,758 equity shares to foreign and domestic
institutional investors and domestic retail investors at a price of Rs. 280 (US$
6) per share, totaling Rs. 32.5 billion (US$ 745 million). In March 2005, we
sponsored an offering of ADSs by our shareholders, resulting in the issuance of
20,685,750 ADSs representing 41,371,500 equity shares sold by our equity
shareholders, at a price of US$ 21.11 per ADS, aggregating approximately US$ 437
million. The proceeds of the offering, net of expenses, were distributed to the
selling shareholders. As a result of this offering, the holding of Deutsche Bank
Trust Company Americas as depositary for ADS holders increased from 21.8% at
August 27, 2004 to 27.2% at September 23, 2005.

The holding of government-controlled shareholders was 15.1% at September
23, 2005 against 17.1% at August 27, 2004 and 17.8% at August 29, 2003. The
holding of Life Insurance Corporation of India was 9.4% at September 23, 2005
compared to 10.1% at August 27, 2004 and 8.0% at August 29, 2003.

We operate as an autonomous and commercial enterprise, making decisions and
pursuing strategies that are designed to maximize shareholder value, and the
Indian government has never directly held any of our shares. There is no
shareholders' agreement or voting trust relating to the ownership of the shares
held by the government-controlled shareholders. We do not have any agreement
with our government-controlled shareholders regarding management control, voting
rights, anti-dilution or any other matter. The government of India has
guaranteed certain of our domestic and multilateral borrowings. Under the terms
of these loan and guarantee facilities provided by the government of India to
us, the government of India is entitled to appoint and has appointed one
representative to our board. We invite a representative of each of the
government-controlled insurance companies that are among our principal
institutional shareholders, Life Insurance Corporation of India and General
Insurance Corporation of India on our board. Mr. T. S. Vijayan, Managing
Director of Life Insurance Corporation of India was appointed as a director
effective April 30, 2005. See "Management--Directors and Executive Officers" for
a discussion of the composition of our board of directors.

The holding of other Indian investors was 11.7% at September 23, 2005,
against 12.8% at August 27, 2004 and 15.6% at August 29, 2003. The total holding
of Indian investors was 26.7% at September 23, 2005 compared to 29.9% at August
27, 2004 and 33.4% at August 29, 2003. The holding of foreign investors
increased to 73.3% at September 23, 2005 from 70.1% at August 27, 2004 and 66.7%
at August 29, 2003. See "Supervision and Regulation - Reserve Bank of India
Regulations - Ownership Restrictions" and "Restriction on Foreign Ownership of
Indian Securities".

Deutsche Bank Trust Company Americas holds the equity shares represented by
100.70 million ADSs outstanding as depositary on behalf of the holders of the
ADSs. The ADSs are listed on the New York Stock Exchange. The depositary has the
right to vote on the equity shares represented by the ADSs as directed by our
board of directors. Under the Indian Banking Regulation Act, no person holding
shares in a banking company can exercise more than 10.0% of the total voting
power. This means that Deutsche Bank Trust Company Americas (as depositary),
which held of record approximately 27.2% of our equity shares as of September
23, 2005 and 21.8% at August 27, 2004, could only

vote 10.0% of our equity shares, in accordance with the directions of our board
of directors. See "Overview of the Indian Financial Sector - Recent Structural
Reforms - Proposed Amendments to the Banking Regulation Act". Except as stated
above, no shareholder has differential voting rights.

In fiscal 2005, neither we nor any affiliate made any repurchases of our
equity securities or ADSs, nor were any such repurchases made on our behalf or
on behalf of an affiliate.

Strategy

Our objective is to enhance our position as a premier provider of banking
and other financial services in India and to leverage our competencies in
financial services and technology to develop an international business
franchise.

The key elements of our business strategy are to:

o focus on quality growth opportunities by:
- maintaining and enhancing our strong retail and corporate
franchise;
- building an international presence;
- strengthening our insurance business; and
- building a rural banking franchise.

o emphasize conservative risk management practices and enhance asset
quality;

o use technology for competitive advantage; and

o attract and retain talented professionals.

Overview of Products and Services

We offer products and services in the areas of commercial banking,
investment banking and insurance.

Commercial Banking for Retail Customers

We believe that the Indian retail financial services market is likely to
continue to experience sustained growth in the future. With upward migration of
household income levels, increasing affordability of retail finance and
acceptance of use of credit to finance purchases, retail credit has emerged as a
rapidly growing opportunity for banks that have the necessary skills and
infrastructure to succeed in this business. We have capitalized on the growing
retail opportunity in India and believe that we have emerged as a market leader
in retail credit. The key dimensions of our retail strategy are innovative
products, parity pricing, customer convenience, wide distribution, strong
processes, prudent risk management and customer focus. Cross-selling of the
entire range of credit and investment products and banking services to our
customers is a critical aspect of our retail strategy.

Our commercial banking operations for retail customers consist of retail
lending and deposits, credit cards, depositary share accounts, distribution of
third-party investment and insurance products, other fee-based products and
services and issuance of unsecured redeemable bonds.

Retail Lending Activities

We offer a range of retail asset products, including home loans, automobile
loans, two wheeler loans, commercial business (including commercial vehicle,
construction equipment and farm equipment) loans, personal loans and credit
cards. We also fund dealers who sell automobiles, two wheelers and commercial
vehicles. Further, we provide loans against time deposits and loans against
shares, including for subscriptions to initial public offerings of Indian
companies. Our total gross retail loans at year-end fiscal 2005 included
consumer loans and credit card receivables of Rs. 526.5 billion (US$ 12.1
billion), which were 48.9% of our total gross loans at year-end fiscal 2005.

The following is a break-down of our gross consumer loans and credit card
receivables at year-end fiscal 2005:

At year-end fiscal 2005
---------------- ----------------
Rs. (in billion) US$ (in million)
---------------- ----------------
Home loans.................................... 260.6 5,974
Automobile loans.............................. 101.3 2,322
Commercial vehicle & related loans............ 71.6 1,641
Personal loans................................ 24.6 564
Credit card receivables....................... 18.1 416
Two wheeler loans............................. 12.1 277
Others........................................ 38.2 876
---------------- ----------------
Total 526.5 12,070
================ ================

At year-end fiscal 2005, we had approximately 3.3 million credit card
holders.

Lending to small and medium enterprises

We are seeking to extend our reach to the small and medium enterprises
sector. We provide supply chain financing, including the financing of selected
customers of our corporate clients. We also provide financing on a cluster-based
approach, that is financing of small enterprises that have a homogenous profile
such as apparel manufacturers and manufacturers of pharmaceuticals.

Retail Deposits

Our retail deposit products include time deposits and savings accounts. We
also offer targeted products to specific customer segments such as high net
worth individuals, defense personnel, trusts and businessmen. We have corporate
salary account products and a deposit account product that provides weekly
automatic transfer of idle balances, above a certain minimum amount, from
savings accounts to time deposits. Further, we offer an international debit card
in association with VISA International. At year-end fiscal 2005, we had a debit
card base of over 6.4 million cards. We offer current account products to our
small and medium enterprise customers.

For a description of the Reserve Bank of India's regulations applicable to
deposits in India and required deposit insurance, see "Supervision and
Regulation -- Regulations Relating to Deposits" and "Supervision and Regulation
- -- Deposit Insurance". For more information on the type, cost and maturity
profile of our deposits, see "Funding".

Bond Issues

We offer retail liability products in the form of a variety of unsecured
redeemable bonds. During fiscal 2005, we raised Rs. 16.3 billion (US$ 374
million) through bond issuances. While deposits will continue to be our primary
source of funding, we may conduct other similar bond issues in the future.

Other Fee-Based Products and Services

Through our distribution network, we offer government of India Relief
Bonds, insurance policies from ICICI Prudential Life Insurance Company and ICICI
Lombard General Insurance Company and distribute public offerings of equity
shares by Indian companies. We also offer a variety of mutual fund products from
Prudential ICICI Asset Management Company and other select mutual funds. We also
levy services charges on deposit accounts. We offer fee-based products and
services including documentary credits and guarantees to small and medium
enterprises.

As a depositary participant of the National Securities Depository Limited
and Central Depository Services (India) Limited, we offer depositary share
accounts to settle securities transactions in a dematerialized mode. Further, we
are one of the banks designated by the Reserve Bank of India for issuing
approvals to non-resident Indians and overseas corporate bodies to trade in
shares and convertible debentures on the Indian stock exchanges.

We also provide web brokering services through ICICI Web Trade Limited.
ICICI Comm Trade Limited, a subsidiary of ICICI Web Trade, proposes to provide
web and telephone based brokering services in the commodities and commodity
derivatives market.

Commercial Banking for Corporate Customers

We provide a range of commercial banking products and services to India's
leading corporations and growth-oriented middle market companies, including loan
products, fee and commission-based products and services, deposits and foreign
exchange and derivatives products. We serve our corporate clients through
corporate relationship groups such as the Corporate Banking Group, the
Government Banking Group and the Rural, Micro-banking and Agri-business Group,
and product groups such as the Product and Technology Group and the Global
Markets Group.

Corporate Loan Portfolio

Our corporate loan portfolio consists of project and corporate finance,
working capital financing and agricultural financing. For further details on our
loan portfolio, see "Loan Portfolio". For a description of our credit rating and
approval system, see "Risk Management - Credit Risk - Credit Risk Assessment
Procedures for Corporate Loans".

Our project finance business consists principally of extending medium-term
and long-term rupee loans to the manufacturing sector. At year-end fiscal 2005,
our gross wholesale banking loans outstanding were Rs. 329.2 billion (US$ 7.5
billion), constituting 30.5% of our gross loan portfolio.

Our working capital financing consists of cash credit facilities and bill
discounting. At year-end fiscal 2005, our gross working capital loans, including
working capital term loans, outstanding were Rs. 135.6 billion (US$ 3.1
billion), constituting approximately 12.6% of our gross loan portfolio. For more
details on our credit risk procedures, see "-- Risk Management -- Credit Risk".

As required by the Reserve Bank of India's directed lending norms, we lend
18.0% of our net bank credit on the residual portion of our advances (i.e., our
total advances excluding the advances of ICICI at year-end fiscal 2002) to the
agricultural sector. Our agricultural lending portfolio includes loans to
farmers and to co-operatives and companies in eligible sectors such as seeds,
poultry and fisheries as well as micro-finance loans to borrowers in rural
areas. For details of our directed lending portfolio, refer "Loan Portfolio -
Directed Lending".

Fee and Commission-Based Activities

We offer our corporate customers a wide variety of fee and commission-based
products and services including documentary credits and standby letters of
credit (called guarantees in India). At year-end fiscal 2005, we had a portfolio
of documentary credits of Rs. 74.1 billion (US$ 1.7 billion) and total
guarantees outstanding of Rs. 160.5 billion (US$ 3.7 billion).

We also offer cash management services (such as collection, payment and
remittance services), escrow, trust and retention account facilities, online
payment facilities, custodial services and tax collection services on behalf of
the government of India and the governments of Indian states. We also offer
custodial services to clients. At year-end fiscal 2005, total assets held in
custody on behalf of our clients (mainly foreign institutional investors,
offshore funds, overseas corporate bodies and depositary banks for GDR
investors) was Rs. 945.7 billion (US$ 21.7 billion). As a registered depositary
participant of National Securities Depository Limited and Central Depository
Services (India) Limited, the two securities depositaries operating in India, we
also provide electronic depositary facilities to investors. Further, we generate
fee income from our syndication and securitization activities.

Corporate Deposits

We offer liquidity management services and a variety of deposit products to
our corporate customers including current accounts, time deposits and
certificates of deposits. For more information on the type, cost and maturity
profile of our deposits, see "-- Funding".

Commercial Banking for International Customers

We believe that the international markets present a major growth
opportunity and have, therefore, expanded the range of our commercial banking
products to international customers. Our strategy for growth in international
markets is based on leveraging home country links and technology for
international expansion by capturing market share in select international
markets. We have identified North America, the United Kingdom, the Middle-East
and South-East Asia as the key regions for establishing our international
presence. The initial focus areas are supporting Indian companies in raising
corporate and project finance for their investments abroad, trade finance,
personal financial services for non-resident Indians and international alliances
to support domestic businesses. We have over the last few years built a large
network of correspondent relationships with international banks across all major
countries. Most of these countries have significant trade and other
relationships with India.

Many of the commercial banking products that ICICI Bank offers to
international customers, such as trade finance and letters of credit, are
similar to the products offered to our corporate customers in India. Some of the
products and services that are unique to international customers are:

o TradeWay: an Internet-based documentary collection product to provide
correspondent banks access to real-time on-line information on the
status of their export bills collections routed through us.

o Remittance Tracker: an Internet-based application that allows a
correspondent bank to query on the status of their payment
instructions and also to get various information reports online.

o Offshore banking deposits: multi-currency deposit products in US
dollar, pound sterling and euro.

o Foreign currency non-resident deposits: foreign currency deposits
offered in four main currencies - US dollar, pound sterling, euro and
yen.

o Non-resident external fixed deposits: deposits maintained in Indian
rupees.

o Non-resident external savings account: savings accounts maintained in
Indian rupees.

o Non-resident ordinary savings accounts and non-resident ordinary fixed
deposits.

o Money2India: a Internet-based wire transfer remittance facility.

We currently have 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. Subsequent to
year-end fiscal 2005, we acquired Investitsionno-Kreditny Bank, a Russian bank
with total assets of approximately US$ 4.4 million at year-end fiscal 2005. The
value of this transaction is not material to our overall results. We have
received preliminary approvals from the host country regulator to set up a
branch office in Sri Lanka and have applied for branch licenses in the United
States and Hong Kong. Our subsidiaries in the United Kingdom and Canada offer
local banking products and services in those countries. In Canada, we have also
launched a direct banking offering in Canada using the Internet as the access
channel.

Delivery Channels

We deliver our products and services through a variety of channels, ranging
from traditional bank branches to ATMs, call centers and the Internet. We also
have direct marketing agents or associates, who deliver our retail credit
products. These agents help us achieve deeper penetration by offering door-step
service to the customer. At year-end fiscal 2005, we offered one or more retail
credit products in approximately 1,070 centers.

At year-end fiscal 2005, we had a network of 510 branches and 52 extension
counters in 367 centers across several Indian states, an increase of 97 branches
and a decrease of 4 extension counters over the previous year. Extension
counters are small offices primarily within office buildings or on factory
premises that provide commercial banking services.

As a part of its branch licensing conditions, the Reserve Bank of India has
stipulated that at least 25.0% of our branches must be located in semi-urban and
rural areas. The following table sets forth the number of branches broken down
by area at year-end fiscal 2005.

At March 31, 2005
----------------------------------
Number of branches % of total
------------------ ---------------
Metropolitan/urban.............. 241 47.3%
Semi-urban/rural ............... 269 52.7%
------------------ ---------------
Total .......................... 510 100.0%
================== ===============

At year-end fiscal 2005, we had 1,910 ATMs, of which 572 were located at
our branches and extension counters. We also have mobile ATMs, which are ATMs
mounted on mobile vans to visit specific areas at a pre-designated time to reach
remotely located customers. Through our website www.icicibank.com, we offer our
customers online access to account information and payment and fund transfer
facilities. We provide Internet banking services to our corporate clients
through ICICI e-business, a finance portal which is the single point web-based
interface for all our corporate clients. We provide telephone banking services
through our call center. At year-end fiscal 2005, our call center had 1,954
inbound sales and service workstations across two locations. We offer mobile
phone banking services to our customers using any cellular telephone service
operator in India.

Investment Banking

Our investment banking operations principally consist of our treasury
operations and the operations of ICICI Securities, our subsidiary.

Treasury

Through our treasury operations, we seek to manage our balance sheet
including the maintenance of required regulatory reserves and to optimize
profits from our trading portfolio by taking advantage of market opportunities.
Our trading and securities portfolio includes our regulatory portfolio, as there
is no restriction on active management of our regulatory portfolio.

At year-end fiscal 2005, government of India securities (excluding
securities purchased under agreements to resell) constituted 9.2% of our trading
portfolio and 91.4% of our total trading and available for sale securities
portfolio, while the remainder included corporate debt securities, equity
securities and mutual funds.

Our treasury undertakes liquidity management by seeking to maintain an
optimum level of liquidity and complying with the cash reserve ratio
requirement. The objective is to ensure the smooth functioning of all our
branches and at the same time avoid the holding of excessive cash. We maintain a
balance between interest-earning liquid assets and cash to optimize earnings and
undertake reserve management by maintaining statutory reserves, including the
cash reserve ratio and the statutory liquidity ratio. Further, we engage in
domestic and foreign exchange operations from a centralized trading floor in
Mumbai. As part of our treasury activities, we also maintain proprietary trading
portfolios in domestic debt and equity securities and in foreign currency
assets. Our treasury manages our foreign currency exposures and the foreign
exchange and risk hedging derivative products offered to our customers and
engages in proprietary trading of currencies. Our investment and market risk
policies are approved by the Risk Committee and Asset Liability Management
Committee of our board of directors.

Our securities are classified into available for sale securities, trading
securities, venture capital investments and non-readily marketable securities.
The following table sets forth, at the dates indicated, certain information
related to our trading portfolio.

At March 31,
--------------------------------------------------------------
2003 2004 2005 2005
--------------- ----------------- --------------- ------------
(in millions)

Government of India securities.. Rs. 26,658 Rs. 30,374 Rs. 6,934 US$ 159
Securities purchased under
agreements to resell.......... 5,399 34,974 24,000 550
Corporate debt securities....... 6,704 6,403 3,202 73
Equity securities............... 187 1,018 3,222 74
Mutual funds.................... - - 37,383 857
Fair value of derivative and
foreign exchange contracts... 686 2,386 797 18
--------------- ----------------- --------------- ------------
Total........................... Rs. 39,634 Rs. 75,155 Rs. 75,538 US$ 1,731
=============== ================= =============== ============

The following table sets forth, for the periods indicated, certain
information related to interest and dividends on our trading securities, net
gain from the sale of these securities and gross unrealized gain/(loss) on these
securities.

Year ended March 31,
--------------------------------------------------------------
2003 2004 2005 2005
--------------- ----------------- --------------- ------------
(in millions)

Interest and dividends........... Rs. 2,754 Rs. 3,232 Rs. 1,946 US$ 45
Gain on sale of trading
securities....................... 2,356 3,889 828 19
Unrealized gain/(loss) on
trading securities............ 719 544 (542) (12)
--------------- ----------------- --------------- ------------
Total............................ Rs. 5,829 Rs. 7,665 Rs. 2,232 US$ 52
=============== ================= =============== ============

In addition to trading securities, we also hold available for sale
securities. The following tables set forth, at the dates indicated, certain
information related to our available for sale securities portfolio.

At March 31,
----------------------------------------------------------------
2003
----------------------------------------------------------------
Amortized Gross Gross
cost unrealized gain unrealized loss Fair value
--------------- --------------- --------------- ------------
(in millions)

Corporate debt securities............. Rs. 10,636 Rs. 389 Rs. (79) Rs. 10,946
Government of India securities........ 240,187 4,403 (459) 244,131
Total debt securities................. 250,823 4,792 (538) 255,077
Equity securities..................... 13,609 745 (1,932) 12,422
--------------- --------------- --------------- ------------
Total................................. Rs. 264,432 Rs. 5,537 Rs. (2,470) Rs. 267,499
=============== =============== =============== ============
Non readily marketable securities(1).. Rs. 9,418
Venture capital investments(2)........ Rs. 3,704

At March 31,
-----------------------------------------------------------------
2004
-----------------------------------------------------------------
Amortized Gross Gross
cost unrealized gain unrealized loss Fair value
--------------- --------------- --------------- -------------
(in millions)

Corporate debt securities............. Rs. 18,791 Rs. 183 Rs. (154) Rs. 18,820
Government of India securities........ 256,284 4,488 (192) 260,580
Total debt securities................. 275,075 4,671 (346) 279,400
Equity securities..................... 15,475 2,072 (342) 17,205
--------------- --------------- --------------- -------------
Total........................ Rs. 290,550 Rs. 6,743 Rs. (688) Rs. 296,605
=============== =============== =============== =============
Non readily marketable securities(1).. Rs. 8,621
Venture capital investments(2)........ Rs. 5,142

At March 31,
-----------------------------------------------------------------
2005
-----------------------------------------------------------------
Amortized Gross Gross
cost unrealized gain unrealized loss Fair value
--------------- --------------- --------------- -------------
(in millions)

Corporate debt securities............. Rs. 25,714 Rs. 65 Rs. (159) Rs. 25,620
Government of India securities....... 335,991 2,700 (4,694) 333,997
Total debt securities................. 361,705 2,765 (4,853) 359,617
Equity securities..................... 5,809 4 (174) 10,201
--------------- --------------- --------------- -------------
Total................................. Rs. 367,514 Rs. 7,331 Rs. (5,027) Rs. 369,818
=============== =============== =============== =============
Non readily marketable securities(1).. Rs. 7,209
Venture capital investments(2)........ Rs. 3,932

- ----------
(1) Primarily represents securities acquired as a part of project financing
activities or conversion of loans in debt restructurings.

(2) Represents venture capital investments in funds managed by ICICI Venture
Funds Management Company.

The following table sets forth, for the period indicated, income from
available for sale securities.

Year ended March 31,
--------------------------------------------------------------
2003 2004 2005 2005
--------------- ----------------- --------------- ------------
(in millions)
Interest..................... Rs. 16,633 Rs. 15,264 Rs. 15,248 US$ 350
Dividend..................... 389 431 485 11
--------------- ----------------- --------------- ------------
Total........................ Rs. 17,022 Rs. 15,695 Rs. 15,733 US$ 361
=============== ================= ============== ============

Gross realized gain.......... Rs. 6,845 Rs. 16,211 Rs. 7,897 181
Gross realized loss.......... (5,022) (2,467) (1,309) (30)
--------------- ----------------- --------------- ------------
Total........................ Rs. 1,823 Rs. 13,744 Rs. 6,588 US$ 151
=============== ================= ============== ============

The following table sets forth, at the date indicated, an analysis of the
maturity profile of our investments in debt securities classified as available
for sale securities and the yields thereon. This maturity profile is based on
repayment dates and does not reflect re-pricing dates of floating rate
securities.

- ------------------------------------------------------------------------------------------------------------------------------
At March 31, 2005
-----------------------------------------------------------------------------------------------
Up to one year One to five years Five to 10 years More than 10 years
--------------------- -------------------- ------------------- ---------------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
(in millions)
Corporate debt securities Rs. 5,041 6.41% Rs. 14,624 5.85% Rs. 5,551 6.73% Rs. 404 7.06%
Government of India
securities........... 57,918 4.81 138,084 5.51 83,265 5.07 54,730 5.59
------ ------- ------ ------
Total interest-earning
securities............ Rs. 62,959 4.94% Rs. 152,708 5.55% Rs. 88,816 5.17% Rs. 55,134 5.60%
========== =========== ========== ==========
Total amortized cost..... Rs. 62,982 Rs. 143,307 Rs. 90,011 Rs. 55,005

We have a limited equity portfolio because the Reserve Bank of India
restricts investments by a bank in equity securities to 5.0% of its total
outstanding domestic loan portfolio as at March 31 of the previous year. See
also "Supervision and Regulation - Reserve Bank of India Regulations -
Regulations relating to Investments and Capital Market Exposure Limits".

Equity securities, forming part of our investment securities portfolio, are
considered as publicly traded if they have been actively traded on a securities
exchange within six months of the balance sheet. The last quoted price of such
securities is taken and recorded as their fair value. Non-readily marketable
equity securities for which there is no readily determinable fair value are
recorded at cost and a provision is made for other than temporary diminution.
Securities acquired through conversion of loans in a troubled debt restructuring
are recorded at the fair value on the date of conversion and subsequently
accounted for as if acquired for cash. Venture capital investments are carried
at fair value. However, they are generally carried at cost during the first
year, unless a significant event occurs that affects the long-term value of the
investment.

Equity securities, including venture capital investments and mutual fund
units were 2.3% of our total assets and 9.5% of our total investment securities
portfolio at year-end fiscal 2005. As these investments are primarily in the
nature of long-term investments in start-up projects, returns on such
investments generally accrue well after commencement of operations by the
projects. In general, we pursue a strategy of active management of our long-term
equity portfolio to maximize return on investment. To ensure compliance with the
Securities and Exchange Board of India's insider trading regulations, all
dealings in our equity investments in listed companies are undertaken by the
equity and corporate bonds dealing desks of our treasury, which are segregated
from our other business groups as well as the other groups and desks in the
treasury, and which do not have access to unpublished price sensitive
information about these companies that may be available to us as a lender.

We deal in several major foreign currencies and take deposits from
non-resident Indians in four major foreign currencies. We also manage onshore
accounts in foreign currencies. The foreign exchange treasury manages its
portfolio through money market and foreign exchange instruments to optimize
yield and liquidity.

We provide a variety of risk management products to our corporate and small
and medium enterprise clients, including foreign currency forward contracts and
currency and interest rate swaps, and are expanding our capabilities in this
area. At year-end fiscal 2005, we had a portfolio of outstanding forward
contracts of Rs. 867.6 billion (US$ 19.9 billion), interest rate and currency
swaps of Rs. 1,450.1 billion (US$ 33.2 billion) and other derivative products of
Rs. 479.1 billion (US$ 11.0 billion).

We control market risk and credit risk on our foreign exchange trading
portfolio through an internal model which sets counterparty limits, stop-loss
limits and limits on the loss of the entire foreign exchange trading operations
and exception reporting. See also "Risk Management - Quantitative and
Qualitative Disclosures About Market Risk - Exchange Rate Risk".

ICICI Securities

We provide investment banking services through our subsidiary, ICICI
Securities, which provides investment banking services through three main
business lines: corporate advisory, fixed income and equities. The clients of
ICICI Securities include a range of Indian and foreign corporations and
institutional investors. ICICI Securities is a non-bank finance company. For a
description of non-bank finance companies, see "Overview of the Indian Financial
Sector - Non-Bank Finance Companies".

Corporate advisory services include business valuations, pricing and
structuring of transactions, and financial and corporate restructuring for large
and mid-market Indian corporate clients and private equity syndication and
privatization services for public sector companies. ICICI Securities is also one
of the market leaders in the Indian debt market and was named the "Best Domestic
Bond House - 2005" by Finance Asia and Asia Money. ICICI Securities is a primary
dealer appointed and authorized by the Reserve Bank of India to trade in
government securities. In fiscal 2005, ICICI Securities achieved turnover in
excess of Rs. 1,200.0 billion (US$ 27.5 billion) in government securities. In
equities, ICICI Securities offers a range of products including underwriting of
equity offerings, public and private placement of corporate equity, assistance
in buyback programs and equity brokering and research, primarily for
institutional investor clients.

Venture capital and private equity

We also provide venture capital funding to start-up companies and private
equity to a range of companies through funds managed by our subsidiary ICICI
Venture Funds Management Company Limited. At year-end fiscal 2005, ICICI Venture
managed or advised funds of Rs. 33.9 billion (US$ 777 million).

Insurance

We provide a wide range of insurance products and services through our
subsidiaries ICICI Prudential Life Insurance Company and ICICI Lombard General
Insurance Company. ICICI Prudential Life Insurance Company and ICICI Lombard
General Insurance Company are joint ventures with Prudential plc of UK and
Fairfax Financial Holdings Limited of Canada, respectively, in which we have a
74.0% interest. We collect fees from these subsidiaries for generating leads and
providing referrals that are converted into policies.

According to statistics published by the Insurance Regulatory & Development
Authority, ICICI Prudential Life Insurance Company had a market share of 34% in
new business written (excluding group insurance) by private sector life
insurance companies and 9% among all insurance companies in India during fiscal
2005. ICICI Lombard General Insurance had a market share of 25% among the
private sector general insurance companies and 5% among all general insurance
companies in India during fiscal 2005. See also "- Subsidiaries and Affiliates".

Funding

Our funding operations are designed to ensure stability of funding,
minimize funding costs and effectively manage liquidity. Since the amalgamation,
our primary source of funding has been deposits raised from both retail and
corporate customers. We also raise funds through short-term rupee borrowings and
domestic or overseas bond offerings pursuant to specific regulatory approvals.
In April 2005, we conducted an offering of equity shares aggregating Rs. 32.5
billion (US$ 745 million) to Indian and non-Indian institutional investors and
Indian retail investors. Because ICICI was not allowed to raise banking deposits
as a financial institution, its primary sources of funding prior to the
amalgamation were retail bonds and rupee borrowings from a wide range of
institutional investors. ICICI also raised funds through foreign currency
borrowings from commercial banks and other multilateral institutions like the
Asian Development Bank and the World Bank, which were guaranteed by the
government of India.

Our deposits constituted 58.6% of our total liabilities at year-end fiscal
2005 compared to 52.1% of our total liabilities at year-end fiscal 2004. Our
borrowings constituted 27.9% of our total liabilities at year-end fiscal 2005
compared to 34.8% of our total liabilities at year-end fiscal 2004. Our
borrowings increased to Rs. 483.7 billion (US$ 11.1 billion) at year-end fiscal
2005 compared to Rs. 456.9 billion (US$ 10.5 billion) at year-end fiscal 2004.
Our long-term debt decreased 1.6% to Rs. 367.5 billion (US$ 8.4 billion) at
year-end fiscal 2005 compared to Rs. 373.4 billion (US$ 8.6 billion) at year-end
fiscal 2004. Our short-term borrowings and trading liabilities increased 39.3%
to Rs. 116.2 billion (US$ 2.7 billion) at year-end fiscal 2005 compared to
short-term borrowings and trading liabilities of Rs. 83.4 billion (US$ 1.9
billion) at year-end fiscal 2004. Going forward, we expect to continue to repay
our higher cost borrowings arising from ICICI Limited in accordance with their
scheduled maturities and raise new funds primarily in the form of lower-cost
deposits.

Our deposits increased 48.4% to Rs. 1,016.5 billion (US$ 23.3 billion) at
year-end fiscal 2005 compared to Rs. 685.0 billion (US$ 15.7 billion) at
year-end fiscal 2004. This significant growth in deposits was achieved primarily

through increased focus on retail and corporate customers by offering a wide
range of products designed to meet varied individual and corporate needs and
leveraging on our network of branches, extension counters and ATMs.

The following table sets forth, for the periods indicated, the average
volume and average cost of deposits by type of deposit.

Year ended March 31,(1)(2)
---------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005
---------------------------------------------------------------------------------------------------------
Amount Cost(3) Amount Cost(3) Amount Cost(3) Amount Cost(3) Amount Amount Cost(3)
---------------------------------------------------------------------------------------------------------
(in millions, except percentages)
Interest-bearing deposits:

Savings deposits...... Rs. - Rs. - -% Rs. 30,874 2.96% Rs. 56,914 2.37% Rs. 98,244 US$ 2,252 2.22%

Time deposits......... 3,682 13.31 6,618 11.24 327,144 7.68 469,589 6.25 598,834 13,728 5.16

Non-interest-bearing
deposits:

Demand deposits....... - - - - 31,172 - 54,090 - 88,414 2,027 -

Total deposits......... Rs. 3,682 13.31% Rs.6,618 11.24% Rs.389,190 6.69% Rs.580,593 5.28% Rs.785,492 US$18,007 4.21
========= ======== ========== ========== ========== =========
- ----------

(2) Average of quarterly balances at the end of March of the previous fiscal
year and June, September, December and March of that fiscal year.

(3) Represents interest expense divided by the average of quarterly balances.

Our average deposits in fiscal 2005 were Rs. 785.5 billion (US$ 18.0
billion) at an average cost of 4.2% compared to average deposits of Rs. 580.6
billion (US$ 13.3 billion) at an average cost of 5.3% in fiscal 2004. Our
average time deposits in fiscal 2005 were Rs. 598.8 billion (US$ 13.7 billion)
at an average cost of 5.2% compared to average time deposits of Rs. 469.6
billion (US$ 10.8 billion) in fiscal 2004 at an average cost of 6.3%.

The following table sets forth, at the date indicated, the maturity profile
of deposits by type of deposit.

At March 31, 2005
-------------------------------------------------------------------------------
After one year
and within After three
Up to one year three years years Total
-------------------------------------------------------------------------------
(in millions)
Interest-bearing deposits:
Savings deposits ........ Rs. 117,261 Rs. - Rs. - Rs. 117,261
Time deposits............ 664,846 81,208 26,311 772,365
Non-interest-bearing
deposits:
Demand deposits.......... 126,908 - - 126,908
-------------------------------------------------------------------------------
Total deposits............. Rs. 909,015 Rs. 81,208 Rs. 26,311 Rs. 1,016,534
===============================================================================

The following table sets forth, for the periods indicated, average
outstanding rupee borrowings based on quarterly balance sheets and by category
of borrowing and the percentage composition by category of borrowing. The
average cost (interest expense divided by average of quarterly balances) for
each category of borrowings is provided in the footnotes.

Year ended March 31,(1) (2)
-----------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005
-----------------------------------------------------------------------------------------------------------
Amount % to Amount % to Amount % to Amount % to Amount Amount % to
total total total total total
-----------------------------------------------------------------------------------------------------------
(in millions, except percentages)

SLR bonds(3).......... Rs. 23,405 4.9% Rs. 20,518 4.0% Rs. 15,690 3.4% Rs. 14,815 3.9% Rs. 14,815 US$ 340 4.4%
Borrowings from 8,049 1.7 7,333 1.4 6,434 1.4 5,735 1.5 4,689 107 1.4
Indian

government(4)........
Other borrowings(5)(6). 442,716 93.4 481,951 94.6 444,461 95.2 357,913 94.6 320,131 7,339 94.2
-----------------------------------------------------------------------------------------------------------
Total.................. Rs.474,170 100.0% Rs.509,802 100.0% Rs. 466,585 100.0% Rs.378,463 100.0% Rs.339,635 US$7,786 100.0%
===========================================================================================================
- ----------
(1) Data for fiscal 2003, 2004 and 2005 is not comparable to fiscal 2001 and
2002, as data for fiscal 2001 and 2002 is only for ICICI and does not
include ICICI Bank, as ICICI Bank was accounted for by the equity method in
those fiscal years.

(2) Average of quarterly balances at the end of March of the previous fiscal
year and June, September, December and March of that fiscal year for each
of fiscal 2002, 2003, 2004 and 2005 and average of quarterly balances at
the end of June, September, December and March for fiscal 2001.

(3) With an average cost of 10.62% in fiscal 2001, 11.10% in fiscal 2002,
11.44% in fiscal 2003, 9.24% in fiscal 2004 and 9.30% in fiscal 2005.

(4) With an average cost of 10.70% in fiscal 2001, 10.40% in fiscal 2002,
10.40% in fiscal 2003, 10.07% in fiscal 2004 and 10.27% in fiscal 2005.

(5) With an average cost of 13.06% in fiscal 2001, 12.36% in fiscal 2002,
11.65% in fiscal 2003, 10.46% in fiscal 2004 and 9.19% in fiscal 2005.

(6) Includes publicly and privately placed bonds, borrowings from institutions
and wholesale deposits such as inter-corporate deposits, certificate of
deposits and call borrowings.

The following table sets forth, at the date indicated, the maturity profile
of our rupee term deposits of Rs. 10 million (US$ 229,253) or more.

At March 31,
---------------------------------------------
% of total
2005 deposits
---------------------------------------------
(in millions, except percentages)

Less than three months........................... Rs. 161,987 US$ 3,714 15.9%
Above three months and less than six months...... 140,899 3,230 13.9%
Above six months and less than 12 months......... 146,532 3,359 14.4%
More than 12 months.............................. 51,738 1,186 5.1%
-------- ------- ------
Total deposits of Rs. 10 million and more........ Rs. 501,156 US$ 11,489 49.3%
======== ======= ======

During fiscal 2005, we repaid a significant amount of ICICI's high cost
long-term debt. As a result, average long-term debt reduced to Rs. 359.7 billion
(US$ 8.2 billion) during fiscal 2005 compared to Rs. 382.7 billion (US$ 8.8
billion) during fiscal 2004.

The following table sets forth, at the dates indicated, certain information
related to short-term rupee borrowings, which consist of certificates of
deposits, inter-corporate deposits and borrowings from government-owned
companies, and trading liabilities.

At March 31,(1)
--------------------------------------------------------------------
2001 2002 2003 2004 2005
--------------------------------------------------------------------
(in millions, except percentages)
Year-end balance........................... Rs. 99,997 Rs. 74,932 Rs. 50,232 Rs. 57,787 Rs. 44,777
Average balance during the year(2) ........ 100,569 85,057 75,983 48,020 47,666
Maximum quarter-end balance................ 104,412 91,950 82,100 57,787 57,787
Average interest rate during the year(3)... 10.17% 9.65% 11.31% 6.16% 6.39%
Average interest rate at year-end (4)...... 11.01% 9.34% 6.80% 4.85% 5.82%

- ----------
(1) Short-term borrowings include trading liabilities, such as borrowings in
the call market and repurchase agreements.

(2) Average of quarterly balances at the end of March of the previous fiscal
year, June, September, December and March of that fiscal year for each of
fiscal 2002, 2003, 2004 and 2005 and average of quarterly balances at the
end of June, September, December and March for fiscal 2001.

(3) Represents the ratio of interest expense on short-term borrowings to the
average of quarterly balances of short-term borrowings.

(4) Represents the weighted average rate of the short-term borrowings
outstanding at fiscal year-end.

The following table sets forth, at the dates indicated, average outstanding
volume of foreign currency borrowings based on quarterly balance sheets by
source and the percentage composition by source. The average cost (interest
expense divided by average of quarterly balances) for each source of borrowings
is provided in the footnotes.

At March 31,(1)(2)
--------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005
--------------------------------------------------------------------------------------------------------
% to % to % to % to % to
Amount total Amount total Amount total Amount total Amount Amount total
--------------------------------------------------------------------------------------------------------
(in millions, except percentages)

Commercial borrowings (3).. Rs.74,745 77.6% Rs.73,955 77.6% Rs.53,791 67.4% Rs.47,003 65.2% Rs.86,208 US$1,976 77.5%
Multilateral borrowings(4). 21,554 22.4 22,290 22.4 26,020 32.6 25,073 34.8 25,080 575 22.5
--------------------------------------------------------------------------------------------------------

Total...................... Rs.96,299 100.0% Rs.96,246 100.0% Rs,79,811 100.0% Rs.72,076 100.0% Rs.111,288 US$2,551 100.0%
========================================================================================================
- ----------

(3) With an average cost of 7.55% in fiscal 2001, 6.75% in fiscal 2002, 3.16%
in fiscal 2003, 3.11% in fiscal 2004 and 3.61% in fiscal 2005.

(4) With an average cost of 4.39% in fiscal 2001, 4.93% in fiscal 2002, 4.40%
in fiscal 2003, 3.03% in fiscal 2004 and 3.22% in fiscal 2005.

At year-end fiscal 2005, our outstanding subordinated debt was Rs. 82.1
billion (US$ 1.9 billion). This debt is classified as Tier 2 capital in
calculating the capital adequacy ratio in accordance with the Reserve Bank of
India's regulations on capital adequacy. See "Supervision and Regulation -
Reserve Bank of India Regulations".

Risk Management

As a financial intermediary, we are exposed to risks that are particular to
our lending, transaction banking and trading businesses and the environment
within which we operate. Our goal in risk management is to ensure that we
understand, measure and monitor the various risks that arise and that the
organization adheres strictly to the policies and procedures which are
established to address these risks.

ICICI Bank is primarily exposed to credit risk, market risk, liquidity
risk, operational risk and legal risk. ICICI Bank has two centralized groups,
the Risk Management Group and the Compliance and Audit Group with a mandate to
identify, assess and monitor all of ICICI Bank's principal risks in accordance
with well-defined policies and procedures. The Risk Management Group reports to
the Chief Financial Officer and Treasurer and through her to the Deputy Managing
Director. The Compliance and Audit Group reports directly to the Deputy Managing
Director and to the Managing Director & CEO in respect of internal audit of
other groups that report to the Deputy Managing Director. The internal audit
function is also responsible to the Audit Committee of our board of directors.
Both the groups are independent of the business units and coordinate with
representatives of the business units to implement ICICI Bank's risk management
methodologies. Committees of the board of directors have been constituted to
oversee the various risk management activities. The Audit Committee provides
direction to and also monitors the quality of the internal audit function. The
Risk Committee reviews risk management policies in relation to various risks
including portfolio, liquidity, interest rate, investment policies and strategy,
and regulatory and compliance issues in relation thereto. The Credit Committee
reviews developments in key industrial sectors and ICICI Bank's exposure to
these sectors as well as to large borrower accounts. The Agriculture & Small
Enterprises Business Committee reviews ICICI Bank's strategy for small
enterprises and agri-business and the quality of the agricultural lending and
small enterprises finance credit portfolio. The Asset Liability Management
Committee is responsible for managing the balance sheet and reviewing the
asset-liability position to manage ICICI Bank's liquidity and market risk
exposure. For a discussion of these and other committees, see "Management".

The Risk Management Group is further organized into the Credit Risk
Management Group, Market Risk Management Group, Retail Risk Management Group and
Risk Analytics Group. The Risk Management Group has a separate team for risk
management in respect of small and medium enterprises. The Compliance and Audit
Group is further organized into the Compliance and Anti-Money Laundering Group
and the Internal Audit Group.

The Risk Management Group is also responsible for assessing the risks
pertaining to the international operations, including review of policies and
setting sovereign and counterparty limits.

Credit Risk

ICICI Bank's credit policy is approved by our board of directors. In its
lending operations, ICICI Bank is principally exposed to credit risk. Credit
risk is the risk of loss that may occur from the failure of any party to abide
by the terms and conditions of any financial contract with ICICI Bank,
principally the failure to make required payments on loans due to ICICI Bank.
ICICI Bank currently measures, monitors and manages credit risk for each
borrower and also at the portfolio level. ICICI Bank has a structured and
standardized credit approval process, which includes a well-established
procedure of comprehensive credit appraisal.

Credit Risk Assessment Procedures for Corporate Loans

In order to assess the credit risk associated with any financing proposal,
ICICI Bank assesses a variety of risks relating to the borrower and the relevant
industry. Borrower risk is evaluated by considering:

o the financial position of the borrower by analyzing the quality of its
financial statements, its past financial performance, its financial
flexibility in terms of ability to raise capital and its cash flow
adequacy;

o the borrower's relative market position and operating efficiency; and

o the quality of management by analyzing their track record, payment
record and financial conservatism.

Industry risk is evaluated by considering:

o certain industry characteristics, such as the importance of the
industry to the economy, its growth outlook, cyclicality and
government policies relating to the industry;

o the competitiveness of the industry; and

o certain industry financials, including return on capital employed,
operating margins and earnings stability.

After conducting an analysis of a specific borrower's risk, the Credit Risk
Management Group assigns a credit rating to the borrower. ICICI Bank has a scale
of 10 ratings ranging from AAA to B, an additional default rating of D and
short-term ratings from S1 to S8. Credit rating is a critical input for the
credit approval process. ICICI Bank determines the desired credit risk spread
over its cost of funds by considering the borrower's credit rating and the
default pattern corresponding to the credit rating. Every proposal for a
financing facility is prepared by the relevant business unit and reviewed by the
appropriate industry specialists in the Credit Risk Management Group before
being submitted for approval to the appropriate approval authority. The approval
process for non-fund facilities is similar to that for fund-based facilities.
The credit rating for every borrower is reviewed at least annually and is
typically reviewed on a more frequent basis for higher risk credits and large
exposures. ICICI Bank also reviews the ratings of all borrowers in a particular
industry upon the occurrence of any significant event impacting that industry.

Working capital loans are generally approved for a period of 12 months. At
the end of 12 months validity period, ICICI Bank reviews the loan arrangement
and the credit rating of the borrower and takes a decision on continuation of
the arrangement and changes in the loan covenants as may be necessary.

Project Finance Procedures

ICICI Bank has a strong framework for the appraisal and execution of
project finance transactions. ICICI Bank believes that this framework creates
optimal risk identification, allocation and mitigation, and helps minimize
residual risk.

The project finance approval process begins with a detailed evaluation of
technical, commercial, financial, marketing and management factors and the
sponsor's financial strength and experience. Once this review is completed, an
appraisal memorandum is prepared for credit approval purposes. As part of the
appraisal process, a risk matrix is generated, which identifies each of the
project risks, mitigating factors and residual risks associated with the
project. The appraisal memorandum analyzes the risk matrix and establishes the
viability of the project. Typical risk mitigating factors include the commitment
of stand-by funds from the sponsors to meet any cost over-runs and a
conservative collateral position. After credit approval, a letter of intent is
issued to the borrower, which outlines the principal financial terms of the
proposed facility, sponsor obligations, conditions precedent to disbursement,
undertakings from and covenants on the borrower. After completion of all
formalities by the borrower, a loan agreement is entered into with the borrower.

In addition to the above, in the case of structured project finance in
areas such as infrastructure and oil, gas and petrochemicals, as a part of the
due diligence process, ICICI Bank appoints consultants, wherever considered
necessary, to advise the lenders, including technical advisors, business
analysts, legal counsel and insurance consultants. These consultants are
typically internationally recognized and experienced in their respective fields.
Risk mitigating factors in these financings generally also include creation of
debt service reserves and channeling project revenues through a trust and
retention account.

ICICI Bank's project finance credits are generally fully secured and have
full recourse to the borrower. In most cases, ICICI Bank has a security interest
and first lien on all the fixed assets and a second lien on all the current
assets of the borrower. Security interests typically include property, plant and
equipment as well as other tangible assets of the borrower, both present and
future. Typically, it is ICICI Bank's practice to lend between 60.0% and 80.0%
of the appraised value of these types of collateral securities. ICICI Bank's
borrowers are required to maintain comprehensive insurance on their assets where
ICICI Bank is recognized as payee in the event of loss. In some cases, ICICI
Bank also takes additional collateral in the form of corporate or personal
guarantees from one or more sponsors of the project and a pledge of the
sponsors' equity holding in the project company. In certain industry segments,
ICICI Bank also takes security interest in relevant project contracts such as
concession agreements, off-take agreements and construction contracts as part of
the security package. In limited cases, loans are also

guaranteed by commercial banks and, in the past, have also been guaranteed by
Indian state governments or the government of India.

It is ICICI Bank's current practice to normally disburse funds after the
entire project funding is committed and all necessary contractual arrangements
have been entered into. Funds are disbursed in tranches to pay for approved
project costs as the project progresses. When ICICI Bank appoints technical and
market consultants, they are required to monitor the project's progress and
certify all disbursements. ICICI Bank also requires the borrower to submit
periodic reports on project implementation, including orders for machinery and
equipment as well as expenses incurred. Project completion is contingent upon
satisfactory operation of the project for a certain minimum period and, in
certain cases, the establishment of debt service reserves. ICICI Bank continues
to monitor the credit exposure until its loans are fully repaid.

Corporate Finance Procedures

As part of the corporate loan approval procedures, ICICI Bank carries out a
detailed analysis of funding requirements, including normal capital expenses,
long-term working capital requirements and temporary imbalances in liquidity.
ICICI Bank's funding of long-term core working capital requirements is assessed
on the basis, among other things, of the borrower's present and proposed level
of inventory and receivables. In case of corporate loans for other funding
requirements, ICICI Bank undertakes a detailed review of those requirements and
an analysis of cash flows. A substantial portion of ICICI Bank's corporate
finance loans are secured by a lien over appropriate assets of the borrower.

The focus of ICICI Bank's structured corporate finance products is on cash
flow based financing. ICICI Bank has a set of distinct approval procedures to
evaluate and mitigate the risks associated with such products. These procedures
include:

o carrying out a detailed analysis of cash flows to accurately forecast
the amounts that will be paid and the timing of the payments based on
an exhaustive analysis of historical data;

o conducting due diligence on the underlying business systems, including
a detailed evaluation of the servicing and collection procedures and
the underlying contractual arrangements; and

o paying particular attention to the legal, accounting and tax issues
that may impact any structure.

ICICI Bank's analysis enables it to identify risks in these transactions.
To mitigate risks, ICICI Bank uses various credit enhancement techniques, such
as over-collateralization, cash collateralization, creation of escrow accounts
and debt service reserves and performance guarantees. The residual risk is
typically managed by complete or partial recourse to the borrowing company whose
credit risk is evaluated as described above. ICICI Bank also has a monitoring
framework to enable continuous review of the performance of such transactions.

Working Capital Finance Procedures

ICICI Bank carries out a detailed analysis of its borrowers' working
capital requirements. Credit limits are established in accordance with the
approval authorization approved by ICICI Bank's board of directors. Once credit
limits are approved, ICICI Bank calculates the amounts that can be lent on the
basis of monthly statements provided by the borrower and the margins stipulated.
Quarterly information statements are also obtained from borrowers to monitor the
performance on a regular basis. Monthly cash flow statements are obtained where
considered necessary. Any irregularity in the conduct of the account is reported
to the appropriate authority on a monthly basis. Credit limits are reviewed on a
periodic basis.

Working capital facilities are primarily secured by inventories and
receivables. Additionally, in certain cases, these credit facilities are secured
by personal guarantees of directors, or subordinated security interests in the
tangible assets of the borrower including plant and machinery.

Credit Monitoring Procedures for Corporate Loans

The Credit Middle Office Group monitors compliance with the terms and
conditions for credit facilities prior to disbursement. It also reviews the
completeness of documentation, creation of security and insurance policies for
assets financed. All borrower accounts are reviewed at least once a year. Larger
exposures and lower rated-borrowers are reviewed more frequently.

Retail Loan Procedures

Our customers for retail loans are typically middle and high-income,
salaried or self-employed individuals, and, in some cases, partnerships and
corporations. Except for personal loans and credit cards, we require a
contribution from the borrower and our loans are secured by the asset financed.

Our retail credit product operations are sub-divided into various product
lines. Each product line is further sub-divided into separate sales and credit
groups. The Risk Management Group, which is independent of the business groups,
approves all new retail products and product policies and credit approval
authorizations. All products and policies require the approval of the Committee
of Directors. All credit approval authorizations require the approval of our
board of directors.

ICICI Bank uses direct marketing associates as well as its own branch
network and employees for marketing retail credit products. However, credit
approval authority lies only with ICICI Bank's credit officers who are distinct
from the business teams. The delegation of credit approval authority is linked,
among other factors, to the size of the credit and the authority delegated to
credit officers varies across different products.

ICICI Bank's credit officers evaluate credit proposals on the basis of the
product policy approved by the Committee of Directors and the risk assessment
criteria defined by the Risk Management Group. These criteria vary across
product segments but typically include factors such as the borrower's income,
the loan-to-value ratio, demographic parameters and certain stability factors.
In case of credit cards, in order to limit the scope of individual discretion,
ICICI Bank has implemented a credit-scoring program that is an automated
credit approval system that assigns a credit score to each applicant based on
certain demographic attributes like income, educational background and age. The
credit score then forms the basis of loan evaluation. External agencies such as
field investigation agencies and credit processing agencies are used to
facilitate a comprehensive due diligence process including visits to offices and
homes in the case of loans to individual borrowers. Before disbursements are
made, the credit officer checks a centralized delinquent database and reviews
the borrower's profile. ICICI Bank avails the services of certain private
agencies operating in India to check applications before disbursement as a
formal credit bureau has only recently become operational in India,. A
centralized retail credit team undertakes review and audit of credit quality and
processes across each credit approval team.

ICICI Bank has established centralized operations to manage operating risk
in the various back office processes of ICICI Bank's retail loan business except
for a few operations which are decentralized to improve turnaround time for
customers.

ICICI Bank has a collections unit structured along various product lines
and geographical locations, to manage delinquency levels. The collections unit
operates under the guidelines of a standardized recovery process. ICICI Bank
also makes use of external collection agencies to aid it in collection efforts,
including collateral repossession in accounts that are overdue for more than 90
days. External agencies for collections are governed by standardized process
guidelines.

A fraud prevention and control department has been set up to manage levels
of fraud, primarily through fraud prevention in the form of forensic audits and
also through recovery of fraud losses. The fraud control department is aided by
specialized agencies involved in verification of income documents. The fraud
control department also evaluates the various external agencies involved in the
retail finance operations, including direct marketing associates, external
verification associates and collection agencies.

Small Enterprises Loan Procedures

The Small and Medium Enterprises Group finances dealers and vendors of
companies by implementing structures to enhance the base credit quality of the
vendor / dealer, that involve an analysis of the base credit quality of the
vendor / dealer pool and an analysis of the linkages that exist between the
vendor / dealer and the company.

The group is also involved in financing based on a cluster-based approach,
that is, financing of small enterprises that have a homogeneous profile such as
apparel manufacturers and manufacturers of pharmaceuticals. The risk assessment
of such cluster involves identification of appropriate credit norms for target
market, use of scoring models for enterprises that satisfy these norms and
applying pre-determined exposure limits to enterprises that are awarded a
minimum required score in the scoring model. The assessment also involves
setting up of portfolio control norms, individual borrower approval norms and
stringent exit triggers to be followed while financing such clusters or
communities.

Credit Approval Authorities

ICICI Bank's credit approval authorisation framework is laid down by our
board of directors. ICICI Bank has established several levels of credit approval
authorities for its corporate banking activities - the Credit Committee of the
board of directors, the Committee of Directors, the Committee of Executives
(Credit) and the Regional Committee (Credit). Retail Credit Forums and Small
Enterprise Group Forums have been created for approval of retail loans and
credit facilities to small enterprises.

The Credit Committee has the power to approve all financial assistance.
ICICI Bank's board of directors has delegated the authority to the Committee of
Directors, consisting of ICICI Bank's wholetime directors, to the Committee of
Executives (Credit), to the Regional Committee (Credit), Retail Credit Forums
and Small Enterprise Group Forums, all consisting of designated executives of
ICICI Bank, and to individual executives in the case of retail and agricultural
loans, to approve financial assistance within certain individual and group
exposure limits set by the board of directors.

The following table sets forth the composition and the approval authority
of these committees / forums at July 31, 2005.

Committee / Forum Composition Approval Authority
---------------------------------------------------------------------------------------------------------------------
Credit Committee of the Chaired by an o All approvals to borrowers (excluding agriculture sector
board of directors independent director and and small and medium enterprise borrowers) in the
consisting of a majority following categories:
of independent directors. o Borrowers rated below BBB;
o New borrowers rated BBB with exposure exceeding Rs. 0.5
billion (US$ 11 million);
o Existing borrowers rated BBB with additional exposure
exceeding 10% of the existing exposure or Rs. 0.1
billion (US$ 2 million), whichever is higher;
o New borrowers rated A- and above, with exposure
exceeding Rs. 5.0 billion (US$ 115 million); or
o Existing borrowers rated A- and above with existing
exposure above Rs. 5.0 billion (US$ 115 million),
where proposed incremental exposure exceeds Rs. 1.0
billion (US$ 23 million).
o Credit / investment proposals for subsidiaries /
companies using "ICICI" as a part of their name.
o Proposals exceeding 15% of capital funds for a single
borrower (20% in case of infrastructure) and 40% of
capital funds for a borrower group (50% in case of
infrastructure).
o Credit / investment proposal relating to a borrower
rated A or below which is in default to ICICI Bank for a
period in excess of 60 days.
o Approvals to companies identified by the Credit
Committee where the company or the borrower group
requires close monitoring.
- ---------------------------------------------------------------------------------------------------------------------

Committee of Directors Consisting of all five o All approvals above the prescribed authority of lower
(Lending) wholetime directors. authorities, other than specific categories of proposals
that require approval of the Credit Committee.
o The Committee of Directors is empowered to approve all
program sanctions. Powers to approve individual
proposals within the approved program norms has been
delegated to certain individuals. These powers can be
exercised either singly or jointly by such individuals
subject to the limits specified in the credit
authorization approved by the board of directors.
- ---------------------------------------------------------------------------------------------------------------------

Committee of Executives Consisting of designated o Approval authority linked to the rating of the borrower.
(Credit) executives as members or Limits range between Rs. 0.2 billion (US$ 5 million) for
permanent invitees, a BBB rated borrower to Rs. 5.0 billion (US$ 115
including million) for a AAA rated borrower. For borrowers in
representatives of Risk agriculture sector rated BB, limits up to Rs. 0.1
Management Group and billion (US$ 2 million) can be approved by the Committee
Compliance and Audit of Executives (Credit).
Group.
- ---------------------------------------------------------------------------------------------------------------------

Regional Committee Consisting of designated o Approval authority linked to the rating of the borrower.
(Credit) executives as members or Limits range between Rs. 0.3 billion (US$ 7 million) for
permanent invitees, a A rated borrower to Rs. 3.5 billion (US$ 80 million)
including for a AAA rated borrower. Approvals to borrowers rated
representatives of Risk below A can be given only if the borrower is from
Management Group and agriculture sector. For these borrowers with credit
Compliance and Audit rating of BB to A-, limits of Rs. 50 million (US$ 1
Group. million) to Rs. 0.2 billion (US$ 5 million) can be
approved by the Regional Committee (Credit).
- ---------------------------------------------------------------------------------------------------------------------

Small Enterprise Group Consisting of designated Approval authority up to Rs. 0.2 billion (US$ 5 million)
Forum 1 executives as members or provided the proposal meets the minimum criteria as
permanent invitees, stipulated by the Committee of Directors.
including representative
of Risk Management Group.
- ---------------------------------------------------------------------------------------------------------------------

Small Enterprise Group Consisting of designated Approval authority up to Rs. 0.1 billion (US$ 2 million)
Forum 2 executives. provided the proposal meets the minimum criteria as
stipulated by the Committee of Directors.
- ---------------------------------------------------------------------------------------------------------------------

Small Enterprise Group Consisting of designated Approval authority up to Rs. 0.1 billion (US$ 2 million)
Forum 3 executives. provided the proposal meets all the criteria as stipulated by
the Committee of Directors.
- ---------------------------------------------------------------------------------------------------------------------

Retail Credit Forum 1 Consisting of Executive Full approval authority for all retail loans. In respect of
Director, Head - Retail corporate exposures on retail products, limits up to Rs. 0.5
Products and billion (US$ 11 million) to Rs. 1.0 billion (US$ 23 million)
Distribution Group and for various products like vehicle loans, consumer durable
Head - Risk Management loans and corporate credit cards.
Group.
- ---------------------------------------------------------------------------------------------------------------------

Retail Credit Forum 2 Consisting of Executive Approval authority for all retail credit products with
Director and designated varying limits for each product subject to a maximum of Rs.
executives including 0.25 billion (US$ 6 million).
representative of Risk
Management Group.
- ---------------------------------------------------------------------------------------------------------------------
In all cases, subject to adherence to limits on ICICI Bank's
capital funds(1) imposed by Reserve Bank of India as
mentioned above.
- ----------
(1) Capital funds consist of Tier 1 and Tier 2 capital, as defined in the
Reserve Bank of India regulations, under Indian GAAP. See "Supervision and
Regulation - Reserve Bank of India Regulations - Capital Adequacy
Requirements".

All new loans must be approved by the above committees / forums in
accordance with their respective powers. In respect of retail and agricultural
loans, powers have been delegated to individual executives subject to certain
criteria and limits. Certain designated executives are also authorized to
approve:

o ad-hoc/additional working capital facilities not exceeding the lower
of 10.0% of existing approved facilities and Rs. 20 million (US$
458,505);

o temporary accommodation facilities not exceeding Rs. 20 million (US$
458,505);

o intra-day limits not exceeding Rs.10.0 billion (US$ 229 million); and

o facilities fully secured by deposits, cash margin, letters of credit
of approved banks or approved sovereign debt instruments not exceeding
Rs. 5.0 billion (US$ 115 million).

Quantitative and Qualitative Disclosures About Market Risk

Market risk is the possibility of loss arising from changes in the value of
a financial instrument as a result of changes in market variables such as
interest rates, exchange rates and other asset prices. The prime source of
market risk for us is the interest rate risk we are exposed to as a financial
intermediary. In addition to interest rate risk, we are exposed to other
elements of market risk such as liquidity or funding risk, price risk on trading
portfolios, and exchange rate risk on foreign currency positions.

Market Risk Management Procedures

Our board of directors reviews and approves the policies for the management
of market risk. The board has delegated the responsibility for market risk
management on the banking book to the Asset Liability Management Committee and
for the trading book to the Committee of Directors, within the broad parameters
laid down by policies approved by the board. The Asset Liability Management
Committee is responsible for managing interest

rate risk on the banking book and liquidity risks reflected in the balance
sheet. The Committee of Directors is responsible for formulating policies and
risk controls for the trading book.

The Asset Liability Management Committee is chaired by the Joint Managing
Director. The Deputy Managing Director and Executive Directors are the other
members of the Committee. The Committee generally meets on a monthly basis and
reviews the interest rate and liquidity gap positions on the banking book,
formulates a view on interest rates, sets deposit and benchmark lending rates,
reviews the business profile and its impact on asset liability management and
determines the asset liability management strategy, as deemed fit, in light of
the current and expected business environment. The Structural Rate Risk
Management Group and Balance Sheet Management Group are responsible for managing
interest rate risk and liquidity risk, under the supervision of the Asset
Liability Management Committee, on a day to day basis.

The Risk Management Group recommends changes in risk policies and controls
and the processes and methodologies for quantifying and assessing market risks.
Risk limits including position limits and stop loss limits for the trading book
are monitored on a daily basis by the Treasury Middle Office Group and reviewed
periodically.

Interest Rate Risk

Since our balance sheet consists predominantly of rupee assets and
liabilities, movements in domestic interest rates constitute the main source of
interest rate risk. The value of our portfolio of traded and other debt
securities is negatively impacted by an increase in interest rates, while our
net interest income is generally positively impacted by an increase in interest
rates. Exposure to fluctuations in interest rates is measured primarily by way
of gap analysis, providing a static view of the maturity and re-pricing
characteristics of balance sheet positions. An interest rate gap report is
prepared by classifying all assets and liabilities into various time period
categories according to contracted maturities or anticipated re-pricing date.
The difference in the amount of assets and liabilities maturing or being
re-priced in any time period category, would then give an indication of the
extent of exposure to the risk of potential changes in the margins on new or
re-priced assets and liabilities. ICICI Bank prepares interest rate risk reports
on a fortnightly basis. These reports are submitted to the Reserve Bank of India
on a monthly basis. Interest rate risk is further monitored through interest
rate risk limits approved by the Asset Liability Management Committee.

Our core business is deposit taking and lending in both rupees and foreign
currencies, as permitted by the Reserve Bank of India. These activities expose
us to interest rate risk. As the rupee market is significantly different from
the international currency markets, gap positions in these markets differ
significantly.

Our primary source of funding is deposits and to a smaller extent,
borrowings. In the rupee market, most of our deposit taking is at fixed rates of
interest for fixed periods, except for savings deposits and current deposits,
which do not have any specified maturity and can be withdrawn on demand. We
usually borrow for a fixed period with a one-time repayment on maturity, with
some borrowings having European call/put options, exercisable only on specified
dates, attached to them. However, we have a mix of floating and fixed interest
rate assets. Our loans generally are repaid more gradually, with principal
repayments being made over the life of the loan. Our housing loans at year-end
fiscal 2005 were primarily floating rate loans where the rates are reset every
quarter. Until December 31, 2003, we followed a four-tier prime rate structure,
namely, a short-term prime rate for one-year loans or loans that re-price at the
end of one year, a medium-term prime rate for one to three year loans, a
long-term prime rate for loans with maturities greater than three years and a
prime rate for cash credit products. Effective January 1, 2004, we have moved to
a single benchmark prime rate structure for all loans other than specific
categories of loans advised by the Indian Banks' Association (which include,
among others, loans to individuals for acquiring residential properties, loans
for purchase of consumer durables, non-priority sector personal loans and loans
to individuals against shares, debentures, bonds and other securities), with
lending rates comprising the benchmark prime rate, term premia and
transaction-specific credit and other charges. Interest rates on loans
outstanding at December 31, 2003 continue to be based on the four-tier prime
rate structure. We seek to eliminate interest rate risk on undisbursed
commitments by fixing interest rates on rupee loans at the time of loan
disbursement.

In contrast to our rupee loans, a large proportion of our foreign currency
loans are floating rate loans. These loans are generally funded with floating
rate foreign currency funds. Our fixed rate foreign currency loans are generally
funded with fixed rate foreign currency funds. We generally convert all our
foreign currency borrowings

and deposits into floating rate dollar liabilities through the use of interest
rate and currency swaps with leading international banks. The foreign currency
gaps are generally significantly lower than rupee gaps, representing a
considerably lower exposure to fluctuations in foreign currency interest rates.

We use the duration of our government securities portfolio as a key
variable for interest rate risk management. We increase or decrease the duration
of government securities portfolio to increase or decrease our interest rate
risk exposure. In addition, we also use interest rate derivatives to manage
asset and liability positions. We are an active participant in the interest rate
swap market and are one of the largest counterparties in India.

The following table sets forth, at the date indicated, our asset-liability
gap position.

At March 31, 2005(1)
---------------------------------------------------------------------
Less than or Greater than
equal to one one year and up Greater than Total
year to five years five years
---------------------------------------------------------------------
(in millions)
Loans, net................................... Rs. 562,383 Rs. 320,339 Rs. 117,136 Rs. 999,858
Securities................................... 226,507 107,518 127,197 461,222
Fixed assets................................. 1,950 14,189 17,856 33,995
Other assets(2).............................. 167,003 5,241 196,128 368,372
---------------------------------------------------------------------
Total assets................................. 957,843 447,287 458,317 1,863,447
Stockholders' equity......................... 203 12,436 115,357 127,996
Debt(2)...................................... 989,153 279,602 207,229 1,475,984
Other liabilities............................ 49,147 30,949 179,371 259,467
---------------------------------------------------------------------
Total liabilities............................ 1,038,503 322,987 501,957 1,863,447
Total gap before risk management positions... (80,660) 124,300 (43,640) -
Risk management positions(3)................. (20,466) 29,324 (8,858) -
---------------------------------------------------------------------
Total gap after risk management positions.... Rs.(101,126) Rs. 153,624 Rs.(52,498) Rs. -
=====================================================================
- ----------
(1) Assets and liabilities are classified into the applicable categories, based
on residual maturity or re-pricing whichever is earlier. Classification
methodologies are generally based on Asset Liability Management Guidelines
issued by the Reserve Bank of India, effective from April 1, 2000. Items
that neither mature nor re-price are included in the "greater than five
years" category. This includes equity share capital and a substantial part
of fixed assets. Impaired loans of residual maturity less than three years
are classified in the "greater than one year and up to five years" category
and impaired loans of residual maturity between three to five years are
classified in the "greater than five years" category.

(2) The categorization for these items is different from that reported in the
financial statements.

(3) The risk management positions comprise foreign currency and rupee swaps.

The following table sets forth, at the date indicated, the amount of our
loans with residual maturities greater than one year that had fixed and variable
interest rates.

At March 31, 2005
------------------------------------------
Fixed rate Variable Total
loans rate loans
------------------------------------------
(in millions)
Loans........................... Rs. 423,266 Rs. 216,046 Rs. 639,312

The following table sets forth, using the balance sheet at year-end fiscal
2005 as the base, one possible prediction of the impact of adverse changes in
interest rates on net interest income for fiscal 2006, assuming a parallel shift
in yield curve at year-end fiscal 2005.

At March 31, 2005
------------------------------------------------
Change in interest rates
(in basis points)
------------------------------------------------
(100) (50) 50 100
(in millions, except percentages)

Rupee portfolio............... Rs. (450) Rs. (225) Rs. 225 Rs. 450
Foreign currency portfolio.... (241) (121) 121 241
------------------------------------------------
Total......................... Rs (691) Rs. (346) Rs. 346 Rs. 241
------------------------------------------------

Based on our asset and liability position at year-end fiscal 2005, the
sensitivity model shows that net interest income from the banking book for
fiscal 2006 would rise by Rs. 691 million (US$ 16 million) if interest rates
increased by 100 basis points during fiscal 2006. Conversely, the sensitivity
model shows that if interest rates decreased by 100 basis points during fiscal
2006, net interest income for fiscal 2006 would fall by an equivalent amount of
Rs. 691 million (US$ 16 million). Based on our asset and liability position at
year-end fiscal 2004, the sensitivity model showed that net interest income for
fiscal 2005 would have risen by Rs. 287 million (US$ 7 million) if interest
rates had increased by 100 basis points during fiscal 2005. Interest rate risk
numbers at year-end fiscal 2004 and 2005 were low primarily due to the low
duration of government securities portfolio maintained by us and the large
proportion of floating rate loans in the housing loans.

Sensitivity analysis, which is based upon a static interest rate risk
profile of assets and liabilities, is used for risk management purposes only and
the model above assumes that during the course of the year no other changes are
made in the respective portfolios. Actual changes in net interest income will
vary from the model.

Price Risk (Trading book)

We undertake trading activities to enhance earnings through profitable
trading for our own account. ICICI Securities, our investment banking
subsidiary, is a primary dealer in government of India securities, and a
significant proportion of its portfolio consists of government of India
securities.

The following tables sets forth, using the fixed income portfolio at
year-end fiscal 2005 as the base, one possible prediction of the impact of
changes in interest rates on the value of our rupee fixed income trading
portfolio for fiscal 2006, assuming a parallel shift in yield curve.

At March 31, 2005
-----------------------------------------------------
Change in interest rates
(in basis points)
-----------------------------------------------------
Portfolio
Size (100) (50) 50 100
-----------------------------------------------------
(in millions)
Government of India securities.. Rs. 7,476 Rs. 24 Rs. 12 Rs. (12) Rs. (23)
Corporate debt securities....... 1,067 46 23 (22) (43)
-----------------------------------------------------
Total........................... Rs. 8,543 Rs. 70 Rs. 35 Rs. (34) Rs. (66)
-----------------------------------------------------

At year-end fiscal 2005, the total value of our rupee fixed income trading
portfolio was Rs. 8.5 billion (US$ 195 million). The sensitivity model shows
that if interest rates increase by 100 basis points during fiscal 2006, the
value of the trading portfolio would fall by Rs. 66 million (US$ 1.5 million).
Conversely, if interest rates fell by 100 basis points during fiscal 2006, under
the model, the value of this portfolio would rise by Rs. 70 million (US$ 1.6
million). At year-end fiscal 2004, the total value of rupee fixed income trading
portfolio was Rs. 10.0 billion (US$ 229 million). The sensitivity model showed
that if interest rates had increased by 100 basis points during fiscal 2005, the
value of the trading portfolio would have fallen by Rs. 767 million (US$ 18
million). The decrease at year-end fiscal 2005 was primarily due to the decrease
in the portfolio to Rs. 8.5 billion (US$ 195 million) from Rs. 10.0

billion (US$ 229 million) at year-end fiscal 2004 and the significantly lower
duration of the portfolio at year-end fiscal 2005 compared to year-end fiscal
2004.

As noted above, sensitivity analysis is used for risk management purposes
only and the model used above assumes that during the course of the year no
other changes are made in the respective portfolios. Actual changes in the value
of the fixed income portfolio will vary from the model above.

We revalue our trading portfolio on a daily basis and recognize aggregate
re-valuation losses in our profit and loss account. The asset liability
management policy stipulates an interest rate risk limit which seeks to cap the
risk on account of the mark-to-market impact on the mark-to-market book (under
the Indian GAAP classification which is different from the US GAAP
classification - see "Supervision and Regulation - Reserve Bank of India
Regulations - Banks' Investment Classification and Valuation Norms") and the
earnings at risk on the banking book, based on a sensitivity analysis of a 100
basis points parallel and immediate shift in interest rates.

In addition, the Risk Management Group stipulates risk limits including
position limits and stop loss limits for the trading book. These limits are
monitored on a daily basis and reviewed periodically. In addition to risk
limits, we also have risk monitoring tools such as Value-at-Risk models for
measuring market risk in our trading portfolio.

ICICI Bank is required to invest a specified percentage, currently 25.0%,
of its liabilities in government of India securities to meet the statutory
liquidity ratio requirement prescribed by the Reserve Bank of India. As a
result, we have a very large portfolio of government of India securities and
these are primarily classified as available for sale securities. Our available
for sale securities included Rs. 334.9 billion (US$ 7.7 billion) of government
of India securities. These are not included in the trading book analysis
presented above.

Equity Risk

We assume equity risk both as part of our investment book and our trading
book. On the investment book, investments in equity shares and preference shares
are essentially long-term in nature. Nearly all the investment in equity
securities have been driven by our project financing activities. The decision to
invest in equity shares during project financing activities has been a conscious
decision to participate in the equity of the company with the intention of
realizing capital gains arising from the expected increases in market prices,
and is separate from the lending decision.

Trading account securities are recorded at market value. For the purpose of
valuation of our available for sale equity investment securities, an assessment
is made whether a decline in the fair value, below the amortized cost of the
investments, is other than temporary. If the decline in fair value below the
amortized cost is other than temporary, the decline is provided for in the
income statement. A temporary decline in value is excluded from the income
statement and reflected directly in the stockholders' equity. To assess whether
a decline in fair value is temporary, the duration for which the decline had
existed, industry and company specific conditions and dividend record are
considered. Non-readily marketable securities for which there is no readily
determinable fair value are recorded at cost. Venture capital investments are
carried at fair value. However, they are generally carried at cost during the
first year, unless a significant event occurs that affected the long-term value
of the investment.

At year-end fiscal 2005, the fair value of trading account equity
securities was Rs. 2.8 billion (US$ 64 million). The fair value of our available
for sale equity securities investment portfolio, including non-readily
marketable securities of Rs. 8.4 billion (US$ 193 million), was Rs. 33.3 billion
(US$ 763 million) at year-end fiscal 2005. At year-end fiscal 2004, the fair
value of trading equity securities was Rs. 1.0 billion (US$ 23 million). The
fair value of the available for sale equity securities investment portfolio,
including non-readily marketable securities of Rs. 8.6 billion (US$ 197
million), was Rs. 31.0 billion (US$ 710 million) at year-end fiscal 2004.

Exchange Rate Risk

We offer foreign currency hedge instruments like swaps, forwards, and
currency options to clients, which are primarily banks and highly rated
corporate customers. We actively use cross currency swaps, forwards, and options
to hedge against exchange risks arising out of these transactions. Trading
activities in the foreign currency markets expose us to exchange rate risks.
This risk is mitigated by setting counterparty limits, stipulating daily and
cumulative stop-loss limits, and engaging in exception reporting.

The Reserve Bank of India has authorized the dealing of foreign
currency-rupee options by banks for hedging foreign currency exposures including
hedging of balance sheet exposures. We have been offering such products to
corporate clients and other inter-bank counterparties and are one of the largest
participants in the currency options market accounting for a significant share
of daily trading volume. All the options are maintained within the specified
limits.

In addition, foreign currency loans are made on terms that are similar to
foreign currency borrowings, thereby transferring the foreign exchange risk to
the borrower. Foreign currency cash balances are generally maintained abroad in
currencies matching with the underlying borrowings. In addition, there is an
open foreign exchange position limit to minimize exchange rate risk.

Liquidity Risk

Liquidity risk arises in the funding of lending, trading and investment
activities and in the management of trading positions. It includes both the risk
of unexpected increases in the cost of funding an asset portfolio at appropriate
maturities and the risk of being unable to liquidate a position in a timely
manner at a reasonable price. The goal of liquidity management is to be able,
even under adverse conditions, to meet all liability repayments on time, to meet
contingent liabilities, and fund all investment opportunities.

We maintain diverse sources of liquidity to facilitate flexibility in
meeting funding requirements. We fund our operations principally by accepting
deposits from retail and corporate depositors and through public issuance of
bonds. We also borrow in the short-term inter-bank market. Loan maturities,
securitization of assets and loans, and sale of investments also provide
liquidity. See "Operating and Financial Review and Prospects - Financial
Condition - Liquidity Risk" for a detailed description of liquidity risk.

Operational Risk

We are exposed to many types of operational risk. Operational risk can
result from a variety of factors, including failure to obtain proper internal
authorizations, improperly documented transactions, failure of operational and
information security procedures, computer systems, software or equipment, fraud,
inadequate training and employee errors. We attempt to mitigate operational risk
by maintaining a comprehensive system of internal controls, establishing systems
and procedures to monitor transactions, maintaining key back-up procedures and
undertaking regular contingency planning.

Operational Controls and Procedures in Branches

ICICI Bank has operating manuals detailing the procedures for the
processing of various banking transactions and the operation of the application
software. Amendments to these manuals are implemented through circulars sent to
all offices.

ICICI Bank has a scheme of delegation of financial powers that sets out the
monetary limit for each employee with respect to the processing of transactions
in a customer's account. Withdrawals from customer accounts are controlled by
dual authorization. Senior officers have been delegated power to authorize
larger withdrawals. ICICI Bank's operating system validates the check number and
balance before permitting withdrawals. Cash transactions over Rs. 1 million (US$
22,925) are subject to special scrutiny to avoid money laundering. ICICI Bank's
banking software has multiple security features to protect the integrity of
applications and data.

Operational Controls and Procedures for Internet Banking

In order to open an Internet banking account, the customer must provide us
with documentation to prove the customer's identity, such as a copy of the
customer's passport, a photograph and specimen signature of the customer. After
verification of this documentation, we open the Internet banking account and
issue the customer a user ID and password to access his account online.

Operational Controls and Procedures in Regional Processing Centers &
Central Processing Centers

To improve customer service at our physical locations, we handle
transaction processing centrally by taking away such operations from branches.
We have centralized operations at regional processing centers located at 15
cities in the country. These regional processing centers process clearing checks
and inter-branch transactions, make inter-city check collections, and engage in
back-office activities for account opening, standing instructions and
auto-renewal of deposits.

In Mumbai, we have centralized transaction processing on a nation-wide
basis for transactions like the issue of ATM cards and PIN mailers,
reconciliation of ATM transactions, monitoring of ATM functioning, issue of
passwords to Internet banking customers, depositing postdated checks received
from retail loan customers and credit card transaction processing. Centralized
processing has been extended to the issuance of personalized check books,
back-office activities of non-resident Indian accounts, opening of new bank
accounts for customers who seek web brokering services and recovery of service
charges for accounts for holding shares in book-entry form.

Operational Controls and Procedures in Treasury

ICICI Bank uses technology to monitor risk limits and exposures. ICICI
Bank's front office, back office and accounting and reconciliation functions are
fully segregated in both the domestic treasury and foreign exchange treasury.
The respective middle offices use various risk monitoring tools such as
counterparty limits, position limits, exposure limits and individual dealer
limits. Procedures for reporting breaches in limits are also in place.

ICICI Bank's front office treasury operations for rupee transactions
consist of operations in fixed income securities, equity securities and
inter-bank money markets. ICICI Bank's dealers analyze the market conditions and
take views on price movements. Thereafter, they strike deals in conformity with
various limits relating to counterparties, securities and brokers. The deals are
then forwarded to the back office for settlement.

Trade strategies are discussed frequently and decisions are taken based on
market forecasts, information and liquidity considerations. Trading operations
are conducted in conformity with the code of conduct prescribed by internal and
regulatory guidelines.

The Treasury Middle Office Group monitors counterparty limits, evaluates
the mark-to-market impact on various positions taken by dealers and monitors
market risk exposure of the investment portfolio and adherence to various market
risk limits.

ICICI Bank's back office undertakes the settlement of funds and securities.
The back office has procedures and controls for minimizing operational risks,
including procedures with respect to deal confirmations with counterparties,
verifying the authenticity of counterparty checks and securities, ensuring
receipt of contract notes from brokers, monitoring receipt of interest and
principal amounts on due dates, ensuring transfer of title in the case of
purchases of securities, reconciling actual security holdings with the holdings
pursuant to the records and reports any irregularity or shortcoming observed.

Anti-money Laundering Controls

The Indian Parliament passed the Prevention of Money Laundering Act in
2002. Effective July 1, 2005, the provisions of this Act (as subsequently
amended) have come into force. The Reserve Bank of India issued detailed
guidelines to the banks on Know Your Customer and Anti-Money Laundering in
November 2004 which superseded the prior instructions and were based on the
recommendations of the Financial Action Task Force and the paper issued on
Customer Due Diligence for banks by the Basel Committee on Banking Supervision.
Banks are required to comply with these Reserve Bank of India guidelines by
December 31, 2005.

Our board of directors approved a group anti-money laundering policy in
January 2004, which established the standards of anti-money laundering
compliance. The group anti-money laundering policy was revised in December 2004
in view of the requirements of the November 2004 Reserve Bank of India
guidelines. The group anti-money laundering policy is applicable to all our
activities. The anti-money laundering regulatory requirements for overseas units
are required to be provided separately. Our anti-money laundering standards are
primarily based on two pillars, namely, know your customer and
monitoring/reporting of suspicious transactions. The group anti-money laundering

policy specifies a risk-based approach in implementing the anti-money laundering
framework. The strategic business units are required to undertake risk profiling
of various customer segments and products, and classify them into high, medium
and low-risk categories. The anti-money laundering framework seeks to institute
a process of customer identification and verification depending on the nature or
status of the customer and the type of transaction. In respect of unusual or
suspicious transactions or when the customer moves from a low-risk to high-risk
profile, appropriate enhanced due-diligence measures are required to be adopted.
The policy also requires that reports of suspicious transactions be submitted to
the regulatory and law enforcement authorities. The Audit Committee of our board
of directors supervises the implementation of the anti-money laundering
framework. A money laundering reporting officer has been designated to monitor
the day-to-day implementation of the anti-money laundering policy and
procedures. Our committee of directors has also approved a customer acceptance
policy, product and customer-specific Know Your Customer procedures and
appropriate transaction monitoring procedures. Suitable training programs on
awareness of anti-money laundering are organized for the employees on a periodic
basis.

Global risk management framework

We have adopted a global risk management framework for our international
banking operations, including overseas branches, offshore banking units and
subsidiaries. Under this framework, our credit, investment, asset liability
management and anti-money laundering policies apply to all our overseas branches
and offshore banking units, with modifications to meet local regulatory or
business requirements. These modifications may be made only with the approval of
our board of directors. All overseas banking subsidiaries are required to adopt
risk management policy frameworks to be approved by their board of directors or
an appropriate committee of their board of directors, based on applicable laws
and regulations as well as our corporate governance and risk management
framework. The overseas banking subsidiaries are required to adopt a process for
formulation of policies which involves seeking the guidance and recommendations
of the related groups in ICICI Bank.

The Compliance and Audit Group plays an oversight role in respect of
regulatory compliance. Key risk indicators pertaining to our international
banking operations are presented to the Risk Committee of our board of directors
on a quarterly basis.

Audit

The Internal Audit Group, which is part of the Compliance and Audit Group,
undertakes a comprehensive audit of all business groups and other functions, in
accordance with a risk-based audit plan. This plan allocates audit resources
based on an assessment of the operational risks in the various businesses. The
audit plan for every fiscal year is approved by the Audit Committee of our board
of directors.

The Internal Audit Group also has a dedicated team responsible for
information technology security audits. The annual audit plan covers various
components of information technology including applications, databases, networks
and operating systems.

The Reserve Bank of India requires banks to have a process of concurrent
audits at branches handling large volumes, to cover a minimum of 50.0% of
business volumes. ICICI Bank has a process of concurrent audits, using external
accounting firms. Concurrent audits are also carried out at centralized and
regional processing centers operations to ensure existence of and adherence to
internal controls.

The Internal Audit Group has formed a separate International Banking Audit
Group for audit of international branches, representative offices and
subsidiaries.

Legal Risk

We are involved in various litigations and are subject to a wide variety of
banking and financial services laws and regulations in each of the jurisdictions
in which we operate. We are also subject to a large number of regulatory and
enforcement authorities in each of these jurisdictions. See "Risk Factors -
Risks Relating to Our Business - We are involved in various litigations and any
final judgment awarding material damages against us could have a material
adverse impact on our future financial performance, our stockholders' equity and
the price of our equity shares and ADSs" and "- regulatory changes or
enforcement initiatives in India or any of

the jurisdictions in which we operate may adversely affect our business and the
price of our equity shares and ADSs." Based on a review of litigations with
legal counsel, management believes that the outcome of such matters will not
have a material adverse effect on our financial position, results of operations
or cashflows.

Derivative Instruments Risk

We enter into interest rate and currency derivative transactions primarily
for the purpose of hedging interest rate and foreign exchange mismatches and
also engage in trading of derivative instruments on our own account. We provide
derivative services to selected major corporate customers and other domestic and
international financial institutions, including foreign currency forward
transactions and foreign currency and interest rate swaps. Our derivative
transactions are subject to counterparty risk to the extent particular obligors
are unable to make payment on contracts when due.

Risk management in key subsidiaries

ICICI Securities provides investment banking services, including corporate
advisory, fixed income and equity services, to corporate customers. All
investment banking mandates, including underwriting commitments, are approved by
the Commitments Committee comprising the Managing Director and CEO and relevant
group heads, of ICICI Securities. ICICI Securities is a primary dealer and has
government of India securities as a significant proportion of its portfolio. It
has a corporate risk management group for managing principally the credit and
market risks arising out of the various activities of the company.

ICICI Prudential Life Insurance is exposed to business risks arising out of
the nature of products and underwriting, and market risk arising out of the
investments made out of the corpus of premiums collected and the returns
guaranteed to policyholders. ICICI Prudential Life Insurance believes it has a
well-developed framework for assessing and managing these risks. We believe it
has the largest team of underwriters among private sector insurance companies in
India. The key risks and the risk management framework are periodically reviewed
by the Risk Management and Audit Committee of its board of directors. The
Investment Committee oversees investment-related risk management by approving
and reviewing the implementation of the investment policy within the norms
stipulated by the Insurance Regulatory and Development Authority. ICICI
Prudential Life Insurance has an asset-liability management framework for its
investment related risks. At year -end fiscal 2005, linked insurance plans were
70% of the portfolio. These are exposed to low market risk as the returns are
linked to the value of underlying investments. In order to manage the interest
rate risk on the non-linked portfolio, ICICI Prudential Life Insurance has
hedged the single premium non-participating portfolio by duration matching,
re-balanced at monthly intervals. For the participating portfolio, ICICI
Prudential Life Insurance has adopted an asset allocation strategy which
includes investments in equities. The equity portfolio is benchmarked to a stock
market index. ICICI Prudential Life Insurance follows a disciplined approach to
portfolio construction to manage the volatility of equity investments and
achieve superior equity asset class returns over the long term. The portfolio
largely comprises index stocks and is constructed with small limits for sector
and stock deviation vis-a-vis index stock weighs. In addition, there are limits
on exposures to companies, groups and industries.

ICICI Lombard General Insurance is principally exposed to risks arising out
of the nature of business underwritten and credit risk on its investment
portfolio. In respect of business risk, ICICI Lombard General Insurance seeks to
diversify its insurance portfolio across industry sectors and geographical
regions. It focuses on product segments that have historically experienced low
loss ratios. It also has the ability to reduce the risk retained on its own
balance sheet by re-insuring a part of the risks underwritten. Its investments
are governed by the investment policy approved by its board of directors within
the norms stipulated by the Insurance Regulatory and Development Authority. The
Investment Committee oversees the implementation of this policy and reviews it
periodically. Exposure to any single entity is normally restricted to 5.0% of
the portfolio and to any industry to 10.0% of the portfolio. Investments in debt
instruments are generally restricted to instruments with a domestic credit
rating of AA or higher.

Controls and Procedures

ICICI Bank's Chief Executive Officer and Chief Financial Officer have
evaluated the effectiveness of ICICI Bank's "disclosure controls and procedures"
(as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as
amended) as of March 31, 2005 and concluded that, as of the date of their
evaluation, ICICI Bank's

disclosure controls and procedures were effective to ensure that information
required to be disclosed by ICICI Bank in the reports that it files or submits
under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported, within the time periods specified in the Securities and
Exchange Commission's rules and forms.

There has been no change in ICICI Bank's internal control over financial
reporting that has occurred during the fiscal year ended March 31, 2005, that
has materially affected, or is reasonably likely to materially affect, ICICI
Bank's internal control over financial reporting.

Loan Portfolio

Our gross loan portfolio, which includes loans structured as debentures and
preferred stock, was Rs. 1,075.8 billion (US$ 24.7 billion) at year-end fiscal
2005, an increase of 35.3% over the gross loan portfolio of Rs. 795.3 billion
(US$ 18.2 billion) at year-end fiscal 2004. At year-end fiscal 2004, the gross
loan portfolio increased 16.2% to Rs. 795.3 billion (US$ 18.2 billion) as
compared to the gross loan portfolio of Rs. 684.6 billion (US$ 15.7 billion) at
year-end fiscal 2003. At year-end fiscal 2005, approximately 86.1% of our gross
loans were rupee loans. At year-end fiscal 2005, our balance outstanding in
respect of loans outside India was Rs. 87.1 billion (US$ 2.0 billion),
representing approximately 8.1% of our total gross loan portfolio.

Loan Portfolio by Categories

The following table sets forth, at the dates indicated, our gross rupee and
foreign currency loans by business category.

At March 31, (1)
-------------------------------------------------------------------------
2001 2002 2003 2004 2005
-------------------------------------------------------------------------
(in millions)
Wholesale banking(2) Rs. 511,312 Rs. 410,556 Rs. 385,143 Rs.316,801 Rs. 326,946 US$ 7,495
Rupee................................ 428,782 342,068 297,030 244,668 269,953 6,189
Foreign currency..................... 82,530 68,488 88,113 72,133 56,993 1,307
Working capital finance 44,442 42,225 74,422 80,505 135,573 3,108
Rupee................................ 42,592 39,943 70,092 63,268 64,262 1,473
Foreign currency..................... 1,850 2,282 4,330 17,237 71,311 1,635
Leasing and related activities (3) 39,741 24,332 17,862 16,015 13,353 306
Rupee................................ 38,258 22,879 17,862 16,015 13,353 306
Foreign currency .................... 1,483 1,453 - - - -
Consumer loans and credit card
receivables 27,106 72,789 188,254 311,907 531,226 12,178
Rupee ............................... 27,106 72,789 188,254 311,690 528,592 12,118
Foreign currency .................... - - - 217 2,634 60
Other(4) 12,457 10,346 18,959 70,059 68,660 1,574
Rupee ............................... 39,563 83,135 18,959 70,044 50,259 1,152
Foreign currency .................... - - - 15 18,401 422
Gross loans
Rupee .............................. 549,195 488,025 592,197 705,685 926,420 21,238
Foreign currency .................... 85,863 72,223 92,443 89,602 149,338 3,424
-------------------------------------------------------------------------
Total gross loans ..................... 635,058 560,248 684,640 795,287 1,075,758 24,662
Allowance for loan losses.............. (33,035) (36,647) (54,219) (66,767) (75,900) (1,740)
-------------------------------------------------------------------------
Net loans ............................. Rs. 602,023 Rs. 523,601 Rs. 630,421 Rs.728,520 Rs. 999,858 US$ 22,922
=========================================================================
- --------------

(1) Data for fiscal 2003, 2004 and 2005 is not comparable to fiscal 2001 and
2002, as data for fiscal 2001 and 2002 is only for ICICI and does not
include ICICI Bank, as ICICI Bank was accounted for by the equity method in
those fiscal years.
(2) Wholesale banking includes project finance, corporate finance and
receivable financing but excludes leasing and related activities.
(3) Leasing and related activities includes leasing and hire purchase.
(4) Other includes bills discounted and inter-corporate deposits.

Our gross consumer loans and credit card receivables increased from Rs.
311.9 billion (US$ 7.2 billion), constituting 39.2% of our gross loans at
year-end fiscal 2004 to Rs. 531.2 billion (US$ 12.2 billion), constituting 49.4%
of our gross loans at year-end fiscal 2005. Our gross foreign currency loans
increased from Rs. 89.6 billion (US$ 2.1 billion), constituting 11.3% of our
total gross loans at year-end fiscal 2004 to Rs. 149.3 billion (US$ 3.4
billion), constituting 13.9% of our total gross loans at year-end fiscal 2005.

Collateral -- Completion, Perfection and Enforcement

Our loan portfolio consists largely of project and corporate finance and
working capital loans to corporate borrowers, and loans to retail customers,
including home loans, automobile loans, two wheeler loans, commercial business
loans, personal loans and credit card receivables and agricultural financing. In
general, our loans are over-collateralized. In India, there are no regulations
stipulating loan-to-collateral limits.

Corporate finance and project finance loans are typically secured by a
first lien on fixed assets, which normally consists of property, plant and
equipment. These security interests are perfected by the registration of these
interests within 30 days with the Registrar of Companies pursuant to the
provisions of the Companies Act when our clients are constituted as companies.
This registration amounts to a constructive public notice to other business
entities. We may also take security of a pledge of financial assets like
marketable securities, and obtain corporate guarantees and personal guarantees
wherever appropriate.

Working capital loans are typically secured by a first lien on current
assets, which normally consist of inventory and receivables. Additionally, in
some cases, we may take further security of a first or second lien on fixed
assets, a pledge of financial assets like marketable securities, or obtain
corporate guarantees and personal guarantees wherever appropriate.

A substantial portion of our loans to retail customers is also secured by a
first and exclusive lien on the assets financed (predominantly property and
vehicles).

We are entitled in terms of our security documents to repossess security
comprising assets such as plant, equipment and vehicles without reference to the
courts or tribunals unless a client makes a reference to such courts or
tribunals to stay our actions.

Separately, in India, foreclosure on collateral of property generally
requires a written petition to an Indian court or tribunal based on amounts
sought to be recovered. An application, when made, may be subject to delays and
administrative requirements that may result, or be accompanied by, a decrease in
the value of the collateral. These delays can last for several years leading to
deterioration in the physical condition and market value of the collateral. In
the event a corporate borrower makes an application for relief to a specialized
authority called the Board for Industrial and Financial Reconstruction,
foreclosure and enforceability of collateral is stayed. In fiscal 2003, the
Indian Parliament passed the Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act, 2002, as amended, which
strengthened the ability of lenders to resolve non-performing assets by granting
them greater rights as to enforcement of security including over immovable
property and recovery of dues, without reference to the courts or tribunals. See
"Overview of the Indian Financial Sector - Recent Structural Reforms -
Legislative Framework for Recovery of Debts due to Banks".

In case of consumer loans, we obtain post-dated checks towards repayment on
pre-specified dates, which if dishonored entitle us to initiate criminal
proceedings against the issuer of the checks.

We recognize that our ability to realize the full value of the collateral
in respect of current assets is difficult, due to, among other things, delays on
our part in taking immediate action, delays in bankruptcy foreclosure
proceedings, defects in the perfection of collateral and fraudulent transfers by
borrowers. However, cash credit facilities are so structured that we are able to
capture the cash flows of our customers for recovery of past due amounts. In
addition, we have a right of set-off for amounts due to us on these facilities.
Also, we regularly monitor the cash flows of our working capital loan customers
so that we can take any actions required before the loan becomes impaired. On a
case-by-case basis, we may also stop or limit the borrower from drawing further
credit from its facility.

Loan Concentration

We follow a policy of portfolio diversification and evaluate our total
financing exposure in a particular industry in light of our forecasts of growth
and profitability for that industry. ICICI Bank's Risk Management Group monitors
all major sectors of the economy and specifically follows industries in which
ICICI Bank has credit exposures. We seek to respond to any economic weakness in
an industrial segment by restricting new credits to that industry segment and
any growth in an industrial segment by increasing new credits to that industry
segment, resulting in active portfolio management. ICICI Bank's policy is to
limit its loan portfolio to any particular industry (other than retail loans) to
15.0%.

Pursuant to the guidelines of the Reserve Bank of India, ICICI Bank's
credit exposure to individual borrowers must not exceed 15.0% of its capital
funds, comprising Tier 1 and Tier 2 capital calculated pursuant to the
guidelines of the Reserve Bank of India, under Indian GAAP. Credit exposure to
individual borrowers may exceed the exposure norm of 15.0% of a bank's capital
funds by an additional 5.0% (i.e. up to 20.0%) provided the additional credit
exposure is on account of infrastructure financing. ICICI Bank's exposure to a
group of companies under the same management control must not exceed 40.0% of
its capital funds unless the exposure is in respect of an infrastructure
project. In that case, the exposure to a group of companies under the same
management control may be up to 50.0% of ICICI Bank's capital funds. With effect
from June 1, 2004, banks may, in exceptional circumstances, with the approval of
their boards, enhance the exposure by 5.0% of capital funds (i.e., 20.0% of
capital funds for an individual borrower and 45.0% of capital funds for a group
of companies under same management), making appropriate disclosures in their
annual reports. Exposure for funded facilities is calculated as the total
committed credit and investment sanctions or the outstanding funded amount,
whichever is higher (for term loans, as undisbursed commitments plus the
outstanding amount). Exposure for non-funded facilities is calculated as 100.0%
of the committed amount or the outstanding non-funded amount whichever is
higher. At year-end fiscal 2005, ICICI Bank was in compliance with these
guidelines.

The following table sets forth, at the dates indicated, our gross loans
outstanding, including loans structured as debentures and preferred stock, by
the borrower's industry or economic activity.

At March 31,(1)
-----------------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005
-----------------------------------------------------------------------------------------------------------------
(in millions, except percentages)
Consumer loans
and credit and Rs. 27,106 4.3% Rs. 72,789 13.0% Rs. 188,254 27.5% Rs.311,907 39.2% Rs. 531,226 US$ 12,178 49.4%
receivables.....
Iron and steel.... 70,547 11.1 71,272 12.7 72,473 10.6 62,354 7.8 56,082 1,286 5.2
Crude petroleum
and petroleum
refining....... 54,822 8.6 32,099 5.7 24,556 3.6 20,807 2.6 45,160 1,035 4.2
Services.......... 74,425 11.7 47,676 8.5 45,443 6.6 33,435 4.2 43,579 999 4.1
Textiles.......... 47,052 7.4 40,867 7.3 40,279 5.9 29,941 3.8 31,214 716 2.9
Power............. 66,368 10.5 61,159 10.9 56,091 8.2 45,199 5.7 31,062 712 2.9
Telecom........... 20,244 3.2 25,547 4.6 27,458 4.0 27,919 3.5 19,757 453 1.8
Transport
Equipment........ 19,613 3.1 13,086 2.3 12,872 1.9 13,068 1.6 14,339 329 1.3
Electronics....... 15,032 2.4 17,817 3.2 20,722 3.0 18,239 2.3 14,114 324 1.3
Non-ferrous metals 4,473 0.7 6,536 1.2 6,868 1.0 5,392 0.7 13,865 318 1.3
Other (2)......... 235,376 37.0 171,400 30.6 189,624 27.7 227,026 28.60 275,360 25.6
--------------------------------------------------------------------------------------------------------------
Gross loans....... Rs 635,058 100.0% Rs.560,248 100.0% Rs. 684,640 100.0% Rs.795,287 100.0% Rs.1,075,758 US$ 24,662 100.0%
=====
Allowance for loan
losses.......... (33,035) (36,647) (54,219) (66,767) (75,900) (1,740)
---------- ---------- ----------- ---------- ------------ ----------
Net loans......... Rs.602,023 Rs.523,601 Rs. 630,421 Rs.728,520 Rs. 999,858 US$ 22,922
========== ========== =========== ========== ============ ==========
- ------------
(1) Data for fiscal years 2003, 2004 and 2005 is not comparable to fiscal 2001
and 2002, as data for fiscal 2001 and 2002 is only for ICICI and does not
include ICICI Bank, as ICICI Bank was accounted for by the equity method in
those fiscal years.
(2) Others principally include basic chemicals, fertilizers and pesticides,
transportation, paper and paper products, electrical equipment, food
products, petrochemicals, man-made fibres, machinery, sugar, plastics,
non-ferrous metals, drugs, mining, rubber and rubber products, shipping,
agriculture, construction, printing, mineral products, glass and glass
products, watches, healthcare, gems and jewelry, leather, cement and wood
products industries.

Our gross loan portfolio at year-end fiscal 2005 increased by 35.3%
compared to the gross loan portfolio at year-end fiscal 2004. The largest
increase was in consumer loans and credit card receivables, which constituted
49.4% of gross loans at year-end fiscal 2005 compared to 39.2% at year-end
fiscal 2004 and 27.5% at year-end

fiscal 2003. Our gross loans to the iron and steel sector as a percentage of
gross loans decreased to 5.2% at year-end fiscal 2005 compared to 7.8% at
year-end fiscal 2004. Our gross loans to the crude petroleum and petroleum
refining sector as a percentage of gross loans increased to 4.2% at year-end
fiscal 2005 compared to 2.6% at year-end fiscal 2004. Consumer loans and credit
card receivables accounted for 12.1% of our gross other impaired loans at
year-end fiscal 2005. The iron and steel sector accounted for 7.4% of our gross
restructured loans and 4.6% of our gross other impaired loans at year-end fiscal
2005. The power sector accounted for 1.8% of our gross restructured loans and
42.0% of our gross other impaired loans at year-end fiscal 2005. See also
"-Impaired Loans".

At year-end fiscal 2005, our 20 largest borrowers accounted for
approximately 13.7% of our gross loan portfolio (gross of unearned income and
security deposits), with the largest borrower accounting for approximately 2.2%
of our gross loan portfolio. The largest group of companies under the same
management control accounted for approximately 3.5% of our gross loan portfolio.

Geographic Diversity

Our portfolios were geographically diversified throughout India, primarily
reflecting the location of our corporate borrowers. The state of Maharashtra,
which is the most industrialized state in India, accounted for the largest
proportion of our gross loans outstanding at year-end fiscal 2005.

Directed Lending

The Reserve Bank of India requires banks to lend to certain sectors of the
economy. Such directed lending is comprised of priority sector lending, export
credit and housing finance.

Priority Sector Lending

The Reserve Bank of India has established guidelines requiring banks to
lend 40.0% of their net bank credit (total domestic loans less marketable debt
instruments and certain exemptions permitted by the Reserve Bank of India from
time to time) to certain specified sectors called priority sectors. Priority
sectors include small-scale industries, the agricultural sector, food and
agri-based industries, small businesses and housing finance up to certain
limits. The agricultural sector is further bifurcated into direct finance to
agriculture which mainly includes short-term crop loans and medium and long term
loans provided directly to farmers for financing production and development
needs and indirect finance to agriculture which mainly includes financing the
distribution of fertilisers, pesticides, seeds, etc, financing distribution of
inputs for the allied activities such as, cattle feed, poultry feed, etc. and
various other specified categories. Out of the 40.0%, banks are required to lend
a minimum of 18.0% of their net bank credit to the agriculture sector (including
direct agriculture and indirect agriculture) and the balance to certain
specified sectors, including small scale industries (defined as manufacturing,
processing and services businesses with a limit of Rs. 10 million on investment
in plant and machinery, and an investment limit of Rs. 50 million in respect of
certain specified items), small businesses, including retail merchants,
professional and other self employed persons and road and water transport
operators, housing loans up to certain limits and to specified state financial
corporations and state industrial development corporations. To ensure focus of
the banks on the direct agricultural advances Reserve bank of India has
stipulated that the lending under the indirect category should not exceed
one-fourth of the agricultural sub-target of 18%, therefore banks are
necessarily required to lend 13.5% of their net bank credit to the direct
agricultural sector. While granting its approval for the amalgamation, the
Reserve Bank of India stipulated that since ICICI's loans transferred to us were
not subject to the priority sector lending requirement, we are required to
maintain priority sector lending of 50.0% of our net bank credit on the residual
portion of our advances (i.e., the portion of our total advances excluding
advances of ICICI at year-end fiscal, 2002, henceforth referred to as residual
net bank credit). This additional 10.0% priority sector lending requirement will
apply until such time as our aggregate priority sector advances reach a level of
40.0% of our total net bank credit. The Reserve Bank of India's existing
instructions on sub-targets under priority sector lending and eligibility of
certain types of investments/ funds for qualification as priority sector
advances apply to us.

We are required to comply with the priority sector lending requirements at
the end of each fiscal year. Any shortfall in the amount required to be lent to
the priority sectors may be required to be deposited with government sponsored
Indian development banks like the National Bank for Agriculture and Rural
Development and the Small Industries Development Bank of India. These deposits
have a maturity of up to five years and carry interest rates lower than market
rates.

At year-end fiscal 2005, our priority sector loans were Rs. 191.1 billion
(US$ 4.4 billion), constituting 54.5% of our residual net bank credit against
the requirement of 50.0%. The following table sets forth our priority sector
loans, classified by the type of borrower, at year-end fiscal 2005.

% of residual
net bank credit
At March 31, at March 31,
------------------------ ---------------
2005 2005 2005
------------------------ --------------
(in millions, except percentages)
Small scale industries............. Rs. 2,334 US$ 54 0.7%
Others including small businesses.. 121,100 2,776 34.5
Agricultural sector (1)............ 67,632 1,550 19.3
Total.............................. Rs.191,066 US$ 4,380 54.5%

- ---------------
(1) Includes direct agriculture Rs. 45.88 billion constituting 13.1% of our
residual net bank credit against the requirement of 13.5%.

Export Credit

As part of directed lending, the Reserve Bank of India also requires banks
to make loans to exporters at concessional rates of interest. Export credit is
provided for pre-shipment and post-shipment requirements of exporter borrowers
in rupees and foreign currencies. At the end of the fiscal year, 12.0% of a
bank's net bank credit is required to be in the form of export credit. This
requirement is in addition to the priority sector lending requirement but
credits extended to exporters that are small scale industries or small
businesses may also meet part of the priority sector lending requirement. The
Reserve Bank of India provides export refinancing for an eligible portion of
total outstanding export loans at the bank rate prevailing in India from time to
time. The interest income earned on export credits is supplemented through fees
and commissions earned from these exporter customers from other fee-based
products and services taken by them from us, such as foreign exchange products
and bill handling. At year-end fiscal 2005, our export credit was Rs. 6.4
billion (US$ 147 million), constituting 1.8% of our residual net bank credit.

Housing Finance

The Reserve Bank of India requires banks to lend up to 3.0% of their
incremental deposits in the previous fiscal year for housing finance. This can
be in the form of home loans to individuals or investments in the debentures and
bonds of the National Housing Bank and housing development institutions
recognized by the government of India. Housing finance also qualifies as
priority sector lending. At year-end fiscal 2005, our housing finance qualifying
as priority sector advances was Rs. 111.9 billion (US$ 2.6 billion) and was well
above the minimum requirement prescribed by the Reserve Bank of India.

Loan Pricing

As required by the Reserve Bank of India's guidelines and the advice issued
by the Indian Banks' Association, effective January 1, 2004, we price our loans
(other than fixed rate loans and certain categories of loans to individuals and
agencies specified by the Indian Banks' Association, including among others,
loans to individuals for acquiring residential properties, loans for purchase of
consumer durables, non-priority sector personal loans and loans to individuals
against shares, debentures, bonds and other securities) with reference to a
benchmark prime lending rate, called the ICICI Bank Benchmark Advance Rate. The
Asset Liability Management Committee of our board of directors fixes the ICICI
Bank Benchmark Advance Rate based on cost of funds, cost of operations and
credit charge as well as yield curve factors, such as interest rate and
inflation expectations, as well as market demand for loans of a certain term and
our cost of funds. The ICICI Benchmark Advance Rate is 11.00% p.a. payable
monthly, effective February 09, 2005. The lending rates comprise ICICI Benchmark
Advance Rate, term premium and transaction-specific credit and other charges.

Impaired Loans

The following discussion on impaired loans is based on US GAAP. For
classification of impaired loans under Indian regulatory requirements, see
"Supervision and Regulation - Reserve Bank of India Regulations - Loan Loss
Provisions and Non-Performing Assets".

Impact of Economic Environment on the Industrial Sector

In 1991, India commenced a program of industrial liberalization involving,
among other things, the abolition of industrial licensing, reduction in import
tariff barriers and greater access for foreign companies to the Indian markets.
In the period following the opening up of the economy, a number of Indian
companies commenced large projects in expectation of growth in demand in India.
These projects generally had relatively high levels of debt relative to equity,
given the inadequate depth in the equity capital markets in India at that time.
However, the negative trends in the global marketplace in the late 1990s,
particularly the South-east Asian economic crisis, a downturn in the commodities
markets and recessionary conditions in various economies impaired the operating
environment for the Indian industrial sector. The manufacturing sector was also
impacted by increased competition arising from economic liberalization in India
and volatility in industrial demand and growth. These factors led to stress on
the operating performance of Indian corporations in certain sectors and the
impairment of a significant amount of loan assets in the financial system,
including loan assets of ICICI and ICICI Bank. Certain Indian corporations have
come to terms with this new competitive reality through a process of
restructuring and repositioning, including rationalization of capital structures
and production capacities. The increase in commodity prices since fiscal 2003
has had a favorable impact on the operations of corporations in several sectors.

Recognition of Impaired Loans

We identify a loan as impaired when it is probable that we will be unable
to collect the scheduled payments of principal and interest due under the
contractual terms of the loan agreement. We conduct a comprehensive analysis of
our corporate loan portfolio on a periodic basis for identification of impaired
loans and determination of the allowance required for loan losses. The analysis
considers both qualitative and quantitative criteria including, among others,
the account conduct, future prospects, repayment history and financial
performance. This comprehensive analysis includes an account-by-account analysis
of a substantial portion of the corporate loan portfolio. Corporate loans with
an outstanding amount of greater than Rs. 100 million are selected across risk
grades (generally adversely graded accounts) for a detailed review. In addition
to the detailed review of large balance loans, we also classify our portfolio
based on the overdue status of each account, after which we classify a loan as
impaired if principal or interest has remained overdue for more than 90 days.
Generally, when a loan is placed on non-accrual status, interest accrued and
uncollected on the loan in the current fiscal year is reversed from income, and
interest accrued and uncollected from the prior year is charged off against the
allowance for loan losses. Thereafter, interest on non-accrual loans is
recognized as interest income only to the extent that cash is received and
future collection of principal is not in doubt. When borrowers demonstrate over
an extended period the ability to repay a loan in accordance with the
contractual terms of a loan, which we had classified as non-accrual, the loan is
returned to accrual status.

We classify a loan as a troubled debt restructuring where we have made
concessionary modifications, that we would not otherwise consider, to the
contractual terms of the loan to a borrower experiencing financial difficulties.
Such loans are placed on a non-accrual status. For these loans, cash receipts
are normally applied to principal and interest in accordance with the terms of
the restructured loan agreement. With respect to restructured loans, performance
prior to the restructuring or significant events that coincide with the
restructuring are evaluated in assessing whether the borrower can meet the
rescheduled terms and may result in the loan being returned to accrual status
after a performance period.

Consumer loans are classified by aggregating individual loans into various
product categories. Total outstanding loans in a product category are then
classified into time buckets based on ageing, that is, the number of days
overdue. Consumer loans are generally identified as impaired when principal or
interest has remained overdue for more than 90 days. Consumer loans when
identified as impaired are placed on non-accrual status.

The value of impaired corporate loans is measured as the present value of
expected future cash flows discounted at the loan's effective interest rate, at
the loan's observable market price, or the fair value of the collateral if the
recovery of the loan is solely collateral dependent. If the value of the
impaired loan is less than the recorded investment in the loan, we recognize
this impairment by creating a valuation allowance with a corresponding charge to
the provision for loan losses. We make allowances for our smaller balance
homogeneous consumer loans by aggregating individual loans into various product
categories. Total outstanding loans in a product category are then classified
into time buckets based on ageing, that is, the number of days overdue. We
establish an aggregate allowance for loan losses on our smaller-balance
homogenous consumer loans (impaired and non-impaired loans) based on our
estimate of probable losses inherent in the time buckets identified for each of
the product categories.

Our gross restructured loans decreased 7.9% to Rs. 149.5 billion (US$ 3.4
billion) at year-end fiscal 2005 from Rs. 162.4 billion (US$ 3.7 billion) at
year-end fiscal 2004. Our gross restructured loans represented 13.9% of our
gross loan portfolio at year-end fiscal 2005 and 20.4% of our gross loan
portfolio at year-end fiscal 2004. This was primarily due to reclassification of
certain loans as unimpaired based on satisfactory performance of the borrower
accounts, offset in part, by restructuring of certain loans to companies in the
telecom and automobile industries and reclassification of other impaired loans
that were restructured or transferred to an asset reconstruction company during
the year. Gross other impaired loans decreased 40.9% to Rs. 29.7 billion (US$
681 million) at year-end fiscal 2005 from Rs. 50.2 billion (US$ 1.2 billion) at
year-end fiscal 2004. Our gross other impaired loans represented 2.8% of our
gross loan portfolio at year-end fiscal 2005 and 6.3% of our gross loan
portfolio at year-end fiscal 2004. This was primarily due to reclassification of
other impaired loans that were restructured or transferred to an asset
reconstruction company during the year, as restructured loans, and
reclassification of certain loans as unimpaired based on satisfactory
performance of the borrower accounts. See also "-- Impact of Economic
Environment on the Industrial Sector". As a percentage of net loans, net
restructured loans were 9.6% at year-end fiscal 2005 compared to 16.7% at
year-end fiscal 2004 and net other impaired loans were 1.4% at year-end fiscal
2005 compared to 3.9% at year-end fiscal 2004. During fiscal 2005, we
transferred gross impaired loans of Rs. 24.5 billion (US$ 562 million) to Asset
Reconstruction Company (India) Limited (See "Overview of the Indian Financial
Sector - Reserve Bank of India Regulations - Legislative Framework for Recovery
of Debts due to Banks" and "Supervision and Regulation - Recent Structural
Reforms - Regulations Relating to Sale of Assets to Asset Reconstruction
Companies"), substantially none of which was recognized as a sale in our US GAAP
financial statements. These loans were included in our restructured loans.

The following table sets forth, at the dates indicated, our gross
restructured rupee and foreign currency loan portfolio by business category.

At March 31,
---------------------------------------------------------------------------
2001 2002 2003 2004 2005
---------------------------------------------------------------------------
(in millions, except percentages)
Wholesale banking(1)...... Rs. 37,726 Rs. 84,048 Rs. 135,421 Rs.149,724 Rs. 140,866 US$ 3,229
Rupee................... 25,190 60,017 83,074 115,262 117,468 2,693
Foreign currency........ 12,536 24,031 52,347 34,462 23,398 536
Working capital finance... 818 5,283 11,084 11,525 8,393 192
Rupee................... 818 5,283 11,084 11,525 8,393 192
Foreign currency........ - - - - - -
Leasing and related
activities(2)............ 5,137 5,652 886 1,149 259 6
Rupee................... 5,137 5,652 886 1,149 259 6
Foreign currency........ - - - - - -
Other(3).................. - 105 - - - -
Rupee................... - 105 - - - -
Foreign currency........ - - - - - -
Total restructured loans
Rupee................... 31,145 71,057 95,044 127,937 126,120 2,891
Foreign currency........ 12,536 24,031 52,347 34,462 23,398 536
-------------------------------------------------- ----------------------
Gross restructured loans.. 43,681 95,088 147,391 162,398 149,518 3,428
Allowance for loan
losses.................. (11,372) (17,722) (24,732) (40,981) (53,929) (1,236)
--------------------------------------------------- -----------------------
Net restructured loans.... Rs. 32,309 Rs. 77,366 Rs. 122,659 Rs.121,417 Rs. 95,589 US$ 2,192
=================================================== =======================
Gross loan assets......... Rs.635,058 560,248 684,640 Rs.795,287 1,075,758 US$ 24,662
Net loan
assets(4)............... 602,023 523,601 630,421 728,520 999,858 22,922

Gross restructured loans
as a percentage of
gross loan assets....... 6.88% 16.97% 21.53% 20.42% 13.90%
Net restructured loans
as a percentage of net
loan assets............. 5.37% 14.78% 19.45% 16.67% 9.56%

- ------------
(1) Includes project finance, corporate finance and receivables financing,
excluding leasing and related activities.
(2) Includes leasing and hire purchase.
(3) Other includes consumer loans and credit card receivables, bills discounted
and inter-corporate deposits.
(4) Net of provisions including unallocated provisions on lending assets not
specifically identified as restructured loans or other impaired loans.

The following table sets forth, at the dates indicated, our gross other
impaired rupee and foreign currency loan portfolio by business category.

At March 31,
-----------------------------------------------------------------------------
2001 2002 2003 2004 2005
-----------------------------------------------------------------------------
(in millions, except percentages)

Wholesale banking(1)...... Rs. 39,430 Rs. 48,093 Rs. 67,906 Rs. 42,842 Rs. 21,959 US$ 503
Rupee..................... 23,514 32,847 50,864 34,945 17,882 410
Foreign currency.......... 15,916 15,246 17,042 7,897 4,077 93
Working capital finance... 1,234 1,699 11,907 2,978 1,868 43
Rupee................... 1,234 1,699 11,907 2,978 1,868 43
Foreign currency........ - - - - - -
Leasing and related
activities(2)............ 899 731 1,550 746 446 10
Rupee................... 899 731 1,550 746 446 10
Foreign currency........ - - - - - -
Other(3).................. 181 231 1,793 3,672 5,440 125
Rupee................... 181 231 1,793 3,672 5,440 125
Foreign currency........ - - - - - -
Total other impaired
loans
Rupee................... 25,828 35,508 66,114 42,341 25,636 588
Foreign currency........ 15,916 15,246 17,042 7,897 4,077 93
---------------------------------------------------------------------------
Gross other impaired
loans................... 41,744 50,754 83,156 50,238 29,713 681
Allowance for loan
losses................... (21,663) (17,567) (27,837) (21,474) (15,517) (356)
-----------------------------------------------------------------------------
Net other impaired loans.. Rs. 20,081 Rs. 33,187 Rs. 55,319 Rs. 28,764 Rs. 14,196 US$ 325
=============================================================================

Gross loan assets......... RS.635,058 Rs. 560,248 Rs. 684,640 Rs.795,287 Rs.1,075,758 US$ 24,662
Net loan assets(4)........ 602,023 523,601 630,421 728,520 999,858 22,922
Gross other impaired
loans as a percentage of
gross loan assets........ 6.57% 9.06% 12.15% 6.32% 2.76%
Net other impaired loans
as a percentage of net
loan assets.............. 3.34% 6.34% 8.77% 3.95% 1.42%
- --------
(1) Includes project finance, corporate finance and receivables financing,
excluding leasing and related activities.
(2) Includes leasing and hire purchase.
(3) Other includes consumer loans and credit card receivables, bills discounted
and inter-corporate deposits.
(4) Net of provisions including unallocated provisions on lending assets not
specifically identified as restructured loans or other impaired loans.

The following table sets forth, at the dates indicated, gross restructured
loans by borrowers' industry or economic activity and as a percentage of total
gross restructured loans.

Crude petroleum
and refining... Rs. 50 0.1% Rs. 15 0.0% Rs. 13 0.0% Rs. 17,462 10.8% Rs. 24,609 US$ 564 16.5%

Textiles......... 12,437 28.5 21,468 22.6 15,660 10.6 16,356 10.1 14,874 341 9.9

Telecom.......... - - - - 3,968 2.7 8,674 5.3 12,639 290 8.5
Iron and steel .. 7,270 16.6 18,013 18.9 52,295 35.5 31,839 19.6 11,102 255 7.4

Cement........... 888 2.0 3,454 3.6 10,102 6.9 7,447 4.6 9,454 217 6.3
Transport
equipment...... 418 1.0 5,857 6.2 7,219 4.9 7,282 4.5 7,672 176 5.1
Metal
products......... 761 1.7 636 0.7 1,030 0.7 6,210 3.8 6,564 150 4.4
Fertilizers and
pesticides....... 141 0.3 3,695 3.9 3,168 2.1 6,308 3.9 5,933 136 4.0

Electronics...... 854 2.0 899 0.9 5,555 3.8 5,855 3.6 5,135 118 3.4

Petrochemicals... 937 2.1 853 0.9 3,793 2.6 2,685 1.7 4,739 109 3.2
Man-made fibers.. 4,561 10.4 5,759 6.1 4,641 3.1 4,297 2.6 4,032 92 2.7

Machinery........ 902 2.1 1,336 1.4 3,773 2.6 3,674 2.3 3,759 86 2.5

Plastics......... 2,586 5.9 2,738 2.9 4,829 3.3 3,471 2.1 3,581 82 2.4
Services
.................. 1,605 3.7 2,710 2.8 4,589 3.1 2,915 1.8 3,561 82 2.4

Sugar............ 446 1.0 2,859 3.0 4,250 2.9 4,678 2.9 3,451 79 2.3

Power............ 2,278 5.2 915 0.9 1,229 0.9 1,284 0.8 2,694 62 1.8
Electrical
equipment..... 1,035 2.4 1,713 1.8 1,086 0.7 1,957 1.2 2,499 57 1.7
Basic
chemicals...... 1,306 3.0 1,991 2.1 1,983 1.3 2,886 1.8 2,209 51 1.5

Drugs............ 27 0.1 189 0.2 356 0.2 2,276 1.4 2,026 46 1.4
Paper and paper
products. 2,211 5.1 6,076 6.4 5,669 3.8 6,971 4.3 1,953 45 1.3
Rubber and rubber
products....... 169 0.4 460 0.5 449 0.3 500 0.3 640 15 0.4
Food
products....... 707 1.6 434 0.5 550 0.4 589 0.4 367 8 0.2
Non-ferrous
metals....... 180 0.4 1,337 1.4 1,164 0.8 1,144 0.7 124 3 0.1
Tea.............. - - 299 0.3 375 0.3 951 0.6 120 3 0.1
Others (1) ...... 1,912 4.4 11,382 12.0 9,645 6.5 14,687 9.0 15,782 362 10.6
----------------------------------------------------------------------------------------------------------------
Gross
restructured
loans........... Rs.43,681 100.0% Rs. 95,088 100.0% Rs.147,391 100.0% Rs.162,398 100.0% Rs.149,518 US$3,428 100.0%
====== ===== ===== ===== =====
Aggregate
allowance
for loan
losses.......... (11,372) (17,722) (24,732) (40,981) (53,929) (1,236)
--------- ---------- ---------- ---------- ---------- --------
Net restructured
loans .......... Rs.32,309 Rs. 77,366 Rs.122,659 Rs.121,417 Rs. 95,589 US$2,192
========= ========== ========== ========== ========== ========
- --------------
(1) Others principally include ports, non-bank finance companies, construction,
shipping, wood, glass, computer software, vegetable oil, health care,
agriculture, infrastructure, fishing, real estate, floriculture, printing,
leather, other chemicals, mining and mineral product.

The following table sets forth, at the dates indicated, gross other
impaired loans by borrowers' industry or economic activity and as a percentage
of total gross other impaired loans.

At March 31,
----------------------------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005
----------------------------------------------------------------------------------------------------------------
(in millions, except percentages)
Power .......... Rs. - -% Rs. 6,009 11.9% Rs. 17,733 21.3% Rs. 11,890 23.7% Rs. 12,483 US$ 286 42.0%
Consumer loans &
credit card
receivables..... 32 0.1 191 0.4 1,402 1.7 3,566 7.1 5,449 125 18.3
Basic chemicals . 2,075 5.0 4,412 8.7 4,624 5.6 3,021 6.0 1,659 38 5.6
Iron and steel .. 5,894 14.1 5,899 11.6 8,481 10.2 5,632 11.2 1,366 31 4.6
Electrical
equipment....... 1,652 4.0 2,008 4.0 3,178 3.8 1,873 3.7 962 22 3.2
Food products ... 2,415 5.8 1,389 2.8 1,323 1.6 1,126 2.2 734 17 2.5
Textiles......... 6,041 14.5 4,250 8.4 4,964 6.0 2,351 4.7 707 16 2.4
Transport
equipment....... 761 1.8 715 1.4 790 1.0 1,784 3.6 669 15 2.3

Electronics...... 1,456 3.5 1,281 2.5 2,166 2.6 1,456 2.9 616 14 2.1
Paper and paper
products........ 2,456 5.9 2,199 4.3 1,582 1.9 950 1.9 495 11 1.7
Construction..... 612 1.4 510 1.0 1,202 1.5 1,160 2.3 363 8 1.2
Services ....... 1,324 3.2 416 0.8 2,255 2.7 1,873 3.7 347 8 1.2
Plastics ....... 1,280 3.1 1,137 2.2 1,142 1.4 684 1.4 321 7 1.1
Metal products .. 2,970 7.1 2,628 5.2 7,003 8.4 1,124 2.2 230 5 0.8
Non-ferrous
metals.......... 503 1.2 447 0.9 447 0.5 253 0.5 222 5 0.7
Man-made fibers . 2,129 5.1 1,802 3.6 1,661 2.0 884 1.8 199 5 0.7
Other chemicals 45 0.1 92 0.2 357 0.4 259 0.5 193 4 0.6
Cement ......... 1,972 4.7 1,287 2.5 1,779 2.1 870 1.7 165 4 0.6
Machinery ...... 919 2.2 2,596 5.1 1,759 2.1 1,235 2.5 112 3 0.4

Rubber and rubber
products........ 335 0.8 328 0.6 328 0.4 288 0.6 94 2 0.3
Drugs............ 2,401 5.7 2,544 5.0 2,588 3.2 412 0.8 82 2 0.3
Petrochemicals... 86 0.2 3,440 6.8 4,029 4.8 3,651 7.3 59 1 0.1
Fertilizers
and pesticides.. 193 0.5 163 0.3 3,282 3.9 71 0.1 42 1 0.1
Sugar............ 1,461 3.5 722 1.4 1,262 1.5 70 0.1 8 - 0.0

Others (1)....... 2,732 6.5 4,289 8.4 7,819 9.4 3,755 7.5 2135 49 7.2
---------------------------------------------------------------------------------------------------------------
Gross other
impaired
loans........... Rs.41,744 100.0% Rs. 50,754 100.0% Rs. 83,156 100.0% Rs. 50,238 100.0% Rs. 29,713 US$ 681 100.0%
===== ===== ===== ===== =====
Aggregate
allowance for
loan losses..... (21,663) (17,567) (27,837) (21,474) (15,517) (356)
--------- ---------- ---------- ---------- ---------- --------
Net other
impaired loans...Rs. 20,081 Rs. 33,187 Rs. 55,319 Rs. 28,764 Rs. 14,196 US$ 325
=========== ========== ========== ========== ========== ========

- ---------------------------------------
(1) Includes clocks, gems & jewelry, shipping, agriculture, road, wood,
fishing, trade, non-bank finance companies, computer software, leather,
vegetable oil, health care, printing, crude petroleum and refining, glass,
mineral product and mining.

The largest proportion of our restructured and other impaired loans was to
the crude petroleum and refining, textiles, telecom and power industries. There
is a risk that restructured and other impaired loans in each of these and other
sectors could increase if Indian economic conditions deteriorate, there is a
negative trend in global commodity prices or projects under implementation are
unable to achieve profitable commercial operations.

Crude petroleum and refining. At year-end fiscal 2005, we had classified
54.5% of our total loans to the crude petroleum and refining sector as
restructured loans. Restructured loans include loans to a large private sector
refinery project, the implementation of which was delayed due to natural
calamities and other factors, resulting in an overrun in the cost of the project
compared to the original appraised cost. The Corporate Debt Restructuring Forum
has approved the restructuring of this project. See "Overview of the Indian
Financial Sector - Recent Structural Reforms - Corporate Debt Restructuring
Forum".

Textiles. Over the last few years, the textiles sector was adversely
affected by the impact of erratic monsoons on cotton production, the South-east
Asian economic crisis, the small economic size and unviable capacity of several
textile units and competitive pressures from other low cost textile producing
countries. A substantial portion of our loans to this sector has been classified
as impaired. At year-end fiscal 2005, we had classified 47.7% of our gross loans
in this sector as restructured loans and 2.3% as other impaired loans.

Telecommunications. At year-end fiscal 2005, we had classified 64.0% of our
gross loans in this sector as restructured loans. Our restructured loans in this
sector mainly include loans to a specific group of companies that have been
restructured under the Corporate Debt Restructuring Forum.

Power. At year-end fiscal 2005, we classified 8.7% of our total loans to
the power sector as restructured loans and 40.2% as other impaired loans. Other
impaired loans primarily include loans to a large private sector power
generation project in the state of Maharashtra, the implementation of which was
suspended on account of a dispute between the power project and the purchaser,
the state electricity board. By consent of the parties, the High Court of
Judicature at Bombay has allowed the sale of the assets of the project to a
newly constituted company and ordered the distribution of the sale proceeds
amongst the secured lenders to the project, including us.

Interest Foregone

The following table sets forth, for the periods indicated, the amount of
interest foregone by us in respect of loans on which accrual of interest was
suspended at the respective fiscal year-end.

Interest foregone
(in billions)
-----------------
Fiscal 2001.............................................Rs. 14.3 US$ 0.3
Fiscal 2002............................................. 16.1 0.4
Fiscal 2003............................................. 17.9 0.4
Fiscal 2004............................................. 12.9 0.3
Fiscal 2005............................................. 10.9 0.3

During fiscal 2005, interest income of Rs. 6.4 billion (US$ 147 million)
was recognized on impaired loans on a cash basis.

Impaired Loans Strategy

We place great emphasis on recovery and settlement of our stressed asset
portfolio and impaired loans. Methods for resolving impaired loans include:

o early enforcement of collateral through judicial means;

o encouraging the consolidation of troubled borrowers in fragmented
industries with stronger industry participants;

o encouraging the financial restructuring of troubled borrowers; and

o encouraging modernization of existing plants through technology
upgrades.

Further, we have taken concrete measures to enhance the security
structures in accounts that may be under stress, including through:

o the pledge of sponsor's shareholding;

o the right to convert debt into equity at par;

o ensuring effective representation in the board of directors of these
companies;

o continuous monitoring of the physical performance of the borrower's
operations through independent technical consultants; and

o escrow mechanisms to capture cash flows.

We work closely with other banks and financial institutions and use
outside experts and specialized agencies for due diligence, valuation and legal
advice to expedite early resolution. We also seek to leverage our corporate
relationships to facilitate quicker resolution of impaired loans.

We are seeking to leverage recent positive developments in the Indian
financial system that facilitate financial restructuring of troubled borrowers
and recovery through enforcement of collateral. These include the constitution
of a Corporate Debt Restructuring Forum, consisting of financial institutions
and banks, by the Reserve Bank of India, the enactment of the Securitisation
and Reconstruction of Financial Assets and Enforcement of Security Interest
Act, 2002 and the setting up of an asset reconstruction company to acquire
impaired loans from banks and financial institutions. See "Overview of the
Indian Financial Sector - Recent Structural Reforms- Legislative Framework for
Recovery of Debts due to Banks". However, there can be no assurance of the
extent to which, if at all, these developments will have a positive impact on
our recovery and settlement efforts.

Allowance for Loan Losses

The following table sets forth, at the dates indicated, movement in our
allowances for loan losses.

At March 31,
--------------------------------------------------------------------------
2001 2002 2003 2004 2005
--------------------------------------------------------------------------
(in millions)
Aggregate allowance for loan losses
at the beginning of the year..................... Rs. 34,085 Rs. 33,035 Rs. 36,647 Rs. 54,219 Rs. 66,767 US$ 1,531
Less: Effect of deconsolidation of
subsidiary on allowance for loan losses.......... (747) - - - - -
Add: Effect of reverse acquisition on
allowance for loan losses........................ - - 1,297 - - -
Add: Provisions for loan losses
Wholesale banking(1).............................. 9,097 9,069 16,601 18,940 14,011 321
Working capital finance........................... 479 513 2,237 77 (560) (13)
Leasing and related activities (2)................ 249 6 231 (48) 348 8
Others (3)........................................ 67 155 580 1,086 878 20
Total provisions for loan losses, net of
releases of provisions as a result of
cash collections.................................. Rs. 9,892 Rs. 9,743 Rs. 19,649 Rs. 20,055 Rs. 14,677 US$ 336
Loans charged-off................................... (10,195) (6,131) (3,374) (7,507) (5,544) (127)
--------------------------------------------------------------------------
Aggregate allowance for loan losses
at the end of the year............................ Rs. 33,035 Rs. 36,647 Rs. 54,219 Rs. 66,767 Rs. 75,900 US$ 1,740
Ratio of net provisions for loan losses
during the period to average loans outstanding.... 1.7% 1.6% 3.2% 3.0% 1.8%

- ---------
(1) Includes project finance, corporate finance and receivables financing,
excluding leasing and related activities. Provisions include unallocated
provisions on lending assets not specifically identified as restructured
loans or other impaired loans.

(2) Includes leasing and hire purchase.

(3) Includes consumer loans and credit card receivables, bills discounted and
inter-corporate deposits.

We conduct a comprehensive analysis of our loan portfolio on a periodic
basis. The analysis considers both qualitative and quantitative criteria
including, among others, the account conduct, future prospects, repayment
history and financial performance. This comprehensive analysis includes an
account by account analysis of the corporate loan portfolio, and an allowance
is made for any probable loss on each account. In estimating the allowance, we
consider the net realizable value on a present value basis by discounting the
future cash flows over the expected period of recovery. Further, we also
consider past history of loan losses and value of underlying collateral. For
further discussions on allowances for loan losses, see "Operating and Financial
Review and Prospects - Critical Accounting Policies - Allowances for Loan
Losses."

Under US GAAP, the analysis of the provisions for restructured and other
impaired loans requires that we take into account the time delay in our ability
to foreclose upon and sell collateral. The net present value of a restructured
and other impaired loan includes the net present value of the underlying
collateral, if any. As a result, even though our loans are generally
over-collateralized, additional allowances are required under US GAAP because
US GAAP takes into account the time value of money.

Our restructured and other impaired loan portfolio largely includes project
finance and other term loans. These loans are generally fully secured and have
full recourse to the borrower. In most cases other than working capital finance,
we have a security interest and first lien on all the fixed assets and a second
lien on all the current assets of the borrower. In respect of working capital
finance loans, we have a security interest and first lien on all current assets
and a second lien on all fixed assets of the borrower. Security interests
typically include property, plant and equipment as well as other tangible assets
of the borrower, both present and future. ICICI typically lent between 60.0% and
80.0% of the appraised value of the collateral. Hence, these loans have
historically been sufficiently over-collateralized so that once collateral is
realized we recover a substantial amount of our loan outstanding. However,
recoveries may be subject to delays of up to several years, due to the long
legal process in India. This leads to delay in enforcement and realization of
collateral. We maintain the impaired assets on our books for as long as the
enforcement process is ongoing. Accordingly, an impaired asset may continue for
a long time in our portfolio until the settlement of loan account or realization
of collateral, which may be longer than US banks under similar circumstances.
While determining the allowance for loan losses we consider the time taken for
realizing the collateral. Hence, while impaired loans may continue for a longer
time in our portfolio we believe our allowance for loan losses on such loans is
adequate.

In fiscal 2003, the Indian Parliament passed the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002, as amended, which strengthened the ability of lenders to resolve
non-performing assets by granting them greater rights as to enforcement of
security and recovery of dues. See "Overview of the Indian Financial Sector -
Recent Structural Reforms - Legislative Framework for Recovery of Debts due to
Banks".

Each portfolio of smaller-balance, homogenous loans, including consumer
mortgage, installment, revolving credit and most other consumer loans, is
individually evaluated for impairment. We establish an aggregate allowance for
loan losses on our smaller balance homogenous (impaired and non-impaired loans)
via a process that includes an estimate of probable losses inherent in the
portfolio, based upon various statistical analysis. These include migration
analysis, in which historical delinquency and credit loss experience is applied
to the current ageing of the portfolio, together with an analysis that reflects
current trends and conditions. The use of different estimates or assumptions
could produce different provisions for smaller balance homogeneous loan losses.

For restructured and other impaired loans in excess of Rs. 100 million
(US$ 2 million), which were 88.8% of our gross restructured and other impaired
loan portfolio at March 31, 2005, we followed a detailed process for each
account to determine the allowance for loan losses to be provided. For the
balance of smaller loans in the restructured and other impaired loan portfolio,
we follow the classification detailed below for determining the allowance for
loan losses.

Settlement Cases

In settlement cases allowances are calculated as per the scheme of
settlement on an individual basis.

Enforcement Cases

Enforcement cases are those cases (excluding cases referred to the Board
for Industrial and Financial Reconstruction or BIFR) in which we have commenced
litigation. We expect that only the secured portion of these loans is
recoverable, after a specified number of years from the date the loan is
recalled. The realizable value of these loans on a present value basis is
determined by discounting the estimated cash flow at the end of the specified
number of years from the date of the recall by the average interest implicit in
these loans.

Non-Enforcement BIFR Cases

Non-enforcement BIFR cases include cases which have been referred to the
Board for Industrial and Financial Reconstruction, which are further
categorized into accounts where the plant is under operation and accounts where
the plant is closed. We expect that in accounts where the plant is operational,
the secured portion of the loan is recoverable over specified annual payments.
In respect of those accounts where the plant is closed, we expect that the
secured portion of the loan will be recoverable at the end of a specified
number of years based upon historical experience.

Non-Enforcement Non-BIFR Cases and Other Loans

Non-enforcement non-BIFR cases include cases, which are neither under
litigation nor referred to the Board for Industrial and Financial
Reconstruction. This category is also divided into accounts where the plant is
under operation and accounts where the plant is closed. We expect that in those
accounts where the plant is operational, the secured portion of the loan is
recoverable over specified annual payments together with a recovery in interest
due at a specified rate. In respect of those loans where the plant is closed,
we expect that the secured portion of the loan will be recoverable over
specified annual payments.

The following table sets forth, for the period indicated, the results of
our restructured and other impaired loan classification scheme.

At March 31, 2005
------------------------------------------------
Percentage
expected to be Impaired
Gross realized on a loans, net
impaired net present of allowance for
loans value basis loan losses
----------- --------------- ----------------
(in millions, except percentages)
Gross principal greater than Rs. 100 million..... Rs. 159,088 63.9% Rs. 101,713
Settlement cases................................. 355 64.8 230
Enforcement cases................................ 2,651 65.2 1,729
Non-enforcement BIFR cases....................... 1,356 39.1 530
Other loans...................................... 15,781 35.4 5,583
----------- ----- -----------
Total............................................ Rs. 179,231 61.3% Rs. 109,785
=========== ==== ===========

We believe that the process for ascertaining allowance for loan losses
described above adequately captures the known losses on our entire loan
portfolio. We believe that our allowance for loan losses is adequate to cover
all known losses in our portfolio.

Subsidiaries and Affiliates

Prior to the amalgamation, ICICI Bank had no subsidiaries. As we are the
surviving legal entity in the amalgamation, the subsidiaries and affiliates of
ICICI have become our subsidiaries and affiliates.

The following table sets forth, for the period indicated, certain
information relating to our direct subsidiaries and affiliates at year-end
fiscal 2005.

- --------------------------------------------------------------------------------------------------------------------------------
Shareholding Total Stockholders'
by ICICI Bank income equity Assets at
Year of and direct in fiscal at March March 31,
Name formation Activities subsidiaries 2005(1) 31, 2005(1) 2005(1)
- --------------------------------------------------------------------------------------------------------------------------------
(in millions, except percentages)
ICICI Securities February Investment banking 99.9% Rs. 2,059 Rs. 4,600 Rs. 14,524
Limited(2) 1993 activities
ICICI Venture Funds January Venture capital 100.0 733 354 464
Management 1988 management
Company Limited
ICICI Prudential Life July 2000 Life insurance 74.0 6,650 3,434 45,452
Insurance Company
Limited(3)
ICICI Lombard October 2000 General insurance 74.0 3,301 2,367 8,178
General Insurance
Company Limited(3)
ICICI Home May Home and property 100.0 2,424 1,729 30,875
Finance 1999 financing and
Company Limited marketing
ICICI International January Offshore fund 100.0 5 23 26
Limited 1996 management
ICICI Trusteeship April Trusteeship services 100.0 1 2
Services Limited 1999 -
ICICI Investment March Investment management 100.0 7 118 123
Management 2000
Company Limited
ICICI Bank UK February 2003 Commercial banking 100.0 833 4,249 43,444
Limited
ICICI Bank Canada September 2003 Commercial banking 100.0 111 523 7,659
ICICI Distribution Finance October 1996 Consumer credit 100.0 50 539 630
Private Limited(4) financing
Prudential ICICI June Investment manager 45.0 1,020 921 1,104
Asset Management 1993 for Prudential
Company Limited(5) Mutual Fund
Prudential ICICI June Trustee company for 44.8 4 9 11
Trust Limited(5) 1993 mutual fund

- ---------
(1) All financial information is in accordance with US GAAP.
(2) Consolidated.
(3) The results of ICICI Prudential Life Insurance Company and ICICI Lombard
General Insurance Company were not consolidated under US GAAP in fiscal
2004 and fiscal 2005, due to substantive participative rights retained by
the minority shareholders, and have been accounted for by the equity
method.
(4) Acquired by us in fiscal 2004. Subsequent to year-end fiscal 2005, the
company merged with ICICI Home Finance Company Limited.
(5) Subsequent to year-end fiscal 2005, ICICI Bank acquired additional 6.0%
from Prudential plc in August 2005, taking ICICI Bank's shareholding to
51%.

The following table sets forth, for the period indicated, information on
other significant entities required to be consolidated in our financial
statements for fiscal 2005 under US GAAP.

- ---------------------------------------------------------------------------------------------------------------------------
Shareholding
by ICICI Bank
and venture
capital funds Stockholders'
or trusts to Total equity/net
which ICICI Bank income in assets at Assets at
Date of was a majority fiscal March 31, March 31,
Name formation Activities contributory 2005(1) 2005(1) 2005(1)
- ---------------------------------------------------------------------------------------------------------------------------
(in millions, except percentages)

3i Infotech October Software consulting and 92.5%(4) Rs. 2,553 Rs. 1,350 Rs. 5,149
Limited(2)(3) 1993 development and information
(Formerly ICICI technology.
Infotech Limited)

ICICI Web Trade December Internet-based brokering 100.0 1,586 473 4,950
Limited(2)(3) 1999 services.

ICICI OneSource December Business process outsourcing 99.6(5) 3,235 1,959 5,825
Limited(2)(3) 2001 and call center services.

ICICI Equity March Investment in equity and 100.0 1,072 4,570 4,721
Fund 2000 equity-linked securities of
mid sized Indian companies.

ICICI Emerging September Investment in mid-sized and 98.9 55 3,838 3,864
Sector Fund 2002 early stage companies across
sectors.

ICICI Strategic February Mid-sized growth companies for 100.0 71 6,119 6,120
Investments 2003 funding capacity expansion and
Fund growth.

ICICI Eco-Net December Investment in equity or 92.0 (8) 723 723
Internet & 2000 equity-linked securities of
Technology Fund early stage, unlisted internet
and technology companies.

- ---------
(1) All financial information is in accordance with US GAAP.

(2) Consolidated.

(3) Prior to the amalgamation, ICICI's entire interest in ICICI Web Trade
Limited and majority interest in 3i Infotech Limited were transferred to
ICICI Information Technology Fund and ICICI Equity Fund respectively. The
majority interest in ICICI OneSource Limited and 3i Infotech Limited is
currently held by ICICI Strategic Investments Fund and the minority
interest by ICICI Bank.

(4) The shareholding by ICICI Bank and venture capital funds or trusts to
which ICICI Bank is a contributory was 54.3% at June 30, 2005.

(5) Represents equity shareholding by ICICI Bank, and venture capital funds or
trusts to which ICICI Bank was a contributory. The shareholding by ICICI
Bank and venture capital funds or trusts to which ICICI Bank is a
contributory, on a fully diluted basis (i.e. assuming conversion of
participatory optionally convertible preference shares into equity) was
approximately 61.3% at year-end fiscal 2005.

At year-end fiscal 2005, all of our subsidiaries and affiliated companies
and entities consolidated or accounted for under the equity method under US
GAAP, were incorporated or organized in India, except the following 16
companies:

o ICICI Securities Holdings Inc., incorporated in the US;

o ICICI Securities Inc., incorporated in the US;

o ICICI Bank UK Limited, incorporated in the United Kingdom;

o ICICI Bank Canada, incorporated in Canada;

o 3i Infotech Inc., incorporated in the US;

o 3i Infotech Pte. Limited, incorporated in Singapore;

o 3i Infotech Pty. Limited, incorporated in Australia;

o 3i Infotech SDN BHD, incorporated in Malaysia;

o Semantik Solutions GmbH, incorporated in Germany;

o ICICI International Limited, incorporated in Mauritius;

o ICICI OneSource Limited, USA, incorporated in the US;

o ICICI OneSource Limited, UK, incorporated in the United Kingdom; and

o First Ring Incorporated, incorporated in the US;

o Accounts Solutions Group, LLC, incorporated in US;

o Pipal research Corporation, incorporated in the US;

o Sherpa Business Solutions Inc., incorporated in the United States

ICICI Securities Holdings Inc. is a wholly-owned subsidiary of ICICI
Securities and ICICI Securities Inc. is a wholly-owned subsidiary of ICICI
Securities Holdings Inc. ICICI Securities Holdings Inc. and ICICI Securities
Inc. are consolidated in ICICI Securities' financial statements.

3i Infotech Inc. and 3i Infotech Pte. Limited are wholly-owned
subsidiaries of 3i Infotech Limited and are consolidated in its financial
statements. 3i Infotech SDN BHD is a subsidiary of 3i Infotech Pte. Limited and
is accounted for by the equity method in the financial statements of 3i
Infotech Limited. During fiscal 2005, 3i Infotech Limited transferred its
entire holding in 3i Infotech Pty. Limited to 3i Infotech Inc., US. Semantik
Solutions GmbH is a joint venture between 3i Infotech Limited, Fraunhofer ISST
and Innova Business Development and Holding GmbH. The shareholding of 3i
Infotech Limited in Semantik Solutions GmbH is 50.0%. The financials of
Semantik Solutions GmbH are consolidated in the financial statements of 3i
Infotech Limited.

ICICI OneSource Limited, USA and ICICI OneSource Limited, UK are both
wholly-owned subsidiaries of Customer Asset India Private Limited, which is a
wholly-owned subsidiary of ICICI OneSource Limited. ICICI OneSource Limited
also holds 99.8% of the equity shareholding of First Ring Incorporated. First
Ring Incorporated holds 100% in Accounts Solutions Group. In fiscal 2005 ICICI
OneSource Limited acquired 51% voting interest in Pipal Research Corporation, a
US company. Pipal Research Corporation wholly owns Satvik Research and
Analytics India Private Limited, a company incorporated in India. ICICI
OneSource Limited, through its subsidiary company First Ring Inc, USA acquired
all voting rights in Accounts Solutions Group, LLC, a US company. ICICI
OneSource Limited also acquired a 90.01% voting interest in Rev IT Systems
Private Limited, a company incorporated in India. Rev IT Systems Private
Limited wholly owns Sherpa Business Solutions Inc, a US company.

In fiscal 2005, ICICI Venture signed a 50:50 joint venture with Tishman
Speyer Properties for pursuing development of commercial, residential and
retail properties throughout India.

Subsequent to year-end fiscal 2005, we acquired Investitsionno-Kreditny
Bank, a Russian bank with total assets of approximately US$ 4.4 million at
year-end fiscal 2005. The value of this transaction is not material to our
overall results. In September 2005, 3i Infotech Limited acquired Innovative
Business Solutions Inc., a US based specialty IT solutions company, for an
aggregate consideration of US$ 3.6 million.

Technology

We continue to endeavor to be at the forefront of usage of technology in
the financial services sector. We strive to use information technology as a
strategic tool for our business operations, to gain a competitive advantage and
to improve our overall productivity and efficiency. Our technology initiatives
are aimed at enhancing value, offering customers enhanced convenience and
improved service while optimizing costs. Our focus on technology emphasizes:

o Electronic and online channels to:
o offer easy access to our products and services;
o reduce distribution and transaction costs;
o reach new target customers;
o enhance existing customer relationships; and
o reduce time to market.

o Application of information systems to:
o manage our large scale of operations efficiently;
o effectively market to our target customers;
o monitor and control risks;
o identify, assess and capitalize on market opportunities; and
o assist in offering improved products to customers.

We also seek to leverage our domestic technology capabilities in our
international operations.

Technology Organization

While we have dedicated technology groups for our products and services
for retail and corporate customers, our enterprise-wide technology initiatives
are coordinated by the Technology Management Group. The retail and corporate
technology groups review the individual requirements of the various business
groups while the technology management group aggregates the requirements of
various business groups to ensure enterprise-wide consistency.

Banking Application Software

We use a banking application software that is flexible and scaleable and
allows us to effectively and efficiently serve our growing customer base. Our
upgraded core banking software is enabled with multi-currency features. A
central stand-in server provides services all days of the week, throughout the
year, to delivery channels. The server stores the latest customer account
balances, which are continuously streamed from the core-banking database. We
have a data center in Mumbai for centralized data base management, data storage
and retrieval.

Electronic and Online Channels

We use a combination of physical and electronic delivery channels to
maximize customer choice and convenience, which has helped the differentiation
of our products in the marketplace. Our branch banking software is flexible and
scaleable and integrates well with its electronic delivery channels. Our ATMs
are sourced from some of the world's leading vendors. These ATMs work with the
branch banking software. At year-end fiscal 2005, we had 1,910 ATMs across
India. We were one of the first banks to offer online banking facilities to our
customers. We now offer a number of online banking services to our customers
for both corporate and retail products and services. Our telephone banking call
centers employ approximately 2,600 phone banking officers, across two
locations, at Mumbai and Hyderabad, which are operational round the clock.
These telephone banking call centers use an Interactive Voice Response System.
The call centers are based on the latest technology and provide an integrated
customer database that allows the call agents to get a complete overview of the
customer's relationship

with us. The database enables customer segmentation and assists the call agent
in identifying cross-selling opportunities.

We offer mobile banking services in India in line with our strategy to
offer multi-channel access to our customers. This service has now been extended
to all mobile telephone service providers across India and non-resident Indian
customers in the United States of America, the United Kingdom, the Middle East
and Singapore.

High-Speed Electronic Communications Infrastructure

We have a nationwide data communications network linking all our channels
and offices. The network design is based on a mix of dedicated leased lines and
satellite links to provide for reach and redundancy, which is imperative in a
vast country like India. The communications network is monitored 24 hours a day
using advanced network management software. We are moving towards multi
protocol label switching (MPLS) as an alternative to lease lines, thus ensuring
redundancy.

Operations relating to Commercial Banking for Corporate Customers

We have successfully centralized our corporate banking back office
operations and rolled out a business process management solution to automate
our activities in the areas of trade services and general banking operations.
Through integration of the workflow system with the imaging and document
management system, we have achieved substantial savings and practically
eliminated the use of paper for these processes.

We have centralized the systems of the treasuries of all our international
branches and subsidiaries. As a result, the processing of transactions as well
as the applications used for deal entry are now centrally located and
maintained out of India.

Customer Relationship Management

We have implemented a customer relationship management solution for
automation of customer handling in all key retail products. The solution helps
in tracking and timely resolution of various customer queries and issues. The
solution has been deployed at the telephone banking call centers as well as a
large number of branches.

Data Warehousing and Data Mining

We have a data warehouse for customer data aggregation. This data
warehouse also provides a platform for data mining initiatives. We have
implemented an Enterprise Application Integration initiative across our retail
and corporate products and services, to link various products, delivery and
channel systems. This initiative underpins our multi-channel customer service
strategy and seeks to deliver customer related information consistently across
access points. It is also aimed to l provide us with the valuable information
to compile a unified customer view and creates various opportunities associated
with cross-selling other financial products.

Data center and disaster recovery system

While our primary data center is located in Mumbai, a separate disaster
recovery data center has been set up in another city and is connected to the
main data center in Mumbai. The disaster recovery data center can host critical
banking applications in the event of a disaster at the primary site.

Competition

As a result of the acquisition of Bank of Madura, we became and continue
to be the largest private sector bank in India and as a result of the
amalgamation, we became and continue to be the second largest bank in India, in
terms of total assets. We face competition in all our principal areas of
business from Indian and foreign commercial banks, housing finance companies,
mutual funds and investment banks. We are the largest private sector bank in
India and the second largest bank among all banks in the country, in terms of
total assets, with total assets of Rs. 1,863.4 billion (US$ 42.7 billion) at
year-end fiscal 2005. We seek to gain a competitive advantage over our
competitors through our larger size and scale of operations and by offering
innovative products and services, the use of technology, building customer
relationships and developing a team of highly motivated and skilled employees.
We

evaluate our competitive position separately in respect of our products and
services for retail and corporate customers.

Commercial banking products and services for retail customers

In the retail markets, competition is primarily from Indian commercial
banks and housing finance companies. Foreign banks have product and delivery
capabilities but are likely to focus on limited customer segments and
geographical locations since they have a smaller branch network than Indian
commercial banks. Foreign banks in the aggregate had only 220 branches in India
at the end of March 2005. Indian commercial banks have wide distribution
networks but relatively less strong technological and marketing capabilities.
We seek to compete in this market through a full product portfolio, effective
distribution channels, which include agents, robust and centralized credit
processes and collection mechanisms, experienced professionals and superior
technology.

Commercial banks attract the majority of retail bank deposits,
historically the preferred retail savings product in India. We have sought to
capitalize on our corporate relationships to gain individual customer accounts
through payroll management products and will continue to pursue a multi-channel
distribution strategy utilizing physical branches, ATMs, telephone banking call
centers and the Internet to reach customers. Further, following a strategy
focused on customer profiles and product segmentation, we offer differentiated
liability products to customers of various ages and income profiles. Mutual
funds are another source of competition to us. Mutual funds offer tax
advantages and have the capacity to earn competitive returns and hence, have
increasingly become a viable alternative to bank deposits.

Commercial banking products and services for corporate customers

In products and services for corporate customers, we face strong
competition primarily from public sector banks, foreign banks and other new
private sector banks. Our principal competition in these products and services
comes from public sector banks, which have built extensive branch networks that
have enabled them to raise low-cost deposits and, as a result, price their
loans and fee-based services very competitively. Their wide geographical reach
facilitates the delivery of banking products to their corporate customers
located in most parts of the country. We have been able, however, to compete
effectively because of our efficient service and prompt turnaround time that we
believe is significantly faster than public sector banks. We seek to compete
with the large branch networks of the public sector banks through our
multi-channel distribution approach and technology-driven delivery
capabilities.

Traditionally, foreign banks have been active in providing trade finance,
fee-based services and other short-term financing products to top tier Indian
corporations. We effectively compete with foreign banks in cross-border trade
finance as a result of our wider geographical reach relative to foreign banks
and our customized trade financing solutions. We have established strong
fee-based cash management services and compete with foreign banks due to our
technological edge and competitive pricing strategies.

Other new private sector banks also compete in the corporate banking
market on the basis of efficiency, service delivery and technology. However, we
believe our size, capital base, strong corporate relationships, wider
geographical reach and ability to use technology to provide innovative,
value-added products and services provide us with a competitive edge.

In project finance, ICICI's primary competitors were established long-term
lending institutions. In recent years, Indian and foreign commercial banks have
sought to expand their presence in this market. We believe that we have a
competitive advantage due to our strong market reputation and expertise in risk
evaluation and mitigation. We believe that our in-depth sector specific
knowledge and capabilities in understanding risks and policy related issues as
well as our advisory, structuring and syndication services have allowed us to
gain credibility with project sponsors, overseas lenders and policy makers.

New business areas

Our international strategy is focused on India-linked opportunities in the
initial stages. In our international operations, we face competition from
Indian public sector banks with overseas operations, foreign banks with
products and services targeted at non-resident Indians and Indian businesses
and other service providers like

remittance services. We are seeking to position ourselves as an Indian bank
offering globally-benchmarked products and services with an extensive
distribution network in India to gain a competitive advantage. We seek to
leverage our technology capabilities developed in our domestic business to
offer convenient and efficient services to our international customers. We also
seek to leverage our strong relationships with Indian corporates in our
international business.

Our insurance joint ventures face competition from existing dominant
public sector players as well as new private sector players. We believe that
the key competitive strength of our insurance joint ventures is the combination
of our experience in the Indian financial services industry with the global
experience and skills of our joint venture partners. We believe that ICICI
Prudential Life Insurance Company and ICICI Lombard General Insurance Company
have built strong product, distribution and risk management capabilities,
achieving market leadership positions in their respective businesses. ICICI
Prudential Life Insurance Company had a market share of 34% in new business
written (excluding group insurance) by private sector life insurance companies
in India during fiscal 2005. ICICI Lombard General Insurance had a market share
of 25% among private sector general insurance companies in India during fiscal
2005.

Employees

At year-end fiscal 2005 we had 30,515 employees, compared to 18,942
employees at year-end fiscal 2004 and 15,179 employees at year-end fiscal 2003.
Of these, 18,029 employees at year-end fiscal 2005 were employed by ICICI Bank,
an increase from 13,549 at year-end fiscal 2004 and 10,617 at year-end fiscal
2003. Of our 30,515 employees at year-end fiscal 2005, 8,126 were professionally
qualified, holding degrees in management, accountancy, engineering, law,
computer science, economics or banking.

Management believes that it has good relationships with its employees.
ICICI Bank has a staff center, which serves as a forum for grievances.

The financial services industry in India is undergoing unprecedented
change as deregulation gains momentum. Moreover, changing customer needs and
rapid advances in technology are continually re-defining the lines of
innovation and competition, thereby providing us with new challenges and
opportunities. To meet these challenges, we have relied extensively on our
human capital, which we believe comprises some of the best talent in the
industry.

We continue to attract graduates from the premier business schools of the
country. We dedicate significant amount of senior management time to ensure
that employees remain highly motivated and perceive the organization as a place
where opportunities abound, innovation is fuelled, teamwork is valued and
success is rewarded. Employee compensation is clearly tied to performance and
we encourage the involvement of our employees in our overall performance and
profitability through profit sharing incentive schemes based on the financial
results. A revised performance appraisal system has been implemented to assist
management in career development and succession planning.

ICICI Bank has an employee stock option scheme to encourage and retain
high performing employees. Pursuant to the employee stock option scheme as
amended by the Scheme of Amalgamation and further amended in September 2004, up
to 5.0% of the aggregate of our issued equity shares at the time of grant of
the stock options can be allocated under the employee stock option scheme. The
stock option entitles eligible employees to apply for equity shares. The grant
of stock options is approved by ICICI Bank's board of directors on the
recommendations of the Board Governance and Remuneration Committee. The
eligibility of each employee is determined based on an evaluation of the
employee including employee's work performance, technical knowledge and
leadership qualities. Moreover, ICICI Bank places considerable emphasis and
value on its policy of encouraging internal communication and consultation
between employees and management. See also "Management - Compensation and
Benefits to Directors and Officers - Employee Stock Option Scheme."

ICICI Bank has training centers, where various training programs designed
to meet the changing skill requirements of its employees are conducted. These
training programs include orientation sessions for new employees and management
development programs for mid-level and senior executives. The training centers
regularly offers courses conducted by faculty, both national and international,
drawn from industry, academia and

ICICI Bank's own organization. Training programs are also conducted for
developing functional as well as managerial skills. Products and operations
training is also conducted through web-based training modules.

In addition to basic compensation, employees of ICICI Bank are eligible to
receive loans from ICICI Bank at subsidized rates and to participate in its
provident fund and other employee benefit plans. The provident fund, to which
both ICICI Bank and its employees contribute a defined amount, is a savings
scheme, required by government regulation, under which ICICI Bank at present is
required to pay to employees a minimum 9.5% annual return. If such return is
not generated internally by the fund, ICICI Bank is liable for the difference.
ICICI Bank's provident fund has generated sufficient funds internally to meet
the minimum annual return requirement since inception of the funds. ICICI Bank
has also set up a superannuation fund to which it contributes defined amounts.
In addition, ICICI Bank contributes specified amounts to a gratuity fund set up
pursuant to Indian statutory requirements.

The following table sets forth, at the dates indicated, the approximate
number of employees in ICICI Bank and its consolidated subsidiaries and other
consolidated entities.

At March 31,
- ------------------------------------------------------------------------------------
2003 2004 2005
% to % to % to
Number total Number total Number total
- ------------------------------------------------------------------------------------

ICICI Bank.................. 10,617 69.9% 13,549 71.5% 18,029 59.1%
ICICI OneSource............. 2,056 13.5 3,902 20.6 5,856 19.1
ICICI Home Finance.......... 1,302 8.6 -(1) - 4,324 14.2
3i Infotech................. 147 1.0 1,141 6.0 1,813 5.9
ICICI Securities............ 927 6.1 146 0.8 172 0.6
Others...................... 130 0.9 204 1.1 321 1.1
--------------------------------------------------------
Total number of employees... 15,179 100.0% 18,942 100.0% 30,515 100.0%
========================================================

- ---------
(1) All employees of ICICI Home Finance became employees of ICICI Bank in
August 2003.

The increase in number of employees in fiscal 2005 was primarily in ICICI
Bank and ICICI Home Finance, which have grown their distribution and operations
capabilities and ICICI OneSource, as a result of both organic and inorganic
growth in its business.

The following table sets forth, the approximate number of employees in
ICICI Bank and its consolidated subsidiaries and other consolidated entities at
August 31, 2005.

--------------------------
Number % to total
--------------------------
ICICI Bank.......................... 22,406 60.5%
ICICI OneSource..................... 7,363 19.9
ICICI Home Finance.................. 4,694 12.7
3i Infotech......................... 1,915 5.2
ICICI Securities.................... 173 0.5
Others.............................. 451 1.2
--------------------------
37,002 100.0%
==========================

The increase in number of employees during the period April 1 to August
31, 2005 was primarily on account of an increase in recruitment of employees by
ICICI Bank, ICICI Home Finance and ICICI OneSource.

The results of ICICI Prudential Life Insurance Company and ICICI Lombard
General Insurance Company have been accounted for under the equity method due to
substantive participative rights retained by the minority shareholders. ICICI
Prudential Life Insurance had 5,186 employees at year-end fiscal 2005 and 6,083
employees at August 31, 2005 compared to 3,298 employees at year-end fiscal
2004. ICICI Lombard General Insurance had 1,249 employees at year-end fiscal
2005 and 1,525 employees at August 31, 2005 compared to 555 employees at
year-end fiscal 2004.

Properties

Our registered office is located at Landmark, Race Course Circle, Vadodara
390 007, Gujarat, India. Our corporate headquarters are located at ICICI Bank
Towers, Bandra-Kurla Complex, Mumbai 400 051, Maharashtra, India.

We had a principal network consisting of 510 branches, 52 extension
counters and 1,910 ATMs at year-end fiscal 2005. These facilities are located
throughout India. 40 of these facilities are located on properties owned by us,
while the remaining facilities are located on leased properties. In addition to
the branches, extension counters and ATMs, We have 18
controlling/administrative offices including the registered office at Vadodara
and the corporate headquarters at Mumbai, 14 regional processing centers in
various cities and one central processing center at Mumbai. We also have one
offshore banking unit each at Mumbai, Singapore and Bahrain. We have 873
apartments for our employees. We also provide residential and holiday home
facilities to employees at subsidized rates.

The net book value of all properties and equipment at year-end fiscal 2005
was Rs. 26.1 billion (US$ 597 million).

Legal and Regulatory Proceedings

We are involved in a number of legal proceedings in the ordinary course of
our business. However, excluding the legal proceedings discussed below, we are
not a party to any proceedings and no proceedings are known by us to be
contemplated by governmental authorities or third parties, which, if adversely
determined, may have a material adverse effect on our financial condition or
results of operations.

At year-end fiscal 2005, we had been assessed an aggregate of Rs. 28.0
billion (US$ 642 million) in excess of the provision made in our accounts, in
income tax, interest tax, wealth tax and sales tax demands by the government of
India's tax authorities for past years. We have appealed each of these tax
demands. Based on consultation with counsel and favourable decisions in our own
or other cases as set out below, management believes that the tax authorities
are not likely to be able to substantiate their income tax, interest tax,
wealth tax and sales tax assessment and accordingly has not provided for these
tax demands at year-end fiscal 2005

o We have received favorable decisions from the appellate authorities
with respect to Rs. 1.4 billion (US$ 33 million) of the assessment.
The income tax authorities have appealed these decisions to higher
appellate authorities and the same are pending adjudication.

o In our appeal of the assessment of sales tax aggregating to Rs. 923
million (US$ 21 million), we are relying on a favorable decision of
the Supreme Court of India in respect of a writ petition filed by us.

o In our appeal of the assessments of income tax, interest tax and
wealth tax aggregating to Rs 25.6 billion (US$ 587 million), we are
relying on favorable precedents of the appellate court and expert
opinions.

Of the Rs. 28.0 billion (US$ 642 million), Rs. 11.1 billion (US$ 254
million) relates to the disallowance of depreciation claim on leased assets.
This is an industry wide issue involving multiple litigations across the
country. In respect of depreciation claimed by us for fiscal 1993 on two sale
and lease back transactions, the Income Tax Appellate Tribunal, Mumbai held in
August 2003 that these transactions were tax planning tools and no depreciation
was allowable. As the Income Tax Appellate Tribunal's decision is based on the
facts of two specific transactions, we believe that the Income Tax Appellate
Tribunal's decision will not have an adverse tax impact on other sale and lease
back transactions entered into by us. The tax impact of this decision is Rs.
189 million (US$ 4 million). We have appealed against this decision and based
on judicial precedents and recent decisions of the Supreme Court and based on
consultation with senior tax counsel and expert advice, we believe that we will
receive a favorable decision in the matter. Moreover, the lease agreements
provide for variation in the lease rental to offset any loss of depreciation
benefit to us. Accordingly, we have not provided for this tax demand but have
disclosed it as a contingent liability in the financial statements.

At August 31, 2005, there were 17 litigations (each involving a claim of
Rs. 10.0 million and more) against us, in the aggregate amount of approximately
Rs. 80.4 billion (US$ 1.8 billion) (to the extent quantifiable and including
amounts claimed jointly and severally from us and other parties). At August 31,
2005, two litigations were pending

against our directors in an aggregate amount of Rs. 56.3 billion (US$ 1.3
billion) (to the extent quantifiable). There were three litigations where
amounts claimed from us are Rs. 1.0 billion (US$ 23 million) or higher:

o In April 1999, ICICI filed a suit before the High Court of Judicature
at Bombay against Mardia Chemicals Limited for recovery of amounts
totaling Rs. 1.4 billion (US$ 32 million) due from Mardia Chemicals.
The suit was subsequently transferred to the Debt Recovery Tribunal,
Mumbai. In July 2002, ICICI Bank issued a notice to Mardia Chemicals
under the Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Ordinance, 2002 (subsequently passed
as an Act by the Indian Parliament) demanding payment of its
outstanding dues. In August 2002, Mardia Chemicals filed a suit in
the city civil court at Ahmedabad against ICICI Bank, Mr. K. V.
Kamath, Managing Director & CEO and Ms. Lalita D. Gupte, Joint
Managing Director, for an amount of Rs. 56.3 billion (US$ 1.3
billion) on the grounds that Mardia Chemicals had allegedly suffered
financial losses on account of ICICI's failure to provide adequate
financial facilities, ICICI's recall of the advanced amount and
ICICI's filing of a recovery action against it. The city civil court
held that the suit should have been filed in the pending proceedings
before the Debt Recovery Tribunal, Mumbai. Mardia Chemicals filed an
appeal before the High Court of Gujarat, which dismissed the appeal
and ordered that the claim against ICICI Bank be filed before the
Debt Recovery Tribunal, Mumbai and the claim against Mr. K.V. Kamath
and Ms. Lalita D. Gupte be continued before the city civil court at
Ahmedabad. The Debt Recovery Tribunal has admitted the counterclaim
filed by Mardia Chemicals Limited. In June 2003, the promoters of
Mardia Chemicals in their capacity as guarantors of loans given by
ICICI to Mardia Chemicals filed a civil suit in the city civil court
at Ahmedabad against ICICI Bank for an amount of Rs. 20.8 billion
(US$ 477 million) on the grounds of loss of investment and loss of
profit on investment. ICICI Bank has filed its reply seeking
dismissal of the suit and the matter is currently pending before the
City Civil Court, Ahmedabad.

o In March 1999, ICICI filed a suit in the Debt Recovery Tribunal,
Delhi against Esslon Synthetics Limited and its Managing Director (in
his capacity as guarantor) for recovery of amounts totaling Rs. 169
million (US$ 4 million) due from Esslon Synthetics. In May 2001, the
guarantor filed a counter-claim for an amount of Rs. 1.0 billion (US$
23 million) against ICICI and other lenders who had extended
financial assistance to Esslon Synthetics on the grounds that he had
been coerced by officers of the lenders into signing an agreement
between LML Limited, Esslon Synthetics and the lenders on account of
which he suffered, among other things, loss of business. Esslon
Synthetics Limited has filed an application to amend the counterclaim
in January 2004. ICICI Bank has filed its reply to the application
for amendment. The application has been partly heard and is listed
for further arguments.

o ICICI had filed a recovery suit in 2001 in the Debt Recovery
Tribunal, Mumbai against Dynamic Logistics Limited for Rs. 350
million (US$ 8 million). Dynamic Logistics Limited filed a
counterclaim for Rs. 1.3 billion (US$ 30 million) in the Debt
Recovery Tribunal, Mumbai. The matter is currently pending for
hearing.

Management believes, based on consultation with counsel, that the legal
proceedings instituted by each of Mardia Chemicals, Esslon Synthetics and
Dynamic Logistics Limited against us are frivolous and untenable and their
ultimate resolution will not have a material adverse effect on our results of
operations, financial condition or liquidity. Based on a review of other
litigations with legal counsel, management also believes that the outcome of
such other matters will also not have a material adverse effect on our
consolidated financial position, results of operations or cashflows.

An arbitration proceeding in London that had been brought against us and
other Indian lenders in connection with loans to a large power generation
project in the state of Maharashtra with a claim in an aggregate amount of US$
534 million, has since been withdrawn and the matters relating to this
arbitration proceeding treated as closed.

SELECTED CONSOLIDATED FINANCIAL AND OPERATING DATA

The following tables set forth our summary financial and operating data on
a consolidated basis. The summary data for fiscal 2003, fiscal 2004 and fiscal
2005 have been derived from our audited consolidated financial statements as of
the end of and for each of these years prepared in accordance with US GAAP. The
summary data for ICICI for fiscal 2001 and fiscal 2002 have been derived from
the audited consolidated financial statements of ICICI as of the end of and each
of these fiscal years prepared in accordance with US GAAP. Our consolidated
financial statements for fiscal 2005 and fiscal 2004 including our consolidated
statement of operations, consolidated statement of cash flows and consolidated
statement of stockholders' equity and other comprehensive income were audited by
KPMG India, independent accountants.

Following the approval of shareholders, the High Court of Gujarat at
Ahmedabad and the High Court of Judicature at Bombay, the Reserve Bank of India
approved the amalgamation of ICICI, ICICI Personal Financial Services and ICICI
Capital Services with and into ICICI Bank on April 26, 2002. The Statement on
Financial Accounting Standard No. 141 on "Business Combinations", issued by the
Financial Accounting Standards Board, requires that business combinations be
accounted for in the period in which the combination is consummated.
Accordingly, under US GAAP, the amalgamation has been reflected in the financial
statements contained in this annual report for fiscal 2003, as it was
consummated in April 2002. The effective date of the amalgamation for accounting
purposes under US GAAP was April 1, 2002. Under US GAAP, the amalgamation was
accounted for as a reverse acquisition. This means that ICICI was recognized as
the accounting acquirer in the amalgamation, although ICICI Bank was the legal
acquirer and the surviving entity. Accordingly, the financial data contained in
this annual report for fiscal 2002 and prior years, except where specifically
stated otherwise, present the assets, liabilities and results of operations of
ICICI. Following the amalgamation, the other subsidiaries and affiliates of
ICICI have become subsidiaries and affiliates of ICICI Bank.

On the date of amalgamation, ICICI held a 46% ownership interest in ICICI
Bank. Accordingly, the acquisition of the balance 54% ownership interest was
accounted for as a step acquisition. Following the acquisition, the 46%
ownership interest held by ICICI in ICICI Bank was recorded as treasury stock at
its historical carrying value. In September 2002, the treasury stock was sold to
institutional investors for Rs. 13.2 billion (US$ 302 million). The difference
between the sale proceeds and the carrying value, net of related tax effects of
Rs. 599 million (US$ 14 million), was recognized in the statement of
stockholders' equity as a capital transaction.

The financial information for ICICI for fiscal 2002 and 2001 reflect
results of ICICI Bank as an equity investment in accordance with ICICI's
ownership interest in ICICI Bank prior to the amalgamation. Effective March 10,
2001, ICICI Bank acquired Bank of Madura, an old private sector bank in India,
in an all stock merger and, as a result, the ownership interest of ICICI was
reduced from 62.2% to 55.6%. In addition, during March 2001, ICICI reduced its
interest in ICICI Bank to 46% through sales of equity shares in the Indian
secondary markets to institutional investors. As a result of the foregoing,
ICICI Bank ceased to be one of ICICI's subsidiaries as of March 22, 2001 and was
accounted for under the equity method of accounting from April 1, 2000, the
beginning of the fiscal year in which ICICI's majority ownership interest in
ICICI Bank was deemed to be temporary. The consolidation of ICICI's majority
ownership interest in two insurance companies, ICICI Prudential Life Insurance
Company Limited and ICICI Lombard General Insurance Company Limited, in each of
fiscal 2001 and 2002 was deemed inappropriate because of substantive
participative rights retained by the minority shareholders. Accordingly, such
investees were no longer consolidated but were accounted for by the equity
method in fiscal 2003. Prior period financial statements have been restated and
as a result, the financial statements for fiscal 2001 and 2002 contained in this
annual report are not the same as those contained in our annual report for
fiscal 2002. There is no resultant impact on the net income or the stockholders'
equity for fiscal 2001 and 2002.

You should read the following data with the more detailed information
contained in "Operating and Financial Review and Prospects" and our consolidated
financial statements. Historical results do not necessarily predict the results
in the future.

Year ended March 31,
----------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2005(1)
------------- ------------- ------------- ------------- ------------ -------------
(in millions, except per common share data)
Selected income statement data:
Interest income..................... Rs. 79,759 Rs. 78,600 Rs. 97,714 Rs. 90,688 Rs. 91,775 US$ 2,105
Interest expense.................... (67,893) (69,520) (83,208) (72,375) (68,409) (1,569)
----------- ----------- ----------- ----------- ----------- -----------
Net interest income................. 11,866 9,080 14,506 18,313 23,366 536
Dividends........................... 345 267 389 431 485 11
----------- ----------- ----------- ----------- ----------- -----------
Net interest income,
including dividends............... 12,211 9,347 14,895 18,744 23,851 547
Provisions for loan losses.......... (9,892) (9,743) (19,649) (20,055) (14,677) (336)
----------- ----------- ----------- ----------- ----------- -----------
Net interest income/(loss),
including dividends, after
provisions for loan losses........ 2,319 (396) (4,754) (1,311) 9,174 211
Non-interest income................. 9,243 8,148 13,253 36,678 34,645 795
----------- ----------- ----------- ----------- ----------- -----------
Net revenue......................... 11,562 7,752 8,499 35,367 43,819 1,006
Non-interest expense................ (5,479) (7,596) (18,609) (27,101) (33,089) (759)
Equity in earnings/(loss)
of affiliates..................... 735 294 (958) (1,437) (577) (13)
Minority interest................... 1 83 24 28 14 -
----------- ----------- ----------- ----------- ----------- -----------
Income/(loss) before income
taxes and cumulative effect
of accounting changes............. 6,819 533 (11,044) 6,857 10,167 234
Income tax (expense)/benefit........ (189) (251) 3,061 (1,638) (1,637) (38)
----------- ----------- ----------- ----------- ----------- -----------
Income /(loss) before
cumulative effect of
accounting changes,
net of tax........................ 6,630 282 (7,983) 5,219 8,530 196
Cumulative effect of
accounting changes, net
of tax(2)......................... - 1,265 - - - -
---------- ------------ -------------- ------------ ----------- ----------
Net income/ (loss).................. Rs. 6,630 Rs. 1,547 Rs. (7,983) Rs. 5,219 Rs. 8,530 US$ 196
========== ============ ============== ============ =========== ==========

Per common share(3)
Net income/(loss) from continuing
operations - Basic(4)............. Rs. 16.88 Rs. 3.94 Rs. (14.18) Rs. 8.50 Rs. 11.72 US$ 0.27
Net income/(loss) from continuing
operations - Diluted(5)........... 16.81 3.94 (14.18) Rs. 8.43 Rs. 11.60 0.27
Dividends(6)........................ 11.00 22.00 - 7.50 7.50 0.17
Book value.......................... 193.35 181.70 150.42 153.35 173.73 3.98
Common shares outstanding
at end of period (in
millions of common shares)........ 393 393 613 616 737 -
Weighted average common
shares outstanding -
Basic (in millions of
common shares).................... 393 393 563 614 728 -
Weighted average common
shares outstanding -
Diluted (in millions
of common shares)................. 393 393 563 619 734 -

- ----------
(1) Rupee amounts for fiscal 2005 have been translated into US dollars using
the noon buying rate of Rs. 43.62 = US$ 1.00 in effect on March 31, 2005.

(2) In June 2001, the FASB issued SFAS No. 141, which requires that the
purchase method of accounting be used for all business combinations
initiated after June 30, 2001. The excess of the cost of an acquired entity
over the net of the amounts assigned to assets acquired and liabilities
assumed shall be recognized as goodwill. SFAS No. 141 specifies that
intangible assets acquired in a purchase method business combination must
be recognized and reported apart from goodwill, noting that any purchase
price allocated to an assembled workforce need not be accounted separately.
The excess of the fair value of the net assets over the cost of acquired
entity is allocated pro rata to specified non-financial assets and
remaining excess, if any, is recognized as an extraordinary gain. As of
April 1, 2001, ICICI had an unamortized deferred credit of Rs. 1.3 billion
(US$ 29 million) relating to the excess of the fair value of assets
acquired over the cost of acquisition of SCICI. As required by SFAS No.
141, in conjunction with the early adoption of SFAS No. 142, the
unamortized deferred credit as of April 1, 2001, was written-off and
recognized as the effect of a change in the accounting principle.

(3) For fiscal years 2001 and 2002, based on the exchange ratio of 1:2 in which
the shareholders of ICICI were issued shares of ICICI Bank, number of
shares has been adjusted by dividing by two. Hence, these numbers are
different from the numbers reported in the annual report on Form 20-F for
fiscal 2002.

(4) Represents net income/(loss) before dilutive impact.

(5) Represents net income/(loss) adjusted for full dilution. All convertible
instruments are assumed to be converted to common shares at the beginning
of the year, at prices that are most advantageous to the holders of these
instruments Options to purchase 2,546,675, 7,015,800, 12,610,275 and
1,098,225 equity shares granted to employees at a weighted average exercise
price of Rs. 226.0, Rs. 81.3, Rs. 154.7 and Rs. 266.6 were outstanding in
fiscal 2001, 2002, 2003 and 2004, respectively, but were not included in
the computation of diluted earnings per share because the exercise price of
the options was greater than the average market price of the equity shares
during the period. In fiscal 2003, we reported a net loss and accordingly
all outstanding options at year-end fiscal 2003 are anti-dilutive.

(6) In India, dividends for a fiscal year are normally declared and paid in the
following year. The same was true for ICICI until fiscal 2001. However, the
interim dividend for fiscal 2002 was paid by ICICI during fiscal 2002. We
declared a dividend of Rs. 7.50 per equity share for fiscal 2003 and fiscal
2004, which was paid out in August 2003 and September 2004, i.e., in fiscal
2004 and fiscal 2005 respectively. We declared a dividend of Rs. 8.50 per
equity share for fiscal 2005, which was paid out in August 2005, i.e.,
fiscal 2006. The dividend per equity share shown above is based on the
total amount of dividends paid out on the equity shares during the year,
exclusive of dividend tax. This was different from the dividend declared
for the year. In US dollars, the dividend was US$ 0.19 per equity share for
fiscal 2005.

(7) Certain reclassifications have been made in the financial statements of
prior years to conform to classifications used in the current year. These
changes have no impact on previously reported results of operations or
stockholders' equity.

The following table sets forth, for the periods indicated, selected income
statement data expressed as a percentage of average total assets for the
respective period.

Year ended March 31,
-------------------------------------------------
2001 2002 2003 2004 2005
------ ------ ------ ------ ------
Selected income statement data:
Interest income................................ 11.29% 10.53% 8.63% 7.14% 5.87%
Interest expense............................... (9.61) (9.31) (7.35) (5.70) (4.37)
------ ------ ------ ------ ------
Net interest income............................ 1.68 1.22 1.28 1.44 1.50
Dividends...................................... 0.05 0.04 0.03 0.03 0.03
------ ------ ------ ------ ------
Net interest income, including dividends....... 1.73 1.25 1.32 1.48 1.53
Provisions for loan losses..................... (1.40) (1.31) (1.73) (1.58) (0.94)
------ ------ ------ ------ ------
Net interest income/(loss),
including dividends, after
provisions for loan losses.................. 0.33 (0.05) (0.42) (0.10) 0.59
Non-interest income............................ 1.31 1.09 1.17 2.89 2.22
------ ------ ------ ------ ------
Net revenue.................................... 1.64 1.04 0.75 2.79 2.81
Non-interest expense........................... (0.78) (1.02) (1.64) (2.13) (2.12)
Equity in earnings/(loss) of affiliates........ 0.10 0.04 (0.08) (0.11) (0.04)
Minority interest.............................. 0.00 0.01 0.00 0.00 0.00
------ ------ ------ ------ ------
Income/(loss) before income taxes and
cumulative effect of
accounting changes.......................... 0.97 0.07 (0.98) 0.54 0.65
Income tax (expense)/benefit (0.03) (0.03) 0.27 (0.13) (0.10)
------ ------ ------ ------ ------
Income/(loss) before cumulative
effect of accounting changes,
net of tax................................... 0.94 0.04 (0.70) 0.41 0.55
Cumulative effect of accounting
changes, net of tax.......................... - 0.17 - - -
------ ------ ------ ------ ------
Net income/(loss).............................. 0.94% 0.21% (0.70)% 0.41% 0.55%
------ ------ ------ ------ ------

At March 31,
--------------------------------------------------------------------------------------------
2001 2002 2003 2004 2005 2005(1)
----------- ----------- ------------- ------------- ------------- -----------
(in millions, except percentages)
Selected balance sheet data:
Total assets...................... Rs. 739,892 Rs. 743,362 Rs. 1,180,263 Rs. 1,409,131 Rs. 1,863,447 US$ 42,720
Securities........................ 18,861 60,046 280,621 310,368 380,959 8,733
Loans, net(2)..................... 602,023 523,601 630,421 728,520 999,858 22,922
Troubled debt restructuring
(restructured loans), net...... 32,309 77,366 122,659 121,417 95,589 2,191
Other impaired loans, net......... 20,081 33,187 55,319 28,764 14,196 325
Total liabilities................. 663,829 671,754 1,087,926 1,313,556 1,733,383 39,738
Long-term debt.................... 492,882 511,458 400,812 373,449 367,499 8,425
Deposits.......................... 6,072 7,380 491,290 684,955 1,016,534 23,304
Redeemable preferred stock(3)..... 698 772 853 944 1,044 24
Stockholders' equity.............. 75,927 71,348 92,213 94,525 127,996 2,935
Common stock ..................... 3,924 3,922 6,127 6,164 7,368 169
Period average(4):
Total assets...................... 706,343 746,330 1,132,638 1,269,638 1,562,983 35,832
Interest-earning assets........... 615,164 641,141 924,573 1,017,009 1,198,058 27,466
Loans, net(2)..................... 570,989 591,398 606,496 662,752 799,169 18,321
Total liabilities(5).............. 631,324 670,750 1,038,377 1,173,961 1,442,117 33,061
Interest-bearing liabilities...... 576,474 613,401 905,226 977,941 1,148,995 26,341
Long-term debt.................... 462,916 504,103 455,347 382,674 359,724 8,247
Stockholders' equity.............. 75,019 75,580 94,261 95,678 120,866 2,771
Profitability:
Net income/(loss) as
a percentage of:

At or for the year ended March 31,
------------------------------------------------------
2001 2002 2003 2004 2005
------ ------ ------ ------ ------
(in percentages)
Asset quality:
Net restructured loans
as a percentage of
net loans........................... 5.37% 14.78% 19.45% 16.67% 9.56%
Net other impaired
loans as a percentage
of net loans......................... 3.34 6.34 8.77 3.95 1.42
Allowance for loan
losses on restructured
loans as a percentage
of gross restructured
loans................................ 26.03 18.64 16.78 25.23 36.07
Allowance for loan losses
on other impaired loans
as a percentage of gross
impaired loans....................... 51.89 34.61 33.48 42.74 52.22
Allowance for loan losses
as a percentage of gross
loans................................ 5.20 6.54 7.92 8.40 7.06

- ----------

(1) Rupee amounts at March 31, 2005 have been translated into US dollars using
the noon buying rate of Rs. 43.62 = US$ 1.00 in effect at March 31, 2005.

(2) Net of allowance for loan losses, security deposits and unearned income in
respect of restructured and other impaired loans and allowances for
non-impaired loan.

(3) ICICI had issued preferred stock redeemable at face value after 20 years.
Banks in India are not currently allowed to issue preferred stock. However,
we are currently exempt from this restriction.

(4) For fiscal years 2002, 2003, 2004 and 2005, the average balances are the
average of quarterly balances outstanding at the end of March of the
previous fiscal year, June, September, December and March of that fiscal
year. For fiscal 2001, due to deconsolidation of ICICI Bank, the average
balances are calculated as the average of quarterly balances outstanding at
the end of June, September, December and March of that fiscal year.

(5) Represents the average of the quarterly balance of total liabilities and
minority interest.

(6) Represents the ratio of net income plus dividend on redeemable preferred
stock to the sum of average stockholders' equity and average redeemable
preferred stock. Under Indian tax laws, dividend on preferred stock is not
tax deductible.

(7) Represents the ratio of total dividends paid on common stock, exclusive of
dividend distribution tax, as a percentage of net income.

(8) Represents the difference between yield on average interest-earning assets
and cost of average interest-bearing liabilities. Yield on average
interest-earning assets is the ratio of interest income to average
interest-earning assets. Cost of average interest-bearing liabilities is
the ratio of interest expense to average interest-bearing liabilities.

(9) Represents the ratio of net interest income to average interest-earning
assets. The difference in net interest margin and spread arises due to the
difference in the amount of average interest-earning assets and average
interest-bearing liabilities. If average interest-earning assets exceed
average interest-bearing liabilities, net interest margin is greater than
spread, and if average interest-bearing liabilities exceed average
interest-earning assets, net interest margin is less than spread.

(10) Represents the ratio of non-interest expense to the sum of net interest
income, dividend and non-interest income.

(11) Represents the ratio of non-interest expense to average total assets.

(12) ICICI Bank's capital adequacy is computed in accordance with the Reserve
Bank of India's guidelines and is based on unconsolidated financial
statements prepared in accordance with Indian GAAP. At March 31, 2005,
ICICI Bank's total capital adequacy ratio was 11.78% with a Tier 1 capital
adequacy ratio of 7.59% and a Tier 2 capital adequacy ratio of 4.19%.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis of our financial
condition and results of operations together with our audited consolidated
financial statements. The following discussion is based on our audited financial
statements and accompanying notes, which have been prepared in accordance with
US GAAP.

Introduction

Our loan portfolio, financial condition and results of operations have
been, and in the future, are expected to be influenced by economic conditions in
India and certain global developments, particularly in commodity prices relating
to the business activities of our corporate customers and by economic conditions
in the United States and other countries influencing inflation and interest
rates in India. For ease of understanding the discussion of our results of
operations that follows, you should consider the introductory discussion of
these macroeconomic factors. In addition, for a meaningful comparison of our
results of operations for these years, you should also consider the amalgamation
and the effect of other acquisitions.

Indian Economy

The rate of growth of GDP was 4.0% in fiscal 2003, 8.5% in fiscal 2004 and
6.9% in fiscal 2005. Growth in fiscal 2003 was impacted by a negative growth in
the agriculture sector because of insufficient rainfall and resulting drought
conditions prevailing in the country. The agriculture sector, which had recorded
a negative growth of 7.0% in fiscal 2003 recorded a growth of 9.6% in fiscal
2004. In fiscal 2005, the growth of the agriculture sector declined to 1.1%
because of insufficient rainfall in many parts of the country. This was partly
offset by the sustained growth of the industrial and services sectors. The
industrial sector grew by 6.4% in fiscal 2003, 6.5% in fiscal 2004 and 8.3% in
fiscal 2005. The services sector grew by 7.9% in fiscal 2003, 8.9% in fiscal
2004 and 8.6% during fiscal 2005.

During the first half of fiscal 2005, there was an increase in inflationary
trends in India, primarily due to the increase in oil prices as well as prices
of certain commodities. The full burden of the oil price increase has not yet
been passed to the Indian consumers and has been largely absorbed by the
government and government owned oil marketing companies. See also "Risk Factors
- - Risks Relating to India - A significant increase in the price of crude oil
could adversely affect the Indian economy, which could adversely affect our
business". The annual average rate of inflation measured by the Wholesale Price
Index was 6.4% during fiscal 2005 compared to 5.4% during the previous year. The
average annual rate of inflation decreased to 3.0% during fiscal 2006 (through
August 27, 2005) from 8.7% during the corresponding period in the previous year.
The average annual rate of inflation measured by the Consumer Price Index for
industrial workers was 4.1% for July 2005. The Indian rupee depreciated by 0.14%
against the US dollar during fiscal 2006 through September 9, 2005, moving from
Rs. 43.75 per US$ 1.00 at year-end fiscal 2005 to Rs. 43.81 per US$ 1.00 on
September 9, 2005. During fiscal 2005, the Indian rupee depreciated by 0.8%
against the US dollar. It also depreciated against the pound sterling and the
euro and appreciated against the Japanese yen.

The impact of these and other factors and the overall growth in industry,
agriculture and services during fiscal 2006 will affect the performance of the
banking sector as it will affect the level of credit disbursed by banks, and the
overall growth prospects of our business, including our ability to grow, the
quality of our assets, the value of our investment portfolio and our ability to
implement our strategy.

Banking Sector

According to the Reserve Bank of India's data, total deposits of all
scheduled commercial banks increased by 12.4% in fiscal 2003, 17.7% in fiscal
2004, 14.3% in fiscal 2005 and 8.1% in fiscal 2006 (through August 5, 2005).
Growth in deposits in fiscal 2003 includes the impact of the amalgamation, as
some of ICICI's liabilities which were not included in banking deposits at
year-end fiscal 2002, were included at year-end fiscal 2003. Bank credit of
scheduled commercial banks grew by 14.7% in fiscal 2003, 15.5% in fiscal 2004,
29.9% in fiscal 2005 and 7.7% in fiscal 2006 (through August 5, 2005). Credit
growth in fiscal 2003 included the impact of the amalgamation, as ICICI's credit
was included in total banking system credit at year-end fiscal 2003 but not
included at year-end fiscal 2002. The increase in credit growth during fiscal
2005 was driven by the continued growth in retail credit as well as

credit to the industrial and agricultural sectors. Also, after its conversion
into a scheduled commercial bank with effect from October 11, 2004, Industrial
Development Bank of India Limited's credit was included in total banking sector
credit at year-end fiscal 2005. Excluding Industrial Development Bank of India
Limited's credit, bank credit of scheduled commercial banks grew at 26.0% during
fiscal 2005.

Until fiscal 2005, there was a downward movement in interest rates, barring
intra-year periods when interest rates were higher temporarily due to extraneous
circumstances. This movement was principally due to the Reserve Bank of India's
policy of assuring adequate liquidity in the banking system and generally
lowering the rate at which it would lend to Indian banks to ensure that
borrowers had access to funding at competitive rates. Banks generally followed
the direction of interest rates set by the Reserve Bank of India and adjusted
both their deposit rates and lending rates downwards until fiscal 2005. The
inflationary trends in fiscal 2005 resulted in an increase in benchmark
secondary market yields on government securities. The Reserve Bank of India also
increased the risk weight for housing loans from 50.0% to 75.0% and for consumer
credit, including personal loans and credit cards, from 100% to 125%, as a
temporary counter-cyclical measure given the rapid growth in these segments. The
Reserve Bank of India increased the cash reserve ratio to 5.0% effective October
2, 2004. However, in its mid-term review of the annual policy statement for
fiscal 2005 released in October 2004, the Reserve Bank of India raised the
reverse repo rate (i.e., the annualized interest earned by the lender in a
repurchase transaction between a bank and the Reserve Bank of India) by 25 basis
points to 4.75% in response to inflationary pressures in the economy. In the
annual policy statement for fiscal 2006 announced in April 2005, the Reserve
Bank of India further raised the reverse repo rate by 25 basis points to 5.0%.
As a result of these increases, banks have also raised their deposit and lending
rates. The following table sets forth the bank rate, reverse repo rate, average
deposit rates and average prime lending rates of five major public sector banks
for the last six fiscal years.

Average deposit Average prime
Reverse rate for over one lending rate
Fiscal year Bank rate repo rate year term (range) (range)
- -------------------------------------- ---------------- --------- ----------------- -------------
(in percentages)
2001.................................. 7.0% 7.0% 8.5-10.0% 11.0-12.0%
2002.................................. 6.50 6.0 8.0-8.5 11.0-12.0
2003.................................. 6.25 5.0 5.25-8.50 10.75-12.00
2004.................................. 6.0 4.5 5.00-6.25 10.50-11.50
2005.................................. 6.0 4.75 4.25-6.25 10.25-11.00
2006 (through August 31, 2005)........ 6.0 5.0 5.25-6.25 10.25-10.75

- ----------
Source: Reserve Bank of India: Handbook of Statistics on Indian Economy, 2002,
Annual Report 2003-2004 and Weekly Statistical Supplements and Annual Policy
Statement 2005-06.

Amalgamation

Following the approval of shareholders, the High Court of Gujarat at
Ahmedabad and the High Court of Judicature at Bombay, the Reserve Bank of India
approved the amalgamation of ICICI, ICICI Personal Financial Services and ICICI
Capital Services with and into ICICI Bank on April 26, 2002. The Statement on
Financial Accounting Standards No. 141 "Business Combinations", issued by the
Financial Accounting Standards Board, requires that business combinations be
accounted for in the period in which the combination is consummated.
Accordingly, under US GAAP, the amalgamation has been reflected in the financial
statements for fiscal 2003, as it was consummated in April 2002. The effective
date of the amalgamation for accounting purposes under US GAAP was April 1,
2002. Under US GAAP, the amalgamation was accounted for as a reverse
acquisition. This means that ICICI was recognized as the accounting acquirer in
the amalgamation, although ICICI Bank was the legal acquirer and the surviving
entity. Accordingly, the financial data for fiscal 2002 and prior years, except
where specifically stated otherwise, present the assets, liabilities and results
of operations of ICICI. The financial information for ICICI for fiscal 2002 and
2001 reflect results of ICICI Bank as an equity investment in accordance with
ICICI's ownership interest in ICICI Bank prior to the amalgamation. Following
the amalgamation, the other subsidiaries and affiliates of ICICI have become
subsidiaries and affiliates of ICICI Bank.

On the date of amalgamation, ICICI held 46% ownership interest in ICICI
Bank. Accordingly, the acquisition of the balance 54% ownership interest has
been accounted for as a step acquisition. Following the acquisition, the 46%
ownership interest held by ICICI in ICICI Bank was recorded as treasury stock at
its historical carrying value. In September 2002, the treasury stock was sold to
institutional investors for Rs. 13.2 billion (US$ 302 million). The difference
between the sale proceeds and the carrying value, net of related tax effects of
Rs. 599 million (US$ 14 million), was recognized in the statement of
stockholders' equity as a capital transaction.

The total purchase price for the acquisition was Rs. 14.1 billion (US$ 323
million) including fair value of common stock issued on reverse acquisition of
Rs. 12.0 billion (US$ 275 million). Intangible assets of Rs. 5.5 billion (US$
126 million), relating to customer and deposit relationships is being amortized
over a period of 10 years. Goodwill recognized in this transaction was Rs. 819
million (US$ 19 million).

Effect of Other Acquisitions

In fiscal 2005, ICICI OneSource, an entity consolidated in our US GAAP
financial statements, acquired business process outsourcing and research
companies in India and United States, namely, Pipal Research Corporation, RevIT
systems Private Limited and Accounts Solutions Group, LLC for an aggregate cash
consideration of Rs. 2,140 million (US$ 49 million). The business combination
resulted in goodwill of Rs. 2,004 million (US$ 46 million) as the purchase price
was more than the fair value of the assets acquired.

In fiscal 2004, ICICI Bank acquired 100.0% ownership interest in
Transamerica Apple Distribution Finance Private Limited for a cash consideration
of Rs. 757 million (US$ 17 million).

In fiscal 2004, ICICI OneSource, an entity consolidated in our US GAAP
financial statements, acquired 99.8% ownership interest in First Ring Inc. The
business combination was accounted for by the purchase method and accordingly
the consolidated financial statements for fiscal 2004 include the results of
operations of First Ring Inc. The business combination resulted in goodwill of
Rs. 616 million (US$ 14 million) as the purchase price was more than the fair
value of net assets acquired.

In fiscal 2003, ICICI Infotech, an entity consolidated in our US GAAP
financial statements, acquired the remaining 50.0% ownership interest in
Tricolor Infotech International Inc., Mauritius for a cash consideration of Rs.
110 million (US$ 3 million). The assets of Tricolor Infotech International Inc.
amounted to Rs. 35 million (US$ 802,384). The business combination was accounted
for by the purchase method and accordingly the consolidated financial statements
for fiscal 2003 include the results of operations of Tricolor Infotech
International Inc. The business combination resulted in goodwill of Rs. 18
million (US$ 412,655) as the purchase price was more than the fair value of net
assets acquired.

In fiscal 2003, ICICI OneSource acquired a 100.0% ownership interest in
Customer Asset India Private Limited, a company engaged in the business of
providing contact center services through its offshore contact center at
Bangalore, India for cash consideration aggregating Rs. 959 million (US$ 22
million). The business combination was accounted for by the purchase method and
accordingly our consolidated financial statements for fiscal 2003 include the
results of operations of Customer Asset India Private Limited. The business
combination resulted in goodwill of Rs. 617 million (US$ 14 million) as the
purchase price was more than the fair value of net assets acquired.

During fiscal 2001, 3i Infotech(formerly ICICI Infotech Limited) acquired
the following software development and services companies based in the United
States: Ivory International Inc., Objects Xperts Inc. and Command Systems Inc.
ICICI also acquired Ajax Software Solutions, a software development company
based in India. The business combinations were accounted for under the purchase
method and the revenues and total assets of the acquired companies were
immaterial to ICICI's consolidated results of operations and financial position
for fiscal 2001.

In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain
Financial Institutions, which requires that business combinations involving
financial institutions within its scope, be accounted for under SFAS No. 141.
Previously, generally accepted accounting principles for acquisitions of
financial institutions provided for recognition of the excess of the fair value
of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset. Under SFAS No.
147, such excess is accounted for

as goodwill. Adoption of SFAS No. 147 resulted in a reclassification of a
previously recorded unidentifiable intangible asset of Rs. 581 million (US$ 13
million) and deferred tax liability of Rs. 208 million (US$ 5 million) to
goodwill with effect from April 1, 2001. Further, as required by SFAS No. 147,
ICICI reversed the amortization expense of Rs. 290 million (US$ 7 million) and
the related income tax benefit of Rs. 103 million (US$ 2 million), by restating
the results for fiscal 2002.

ICICI adopted SFAS No. 142 on April 1, 2001, which resulted in
reclassification of existing goodwill and intangible assets. In fiscal 2002,
ICICI recorded goodwill of Rs. 354 million (US$ 8 million) relating to
acquisitions of certain software services companies in fiscal 2001, of which
goodwill of Rs. 70 million (US$ 2 million) had been recorded pending final
allocation as of March 31, 2002. The revenues and total assets of the acquired
companies were immaterial to the consolidated results of operations and
financial position of ICICI. Substantially all goodwill at year-end fiscal 2002,
related to the software development and services reporting unit of ICICI. No
goodwill impairment loss was recorded during fiscal 2002, 2003 and 2004. In June
2001, the FASB issued SFAS No. 141, which requires that the purchase method of
accounting be used for all business combinations initiated after June 30, 2001.
SFAS No. 141 also specifies the criteria that intangible assets acquired in a
purchase method business combination must be recognized and reported apart from
goodwill, noting that any purchase price allocated to an assembled workforce may
not be accounted separately. As of April 1, 2001, ICICI had an unamortized
deferred credit of Rs. 1.3 billion (US$ 29 million) related to an excess of the
fair value of assets acquired over the cost of acquisition of SCICI, a
diversified lending institution acquired by ICICI in fiscal 1997. As required by
SFAS No. 141, in conjunction with the early adoption of SFAS No. 142, the
unamortized deferred credit as of April 1, 2001, has been written-off and
recognized as the effect of a change in accounting principle.

For certain information regarding the accounting treatment of ICICI's
ownership in ICICI Bank in 2001 and 2002 and the change in accounting basis for
our insurance subsidiaries in fiscal 2003, see "Selected Consolidated Financial
and Operating Data".

Results of Operations

From fiscal 2002, we have experienced major changes and developments in our
business and strategy. An understanding of these events and developments is
necessary for an understanding of the discussion and analysis that follows.
These changes are reflected in our financial statements in connection with or
since the amalgamation of ICICI Limited into ICICI Bank. The first change
reflects the impact of our history upon our average cost of funds. Consequent to
the amalgamation, the businesses formerly conducted by ICICI became subject for
the first time to various regulations applicable to banks. These include the
prudential reserve and liquidity requirements, namely the statutory liquidity
ratio and the cash reserve ratio. See "Supervision and Regulation - Legal
Reserve Requirements". While we have benefited from the lower cost of funding as
a bank as compared to ICICI as a non-bank financial institution, the imposition
of the statutory liquidity ratio and the cash reserve ratio on the liabilities
of ICICI have impacted our spread. As the average yield on investments in
government of India securities and cash balances maintained with the Reserve
Bank of India is typically lower than the yield on other interest-earning
assets, our net interest margin has been adversely impacted. As a result, our
net interest margin has been and is expected to continue to be lower than other
banks in India until we repay the borrowings of ICICI. We are expanding our
deposit base and changing the mix of our liabilities away from the legacy ICICI
liabilities towards the lower average cost deposits. The increase in investment
in government securities has substantially increased our exposure to market
risk. In a declining interest rate environment, we made gains on sale of
government securities. A rise in interest rates would cause the value of our
fixed income portfolio to decline and adversely affect the income from our
treasury operations. See also "Risk Factors - Risks Relating to Our Business -
Our business is particularly vulnerable to interest rate risk and volatility in
interest rates could adversely affect our net interest margin, the value of our
fixed income portfolio, our income from treasury operations and our financial
performance."

Another key change reflects the implementation of our strategy to grow our
retail loan portfolio. The results of our implementation of this strategy can be
seen in the rapid growth in the retail loan portfolio. While we cannot guarantee
that growth will continue at the same rate, we see continued significant demand
for retail loans.

Long-term project finance was a major proportion of ICICI's asset portfolio
and continues to be a significant portion of our loan portfolio, though we have
diversified our lending towards retail loans and working capital financing. Over
the past several years, we and ICICI experienced a high level of impaired loans
in our loan portfolio

as a result of downturn in certain global commodity markets, increased
competition in India, the high level of debt in the financing of projects and
capital structures of Indian companies and high interest rates in the Indian
economy during the period in which a large number of projects contracted their
borrowings, as well as delays experienced in enforcement of collateral when
borrowers defaulted on their obligations to us. Our loan portfolio includes
loans to projects under implementation and there are risks and uncertainties
associated with the timely completion and viability of these projects. Our
retail loans have grown rapidly and the level of impaired loans in our retail
portfolio could increase if there is a rise in unemployment, prolonged
recessionary conditions and a sharp and sustained rise in interest rates in
India. See also "Risk Factors - Risks Relating to Our Business - If we are not
able to control or reduce the level of impaired loans in our portfolio, our
business will suffer".

In addition to the above, the directed lending norms of Reserve Bank of
India require commercial banks to lend 40.0% of their net bank credit to
specific sectors (known as priority sectors), such as agriculture, small-scale
industry, small businesses and housing finance. Prior to the amalgamation, the
advances of ICICI were not subject to the requirement applicable to banks in
respect of priority sector lending. Pursuant to the terms of Reserve Bank of
India's approval to the amalgamation, we are required to maintain a total of
50.0% of our net bank credit on the residual portion of our advances (i.e., the
portion of our total advances excluding advances of ICICI at year-end fiscal
2002) in the form of priority sector advances. This additional requirement of
10.0% by way of priority sector advances will apply until such time as the
aggregate priority sector advances reach a level of 40.0% of our net bank
credit. The Reserve Bank of India's existing instructions on sub-targets under
priority sector lending and eligibility of certain types of investments and
funds for reckoning as priority sector advances also apply to us. See
"Supervision and Regulation - Directed Lending - Priority Sector Lending" and
"Business - Loan Portfolio - Directed Lending - Priority Sector Lending".

Consequences of Tsunami

The Tsunami wave which hit the east coast of India on December 26, 2004,
while horrible in its human and emotional consequences, did not have a material
adverse impact on our results and financial operations as our operations are
concentrated in other areas of the country and in other sectors of the Indian
economy. See also "Risk Factors - Risks Relating to India - Natural calamities
could adversely affect the Indian economy, our business and the price of our
equity shares and ADSs." In response to the crisis, we decided to facilitate
contributions to the relief effort through our branches and other channels,
including by waiving transaction charges, and we donated Rs. 50 million to the
Fund. In addition, our employees have made donations out of their salaries to
aid the relief and rehabilitation efforts.

Average Balance Sheet

The average balances are the average of quarterly balances outstanding at
the end of March of the previous fiscal year, June, September, December and
March of that year. The average yield on average interest-earning assets is the
ratio of interest income to average interest-earning assets. The amortized
portion of loan origination fees (net of loan origination costs) was included in
interest income on loans, representing an adjustment to the yield. The average
cost on average interest-bearing liabilities is the ratio of interest expense to
average interest-bearing liabilities. The average balances of loans include
impaired loans and are net of allowance for loan losses. We did not recalculate
tax-exempt income on a tax-equivalent basis because we believed that the effect
of doing so would not be significant. Total interest income also includes other
interest income, which is primarily interest on refund of income tax.

The following table sets forth, for the periods indicated, the average
balances of the assets and liabilities outstanding, which are major components
of interest income, interest expense and net interest income.

Year ended March 31,
----------------------------------------------------------------------------------------------------------
2003 2004 2005
----------------------------------------------------------------------------------------------------------
Interest Average Interest Average Interest Average
Average income/ yield/ Average income/ yield/ Average income/ yield/
balance expense cost balance expense cost balance expense cost
----------------------------------------------------------------------------------------------------------
(in millions, except percentages)
----------------------------------------------------------------------------------------------------------
Assets:
Cash, cash equivalents
and trading assets:
Rupee.................. Rs. 58,204 Rs. 3,937 6.76% Rs. 68,104 Rs. 4,483 6.58% Rs. 63,852 Rs. 3,022 4.73%
Foreign currency ...... 15,712 195 1.24 9,404 174 1.85 28,844 620 2.15
-------------------------- -------------------------- -------------------------
Total cash,
cash equivalents
and trading assets..... 73,916 4,132 5.59 77,508 4,657 6.01 92,696 3,642 3.93
Securities--debt:
Rupee ................. 244,161 16,633 6.81 276,432 15,261 5.52 295,720 14,843 5.02
Foreign currency ...... - - - 317 3 0.95 10,474 405 3.87
-------------------------- 6.81 -------------------------- 5.52 -------------------------
Total securities--debt .. 244,161 16,633 276,749 15,264 306,194 15,248 4.98

Loans, net:
Rupee ................. 541,868 70,917 13.09 592,048 64,791 10.94 692,945 64,328 9.28
Foreign currency ...... 64,628 4,163 6.44 70,704 4,430 6.27 106,223 6,640 6.25
-------------------------- --------------------------- -------------------------
Total loans, net ........ 606,496 75,080 12.38 662,752 69,221 10.44 799,168 70,968 8.88
Other interest income ... - 1,869 - 1,546 - 1,917
Interest-earning assets:
Rupee ................. 844,233 93,356 11.06 936,584 86,081 9.19 1,052,517 84,110 7.99
Foreign currency ...... 80,340 4,358 5.42 80,425 4,607 5.73 145,541 7,665 5.27
-------------------------- --------------------------- -------------------------
Total interest-earning
assets................. 924,573 97,714 10.57 1,017,009 90,688 8.92 1,198,058 91,775 7.66
Securities--equity:
Rupee ................. 29,379 389 1.32 28,561 431 1.51 32,795 485 1.48
Foreign currency ...... - - - - - - - - -
-------------------------- --------------------------- -------------------------
Total
securities--equity....... 29,379 389 1.32 28,561 431 1.51 32,795 485 1.48
Earning assets:
Rupee ................. 873,613 93,745 10.73 965,145 86,512 8.96 1,085,312 84,595 7.79
Foreign currency ...... 80,340 4,358 5.42 80,425 4,607 5.73 145,541 7,665 5.27
-------------------------- ---------------------------- -------------------------
Total earning assets .... 953,953 98,103 10.28 1,045,570 91,119 8.71 1,230,853 92,260 7.50
Cash and cash
equivalents............ 45,585 - 54,929 - 73,807
Acceptances ............. 26,496 - 50,706 - 82,225
Property and equipment .. 18,826 - 22,188 - 23,874
Other assets ............ 87,778 - 96,245 - 152,224
-------------------------- ---------------------------- -------------------------
Total non-earning
assets................... 178,685 - 224,068 - 332,130
-------------------------- ---------------------------- -------------------------
Total assets ............ Rs. 1,132,638 Rs. 98,103 Rs. 1,269,638 Rs. 91,119 Rs. 1,562,983 92,260
======================== ============================ =========================

Year ended March 31,
-----------------------------------------------------------------------------------------------------------
2003 2004 2005
-----------------------------------------------------------------------------------------------------------
Interest Average Interest Average Interest Average
Average income/ yield/ Average income/ yield/ Average income/ Yield/
balance expense cost balance expense cost balance expense cost
-----------------------------------------------------------------------------------------------------------
Liabilities: (in millions, except percentages)
Savings account
deposits:
Rupee ................ Rs. 30,828 Rs. 914 2.96% Rs. 56,843 Rs. 1,348 2.37% Rs. 98,114 Rs. 2,178 2.22%
Foreign currency ..... 46 - 0.67 71 - 0.42 130 1 0.46
--------------------------- ------------------------- ------------------------
Total savings account
deposits ............. 30,874 914 2.96 56,914 1,348 2.37 98,244 2,179 2.22
Time deposits:

Rupee ................ 315,688 24,688 7.82 454,896 28,918 6.36 562,577 29,641 5.27
Foreign currency ..... 11,456 431 3.76 14,693 414 2.82 36,257 1,285 3.54
--------------------------- ------------------------- ------------------------
Total time deposits .... 327,144 25,119 7.68 469,589 29,332 6.25 598,834 30,926 5.16
Long-term debt:
Rupee ................ 390,602 45,661 11.69 330,443 36,425 11.02 291,969 28,236 9.67
Foreign currency ..... 64,745 2,420 3.74 52,231 1,896 3.63 67,755 2,974 4.39
--------------------------- ------------------------- ------------------------
Total long-term debt ... 455,347 48,081 10.56 382,674 38,321 10.01 359,724 31,210 8.68
Redeemable
preferred stock....... 813 82 10.09 899 91 10.12 994 100 10.06
Trading account
and other
liabilities:
Rupee................... 75,983 8,590 11.31 48,020 2,960 6.16 47,666 3,047 6.39
Foreign
currency................ 15,065 423 2.81 19,845 323 1.63 43,533 947 2.18
--------------------------- ------------------------- -------------------------
Total trading account
and other
liabilities .......... 91,048 9,013 9.90 67,865 3,283 4.84 91,199 3,994 4.38
Interest-bearing
liabilities:
Rupee ................ 813,913 79,935 9.82 891,101 69,742 7.83 1,001,320 63,202 6.31
Foreign currency ..... 91,313 3,274 3.59 86,840 2,633 3.03 147,675 5,207 3.53
--------------------------- ------------------------- -------------------------
Total interest-bearing 905,226 83,209 9.19 977,941 72,375 7.40 1,148,995 68,409 5.95
liabilities...........
Non-interest-bearing
deposits:
Rupee ................ 31,172 - 53,941 - 88,061 -
Foreign currency ..... - - 149 - 353 -
--------------------------- ------------------------- -------------------------
Total
non-interest-bearing
deposits ............. 31,172 54,090 88,414 -
Other liabilities ...... 101,979 - 141,930 - 204,708 -
--------------------------- ------------------------- -------------------------
Total
non-interest-bearing
liabilities .......... 133,151 196,020 293,122 -
Total liabilities ...... Rs. 1,038,377 Rs. 83,209 Rs.1,173,961 Rs. 72,375 Rs.1,442,117 Rs. 68,409
--------------------------- ------------------------- -------------------------
Stockholders' equity.... Rs. 94,261 - Rs. 95,678 - Rs. 120,866 -
--------------------------- ------------------------- -------------------------
Total liabilities and
stockholders'
equity ............... Rs. 1,132,638 Rs. 83,209 Rs.1,269,639 Rs. 72,375 Rs.1,562,983 Rs. 68,409
=========================== ========================= =========================

Analysis of changes in interest income and interest expense volume and rate
analysis

The following table sets forth, for the periods indicated, the changes
in the components of net interest income. The changes in net interest income
between periods have been reflected as attributed either to volume or rate
changes. For the purpose of this table, changes, which are due to both volume
and rate, have been allocated solely to volume.

Fiscal 2004 vs. Fiscal 2003 Fiscal 2005 vs. Fiscal 2004
------------------------------------------------------------------------------------------------------
Increase (decrease) due to Increase (decrease) due to
------------------------------------------------------------------------------------------------------
Change in Change in Change in Change in
average average average average
Net change volume rate Net change volume rate
------------------------------------------------------------------------------------------------------
Interest income: (in millions)
Cash, cash equivalents
and trading assets:
Rupee ................... Rs. 546 Rs. 652 Rs. (106) Rs. (1,461) Rs. (201) Rs. (1,260)
Foreign currency ........ (21) (117) 96 446 418 28
------------------------------------------------------------------------------------------------------
Total cash,
cash equivalents
and trading
assets................... 525 535 (10) (1,015) 217 (1,232)
Securities:
Rupee ................... (1,372) 1,782 (3,154) (418) 968 (1,386)
Foreign currency ........ 3 3 - 402 393 9
------------------------------------------------------------------------------------------------------
Total securities ........... (1,369) 1,785 (3,154) (16) 1,361 (1,377)
Loans:
Rupee ................... (6,126) 5,491 (11,617) (463) 9,367 (9,830)
Foreign currency ........ 267 381 (114) 2,210 2,220 (10)
------------------------------------------------------------------------------------------------------
Total loans ................ (5,859) 5,872 (11,731) 1,747 11,587 (9,840)
Other interest income ...... (323) (323) - 371 371 -
------------------------------------------------------------------------------------------------------
Total interest income:
Rupee ................... (7,275) 7,602 (14,877) (1,971) 10,505 (12,476)
Foreign currency ........ 249 267 (18) 3,058 3,031 27
------------------------------------------------------------------------------------------------------
Total interest income ...... Rs. (7,026) Rs. 7,869 Rs.(14,895) 1,087 13,536 ( 12,449)
Interest expense:
Savings account deposits:
Rupee ................... Rs. 434 Rs. 617 Rs. (183) 830 916 (86)
Foreign currency ........ - - - 1 - 1
------------------------------------------------------------------------------------------------------
Total savings
account deposits ........ Rs. 434 Rs. 617 Rs. (183) 831 916 (85)
Time deposits:
Rupee ................... 4,230 8,850 (4,620) 723 5,673 (4,950)
Foreign currency ........ (17) 91 (108) 871 764 107
------------------------------------------------------------------------------------------------------
Total time deposits ........ 4,213 8,941 (4,728) 1,594 6,437 (4,843)
Long-term debt:
Rupee ................... (9,236) (6,631) (2,605) (8,189) (3,721) (4,468)
Foreign currency ........ (524) (454) (70) 1,078 681 397
------------------------------------------------------------------------------------------------------
Total long-term debt ....... (9,760) (7,085) (2,675) (7,111) (3,040) (4,071)
Redeemable preferred stock(1 9 9 - 9 10 (1)
Trading account and
other liabilities:
Rupee ................... (5,630) (1,724) (3,906) 87 (23) 110
Foreign currency ........ (100) 78 (178) 624 515 109
------------------------------------------------------------------------------------------------------
Total trading account
and other
liabilities ............. (5,730) (1,646) (4,084) 711 492 219
Total interest expense:
Rupee ................... (10,193) 1,121 (11,314) (6,540) 2,855 (9,395)
Foreign currency ........ (641) (285) (356) 2,574 1,960 614
======================================================================================================
Total interest expense ..... Rs. (10,834) Rs. 836 Rs.(11,670) (3,966) 4,815 (8,781)

Net interest income:
Rupee ................... 2,918 6,481 (3,563) 4,569 7,650 (3,081)
Foreign currency ........ 890 552 338 484 1,071 (587)
======================================================================================================
Total net interest income .. Rs. 3,808 Rs. 7,033 Rs. (3,225) 5,053 8,721 (3,668)
======================================================================================================

- ----------

(1) Banks in India are not allowed to issue preferred stock. However, we have
been currently exempted from this restriction.

Yields, Spreads and Margins

The following table sets forth, for the periods indicated, the yields,
spreads and net interest margins on interest-earning assets.

Year ended March 31,
---------------------------------------------------------------------------
2001 2002 2003 2004 2005
---------------------------------------------------------------------------
(in millions, except percentages)

Interest income................................. Rs. 79,759 Rs. 78,600 Rs. 97,714 Rs. 90,688 Rs. 91,775
Average interest-earning assets................. 615,164 641,141 924,573 1,017,009 1,198,058
Interest expense................................ 67,893 69,520 83,208 72,375 68,409
Average interest-bearing liabilities............ 576,474 613,401 905,226 977,941 1,148,995
Average total assets............................ 706,343 746,330 1,132,638 1,269,638 1,562,983
Average interest-earning assets as a
percentage of average total assets............ 87.09% 85.91% 81.63% 80.10% 76.65%
Average interest-bearing liabilities as a
percentage of average total assets............ 81.61 82.19 79.92 77.03 73.51
Average interest-earning assets as a
percentage of average interest-bearing
liabilities................................... 106.71 104.52 102.14 103.99 104.27

Yield........................................... 12.97 12.26 10.57 8.92 7.66
Rupee......................................... 13.66 12.98 11.06 9.19 7.99
Foreign currency.............................. 9.04 7.17 5.42 5.73 5.27

Cost of funds................................... 11.78 11.33 9.19 7.40 5.95
Rupee......................................... 12.77 12.26 9.82 7.83 6.31
Foreign currency.............................. 6.84 6.34 3.59 3.03 3.53

Spread (1)...................................... 1.19 0.93 1.38 1.52 1.71
Rupee......................................... 0.89 0.72 1.24 1.36 1.68
Foreign currency.............................. 2.19 0.84 1.84 2.69 1.74

Net interest margin (2)......................... 1.93 1.42 1.57 1.80 1.95
Rupee......................................... 1.93 1.69 1.59 1.74 1.99
Foreign currency.............................. 1.90 -0.48 1.35 2.45 1.69

- ----------
(1) Spread is the difference between yield on average interest-earning assets
and cost of average interest-bearing liabilities. Yield on average
interest-earning assets is the ratio of interest income to average
interest-earning assets. Cost of average interest-bearing liabilities is
the ratio of interest expense to average interest-bearing liabilities.

(2) Net interest margin is the ratio of net interest income to average
interest-earning assets. The difference in net interest margin and spread
arises due to the difference in amount of average interest-earning assets
and average interest-bearing liabilities. If average interest-earning
assets exceed average interest-bearing liabilities, net interest margin is
greater than the spread and if average interest-bearing liabilities exceed
average interest-earning assets, net interest margin is less than the
spread.

Fiscal 2005 to Fiscal 2004

Summary

Net income after tax amounted to Rs. 8.5 billion (US$ 196 million) for
fiscal 2005 compared to Rs. 5.2 billion (US$ 120 million) for fiscal 2004,
primarily due to a 27.6% increase in net interest income (excluding dividends)
before provisions for loan losses to Rs. 23.4 billion (US$ 536 million) for
fiscal 2005 from Rs. 18.3 billion (US$ 420 million) for fiscal 2004, and a
decrease of 26.8% in provision for loan losses offset, in part, by a 22.1%
increase in non-interest expense.

o Net interest income (excluding dividends) before provisions for loan
losses increased 27.6% to Rs. 23.4 billion (US$ 536 million) for
fiscal 2005 from Rs. 18.3 billion (US$ 420 million) for fiscal 2004,
reflecting an increase of 18.6% in the average volume of
interest-earning assets and an increase in net interest margin by 15
basis points.

o Non-interest income decreased by 5.5% for fiscal 2005 to Rs. 34.6
billion (US$ 794 million) from Rs. 36.7 billion (US$ 841 million) for
fiscal 2004, primarily due to a decrease in trading account revenue
and a decrease in gains from securities transactions offset by an
increase in income from fees, commission and brokerage.

o Non-interest expense increased 22.1% for fiscal 2005 to Rs. 33.1
billion (US$ 759 million) from Rs. 27.1 billion (US$ 621 million) for
fiscal 2004, primarily due to a 28.9% increase in administration
expenses and a 13.2% increase in salary expenses.

o Provisions for loan losses decreased 26.8% to Rs. 14.7 billion (US$
336 million) for fiscal 2005 from Rs. 20.1 billion (US$ 460 million)
for fiscal 2004 primarily due to lower additions to gross restructured
and other impaired loans.

o Gross restructured loans decreased 7.9% to Rs. 149.5 billion (US$ 3.4
billion) at year-end fiscal 2005 from Rs. 162.4 billion (US$ 3.7
billion) at year-end fiscal 2004. Gross other impaired loans decreased
40.8% to Rs. 29.7 billion (US$ 681 million) at year-end fiscal 2005
from Rs. 50.2 billion (US$ 1.2 billion) at year-end fiscal 2004.

o Total assets increased 32.2% to Rs. 1,863.4 billion (US$ 42.7 billion)
at year-end fiscal 2005 compared to Rs. 1,409.1 billion (US$ 32.3
billion) at year-end fiscal 2004.

Net Interest Income

The following table sets forth, for the periods indicated, the principal
components of net interest income, excluding income from dividends.

Year ended March 31,
-----------------------------------------------------------
2004/2005
2004 2005 2005 % change
-----------------------------------------------------------
(in millions, except percentages)

Interest income ........... Rs. 90,688 Rs. 91,775 US$ 2,105 1.2%
Interest expense .......... (72,375) (68,409) (1,569) (5.5)
-----------------------------------------------------------
Net interest income,
excluding income
from dividends .......... Rs. 18,313 Rs. 23,366 US$ 536 27.6%
===========================================================

Net interest income (excluding dividend) increased 27.6% to Rs. 23.4
billion (US$ 536 million) in fiscal 2005 from Rs. 18.3 billion (US$ 420 million)
in fiscal 2004 reflecting mainly the following:

o an increase of Rs. 115.9 billion (US$ 2.7 billion) or 12.4% in the
average volume of interest-earning rupee assets;

o an increase of Rs. 65.1 billion (US$ 1.5 billion) or 81.0% in the
average volume of interest-earning foreign currency assets;

o an increase of 25 basis points in rupee net interest margin to 2.0% in
fiscal 2005 from 1.7% in fiscal 2004

o a decrease of 76 basis points in foreign currency net interest margin
to 1.7% in fiscal 2005 from 2.5% in fiscal 2004.

The average volume of interest-earning rupee assets increased by 12.4% or
Rs. 115.9 billion (US$ 2.7 billion) to Rs. 1,052.5 billion (US$ 24.1 billion)
during fiscal 2005 from Rs. 936.6 billion (US$ 21.5 billion) during fiscal 2004,
primarily due to the increase in the average volume of loans. The average volume
of loans increased by 20.6% to Rs. 799.2 billion (US$ 18.3 billion) in fiscal
2005 from Rs. 662.8 billion (US$ 15.2 billion) in fiscal 2004. The average
volume of rupee loans increased by 17.0% or Rs. 100.9 billion (US$ 2.3 billion)
to Rs. 692.9 billion (US$ 15.9 billion) at year-end fiscal 2005 from Rs. 592.0
billion (US$ 13.6 billion) at year-end fiscal 2004. This increase in average
loans was primarily due to increased disbursements of retail finance loans
offset, in part, by sell-down/securitization and repayments of loans. The
average volume of foreign currency loans increased 50.2% to Rs. 106.2 billion
(US$ 2.4 billion) at year-end fiscal 2005 from Rs. 70.7 billion (US$ 1.6
billion) at year-end fiscal 2004.

Our gross loans increased 35.3% to Rs. 1,075.8 billion (US$ 24.7 billion)
at year-end fiscal 2005, from Rs. 795.3 billion (US$ 18.2 billion) at year-end
fiscal 2004, primarily due to the increase in gross consumer loans and credit
card receivables. Gross rupee loans at year-end fiscal 2005 increased 31.3% to
Rs. 926.4 billion (US$ 21.2 billion) compared to Rs. 705.7 billion (US$ 16.2
billion) at year-end fiscal 2004. Gross consumer loans and credit card
receivables at year-end fiscal 2005 increased 70.3% to Rs. 531.2 billion (US$
12.2 billion) from Rs. 311.9 billion (US$ 7.2 billion) at year-end fiscal 2004,
driven by the growth in the consumer credit market and our continued strategic
focus on this area. Our project and corporate finance and working capital
finance loans increased 16.4% to Rs. 462.5 billion (US$ 10.6 billion) at
year-end fiscal 2005 compared to Rs. 397.3 billion (US$ 9.1 billion) at year-end
fiscal 2004. Gross foreign currency loans at year-end fiscal 2005 increased
66.7% to Rs. 149.3 billion (US$ 3.4 billion) compared to Rs. 89.6 billion (US$
2.1 billion) at year-end fiscal 2004 primarily due to an increase in loans at
our branch in Singapore and our subsidiary in the United Kingdom.

Investment in government of India securities increased by Rs. 50.0 billion
(US$ 1.1 billion) to Rs. 340.9 billion (US$ 7.8 million) at year-end fiscal 2005
from Rs. 291.0 billion (US$ 6.7 billion) at year-end fiscal 2004 primarily due
to compliance with the statutory liquidity ratio on ICICI Bank's liabilities.

The average volume of cash, cash equivalents and trading account assets
increased by 19.6% to Rs. 92.7 billion (US$ 2.1 billion) in fiscal 2005 from Rs.
77.5 billion (US$ 1.8 billion) in fiscal 2004. Trading account assets increased
by Rs. 383 million (US$ 9.0 million) to Rs. 75.5 billion (US$ 1.7 billion) at
year-end fiscal 2005 from Rs. 75.2 billion (US$ 1.7 billion) at year-end fiscal
2004. Cash and cash equivalents increased by Rs. 56.7 billion (US$ 1.3 billion)
to Rs. 155.6 billion (US$ 3.6 billion) at year-end fiscal 2005 from Rs. 99.0
billion (US$ 2.3 billion) at year-end fiscal 2004.

Total interest income (excluding dividend) increased 1.2% to Rs. 91.8
billion (US$ 2.1 billion) for fiscal 2005 from Rs. 90.7 billion (US$ 2.1
billion) for fiscal 2004 primarily due to an increase of 12.4% in the average
volume of interest-earning rupee assets to Rs. 1,052.5 billion (US$ 24.1
billion) during fiscal 2005 from Rs. 936.6 billion (US$ 21.5 billion) during
fiscal 2004 offset, in part, by a decline of 120 basis points in the yield on
interest-earning rupee assets. The yield on interest-earning rupee assets
decreased 120 basis points to 8.0% in fiscal 2005 from 9.2% in fiscal 2004.
There was a decline of 156 basis points in the yield on loans to 8.9% in fiscal
2005 from 10.4% in fiscal 2004 primarily due to origination of new loans at
lower rates in line with the reduction in lending rates and the decline in our
cost of funding, and a reduction in higher yield loans. The yield on our
interest-earning foreign currency assets decreased to 5.3% for fiscal 2005 from
5.7% for fiscal 2004.

Total interest expense decreased 5.5% to Rs. 68.4 billion (US$ 1.6 billion)
during fiscal 2005 from Rs. 72.4 billion (US$ 1.7 billion) during fiscal 2004
primarily due to a decline of 145 basis points in the cost of liabilities
offset, in part by a 17.5% increase in average interest-bearing liabilities to
Rs. 1,149.0 billion (US$ 26.3 billion) in

fiscal 2005 from Rs. 977.9 billion (US$ 22.4 billion) in fiscal 2004. The
average cost of rupee liabilities decreased 152 basis points to 6.3% in fiscal
2005 from 7.8% in fiscal 2004 primarily due to repayment of high cost
borrowings. Average deposits, with an average cost of 4.2% for fiscal 2005,
constituted 68.4% of total average interest-bearing liabilities compared to
59.4% of the total average interest-bearing liabilities with an average cost of
5.3% for fiscal 2004. While the average cost of long-term rupee debt decreased
to 9.7% from 11.0%, the average cost of short-term rupee borrowings increased to
6.4% in fiscal 2005 compared to 6.2% in fiscal 2004. The average cost of foreign
currency liabilities increased to 3.5% for fiscal 2005 from 3.0% for fiscal
2004. The foreign currency spread decreased 95 basis points to 1.7% for fiscal
2005 from 2.7% for fiscal 2004. The net interest margin increased by 15 basis
points to 2.0% for fiscal 2005 from 1.8% for fiscal 2004 as rupee net interest
margin increased by 25 basis points. A 1.5% decline in the cost of funds was
offset, in part, by a 1.3% decline in the yield on average interest-earning
assets. While our margin has increased, it still continues to be lower than that
of other banks in India primarily due to maintenance of the statutory liquidity
ratio and cash reserve ratio on ICICI's liabilities, which were not subject to
these ratios prior to the amalgamation. The average cost of our total deposits,
including non-interest bearing deposits, was 4.2% for fiscal 2005 compared to
5.3% for fiscal 2004. While our cost of deposits is in line with the cost of
deposits of other banks in India, our total cost of funding is higher compared
to other banks in India as a result of the higher-cost borrowings of ICICI.

Non-Interest Income

The following table sets forth, for the periods indicated, the principal
components of non-interest income.

Year ended March 31,
---------------------------------------------------------
2005/2004
2004 2005 2005 % change
----------- ------------- ------------- ------------
(in millions, except percentages)

Fees, commission and brokerage.......... Rs. 8,988 Rs. 15,660 US$ 359 74.2%
Trading account revenue (1)............. 4,433 286 7 (93.5)
Securities transactions (2)............. 12,800 5,925 135 (53.7)
Foreign exchange transactions (3)....... 2,061 2,130 49 3.3
Gain on sale of loans................... 4,687 5,414 124 15.5
Software development and services....... 903 1,731 40 91.7
Profit on sale of certain
premises and equipment................ 345 33 1 (90.4)
Other income............................ 2,461 3,466 80 40.8
----------- ------------- -------------
Total non-interest income............... Rs. 36,678 Rs. 34,645 US$ 795 (5.5)%
=========== ============= =============

- ----------
(1) Primarily reflects income from trading in government of India securities
and corporate debt securities.

(2) Primarily reflects capital gains/(losses) realized on the sale of
securities, including fixed income and equity, venture capital investments
and revenues from our investment banking subsidiary less other than
temporary diminution.

(3) Arises primarily from purchase and sale of foreign exchange on behalf of
corporate clients and revaluation of foreign currency assets and
liabilities and outstanding forward contracts.

Non-interest income decreased by 5.5% for fiscal 2005 to Rs. 34.6 billion
(US$ 795 million), from Rs. 36.7 billion (US$ 841 million) for fiscal 2004
primarily due to a decrease in trading account revenue and income on securities
transactions, offset by an increase in income from fees, commission and
brokerage.

Fees, commission and brokerage increased 74.2% to Rs. 15.7 billion (US$ 359
million) for fiscal 2005 from Rs. 9.0 billion (US$ 206 million) for fiscal 2004
with growth across all our fee generating businesses. The large increase was
primarily due to growth in retail liability product income such as account
servicing charges, and transaction banking fee income from small enterprises, as
well as an increase in transaction banking and other fee income from corporate
banking. During fiscal 2005 we increased charges and introduced new charges for
some of the services that we offer to our deposit customers. During fiscal 2005
there was a significant increase in business volumes of transaction banking
services such as bankers acceptances, bank guarantees and cash management
services.

Trading account revenue and gain on securities transactions decreased 64.0%
to Rs. 6.2 billion (US$ 142 million) for fiscal 2005 from Rs. 17.2 billion (US$
395 million) for fiscal 2004 as interest rates increased during this

period. The yield on 10-year government of India securities increased by 152
basis points to 6.68% during fiscal 2005. During fiscal 2004, the yield on
10-year government of India securities had declined by 105 basis points as
compared to March 31, 2003 and we had capitalized on this decline to realize a
high level of trading account revenue and gains on fixed income securities. The
level of trading account revenue and gain on securities transactions is volatile
as it depends on specific market conditions which may or may not be favorable.

In fiscal 2005, gain on the sale of loans (including credit substitutes)
increased by 15.5% to Rs. 5.4 billion (US$ 124 million) from Rs. 4.7 billion
(US$ 107 million) in fiscal 2004. We view securitization and sell-down of
corporate and retail loans as a key element of our business strategy, seeking to
leverage our strong origination capabilities to meet the investment requirements
of other financial intermediaries that have access to funding but relatively
limited origination capabilities.

Income from software development and services increased 91.7% to Rs. 1.7
billion (US$ 40 million) for fiscal 2005 from Rs. 903 million (US$ 21 million)
for fiscal 2004 primarily due to the addition of new clients and increased sales
of software products by 3i Infotech Limited (formerly ICICI Infotech Limited).

Other income has increased on account of an increase in income from
transaction processing services, earned by ICICI OneSource Limited to Rs. 3.2
billion (US$ 74 million) for fiscal 2005 from Rs. 1.8 billion (US$ 40 million)
for fiscal 2004.

Non-Interest Expense

The following table sets forth, for the periods indicated, the principal
components of non-interest expense.

Year ended March 31,
-------------------------------------------------------------
2005/2004
2004 2005 2005 % change
-------------------------------------------------------------
(in millions, except percentages)
Employee expense:
Salaries ......................... Rs. 7,198 Rs. 10,005 US$ 229 39.0%
Employee benefits ................ 2,778 1,287 30 (53.7)
-------------------------------------------
Total employee expense ............. 9,976 11,292 259 13.2
Premises and equipment expense ...... 6,029 7,156 164 18.7
Administration and other expense .... 10,411 14,037 322 34.8
Amortization of goodwill
and intangible assets ............ 685 604 14 (11.8)
-------------------------------------------
Total non-interest expense ......... Rs. 27,101 33,089 US$ 759 22.1%
===========================================

Non-interest expense increased by 22.1% in fiscal 2005 to Rs. 33.1 billion
(US$ 759 million) from Rs. 27.1 billion (US$ 621 million) in fiscal 2004
primarily due to an increase in administration expense and salary expenses.

Employee expenses increased 13.2% to Rs. 11.3 billion (US$ 259 million) in
fiscal 2005 from Rs. 10.0 billion (US$ 229 million) in fiscal 2004, primarily
due to increase in the number of employees in ICICI Bank Limited to 18,029
employees at year-end fiscal 2005 from 13,549 employees at year-end fiscal 2004.
The increase in employees is commensurate with the growth in our retail
business. We had implemented an Early Retirement Option Scheme for 1,495
employees in fiscal 2004, for which we incurred an expense of Rs. 1.9 billion
(US$ 44 million) on account of ex-gratia payments, termination benefits and
leave encashment.

Premises and equipment expense increased 18.7% to Rs. 7.2 billion (US$ 164
million) in fiscal 2005 from Rs. 6.0 billion (US$ 138 million) in fiscal 2004,
primarily due to increased maintenance and depreciation expenses on premises,
branches, ATMs, computers and computer software. The increase is also due to an
increase in the number of branches and extension counters to 562 at year-end
fiscal 2005 compared to 469 at year-end fiscal 2004. Administrative and other
expenses increased 34.8% to Rs. 14.0 billion (US$ 322 million) in fiscal 2005
from Rs. 10.4 billion (US$ 239 million) in fiscal 2004, primarily due to an
increase in advertisement expense, repairs and maintenance and retail business
expenses in line with the increase in business volumes and increased expenses of
the Internet-based brokering services subsidiary and our business process
outsourcing subsidiary. The number of ATM's increased from 1,790 at year-end
fiscal 2004 to 1,910 at year-end fiscal 2005.

Provisions for Loan Losses

The following table set forth, at the dates indicated, certain information
regarding restructured and other impaired loans.

At March 31,
-------------------------------------------------------------------
2005/2004
2004 2005 2005 % change
------------- ----------------- ------------- ---------------
(in millions, except percentages)

Gross restructured loans................ Rs. 162,398 Rs. 149,518 US$ 3,428 (7.9)%
Allowance for loan losses
on restructured loans................. (40,981) (53,929) (1,236) 31.6
------------- ----------------- -------------
Net restructured loans.................. 121,417 95,589 2,192 (21.3)
------------- ----------------- -------------
Gross other impaired loans.............. 50,238 29,713 681 (40.9)
Allowance for loan losses
on other impaired loans............... (21,474) (15,517) (356) (27.7)
------------- ----------------- -------------
Net other impaired loans................ 28,764 14,196 325 (50.6)
------------- ----------------- -------------
Gross restructured and
other impaired loans.................... 212,636 179,231 4,109 (15.7)
Allowance for loan losses(1)............ (62,455) (69,446) (1,592) 11.2
------------- ----------------- -------------
Net restructured and
other impaired loans.................. 150,181 109,785 2,517 (26.9)
------------- ----------------- -------------
Gross total loans....................... 795,287 1,075,758 24,662 35.3
Net total loans......................... 728,520 999,858 22,922 37.2
Gross restructured loans
as a percentage of gross loans........ 20.42% 13.90%
Gross other impaired loans
as a percentage of gross loans........ 6.32 2.76
Net restructured loans
as a percentage of net loans.......... 16.67 9.56
Net other impaired loans
as a percentage of net loans.......... 3.95 1.42
Allowance for loans losses on
restructured loans as a
percentage of gross
restructured loans.................... 25.23 36.07
Allowance for loan losses on
other impaired loans
as a percentage of gross
other impaired loans.................. 42.74 52.22
Allowance on loan losses
as a percentage of
gross loans(2)........................ 8.40 7.06

- ----------
(1) Excludes allowances on non-impaired loans.

(2) Includes allowances on non-impaired loans.

The following table sets forth, for the periods indicated, certain
information regarding provisions for loan losses.

Year ended March 31,
------------------------------------------------------------
2005/2004
2004 2005 2005 % change
------------------------------------------------------------
(in millions, except percentages)

Total provisions for the year............ Rs. 20,055 Rs. 14,677 US$ 336 (26.8)%
Provision for loans losses as
a percentage of net Loans.............. 2.75% 1.47%

Gross restructured loans decreased 7.9% to Rs. 149.5 billion (US$ 3.4
billion) at year-end fiscal 2005 from Rs. 162.4 billion (US$ 3.7 billion) at
year-end fiscal 2004 primarily due to the reclassification of certain loans as

unimpaired based on satisfactory performance of the borrower accounts,
offset in part, by restructuring of loans to certain companies in the telecom
and automobile industries and reclassification of other impaired loans that were
restructured or transferred to an asset reconstruction company during the year.
Gross other impaired loans decreased 40.9% to Rs. 29.7 billion (US$ 681 million)
at year-end fiscal 2005 from Rs. 50.2 billion (US$ 1.2 billion) at year-end
fiscal 2004 primarily due to the reclassification of other impaired loans that
were restructured or transferred to an asset reconstruction company during the
year, as restructured loans, and reclassification of certain loans as unimpaired
based on satisfactory performance of the borrower accounts. As a percentage of
net loans, net restructured loans were 9.6% at year-end fiscal 2005 and 16.7% at
year-end fiscal 2004 and net other impaired loans were 1.4% at year-end fiscal
2005 and 4.0% at year-end fiscal 2004. Provisions for loan losses for fiscal
2005 decreased 26.8% to Rs. 14.7 billion (US$ 336 million) from Rs. 20.1 billion
(US$ 460 million) for fiscal 2004 primarily due to lower additions to gross
restructured and other impaired loans. The coverage ratio on gross restructured
loans increased to 36.1% at year-end fiscal 2005 from 25.2% at year-end fiscal
2004 primarily due to the reclassification of certain loans as unimpaired based
on satisfactory performance of the borrower accounts, offset in part, by
restructuring of loans to certain companies in the telecom and automobile
industries and reclassification of other impaired loans that were restructured.
The coverage ratio on other impaired loans increased to 52.2% at year-end fiscal
2005 from 42.7% at year-end fiscal 2004.

We identify a loan as impaired when it is probable that we will be unable
to collect the scheduled payments of principal and interest due under the
contractual terms of the loan agreement. Until year-end fiscal 2003, a loan was
considered to be impaired if interest or principal was overdue for more than 180
days. From fiscal 2004, an asset is classified as impaired when principal or
interest has remained overdue for more than 90 days. In addition, delays or
shortfalls in loan repayments are evaluated along with other factors to
determine if a loan should be placed on non-accrual status. Generally, loans
with delinquencies below 90 days are placed on non-accrual status. The decision
to place a loan on non-accrual status is also based on an evaluation of the
borrower's financial condition, collateral, liquidation value, and other factors
that affect the borrower's ability to repay the loan in accordance with the
contractual terms. Generally, on placement of the loan on non-accrual status,
interest accrued and uncollected on the loan in the current fiscal year is
reversed from income, and interest accrued and uncollected from the prior year
is charged off against the allowance for loan losses. Thereafter, interest on
non-accrual loans is recognized as interest income only to the extent of cash
received and future collection of principal is not in doubt. When borrowers
demonstrate over an extended period the ability to repay a loan in accordance
with the contractual terms of a loan, which we had classified as non-accrual,
the loan is returned to accrual status.

Consumer loans are generally identified as impaired when principal or
interest has remained overdue for more than 90 days. Consumer loans when
identified as impaired are placed on non-accrual status.

The value of impaired loans is measured as the present value of expected
future cash flows discounted at the loan's effective interest rate, at the
loan's observable market price, or the fair value of the collateral if the
recovery of the loan is solely collateral dependent. If the value of the
impaired loan is less than the recorded investment in the loan, we recognize
this impairment by creating a valuation allowance with a corresponding charge to
the provision for loan losses.

classification detailed under "Business--Impaired Loans--Allowance for Loan
Losses" for determining the allowance for loan losses. Our impaired loan
portfolio is composed largely of project finance and other term loans where we
have a security interest and first lien on all the fixed assets and a second
lien on all the current assets of the borrower. ICICI typically lent between
60.0% and 80.0% of the appraised value of collateral. Hence, all of ICICI's
loans have historically been sufficiently over-collateralized so that once
collateral was realized, ICICI typically recovered the full principal along with
a small portion of interest claims. However, recoveries may be subject to delays
of up to several years, due to the long legal collection process in India. As a
result, we make an allowance for loans based on the time value of money or the
present value of expected realizations of collateral, which takes into account
the delay we would experience before recovering its principal. The time to
recovery, expected future cash flows and realizable value for collateral are
periodically reviewed in estimating the allowance.

We believe that the process for ascertaining allowance for loan losses
described above adequately captures the expected losses on our entire loan
portfolio.

Income Tax Expense

Income tax expense amounted to Rs. 1.6 billion (US$ 38 million) for fiscal
2005 and was at the same level in fiscal 2004. The effective rate of tax expense
was 16.1% for fiscal 2005 compared to the effective tax expense of 23.9% for
fiscal 2004. The effective tax rate of 16.1% for fiscal 2005 was lower compared
to statutory tax rate of 36.6% primarily due to exempt interest and dividend
income and the charging of certain income at rates other than statutory tax
rate.

The Indian Finance Act 2005 imposes an additional income tax on companies
called a "Fringe Benefits Tax", or FBT. Pursuant to this Act, companies are
deemed to have provided fringe benefits to the employees if certain defined
expenses are incurred. A portion of these expenses is deemed to be a fringe
benefit to the employees and subjects the Bank to tax at a rate of 30%,
exclusive of applicable surcharge and cess. FBT and other similar taxes enacted
in the future by the government of India could adversely affect our
profitability. This tax is effective from April 1, 2005.

Financial Condition

Assets

The following table sets forth, at the dates indicated, the principal
components of assets.

At March 31,
-------------------------------------------------------
2005/2004
2004 2005 2005 % change
----------------- --------------- --------- ---------
(in millions, except percentages)
Cash and cash equivalents......... Rs. 98,985 Rs. 155,639 US$ 3,568 57.2%
Trading account assets (1) ....... 75,155 75,538 1,732 0.5
Securities, excluding venture
capital investments (2) ........ 305,226 377,027 8,643 23.5
Venture capital investments ...... 5,142 3,932 90 (23.5)
Investments in affiliates ........ 3,619 4,725 108 30.6
Loans, net:
Rupee ...................... 705,685 926,420 21,238 31.3
Foreign currency ........... 89,602 149,338 3,424 66.7
Less: Allowances ........... (66,767) (75,900) (1,740) 13.7
------------- ------------- -----------
Total loans, net ................. 728,520 999,858 22,922 37.2
Acceptances ...................... 65,142 74,116 1,699 13.8
Property and equipment ........... 23,183 26,055 597 12.4
Other assets ..................... 104,159 146,557 3,361 40.7
------------- ------------- -----------
Total assets ..................... Rs. 1,409,131 Rs. 1,863,447 US$ 42,720 32.2%
============= ============= ==========

- ------------
(1) Primarily includes government of India securities, corporate debt securities
and mutual fund securities.

(2) Primarily includes government of India securities and to a much smaller
extent, corporate debt securities and equity securities.

Our total assets increased 32.2% to Rs. 1,863.4 billion (US$ 42.7 billion)
at year-end fiscal 2005 compared to Rs. 1,409.1 billion (US$ 32.3 billion) at
year-end fiscal 2004, primarily due to an increase in loans, securities and cash
and cash equivalents.

Our net loans increased 37.2% to Rs. 999.9 billion (US$ 22.9 billion) at
year-end fiscal 2005 compared to Rs. 728.5 billion (US$ 16.7 billion) at
year-end fiscal 2004. Gross consumer loans and credit card receivables at
year-end fiscal 2005 increased 42.2% to Rs. 531.2 billion (US$ 12.2 billion)
from Rs. 311.9 billion (US$ 7.2 billion) at year-end fiscal 2004 in accordance
with our strategy to grow our retail asset portfolio.

Securities, excluding venture capital investment increased 23.5% to Rs.
377.0 billion (US$ 8.6 billion) at year-end fiscal 2005 from Rs. 305.2 billion
(US$ 7.0 billion) at year-end fiscal 2004. Venture capital investments declined
23.5% to Rs. 3.9 billion (US$ 90 million) at year-end fiscal 2005 compared to
year-end fiscal 2004 primarily due to the sale of investments. Cash, cash
equivalents and trading account assets increased 32.8% to Rs. 231.1 billion (US$
5.3 billion) at year-end fiscal 2005 from Rs. 174.1 billion (US$ 4.0 billion) at
year-end fiscal 2004 due to an increase in call lending volumes at year-end
fiscal 2005 as well as higher term lending by foreign branches.

Investment in affiliates increased to Rs. 4.7 billion (US$ 108 million) at
year-end fiscal 2005 from Rs. 3.6 billion (US$ 83 million) at year-end fiscal
2004. Acceptances increased 13.8% to Rs. 74.1 billion (US$ 1.7 billion) at
year-end fiscal 2005 from Rs. 65.1 billion (US$ 1.5 billion) at year-end fiscal
2004 reflecting our focus on increasing revenues from non-fund based businesses.
Property and equipment increased to Rs. 26.1 billion (US$ 597 million) at
year-end fiscal 2005 from Rs. 23.2 billion (US$ 531 million) at year-end fiscal
2004. The increase was primarily due to additions in buildings and equipment of
ICICI Bank Limited. This increase was commensurate with the increase in number
of branches and extension counters to 562 at year-end fiscal 2005 compared to
469 at year-end fiscal 2004.

Other assets increased 40.7% to Rs. 146.6 billion (US$ 3.4 billion) at
year-end fiscal 2005 from Rs. 104.2 billion (US$ 2.4 billion) at year-end fiscal
2004. Certain securities sold on the last day of the year in the ordinary course
of business for which the settlement was pending have contributed to this
increase. At year-end fiscal 2005, other assets included deferred tax asset of
Rs. 12.1 billion (US$ 278 million), intangible assets (including goodwill) of
Rs. 11.6 billion (US$ 266 million) and Rs. 3.7 billion (US$ 86 million) of
assets held for sale, which were primarily acquired through foreclosure of
loans.

Liabilities and Stockholders' Equity

The following table sets forth, at the dates indicated, the principal
components of liabilities and stockholders' equity.

At March 31,
--------------------------------------------------------
2004/2005
2004 2005 2005 % change
--------------------------------------------------------
(in millions, except percentages)
Deposits ......................... Rs. 684,955 Rs. 1,016,534 US$ 23,304 48.4%
Trading account liabilities....... 26,079 24,258 556 (7.0)
Short-term borrowings ............ 57,364 91,951 2,108 60.3
Acceptances ...................... 65,142 74,116 1,699 13.8
Long-term debt:
Rupee ............................ 311,668 284,979 6,533 (8.6)
Foreign currency ................. 61,781 82,520 1,892 33.6
---------------------------------------------
Total long-term debt ............. 373,449 367,499 8,425 (1.6)
Other liabilities ................ 85,443 140,096 3,212 64.0
Taxes and dividends payable ...... 20,180 17,885 410 (11.4)

Redeemable preferred stock(1)..... 944 1,044 24 10.6
---------------------------------------------
Total liabilities ................ 1,313,556 1,733,383 39,738 32.0
Minority interest ................ 1,050 2,068 47 97.0
Stockholders' equity ............. 94,525 127,996 2,935 35.4
---------------------------------------------
Total liabilities and
stockholders' equity............. Rs. 1,409,131 Rs. 1,863,447 US$ 42,720 32.2%
=============================================

- ------------
(1) In line with the existing regulatory requirements in India, preferred stock
issued by ICICI needed to be compulsorily redeemed within a specified time
period. Accordingly, all series of preferred stock issued by ICICI were
redeemable in accordance with the terms of the issue.

Deposits increased by 48.4% to Rs. 1,016.5 billion (US$ 23.3 billion) at
year-end fiscal 2005 from Rs. 685.0 billion (US$ 15.7 billion) at year-end
fiscal 2004. This significant growth in deposits was primarily achieved through
increased focus on retail and corporate customers by offering a wide range of
products designed to meet varied individual and corporate needs and leveraging
our network of branches, extension counters and ATMs. Our long-term debt
decreased 1.6% to Rs. 367.5 billion (US$ 8.4 billion) at year-end fiscal 2005
from Rs. 373.4 billion (US$ 8.6 billion) at year-end fiscal 2004 on account of
an 8.6% decrease in long-term rupee debt offset by a 33.6% increase in long-term
foreign currency debt. Our short-term borrowings increased 60.3% to Rs. 92.0
billion (US$ 2.1 billion) at year-end fiscal 2005 compared to Rs. 57.4 billion
(US$ 1.3 billion) at year-end fiscal 2004. Trading account liabilities decreased
to Rs. 24.3 billion (US$ 556 million) at year-end fiscal 2005 compared to Rs.
26.1 billion (US$ 598 million) at year-end fiscal 2004. Taxes and dividends
payable decreased 11.4% to Rs. 17.9 billion (US$ 410 million) at year-end fiscal
2005 from Rs. 20.2 billion (US$ 463 million) at year-end fiscal 2004. The
carrying amount of redeemable preferred stock increased to Rs. 1,044 million
(US$ 24 million) at year-end fiscal 2005 from Rs. 944 million (US$ 22 million)
at year-end fiscal 2004. Minority interest increased to Rs. 2,068 million (US$
47 million) at year-end fiscal 2005 from Rs. 1,050 million (US$ 24 million) at
year-end fiscal 2004. Stockholders' equity increased 35.4% at year-end fiscal
2005 to Rs. 128.0 billion (US$ 2.9 billion) from Rs. 94.5 billion (US$ 2.2
billion) at year-end fiscal 2004.

Fiscal 2004 to Fiscal 2003

Summary

Net income after tax amounted to Rs. 5.2 billion (US$ 120 million) in
fiscal 2004 compared to a loss of Rs. 8.0 billion (US$ 183 million) in fiscal
2003, primarily due to a 176.8% increase in non-interest income to Rs. 36.7
billion (US$ 841 million) in fiscal 2004 from Rs. 13.3 billion (US$ 304 million)
in fiscal 2003 and a 26.2% increase in net interest income (excluding dividends)
before provisions for loan losses to Rs. 18.3 billion (US$ 420 million) in
fiscal 2004 from Rs. 14.5 billion (US$ 333 million) in fiscal 2003. We made a
profit on average assets of 0.4% for fiscal 2004 compared to a net loss on
average assets of 0.7% for fiscal 2003 and a profit on average stockholders'
equity of 5.5% for fiscal 2004 compared to a net loss on average stockholders'
equity of 8.5% for fiscal 2003.

o Net interest income (excluding dividends) before provisions for loan
losses increased 26.2% to Rs. 18.3 billion (US$ 420 million) in fiscal
2004 from Rs. 14.5 billion (US$ 333 million) in fiscal 2003,
reflecting an increase of 10.0% in the average volume of
interest-earning assets and increase of 14 basis points in the spread.

o Non-interest income increased by 176.8% in fiscal 2004 to Rs. 36.7
billion (US$ 841 million) from Rs. 13.3 billion (US$ 304 million) in
fiscal 2003, primarily due to increase in gains from securities
transactions by Rs. 13.1 billion (US$ 301 million) and increase in
income from fees, commission and brokerage by Rs. 3.6 billion (US$ 82
million).

o Non-interest expense increased 45.6% in fiscal 2004 to Rs. 27.1
billion (US$ 621 million) from Rs. 18.6 billion (US$ 427 million) in
fiscal 2003, primarily due to 85.3% increase in employee expenses
(employee expenses in fiscal 2004 includes Early Retirement Option
expense of Rs. 1.9 billion (US$ 44 million)) and 33.5% increase in
administration expenses.

o Provisions for loan losses increased to Rs. 20.1 billion (US$ 460
million) in fiscal 2004 from Rs. 19.6 billion (US$ 450 million) in
fiscal 2003.

o Gross restructured loans increased 10.2% to Rs. 162.4 billion (US$ 3.7
billion) at year-end fiscal 2004 from Rs. 147.4 billion (US$ 3.4
billion) at year-end fiscal 2003. Gross other impaired loans decreased
40.0% to Rs. 50.2 billion (US$ 1.2 billion) at year-end fiscal 2004
from Rs. 83.2 billion (US$ 1.9 billion) at year-end fiscal 2003.

o Total assets increased 19.4% to Rs. 1,409.1 billion (US$ 32.3 billion)
at year-end fiscal 2004 compared to Rs. 1,180.3 billion (US$ 27.1
billion) at year-end fiscal 2003 with trading account assets
increasing by 89.6% and loans increasing by 15.6%.

Net Interest Income

The following table sets forth, for the periods indicated, the principal
components of net interest income, excluding income from dividends.

Net interest income (excluding dividends) increased 26.2% to Rs. 18.3
billion (US$ 420 million) in fiscal 2004 from Rs. 14.5 billion (US$ 333 million)
in fiscal 2003 reflecting mainly the following:

o an increase of Rs. 92.4 billion (US$ 2.1 billion) or 10.9% in the
average volume of interest-earning rupee assets;

o an increase of Rs. 85 million (US$ 2 million) or 0.1% in the average
volume of interest-earning foreign currency assets;

o an increase in rupee spread to 1.4% in fiscal 2004 from 1.2% in fiscal
2003; and

o an increase in foreign currency spread to 2.7% in fiscal 2004 from
1.8% in fiscal 2003.

The average volume of interest-earning rupee assets increased by 10.9% or
Rs. 92.4 billion (US$ 2.1 billion) to Rs. 936.6 billion (US$ 21.5 billion)
during fiscal 2004 from Rs. 844.2 billion (US$ 19.4 billion) during fiscal 2003,
primarily due to the increase in the volume of loans. Our average volume of
loans increased by 9.3% to Rs. 662.8 billion (US$ 15.2 billion) in fiscal 2004
from Rs. 606.5 billion (US$ 13.9 billion) in fiscal 2003. The average volume of
rupee loans increased by 9.3% or Rs. 50.2 billion (US$ 1.2 billion) to Rs. 592.0
billion (US$ 13.6 billion) in fiscal 2004 from Rs. 541.9 billion (US$ 12.4
billion) in fiscal 2003. This increase in average loans was primarily due to
increased disbursements of retail finance loans offset, in part, by
sell-down/securitization and repayments of loans. The average volume of foreign
currency loans increased 9.4% to Rs. 70.7 billion (US$ 1.6 billion) in fiscal
2004 from Rs. 64.6 billion (US$ 1.5 billion) in fiscal 2003.

Our gross loans increased 16.2% to Rs. 795.3 billion (US$ 18.2 billion) at
year-end fiscal 2004 from Rs. 684.6 billion (US$ 15.7 billion) at year-end
fiscal 2003. Gross rupee loans at year-end fiscal 2004 increased 19.2% to Rs.
705.7 billion (US$ 16.2 billion) compared to Rs. 592.2 billion (US$ 13.6
billion) at year-end fiscal 2003. Gross consumer loans and credit card
receivables at year-end fiscal 2004 increased 65.7% to Rs. 311.9 billion (US$
7.2 billion) from Rs. 188.3 billion (US$ 4.3 billion) at year-end fiscal 2003.
Our project and corporate finance and working capital finance loans decreased
13.4% to Rs. 400.2 billion (US$ 9.2 billion) at year-end fiscal 2004 compared to
Rs. 462.3 billion (US$ 10.6 billion) at year-end fiscal 2003.

Investment in government of India securities increased by Rs. 20.2 billion
(US$ 463 million) to Rs. 291.0 billion (US$ 6.7 billion) at year-end fiscal 2004
from Rs. 270.8 billion (US$ 6.2 billion) at year-end fiscal 2003 primarily due
to compliance with the statutory liquidity ratio on ICICI Bank's liabilities.

The average volume of cash, cash equivalents and trading account assets
increased by 4.9% to Rs. 77.5 billion (US$ 1.8 billion) in fiscal 2004 from Rs.
73.9 billion (US$ 1.7 billion) in fiscal 2003. Cash, cash equivalents and
trading account assets increased by 55.4% to Rs. 174.1 billion (US$ 4.0 billion)
at year-end fiscal 2004 from Rs. 112.1 billion (US$ 2.6 billion) at year-end
fiscal 2003. Trading account assets increased by Rs. 35.5 billion (US$ 814
million) primarily due to deployment of surplus cash in reverse repurchase
transactions.

While both interest income and interest expense declined in line with the
declining interest rate trend in the market, interest expense declined more
sharply than interest income. Total interest income (excluding dividend)
decreased 7.2% to Rs. 90.7 billion (US$ 2.1 billion) for fiscal 2004 from Rs.
97.7 billion (US$ 2.2 billion) for fiscal 2003 primarily due to a decline of 187
basis points in the yield on interest-earning rupee assets, off-set, in part, by
an increase of 10.9% in the average interest- earning rupee assets to Rs. 936.6
billion (US$ 21.5 billion) in fiscal 2004 from Rs. 844.2 billion (US$ 19.4
billion) in fiscal 2003. The yield on interest-earning rupee assets decreased
187 basis points to 9.2% in fiscal 2004 from 11.1% in fiscal 2003 primarily due
to a general decline in interest rates in the economy. There was a decline of
194 basis points in the yield on loans from 12.4% in fiscal 2003 to 10.4% in
fiscal 2004.

Total interest expense decreased 13.0% to Rs. 72.4 billion (US$ 1.7
billion) in fiscal 2004 from Rs. 83.2 billion (US$ 1.9 billion) in fiscal 2003
primarily due to a decline of 1.8% in the cost of liabilities off-set, in part
by 8.0% increase in average interest bearing liabilities to Rs. 977.9 billion
(US$ 22.4 billion) in fiscal 2004 from Rs. 905.2 billion (US$ 20.8 billion) in
fiscal 2003. The average cost of rupee liabilities decreased 199 basis points to
7.8% in fiscal 2004 from 9.8% in fiscal 2003 primarily due to increase in lower
cost deposits and a general decline in interest rates in fiscal 2004. Average
interest-bearing deposits, with an average cost of 5.8% in fiscal 2004,
constituted 53.8% of total average interest-bearing liabilities compared to
39.6% of the total average interest-bearing liabilities with an average cost of
7.3% in fiscal 2003. While the average cost of long-term rupee debt decreased to
11.0% from 11.7%, the average cost of short-term rupee borrowings decreased to
6.2% in fiscal 2004 from 11.3% in fiscal 2003. The average cost of foreign
currency liabilities decreased 56 basis points to 3.0% in fiscal 2004 from 3.6%
in fiscal 2003. The foreign currency spread increased 85 basis points to 2.7% in
fiscal 2004 from 1.8% in fiscal 2003. The yield on our interest-earning foreign
currency assets increased 31 basis points to 5.7% in fiscal 2004 from 5.4% in
fiscal 2003.

The spread increased by 14 basis points to 1.5% in fiscal 2004 from 1.4%
in fiscal 2003 as rupee spread increased by 12 basis points and foreign currency
spread increased by 85 basis points. As a result of the 1.8% decline in the cost
of funds, offset, in part by a 1.7% decline in the yield on average
interest-earning assets, net interest margin increased to 1.8% for fiscal 2004
from 1.6% for fiscal 2003.

Non-Interest Income

The following table sets forth, for the periods indicated, the principal
components of non-interest income.

Year ended March 31,
----------------------------------------------------------
2004/2003
2003 2004 2004 % change
----------------------------------------------------------
(in millions, except percentages)
Fees, commission and brokerage.... Rs. 5,397 Rs. 8,988 US$ 206 66.5%
Trading account revenue (1)....... 3,075 4,433 102 44.2
Securities transactions (2)....... (322) 12,800 293 -
Foreign exchange transactions (3). 92 2,061 47 2,140.2
Gain on sale of loans............. 3,120 4,687 108 50.2
Software development and services. 1,062 903 21 (15.0)
Profit on sale of certain premises
and equipment.................... 16 345 8 2,056.3
Other income...................... 813 2,461 56 202.7
--------------------------------------------
Total non-interest income......... Rs. 13,253 Rs. 36,678 US$ 841 176.8%
============================================

- ---------
(1) Primarily reflects income from trading in government of India securities
and corporate debt securities.
(2) Primarily reflects capital gains/(losses) realized on the sale of
securities, including fixed income and equity, venture capital investments
and revenues from investment banking subsidiary less other than temporary
diminution.
(3) Arises primarily from purchase and sale of foreign exchange on behalf of
corporate clients and revaluation of foreign currency assets and
liabilities and outstanding forward contracts.

Non-interest income increased by 176.8% in fiscal 2004 to Rs. 36.7 billion
(US$ 841 million), from Rs. 13.3 billion (US$ 304 million) in fiscal 2003
primarily due to an increase in gains from securities transactions, an increase
in income from foreign exchange transactions and increase in income from fees,
commission and brokerage.

Fees, commission and brokerage increased 66.5% to Rs. 9.0 billion (US$ 206
million) in fiscal 2004 from Rs. 5.4 billion (US$ 124 million) in fiscal 2003
primarily due to growth in retail banking fee income arising from credit cards
and retail liability product income like account servicing charges, and an
increase in transaction banking fee income from corporate banking.

Trading account revenue primarily consisted of income from trading in
government of India securities and corporate debt securities. Trading account
revenue increased 44.2% to Rs. 4.4 billion (US$ 102 million) during fiscal 2004
compared to Rs. 3.1 billion (US$ 70 million) in fiscal 2003 due to an increase
in trading profits on government of India securities and corporate debt
securities as a result of the declining interest rate environment.

The gain on securities transactions increased by Rs. 13.1 billion (US$ 301
million) to Rs. 12.8 billion (US$ 293 million) during fiscal 2004 as compared to
a loss of Rs. 322 million (US$ 7 million) in fiscal 2003 primarily due to an
increase in net gains realized on securities available for sale to Rs. 13.7
billion (US$ 315 million) from Rs. 1.8 billion (US$ 42 million) in fiscal 2003
as we capitalized on a declining interest rate environment and also realized
capital gains on the sale of investments primarily relating to ICICI's project
finance portfolio. The 10-year government of India securities rate declined by
105 basis points to 5.16% at year-end fiscal 2004 from 6.21% at year-end fiscal
2003. The benchmark S&P CNX Nifty index of the National Stock Exchange of India
almost doubled from 977.0 at April 1, 2003 to 1,771.9 at March 31, 2004.

This level of trading account revenue and gain on securities transactions
is a result of specific market conditions and may not be repeated in future
periods.

Income from foreign exchange transactions increased by Rs. 2.0 billion
(US$ 45 million) to Rs. 2.1 billion (US$ 47 million) in fiscal 2004 from Rs. 92
million (US$ 2 million) in fiscal 2003, primarily due to our enhanced focus on
this segment.

In fiscal 2004, gain on the sale of loans (including credit substitutes)
increased by 50.2% to Rs. 4.7 billion (US$ 108 million) from Rs. 3.1 billion
(US$ 72 million) in fiscal 2003. We view securitization and sell-down of
corporate and retail loans as a key element of our business strategy, seeking to
leverage our strong origination capabilities to meet the investment requirements
of other financial intermediaries that have access to funding but relatively
limited origination capabilities.

Income from software development and services decreased 15.0% to Rs. 903
million (US$ 21 million) in fiscal 2004 from Rs. 1.1 billion (US$ 24 million) in
fiscal 2003. Non-interest income also included a gain of Rs. 345 million (US$ 8
million) on the sale of premises and equipment in fiscal 2004 as compared to Rs.
16 million (US$ 366,804) in fiscal 2003. Other income has also increased on
account of increase in income from transaction processing services rendered by
the ICICI OneSource Limited to Rs. 1.8 billion (US$ 40 million) in fiscal 2004
from Rs. 696 million (US$ 16 million) in fiscal 2003.

Non-Interest Expense

The following table sets forth, for the periods indicated, the principal
components of non-interest expense.

Year ended March 31,
---------------------------------------------------------
2004/2003
2003 2004 2004 % change
---------------------------------------------------------
(in millions, except percentages)
Employee expense:
Salaries....................... Rs. 4,686 Rs. 7,198 US$ 165 53.6%
Employee benefits.............. 697 2,778 64 298.6
--------------------------------------------
Total employee expense............ 5,383 9,976 229 85.3
Premises and equipment expense ... 4,784 6,029 138 26.0
Administration and other expense . 7,797 10,411 238 33.5
Amortization of goodwill and
intangible assets............... 645 685 16 6.2
--------------------------------------------
Total non-interest expense........ Rs. 18,609 Rs. 27,101 US$ 621 45.6%
============================================

Non-interest expense increased by 45.6% in fiscal 2004 to Rs. 27.1 billion
(US$ 621 million) from Rs. 18.6 billion (US$ 427 million) in fiscal 2003
primarily due to an increase in employee expenses and administration expense.

Employee expenses increased 85.3% to Rs. 10.0 billion (US$ 229 million) in
fiscal 2004 from Rs. 5.4 billion (US$ 123 million) in fiscal 2003, primarily due
to increase in the number of employees to 18,942 at year-end fiscal 2004 from
15,179 at year-end fiscal 2003. The increase in employees is commensurate with
the growth in our retail business. We had implemented an Early Retirement Option
Scheme for 1,495 employees in July 2003. An amount of Rs. 1.9 billion (US$ 44
million) has been expensed (included in employee benefits) on account of the
ex-gratia payments under the Early Retirement Option Scheme, termination
benefits and leave encashment in excess of the provisions made (net of tax
benefits).

Premises and equipment expense increased 26.0% to Rs. 6.0 billion (US$ 138
million) in fiscal 2004 from Rs. 4.8 billion (US$ 110 million) in fiscal 2003,
primarily due to increased maintenance and depreciation expenses on premises,
branches, ATM's, computers and computer software. The number of ATM's increased
from 1,675 at year-end fiscal 2003 to 1,790 at year-end fiscal 2004 and the
number of branches and extension counters increased from 446 at year-end fiscal
2003 to 469 at year-end fiscal 2004.

Administrative and other expenses increased 33.5% to Rs. 10.4 billion (US$
239 million) in fiscal 2004 from Rs. 7.8 billion (US$ 179 million) in fiscal
2003, primarily due to an increase in the retail business expenses and increase
in general business volumes.

Provisions for Loan Losses

The following table set forth, at the dates indicated, certain information
regarding restructured and other impaired loans.

At March 31,
-----------------------------------------------------------
2004/2003
2003 2004 2004 % change
-----------------------------------------------------------
(in millions, except percentages)
Gross restructured loans.......... Rs. 147,391 Rs. 162,398 US$ 3,723 10.2%
Allowance for loan losses on
restructured loans.............. (24,732) (40,981) (939) 65.7
---------------------------------------------
Net restructured loans............ 122,659 121,417 2,784 (1.0)
---------------------------------------------
Gross other impaired loans........ 83,156 50,238 1,151 (39.6)
Allowance for loan losses on
other impaired loans............ (27,837) (21,474) (492) (22.9)
---------------------------------------------
Net other impaired loans.......... 55,319 28,764 659 (48.0)
---------------------------------------------
Gross restructured and other
impaired loans.................. 230,547 212,636 4,875 (7.8)
Allowance for loan losses(1)...... (52,569) (62,455) (1,432) (18.8)
---------------------------------------------

100

Net restructured and other
impaired loans.................. 177,978 150,181 3,443 (15.6)
---------------------------------------------
Gross total loans................. 684,640 795,287 18,232 16.16
Net total loans................... 630,421 728,520 16,702 15.6
Gross restructured loans as a
percentage of gross loans....... 21.53% 20.42%
Gross other impaired loans as a
percentage of gross loans....... 12.15 6.32
Net restructured loans as a
percentage of net loans......... 19.45 16.67
Net other impaired loans as a
percentage of net loans......... 8.77 3.95
Allowance for loans losses on
restructured loans as a
percentage of gross
restructured loans.............. 16.78 25.23
Allowance for loan losses on other
impaired loans as a percentage
of gross other impaired loans... 33.48 42.74
Allowance on loan losses as a
percentage of gross loans(2).... 7.92 8.40

- -------------
(1) Excludes allowances on non-impaired loans.
(2) Includes allowances on non-impaired loans.

The following table sets forth, for the periods indicated, certain
information regarding provisions for loan losses.

Year ended March 31,
----------------------------------------------------------
2004/2003
2003 2004 2004 % change
----------------------------------------------------------
(in millions, except percentages)
Total provisions for the year..... Rs. 19,649 Rs. 20,055 US$ 460 2.1%
Provision for loans losses as a
percentage of net loans......... 3.12% 2.75%

Gross restructured loans increased 10.2% during fiscal 2004 to Rs. 162.4
billion (US$ 3.7 billion) at year-end fiscal 2004, from Rs. 147.4 billion (US$
3.4 billion) at year-end fiscal 2003 primarily due to restructuring of loans to
companies in the crude petroleum and refining and telecom industries and
reclassification of other impaired loans that were restructured or transferred
to an asset reconstruction company during the year, offset, in part, by
reclassification of certain loans as unimpaired based on satisfactory
performance of the borrower accounts as per the contractual terms of repayment
of the loan. Gross other impaired loans decreased 39.6% during fiscal 2004 to
Rs. 50.2 billion (US$ 1.2 billion) at year-end fiscal 2004, from Rs. 83.2
billion (US$ 1.9 billion) at year-end fiscal 2003 primarily due to
reclassification of other impaired loans that were restructured or transferred
to an asset reconstruction company during the year as restructured loans and
reclassification of certain loans as unimpaired based on satisfactory
performance of the borrower accounts as per the contractual terms of repayment
of the loan. As a percentage of net loans, net restructured loans were 16.7% at
year-end fiscal 2004 compared to 19.5% at year-end fiscal 2003 and net other
impaired loans were 3.9% at year-end fiscal 2004 compared to 8.8% at year-end
fiscal 2003. During fiscal 2004, we transferred impaired loans of Rs. 23.0
billion (US$ 527 million) to Asset Reconstruction Company (India) Limited (See
"Overview of the Indian Financial Sector - Recent Structural Reforms -
Legislative Framework for Recovery of Debts due to banks" and "Supervision and
Regulation - Reserve Bank of India Regulations - Regulations Relating to Sale of
Assets to Asset Reconstruction Companies"), of which Rs. 2.0 billion (US$ 46
million) was recognized as a sale in our US GAAP financial statements and Rs.
21.0 billion (US$ 481 million) is included in our restructured loans.

Provisions for loan losses for fiscal 2004 increased 2.1% to Rs. 20.1
billion (US$ 460 million) from Rs. 19.6 billion (US$ 450 million) in fiscal
2003. The coverage ratio on gross restructured loans increased to 25.2% at
year-end fiscal 2004 from 16.8% at year-end fiscal 2003. The coverage ratio on
other impaired loans increased to 42.7% at year-end fiscal 2004 from 33.5% at
year-end fiscal 2003.

Income Tax Expense

Income tax expense amounted to Rs. 1.6 billion (US$ 38 million) in fiscal
2004 compared to income tax benefit of Rs. 3.1 billion (US$ 70 million) in
fiscal 2003. The effective rate of tax expense was 23.9% in fiscal 2004

101

compared to effective rate of tax benefit of 27.7% in fiscal 2003. The effective
tax rate of 23.9% in fiscal 2004 was lower compared to statutory tax rate of
35.9% primarily due to exempt interest and dividend income and the charging of
certain income at rates other than statutory tax rate. See Note 29 of our
consolidated financial statements for a further discussion on income tax.

Financial Condition

Assets

The following table sets forth, at the dates indicated, the principal
components of assets.

At March 31,
-----------------------------------------------------------
2004/2003
2003 2004 2004 % change
-----------------------------------------------------------
(in millions, except percentages)
Cash and cash equivalents......... Rs. 72,453 Rs. 98,985 US$ 2,269 36.6%
Trading account assets (1) ....... 39,634 75,155 1,723 89.6
Securities, excluding venture
capital investments (2) ........ 276,917 305,226 6,997 10.2
Venture capital investments ...... 3,704 5,142 118 38.8
Investments in affiliates ........ 2,615 3,619 83 38.4
Loans, net:
Rupee ......................... 594,955 705,685 16,178 18.6
Foreign currency .............. 89,685 89,602 2,054 (0.1)
Less: Allowances .............. (54,219) (66,767) (1,530) 23.1
---------------------------------------------
Total loans, net ................. 630,421 728,520 16,702 15.6
Acceptances ...................... 43,252 65,142 1,493 50.6
Property and equipment ........... 21,215 23,183 532 9.3
Other assets ..................... 90,052 104,159 2,388 15.7
---------------------------------------------
Total assets ..................... Rs. 1,180,263 Rs. 1,409,131 US$ 32,305 19.4%
=============================================

- ---------------
(1) Primarily includes government of India securities and corporate debt
securities.
(2) Primarily includes government of India securities and to a much smaller
extent, corporate debt securities and equity securities.

Our total assets increased 19.4% to Rs. 1,409.1 billion (US$ 32.3 billion)
at year-end fiscal 2004 compared to Rs. 1,180.3 billion (US$ 27.1 billion) at
year-end fiscal 2003, primarily due to an increase in loans, trading account
assets and investments.

Our net loans increased 15.6% to Rs. 728.5 billion (US$ 16.7 billion) at
year-end fiscal 2004 compared to Rs. 630.4 billion (US$ 14.5 billion) at
year-end fiscal 2003, reflecting a 18.6% increase in gross rupee loans, a 0.1%
decrease in gross foreign currency loans and a 23.1% increase in allowance for
loan losses. Gross consumer loans and credit card receivables increased 65.7% to
Rs. 311.9 billion (US$ 7.2 billion) at year-end fiscal 2004 from Rs. 188.3
billion (US$ 4.3 billion) at year-end fiscal 2003 in accordance with our
strategy to grow our retail asset portfolio.

Securities, excluding venture capital investment increased 10.2% to Rs.
305.2 billion (US$ 7.0 billion) at year-end fiscal 2004 from Rs. 276.9 billion
(US$ 6.3 billion) at year-end fiscal 2003 primarily due to investments in
government securities for meeting the statutory liquidity ratio requirement.

Cash, cash equivalents and trading account assets increased 55.4% to Rs.
174.1 billion (US$ 4.0 billion) at year-end fiscal 2004 from Rs. 112.1 billion
(US$ 2.6 billion) at year-end fiscal 2003 primarily due to an increase in
reverse repurchase transactions by Rs. 29.6 billion (US$ 678 million) from Rs.
5.4 billion (US$ 124 million) at year-end fiscal 2003 to Rs. 35.0 billion (US$
802 million) at year-end fiscal 2004. Under the reverse repurchase transactions,
securities were purchased under agreements to resell after a specified time.
Such securities qualified as approved securities for statutory liquidity ratio
requirements, and were of short maturity, carrying lower risk while

102

yielding higher returns as compared to other short-term money market
instruments. These transactions were typically used for liquidity management.

Investment in affiliates increased to Rs. 3.6 billion (US$ 83 million) at
year-end fiscal 2004 from Rs. 2.6 billion (US$ 60 million) at year-end fiscal
2003 due to additional investment in ICICI Prudential Life Insurance Company
Limited. Acceptances increased 50.6% to Rs. 65.1 billion (US$ 1.5 billion) at
year-end fiscal 2004 from Rs. 43.3 billion (US$ 992 million) at year-end fiscal
2003 reflecting our focus on increasing revenues from non-fund based businesses.
Property and equipment increased to Rs. 23.2 billion (US$ 532 million) at
year-end fiscal 2004 from Rs. 21.2 billion (US$ 486 million) at year-end fiscal
2003.

Other assets increased 15.7% to Rs. 104.2 billion (US$ 2.4 billion) at
year-end fiscal 2004 from Rs. 90.1 billion (US$ 2.1 billion) at year-end fiscal
2003. At year-end fiscal 2004, other assets included advance tax of Rs. 33.5
billion (US$ 768 million), deferred tax asset of Rs. 7.9 billion (US$ 182
million), intangible assets of Rs. 4.5 billion (US$ 103 million) and Rs. 4.8
billion (US$ 111 million) of assets held for sale, which were primarily acquired
through foreclosure of loans.

Liabilities and Stockholders' Equity

The following table sets forth, at the dates indicated, the principal
components of liabilities and stockholders' equity.

At March 31,
----------------------------------------------------------
2004/2003
2003 2004 2004 % change
----------------------------------------------------------
(in millions, except percentages)
Deposits ......................... Rs. 491,290 Rs. 684,955 US$ 15,703 39.4%
Trading account liabilities....... 26,086 26,079 598 (0.0)
Short-term borrowings ............ 42,095 57,364 1,315 36.3
Acceptances ...................... 43,252 65,142 1,493 50.6
Long-term debt:
Rupee ............................ 350,633 311,668 7,145 (11.1)
Foreign currency ................. 50,179 61,781 1,416 23.1
--------------------------------------------
Total long-term debt ............. 400,812 373,449 8,561 (6.8)
Other liabilities ................ 66,658 85,443 1,959 28.2
Taxes and dividends payable ...... 16,880 20,180 463 19.5
Redeemable preferred stock(1)..... 853 944 22 10.7
--------------------------------------------
Total liabilities ................ 1,087,926 1,313,556 30,114 20.7
Minority interest ................ 124 1,050 24 746.8
Stockholders' equity ............. 92,213 94,525 2,167 2.5
--------------------------------------------
Total liabilities and
stockholders' equity............ Rs. 1,180,263 Rs. 1,409,131 US$ 32,305 19.4%
============================================
- ------------------
(1) In line with the existing regulatory requirements in India, preferred stock
issued by ICICI needed to be compulsorily redeemed within a specified time
period. Accordingly, all series of preferred stock issued by ICICI were
redeemable in accordance with the terms of the issue.

Deposits increased by 39.4% to Rs. 685.0 billion (US$ 15.7 billion) at
year-end fiscal 2004 from Rs. 491.3 billion (US$ 11.3 million) at year-end
fiscal 2003. This significant growth in deposits was primarily achieved through
increased focus on retail and corporate customers by offering a wide range of
products designed to meet varied individual and corporate needs and leveraging
on our network of branches, extension counters and ATMs. Our long-term debt
decreased 6.8% to Rs. 373.5 billion (US$ 8.6 billion) at year-end fiscal 2004
from Rs. 400.8 billion (US$ 9.2 billion) at year-end fiscal 2003 on account of
11.1% decrease in long-term rupee debt and 23.1% increase in long-term foreign
currency debt. Our short-term borrowings increased 36.3% to Rs. 57.4 billion
(US$ 1.3 billion) at year-end fiscal 2004 compared to Rs. 42.1 billion (US$ 965
million) at year-end fiscal 2003. Trading account liabilities decreased
marginally by Rs. 7 million (US$ 160,477) at year-end fiscal 2004 compared to
year-end fiscal 2003. Taxes and dividends payable increased 19.5% to Rs. 20.2
billion (US$ 463 million) at year-end

103

fiscal 2004 from Rs. 16.9 billion (US$ 387 million) at year-end fiscal 2003. The
carrying amount of redeemable preferred stock increased to Rs. 944 million (US$
22 million) at year-end fiscal 2004 from Rs. 853 million (US$ 20 million) at
year-end fiscal 2003. Minority interest increased to Rs. 1.1 billion (US$ 24
million) at year-end fiscal 2004 from Rs. 124 million (US$ 3 million) at
year-end fiscal 2003. Stockholders' equity increased 2.5% at year-end fiscal
2004 to Rs. 94.5 billion (US$ 2.2 billion) from Rs. 92.2 billion (US$ 2.1
billion) at year-end fiscal 2003.

Off Balance Sheet Items, Commitments and Contingencies

Foreign Exchange and Derivative Contracts

We enter into foreign exchange forwards, options, swaps and other
derivative products to enable customers to transfer, modify or reduce their
foreign exchange and interest rate risks and to manage our own interest rate and
foreign exchange positions. These instruments are used to manage foreign
exchange and interest rate risk relating to specific groups of on-balance sheet
assets and liabilities. Since adoption of SFAS No. 133 and SFAS No. 138
effective April 1, 2001, all derivatives have been recorded as assets or
liabilities on the balance sheet at their respective fair values with unrealized
gains or losses recorded either in accumulated other comprehensive income or in
the statement of income, depending on the purpose for which the derivative is
held. Derivatives that do not meet the criteria for designation as a hedge under
SFAS No. 133 at inception, or fail to meet the criteria thereafter, are
accounted for in "Other assets" with changes in fair value recorded in the
statement of income. The following table sets forth, at the dates indicated, the
notional amount of derivative contracts.

Notional principal amounts Balance sheet credit exposure (1)
----------------------------------------------------- ---------------------------------------------
At March 31 At March 31
----------- ------------ ------------ ---------- -------- --------- ---------- ---------
2003 2004 2005 2005 2003 2004 2005 2005
----------- ------------ ------------ ---------- -------- --------- ---------- ---------
(in millions)
Interest rate
products:
Swap agreements.. Rs. 324,893 Rs.1,456,182 Rs 1,352,576 US$ 31,008 Rs. 137 Rs. 1,552 Rs. 582 US$ 13

Others .......... - 43,073 479,098 US$ 10,983 - 43 Rs. (6)
====================================================================================================
Total interest
rate products... Rs. 324,893 Rs.1,499,255 Rs.1,831,674 US$ 41,991 Rs. 137 Rs. 1,595 Rs. 576 US$ 13
====================================================================================================
Foreign exchange
products:
Forward contracts Rs. 277,280 Rs. 620,415 Rs. 867,644 US$ 19,891 Rs. (116) Rs. 398 Rs. (222) US$ (5)
Swap agreements.. 14,611 46,724 97,496 2,235 539 263 Rs. 1,830 US$ 42
Others........... - 44,401 - - - (345) - -
====================================================================================================
Total foreign
exchange
products....... Rs. 291,891 Rs. 711,540 Rs. 965,140 US$ 22,126 Rs. 423 Rs. 316 Rs. 1,608 US$ 37
====================================================================================================
- ---------------

(1) Denotes the mark-to-market impact of the derivative and foreign exchange
products on the reporting date.

The notional principal amount of interest rate products increased to Rs.
1,831.7 billion (US$ 42.0 billion) at year-end fiscal 2005 compared to Rs.
1,499.3 billion (US$ 34.4 billion) at year-end fiscal 2004. The notional
principal amount of foreign exchange products increased to Rs. 965.1 billion
(US$ 22.1 billion) at year-end fiscal, 2005 compared to Rs. 711.5 billion (US$
16.3 billion) at year-end fiscal 2004. This significant increase in the volumes
of interest rates swaps and foreign exchange forward contracts was primarily due
to increased transactions carried out by us on behalf of our customers and
growth in the market for such products. Market volumes have also increased
significantly during this period. As an active player and market-maker in swap
and forward exchange contract markets and due to the fact that reduction in
positions is generally achieved by entering into offsetting transactions rather
than termination/cancellation of existing transactions, we have seen a
substantial increase in the notional principal of our swap portfolio during this
period.

An interest rate swap does not entail exchange of notional principal and
the cash flow arises on account of the difference between the interest rate pay
and receive legs of the swap which is generally much lower than the notional
principal of the swap. A large proportion of interest rate swaps, currency swaps
and forward exchange contracts are on account of market making which involves
providing regular two-way prices to customers or inter-bank counter-parties.
This results in generation of a higher number of outstanding transactions, and
hence a large value of gross notional principal of the portfolio. For example,
if a transaction entered into with a customer is

104

covered by an exactly opposite transaction entered into with another
counter-party, the net market risk of the two transactions will be zero whereas,
the notional principle of the portfolio will be the sum of both transactions.

Securitization

We primarily securitize commercial loans through "pass-through"
securitizations. In fiscal 2005, we securitized loans and credit substitutes
which resulted in gains of Rs. 5.1 billion (US$ 116 million) compared to Rs. 4.2
billion (US$ 97 million) in fiscal 2004. The gains are reported as a component
of gain on sale of loans and credit substitutes. After the securitization, we
generally continue to maintain customer account relationships and service loans
transferred to the securitization trust. The securitizations are either with or
without recourse. In certain cases, we may enter into derivative transactions
such as written put options and interest rate swaps with the transferees.

In certain cases, we write put options, which require us to purchase, upon
request of the holders, securities issued in certain securitization
transactions. The put options seek to provide liquidity to holders of such
instruments. If exercised, we are obligated to purchase the securities at the
pre-determined exercise price. At year-end fiscal 2005, we had sold loans and
credit substitutes with an aggregate put option exercise price of Rs. 57.2
billion (US$ 1.3 billion) compared to Rs. 38.3 billion (US$ 877 million) at
year-end fiscal 2004.

Variable Interest Entities

During the year, we transferred certain impaired loans to borrower
specific funds/trusts managed by an asset reconstruction company set up under
the Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 and guidelines issued by the Reserve Bank of India.
The trusts/funds (which are separate legal entities) issued security receipts to
us and other transferors as consideration for the transaction. Certain transfers
did not qualify for sale accounting under SFAS No. 140 and continue to be
reflected as loans on our balance sheet. Other transfers qualified for sale
accounting but were impacted by FIN 46/FIN 46R. We have consolidated entities in
which we are the primary beneficiary at year-end fiscal 2005. Funds/trusts which
are VIEs but in which we are not the primary beneficiary have not been
consolidated.

Our venture capital subsidiary is accounted for pursuant to specialized
industry guidance applicable to investment companies. Pursuant to this guidance,
investment holdings are accounted for at estimated fair value irrespective of
the level of equity ownership. Some of these investment holdings may be deemed
to be VIEs as defined in FIN 46R. The FASB permitted non-registered investment
companies to defer consolidation of VIEs in which they are involved until the
proposed Statement of Position on the clarification of the scope of the
Investment Company Audit Guide is finalized. Following issuance of the Statement
of Position, the FASB will consider further modification to FIN 46R to provide
an exception for companies that qualify to apply the revised Audit Guide. We
applied this deferral provision and did not consolidate additional assets in
potential VIEs in which we are involved at year-end fiscal 2005. Following
issuance of the revised Audit Guide and further modification, if any, to FIN
46R, we will assess the effect of such guidance on our venture capital
subsidiary.

Loan Commitments

We have outstanding undrawn commitments to provide loans and financing to
customers. These loan commitments aggregated Rs. 37.8 billion (US$ 867 million)
at year-end fiscal 2005 compared to Rs. 73.9 billion (US$ 1.7 billion) at
year-end fiscal 2004. The interest rate on these commitments is dependent on the
lending rates on the date of the loan disbursement. Further, the commitments
have fixed expiration dates and are contingent upon the borrower's ability to
maintain specific credit standards.

Capital Commitments

We are obligated under a number of capital contracts. Capital contracts
are job orders of a capital nature, which have been committed. Estimated amounts
of contracts remaining to be executed on capital account aggregated Rs. 604
million (US$ 14 million) at year-end fiscal 2005 compared to Rs. 294 million
(US$ 7 million) at year-end fiscal 2004 signifying the unpaid amount for
acquisition of fixed assets as per contracts entered into with suppliers.

105

Operating Lease Commitments

We have commitments under long-term operating leases principally for
premises. The following table sets forth, a summary of future minimum lease
rental commitments at year-end fiscal, for non-cancelable leases.

Lease rental commitments for fiscal (in millions)
- ----------------------------------------------------------------- -------------
2006............................................................. Rs. 866
2007............................................................. 835
2008............................................................. 829
2009............................................................. 813
2010............................................................. 690
Thereafter ..................................................... 3,225
Total minimum lease commitments ................................. Rs. 7,258

Guarantees

As a part of our financing activities, we issue guarantees to enhance the
credit standing of our customers. The guarantees are generally for a period not
exceeding 10 years. The credit risk associated with these products, as well as
the operating risks, are similar to those relating to other types of financial
instruments. We have the same appraisal process for guarantees as that for any
other loan product. Guarantees increased by 31.2% to Rs. 160.5 billion (US$ 3.7
billion) at year-end fiscal 2005 from Rs. 122.3 billion (US$ 2.8 billion) at
year-end fiscal 2004.

The following table sets forth, at the dates indicated, guarantees
outstanding.

At March 31,
------------------------------------------------------------------------------
2004/2003 2005/2004
2003 2004 % change 2005 2005 % change
------------------------------------------------------------------------------
(in millions, except percentages)
Financial guarantees(1).... Rs. 69,076 Rs. 57,344 (17.0)% Rs. 60,672 US$ 1,391 5.8%
Performance guarantees(2).. Rs. 37,042 65,000 73.8 99,808 2,288 53.6
--------------------------- --------------------------
Total guarantees .......... Rs. 106,478 Rs. 122,344 14.9% Rs. 160,480 US$ 3,679 31.2%
=========================== ==========================

- ---------------
(1) Consists of instruments guaranteeing the timely contractual payment of loan
obligations, primarily to foreign lenders on behalf of project companies.

(2) Consists of instruments guaranteeing the performance by a company of an
obligation, such as exports.

The following table sets forth contractual obligations on long-term debt,
operating lease and guarantees at year-end fiscal 2005.

Payments due by period
--------------------------------------------------------------------
Less than More than
Contractual Obligations Total 1 year 1-3 years 3-5 years 5 years
- ------------------------------ ------------ ------------ ----------- ----------- ----------
(in millions)
Long term debt obligations.... Rs. 368,152 Rs. 88,889 Rs. 118,217 Rs. 87,663 Rs. 73,383
Operating lease obligations... 7,258 866 1,664 1,503 3,225
Guarantees
Financial guarantees.... 60,672 35,040 10,000 6,228 9,404
Performance guarantees.. 99,808 37,447 39,539 17,298 5,524
------------ ------------ ----------- ----------- ----------
Total......................... Rs. 535,890 Rs. 162,242 Rs. 169,420 Rs. 112,692 Rs. 91,536
============ ============ =========== =========== ==========

Capital Resources

ICICI Bank is subject to the capital adequacy requirements of the Reserve
Bank of India, which are primarily based on the capital adequacy accord reached
by the Basel Committee of Banking Supervision, Bank of

106

International Settlements in 1988. ICICI Bank is required to maintain a minimum
ratio of total capital to risk adjusted assets of 9.0%, at least half of which
must be Tier 1 capital.

At year-end fiscal 2005, ICICI Bank's capital adequacy ratio calculated in
accordance with the Reserve Bank of India guidelines and based on its
unconsolidated financial statements prepared in accordance with Indian GAAP was
11.8%. Using the same basis of calculation, at year-end fiscal 2005, ICICI
Bank's Tier 1 capital adequacy ratio was 7.6% and its Tier 2 capital adequacy
ratio was 4.2%.

ICICI Bank raised additional Tier 1 capital through a public issue of
equity shares aggregating to Rs. 32.5 billion (US$ 745 million) in fiscal 2005.

The following table sets forth, at the dates indicated, risk-based
capital, risk-weighted assets and risk-based capital adequacy ratios computed in
accordance with the applicable Reserve Bank of India guidelines and based on
ICICI Bank's unconsolidated financial statements prepared in accordance with
Indian GAAP.

Indian GAAP

At March 31, 2005
------------------------------
(in millions)
Tier 1 capital ............................. Rs. 102,463 US$ 2,349
Tier 2 capital ............................. 56,566 1,297
------------- -----------
Total capital .............................. Rs. 159,029 US$ 3,646
============= ===========
On- balance sheet risk weighted assets ..... Rs. 1,080,528 US$ 24,771
Off-balance sheet risk weighted assets ..... 207,968 4,768
------------- -----------
Risk weighted assets on trading book 61,672 1,414
============= ===========
Total risk weighted assets ................. Rs. 1,350,168 US$ 30,953
============= ===========
Tier 1 capital adequacy ratio .............. 7.6%
Tier 2 capital adequacy ratio .............. 4.2
-------------
Total capital adequacy ratio ............... 11.8%
-------------

From time to time, we may access the capital markets through additional
equity or debt offerings to increase our capital resources.

Liquidity Risk

We maintain diverse sources of liquidity to facilitate flexibility in
meeting funding requirements. Incremental operations are principally funded by
accepting deposits from retail and corporate depositors. The deposits are
augmented by borrowings in the short-term inter-bank market and through the
issuance of bonds. Loan maturities and sale of investments also provide
liquidity. Most of the funds raised are used to extend loans or purchase
securities. Generally, deposits are of a shorter average maturity than loans or
investments.

Most of our incremental funding requirements, including replacement of
maturing liabilities of ICICI which generally had longer maturities, are met
through short-term funding sources, primarily in the form of deposits including
inter-bank deposits. However, a large portion of our assets, primarily the
assets of ICICI and our home loan portfolio, have medium or long-term
maturities, creating a potential for funding mismatches. We actively monitor our
liquidity position and attempt to maintain adequate liquidity at all times to
meet all requirements of all depositors and bondholders, while also meeting the
requirement of lending groups. From time to time, we may buy back some of our
outstanding bonds at our discretion in the open market or in privately
negotiated transactions depending on market conditions, interest rates and other
factors. We seek to establish a continuous information flow and an active
dialogue between the funding and borrowing divisions of the organization to
enable optimal liquidity management. A separate group is responsible for
liquidity management.

107

Another source of liquidity risk is the put options written by us on the
loans, which we have securitized. These options are binding on us and require us
to purchase, upon request of the holders, securities issued in such securitized
transactions. The options seek to provide liquidity to the security holders. If
exercised, we will be obligated to purchase the securities at the pre-determined
exercise price. All put options were out-of-the-money for the holders.

Under the Reserve Bank of India's statutory liquidity ratio requirement,
we are required to maintain 25.0% of our total demand and time liabilities by
way of approved securities, such as government of India securities and state
government securities. We maintain the statutory liquidity ratio through a
portfolio of government of India securities that we actively manage to optimize
the yield and benefit from price movements. Until September 17, 2004, under the
Reserve Bank of India's cash reserve ratio requirements, we were required to
maintain 4.5% of our demand and time liabilities in a current account with the
Reserve Bank of India. The Reserve Bank of India increased the cash reserve
ratio to 5.0% in two stages (4.75% effective September 18, 2004 and 5.0%
effective October 2, 2004).

We also have recourse to the liquidity adjustment facility and the
refinance window, which are short-term funding arrangements provided by the
Reserve Bank of India. We maintain a substantial portfolio of liquid high
quality securities that may be sold on an immediate basis to meet our liquidity
needs.

We also have the option of managing liquidity by borrowing in the
inter-bank market on a short-term basis. The overnight market which is a
significant part of the inter-bank market, is susceptible to volatile interest
rates. These interest rates on certain occasions, have touched historical highs
of 100.0% and above. To curtail reliance on such volatile funding, our liquidity
management policy has stipulated daily limits for borrowing and lending in this
market. The limit on daily borrowing is more stringent than the limit set by the
Reserve Bank of India. ICICI Securities, like us, relies for a certain
proportion of its funding on the inter-bank market for overnight money and is
therefore also exposed to similar risk of volatile interest rates.

We are required to submit gap analysis on a monthly basis to the Reserve
Bank of India. Pursuant to the Reserve Bank of India guidelines, the liquidity
gap (if negative) must not exceed 20.0% of outflows in the 1-14 day and the
15-28 day time category. We prepare fortnightly maturity gap analysis to review
our liquidity position. Static gap analysis is also supplemented by a dynamic
analysis for the short-term, to enable the liability raising units to have a
fair estimate of the short-term funding requirements. In addition, we also
monitor certain liquidity ratios on a fortnightly basis.

Our bonds are rated AAA by two Indian credit rating agencies, ICRA Limited
and Credit Analysis & Research Limited. Our term deposits are rated AAA by ICRA
Limited. Our long-term foreign currency borrowings are rated Baa3 by Moody's
Investors Service and BB+ by Standard and Poor's. Our short-term foreign
currency ratings are Ba2/ Not Prime by Moody's Investors Service and B by
Standard and Poor's. The outlook from Standard and Poor is stable. Moody's has a
positive outlook on our Baa3 foreign currency senior debt rating, a stable
outlook on our Baa3 subordinated debt rating and also a stable outlook on our
Ba2 ratings on foreign currency deposits. Any downgrade in these credit ratings,
or any adverse change in these ratings relative to other banks and financial
intermediaries, could adversely impact our ability to raise resources to meet
our funding requirements, which in turn could adversely impact our liquidity
position. See also "Risk Factors - Risks Relating to Our Business - We are
subject to credit, market and liquidity risk which may have an adverse effect on
our credit ratings and our cost of funds".

108

Capital Expenditure

The following tables set forth, for the periods indicated, certain
information related to capital expenditure by category of fixed assets.

Fiscal 2003
---------------------------------------------------------------------------------------
Cost at March Additions/ Deletions/ Net assets at March 31,
31, 2002 transfers transfers Depreciation 2003
------------- ------------ ---------- ------------ --------------------------
(in millions)
Land Rs. 1,336 Rs. 199 Rs. - Rs. 82 Rs. 1,453 US$ 33
Buildings................... 7,208 4,224 (238) 930 10,264 235
Equipment, furniture and
others.................... 5,727 7,808 (874) 4,234 8,427 193
Construction in progress.... 469 1,010 (402) 6 1,071 25
------------- ------------ ---------- ------------ ----------- -----------
Total....................... Rs. 14,740 Rs. 13,241 Rs. (1,514) Rs. 5,252 Rs. 21,215 US$ 486
============= ============ ========== ============ =========== ===========

Fiscal 2004
---------------------------------------------------------------------------------------
Cost at March Additions/ Deletions/ Net assets at March 31,
31, 2003 transfers transfers Depreciation 2004
------------- ------------ ---------- ------------ --------------------------
(in millions)
Land Rs. 1,535 Rs. 79 Rs. (88) Rs. 207 Rs. 1,319 US$ 30
Buildings................... 11,194 1,611 (492) 1,302 11,011 252
Equipment, furniture and
others(1)................. 12,661 3,950 (212) 6,534 9,865 226
Construction in progress.... 1,077 (89) .. 988 23
------------- ------------ ---------- ------------ ----------- -----------
Total Rs. 26,467 Rs. 5,640 Rs. (881) Rs. 8,043 Rs. 23,183 US$ 531
============= ============ ========== ============ =========== ===========

- ---------------
(1) Includes equipment and furniture, and others category as specified in Note
13 to our consolidated financial statements.

Fiscal 2005
---------------------------------------------------------------------------------------
Cost at March Additions/ Deletions/ Net assets at March 31,
31, 2004 transfers transfers Depreciation 2005
------------- ------------ ---------- ------------ --------------------------
(in millions)
Land....................... Rs. 1,526 Rs. 190 Rs. (68) Rs. 268 Rs. 1,380 US$ 31
Buildings.................. 12,313 2,292 (50) 1,788 12,767 293
Equipment, furniture
and others(1)............ 16,399 4,932 (230) 10,423 10,678 245
Construction in progress... 988 440 (191) 7 1,230 28
------------- ------------ ---------- ------------ ----------- -----------
Total...................... Rs. 31,226 Rs. 7,854 Rs. (539) Rs. 12,486 Rs. 26,055 US$ 597

- ---------------
(1) Includes equipment and furniture, and others category as specified in Note
13 to our consolidated financial statements.

Our capital expenditure on property and equipment was Rs. 7.9 billion (US$
180 million) for fiscal 2005. Capital expenditure of Rs. 4.9 billion (US$ 113
million) on equipment, furniture and others included Rs. 1.7 billion (US$ 40
million) on computers and software. The increase of Rs. 2.9 billion (US$ 66
million) in the value of net assets was primarily due to additions in buildings,
equipment and furniture of ICICI Bank Limited. This increase was commensurate
with the increase in number of branches and extension counters to 562 at
year-end fiscal 2005 compared to 469 at year-end fiscal 2004.

109

Significant Changes

Except as stated in this annual report, no significant changes have
occurred to us since the date of the fiscal 2005 consolidated financial
statements contained in this annual report.

Segment Revenues and Assets

Our operations are classified into the following segments: commercial
banking segment, investment banking segment and others. Segment data for
previous periods has been reclassified on a comparable basis.

The commercial banking segment provides medium-term and long-term project
and infrastructure financing, securitization, factoring, lease financing,
working capital finance and foreign exchange services to clients. Further, it
provides deposit and loan products to retail customers. The investment banking
segment includes ICICI Bank's treasury operations and the operations of ICICI
Securities, and deals in the debt, equity and money markets and provides
corporate advisory products such as mergers and acquisition advice, loan
syndication advice and issue management services. Others consist of various
operating segments that do not meet the requirements to be reported as an
individual reportable segment as defined in SFAS No. 131 on Disclosure about
Segments of an Enterprise and Related Information.

Operating segments are defined as components of an enterprise for which
separate financial information is available that is regularly evaluated by the
chief operating decision maker in deciding how to allocate resources and in
assessing performance. The chief operating decision maker evaluates performance
and allocates resources based on an analysis of various performance indicators
for each of the above reportable segments. Components of profit and loss are
evaluated for commercial banking and investment banking segments. Further, the
chief operating decision maker specifically reviews assets of our retail loan
operations, which are part of the commercial banking segment. The segment-wise
information presented below is consistent with the management reporting.

Commercial Banking Segment

Fiscal 2005 compared to Fiscal 2004

Net income of the commercial banking segment was Rs. 4.3 billion (US$ 99
million) in fiscal 2005 as compared to a net loss of Rs. 4.4 billion (US$ 100
million) in fiscal 2004, primarily due to an increase in net interest income by
Rs. 5.7 billion (US$ 131 million) and non-interest income by Rs. 5.5 billion
(US$ 126 million) in fiscal 2005 as compared to fiscal 2004 and lower provisions
for loan losses of Rs. 14.7 billion (US$ 337 million) for fiscal 2005 compared
to Rs. 20.0 billion (US$ 459 million) for fiscal 2004, offset, in part by an
increase of Rs. 6.0 billion (US$ 138 million) in non-interest expense.

Net interest income, including dividends, increased 32.3% to Rs. 23.4
billion (US$ 537 million) for fiscal 2005 from Rs. 17.7 billion (US$ 406
million) for fiscal 2004 primarily due to replacement of higher cost liabilities
of ICICI Limited with relatively lower cost deposits resulting in a positive
impact on the net interest income. Provisions for loan losses decreased 26.7% to
Rs. 14.7 billion (US$ 337 million) for fiscal 2005 from Rs. 20.0 billion (US$
459 million) for fiscal 2004 primarily due to lower additions to gross
restructured and other impaired loans. Non-interest income increased 33.7% to
Rs. 21.9 billion (US$ 502 million) in fiscal 2005 from Rs. 16.4 billion (US$ 375
million) in fiscal 2004. The large increase was primarily due to growth in
retail liability product income like account servicing charges and transaction
banking fee income from small enterprises, as well as an increase in transaction
banking and other fee income from corporate banking. During the year we
increased charges and introduced new charges for some of the services that we
offer to our deposit customers. There was a significant increase in business
volume of transaction banking services like bankers acceptances, bank guarantees
and cash management services. Non-interest expense increased 30.9% to Rs. 25.5
billion (US$ 584 million) in fiscal 2005 from Rs. 19.5 billion (US$ 446 million)
in fiscal 2004 primarily due to an increase in salary and other administration
expenses.

Fiscal 2004 compared to Fiscal 2003

The commercial banking segment incurred a net loss of Rs. 4.4 billion (US$
100 million) in fiscal 2004 and a net loss of Rs. 7.8 billion (US$ 180 million)
in fiscal 2003, primarily due to provisions for loan losses of Rs. 20.0 billion
(US$ 459 million) in fiscal 2004 and Rs. 19.6 billion (US$ 450 million) in
fiscal 2003 respectively. The decrease in net loss in fiscal 2004 in comparison
with fiscal 2003 was primarily due to an increase in non-interest income partly
offset by an increase in non-interest expense.

110

Net interest income, including dividends, increased 13.7% to Rs. 17.7
billion (US$ 406 million) in fiscal 2004 from Rs. 15.6 billion (US$ 357 million)
in fiscal 2003 primarily due to the benefit of lower funding costs. Non-interest
income increased 217.6% to Rs. 16.4 billion (US$ 375 million) in fiscal 2004
from Rs. 5.2 billion (US$ 118 million) in fiscal 2003 primarily due to a greater
focus on fee income and increased gains on investments held as credit
substitutes. Non-interest expense increased 57.6% to Rs. 19.5 billion (US$ 446
million) in fiscal 2004 from Rs. 12.4 billion (US$ 283 million) in fiscal 2003
primarily due to enhanced operations and the growth in the retail franchise,
including maintenance of ATMs, credit card expenses, call centre expenses and
technology expenses.

Investment Banking Segment

Fiscal 2005 compared to Fiscal 2004

Net income for the investment banking segment decreased 57.9% to Rs. 4.7
billion (US$ 108 million) in fiscal 2005 compared to Rs. 11.2 billion (US$ 256
million) in fiscal 2004, primarily due to a decrease in trading account revenue
and a decrease in gains from securities transactions. Trading account revenue
and gain on securities transactions decreased 64.0% to Rs. 6.2 billion (US$ 142
million) for fiscal 2005 from Rs. 17.2 billion (US$ 395 million) for fiscal 2004
as a result of an increase in interest rates during the year. The yield on
10-year government of India securities increased by 1.52% to 6.68% during fiscal
2005. See also "Risk Factors - Risks Relating to Our Business - Our business is
particularly vulnerable to interest rate risk and volatility in interest rates
could adversely affect our net interest margin, the value of our fixed income
portfolio, our income from treasury operations and our financial performance".
During fiscal 2004, the yield on 10-year government of India securities had
declined by 105 basis points. Net interest income, including dividends,
decreased to Rs. 688 million (US$ 16 million) in fiscal 2005 from Rs. 1.2
billion (US$ 28 million) in fiscal 2004. Non-interest expense decreased 22.4% to
Rs. 3.7 billion (US$ 84 million) in fiscal 2005 from Rs. 4.7 billion (US$ 108
million) in fiscal 2004.

Fiscal 2004 compared to Fiscal 2003

Net income for the investment banking segment increased 809.5% to Rs. 11.2
billion (US$ 256 million) in fiscal 2004 compared to Rs. 1.2 billion (US$ 28
million) in fiscal 2003, primarily due to an increase in non-interest income
partly offset by an increase in non-interest expense.

Net interest income, including dividends, increased to Rs. 1.2 billion
(US$ 28 million) in fiscal 2004 from a loss of Rs. 2.1 billion (US$ 49 million)
in fiscal 2003 primarily due to reduction in premium amortization expenses
consequent to sale of certain government securities acquired at fair value at
the time of amalgamation. These securities were marked up on the date of
amalgamation due to decline in the interest rates subsequent to their purchase.
Provision for loan losses was Rs. 15 million (US$ 343,879) in fiscal 2004
compared to Rs. 4 million (US$ 91,701) in fiscal 2003.

Non-interest income increased 147.4% to Rs. 17.4 billion (US$ 399 million)
in fiscal 2004 from Rs. 7.0 billion (US$ 161 million) in fiscal 2003 primarily
due to higher income on the fixed income portfolio in a favorable interest rate
environment and favorable equity markets. Non-interest expense increased 50.1%
to Rs. 4.7 billion (US$ 108 million) in fiscal 2004 from Rs. 3.2 billion (US$ 72
million) in fiscal 2003.

Related party transactions

ICICI Bank has transactions with its affiliates and directors/employees.
The following represent the significant transactions between ICICI Bank and
related parties including our affiliates, directors or employees:

Insurance services

During fiscal 2005, we paid insurance premium to ICICI Lombard General
Insurance Company and its affiliates amounting to Rs. 322 million (US$ 7
million) compared to Rs. 219 million (US$ 5 million) in fiscal 2004 and received
insurance claims amounting to Rs. 17 million (US$ 389,729) compared to Rs. 86
million(US$ 2 million) in fiscal 2004.

111

Lease of premises and facilities

During fiscal 2005, we received the following amounts for lease of
premises, facilities and other administrative costs, Rs. 121 million (US$ 3
million) from ICICI Prudential Life Insurance Company, compared to Rs. 198
million (US$ 4 million) in fiscal 2004, Rs. 19 million (US$ 435,580) from
Prudential ICICI Asset Management Company, compared to Rs. 6 million (US$
137,552) in fiscal 2004 and Rs. 131 million (US$ 3 million) from ICICI Lombard
General Insurance Company, compared to Rs. 91 million (US$ 2 million) in fiscal
2004.

Secondment of employees

During fiscal 2005, we received Rs. 1 million (US$ 22,925) from ICICI
Prudential Life Insurance Company for seconded employees, compared to Rs. 0.6
million (US$ 13,755) in fiscal 2004 and Rs. 8 million (US$ 183,402) from ICICI
Lombard General Insurance Company, compared to Rs. 14 million (US$ 320,954) in
fiscal 2004.

Asset management services

During fiscal 2005, we provided asset management services to TCW and earned
fees of Rs. 5 million (US$ 114,626) compared to Rs. 14 million (US$ 320,954) in
fiscal 2004.

Deposits and borrowings

During fiscal 2005, we paid Rs. 74 million (US$ 2 million) interest on
bonds/deposits/call borrowings to its affiliated companies, compared to Rs. 27
million (US$ 618,982) in fiscal 2004.

Interest and Dividend

During fiscal 2005, we received a dividend of Rs. 218 million (US$ 5
million) from our affiliates compared to Rs. 172 million in fiscal 2004 (US$ 4
million).

Employee loans

ICICI Bank has advanced housing, vehicle and general purpose loans to
employees, bearing interest ranging from 2.5% to 6%. The tenure of these loans
range from five 5 years to 25 years. The loans are generally secured by the
assets acquired by the employees. Outstanding employee loan balances at year-end
fiscal 2005 of Rs. 4,539 million (US$ 104 million) were included in other assets
compared to Rs. 3,766 million (US$ 86 million) at year-end fiscal 2004.

Referral fees

During fiscal 2005 we received Rs. 280 million (US$ 6 million) in referral
fees from our insurance affiliates compared to Rs. 243 million (US$ 6 million)
in fiscal 2004.

Purchase of investments

During fiscal 2005, we purchased Rs. 7,574 million (US$ 174 million) of
investments from our affiliates, compared to Rs. 2,843 million in fiscal 2004
(US$ 65 million).

Sale of investments

During fiscal 2005, we sold Rs. 4,518 (US$ 104 million) of investments to
our affiliates compared to Rs. 971 million (US$ 22 million) in fiscal 2004.

112

Related party balances

The following balances payable to/receivable from related parties were
included in the balance sheet:

At March 31,
--------------------------
2004 2005
---------- ----------
(in millions)
Loans...................................... Rs. 20 Rs. 9
Other assets............................... 3,353 62
Deposits................................... 700 1,621
Other liabilities.......................... 50 23

Critical Accounting Policies

In order to understand our financial condition and results of operations,
it is important to understand our significant accounting policies and the extent
to which we use judgments and estimates in applying those policies. Our
accounting and reporting policies are in accordance with US GAAP and conform to
standard accounting practices relevant to our products and services and the
businesses in which we operate. US GAAP requires us to make estimates and
assumptions that affect the reported amounts of assets and liabilities as of the
date of the financial statements and the reported income and expenses during the
reported period. Accordingly, we use a significant amount of judgment and
estimates based on assumptions for which the actual results are uncertain when
we make the estimation.

We have identified three critical accounting policies, based on the
judgments and estimates required in the application of these policies. These
include valuation of securities and accounting for derivative transactions and
hedging activities, allowance for loan losses and accounting for securitization
transactions. Additional information about these policies can be found in Note 1
to our consolidated financial statements. The statements below contain
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. See "Forward-Looking Statements".

Allowance for loan losses

The allowance for loan losses represents management's estimate of probable
losses inherent in the portfolio. We have developed appropriate policies and
procedures for assessing the adequacy of the allowance for loan losses that
reflect our careful evaluation of credit risk considering all information
available to us. In developing this assessment, we must rely on estimates and
exercise judgment regarding matters where the ultimate outcome is unknown, such
as economic factors, developments affecting companies in specific industries and
issues with respect to single borrowers. Depending on changes in circumstances,
future assessments of credit risk may yield materially different results, which
may require an increase or a decrease in the allowance for loan losses.

Larger balance, non-homogenous exposures representing significant
individual credit exposures are evaluated based upon the borrower's overall
financial condition, resources and payment record and the realizable value of
any collateral. Loans identified as trouble debt restructuring or other impaired
with a balance of Rs. 100 million and above are individually reviewed and an
allowance is determined based on the difference between the loan's carrying
value and the loan's fair value. Fair value is based on either the present value
of expected future cash flows discounted at the loan's effective interest rate,
the loan's observable market price or the fair value of the collateral, less
disposal costs, if the loan is collateral dependent. No other allowance is
provided on impaired loans that are individually reviewed.

Each portfolio of smaller-balance, homogenous loans, including consumer
loans and credit card receivables, is evaluated for impairment. The allowance
for loan losses attributed to these loans is established by a process that
includes an estimate of probable losses inherent in the portfolio. These include
historical delinquency and credit loss experience and current trends and
conditions.

113

These evaluation processes are subject to numerous estimates and
judgments. The use of different estimates or assumptions could produce different
results. We regularly monitor qualitative and quantitative trends in the loan
portfolio, including changes in the levels of restructured loans and other
impaired loans. The distribution of the allowance as described above does not
diminish the fact that the entire allowance is available to absorb credit losses
in the loan portfolio. Our principal focus, therefore, is on the adequacy of the
total allowance for loan losses.

Valuation of Securities and Accounting for Derivatives Transactions and
Hedging Activities

Our securities are classified into available for sale securities, trading
securities, venture capital investments and non-readily marketable securities.
The classification into available for sale and trading securities is based on
management's intention at the time of purchase. We no longer classify
investments in debt securities as held to maturity, due to sale of certain held
to maturity securities in fiscal 2002 by ICICI for reasons other than those
specified in SFAS No. 115. Further, we offer derivative products to our
customers to transfer, modify or reduce their foreign exchange and interest rate
risks and to manage our own interest rate and foreign exchange positions. The
derivatives market in India is evolving and our derivative volumes have
increased significantly since the amalgamation.

The fair values of quoted securities are determined based on market
prices. The fair value of securities for which quoted market prices are not
available is estimated as follows:

o The fair value of unquoted government of India securities is estimated
based on the yields to maturity of these securities published by certain
agencies approved by the Reserve Bank of India.

o The fair value of other unquoted securities and preference shares is
computed based on the mark-up, based on the credit rating of the issuer by
a credit rating agency, over the yields to maturity for government of India
securities, as published by certain agencies approved by the Reserve Bank
of India.

o The fair values of investments in unquoted mutual fund units are estimated
based on the latest repurchase price declared by the mutual fund in respect
of each particular scheme. If the repurchase price is not available, the
fair value is estimated based on the net asset values of the respective
mutual fund scheme.

o The fair values of certain derivative contracts are derived from pricing
models that consider market and contractual prices for the underlying
financial instruments, as well as the time value of money, the yield curve
and any other volatility factors underlying the positions.

Changes in values of available-for-sale securities are recognized net of
taxes as a component of stockholders' equity, unless the value is impaired and
the impairment is not considered to be temporary. Impairment losses that are not
considered temporary are recognized in the income statement. We conduct regular
reviews to assess whether other-than-temporary impairment exists. Changes in the
fair values of trading account assets are recognized in the income statement.

Equity securities, forming part of our securities portfolio, are
considered as publicly traded if they have been traded on a securities exchange
within six months prior to the relevant fiscal year-end. The fair value of such
securities is the last quoted price. Non-readily marketable equity securities
are recorded at cost and a provision is made for other than temporary
diminution. Equity securities acquired by conversion of loans in a troubled debt
restructuring are stated at their fair values and accounted for in the same
manner as equity investments acquired for cash.

The fair values of publicly traded venture capital investments are
generally based upon quoted market prices. In certain situations, including
thinly traded securities, large block holdings, restricted shares or other
special situations, the quoted market price is adjusted to produce an estimate
of the attainable fair value for the securities. For securities that are not
publicly traded, fair value is determined in good faith pursuant to procedures
established by the board of directors of the venture capital subsidiary. In
determining the fair value of these securities, consideration is given to the
financial conditions, operating results and prospects of the underlying
companies, and any other factors deemed relevant. Since the valuations are
inherently uncertain, these estimated values may differ

114

significantly from the values that would have been used had a ready market for
the investments existed. Changes in fair values of venture capital investments
are recognized in the income statement.

SFAS No. 133 and SFAS No. 138 require that all derivative instruments be
recorded on the balance sheet at their respective fair values with unrealized
gains and losses recorded either in accumulated other comprehensive income or in
the statement of income, depending on the purpose for which the derivative was
held.

We provide forward contracts to our customers for hedging their short-term
exchange rate risk on foreign currency denominated receivables and payables. We
generally provide this facility for a term of up to six months and occasionally
up to 12 months. We also offer interest rate and currency swaps to our customers
for hedging their medium and long-term risks due to interest rate and currency
exchange rate movements. We offer these swaps for a period ranging from three to
10 years. We also hedge our own exchange rate risk related to our foreign
currency trading portfolio with products from banking counterparties.

At the inception of a hedge transaction, we formally document the hedge
relationship and the risk management objective and strategy for undertaking the
hedge. This process includes identification of the hedging instrument, hedged
item, risk being hedged and the methodology for measuring effectiveness of the
hedge. In addition, we assess both at the inception of the hedge and on an
ongoing basis, whether the derivative used in the hedging transaction has been
highly effective in offsetting changes in fair value or cash flows of the hedged
item, and whether the derivative is expected to continue to be highly effective.
Derivatives that do not meet the criteria for designation as a hedge under SFAS
No. 133 at inception, or fail to meet the criteria thereafter, are accounted for
in other assets with changes in fair value recorded in the statement of income.

We discontinue hedge accounting prospectively when it is either determined
that the derivative is no longer highly effective in offsetting changes in the
fair value or cash flows of a hedged item; the derivative expires or is sold,
terminated or exercised; the derivative is de-designated because it is unlikely
that a forecasted transaction would occur; or management determines that
designation of the derivative as a hedging instrument is no longer appropriate.

Changes in the fixed income, equity, foreign exchange markets would impact
our estimate of fair value in the future, potentially affecting principal
trading revenues. Similarly, pricing models and their underlying assumptions
impact the amount and timing of unrealized gains and losses recognized, and the
use of different pricing models or assumptions could produce different financial
results.

Securitization

We primarily securitize commercial loans through "pass-through"
securitizations. After the securitization, we generally continue to maintain
customer account relationships and service loans transferred to the
securitization trust. Transfers that do not meet the criteria for a sale under
SFAS No. 140, are required to be recorded as secured borrowings with a pledge of
collateral, and such secured borrowings are required to be reported as a
component of other borrowings. Recourse and servicing obligations and put
options written are recorded as proceeds of the sale.

Retained beneficial interests in the loans and servicing rights are
measured by allocating the carrying value of the loans between the assets sold
and the retained interest, based on the relative fair value at the date of the
securitization. The fair values are determined using financial models or quoted
market prices or sale value of similar assets.

Financial models and their underlying assumptions relating to delinquency,
prepayments, servicing costs and conversions from floating rate loans to fixed
rate loans, impact the amount and timing of gains and losses recognized and the
valuation of retained interests, and the use of different financial models or
assumptions could produce different financial results.

115

Recently Issued Accounting Standards

Accounting changes and error corrections

In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error
Corrections" ("SFAS No. 154") which replaces Accounting Principles Board ("APB")
Opinions No. 20 "Accounting Changes" and SFAS No. 3, "Reporting Accounting
Changes in Interim Financial Statements-An Amendment of APB Opinion No. 28".
SFAS No. 154 applies to all voluntary changes in accounting principles and
provides guidance on the accounting for and reporting of accounting changes and
error corrections. It establishes retrospective application, or the latest
practicable date, as the required method for reporting a change in accounting
principles and the reporting of a correction of an error. SFAS No. 154 is
effective for accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005.

Share based payment

On December 16, 2004, the Financial Accounting Standards Board (FASB)
issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a
revision of FASB Statement No. 123, Accounting for Stock-Based Compensation.
Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to
Employees, and amends FASB Statement No. 95, Statement of Cash Flows. Generally,
the approach in Statement 123(R) is similar to the approach described in
Statement 123. However, Statement 123(R) requires all share-based payments to
employees, including grants of employee stock options, to be recognized in the
income statement based on their fair values.

SFAS No. 123(R) would be applicable to all awards granted, modified or
settled in the first reporting period under US GAAP that begins after June 15,
2005.

Statement 123(R) permits public companies to adopt its requirements using
one of two methods:

A "modified prospective" method in which compensation cost is recognized
beginning with the effective date (a) based on the requirements of Statement
123(R) for all share-based payments granted after the effective date and (b)
based on the requirements of Statement 123 for all awards granted to employees
prior to the effective date of Statement 123(R) that remain unvested on the
effective date.

A "modified retrospective" method which includes the requirements of the
modified prospective method described above, but also permits entities to
restate based on the amounts previously recognized under Statement 123 for
purposes of pro forma disclosures either (a) all prior periods presented or (b)
prior interim periods of the year of adoption.

The company plans to adopt Statement 123 using the modified-prospective
method. As permitted by Statement 123, the company currently accounts for
share-based payments to employees using Opinion 25's intrinsic value method and,
as such, generally recognizes no compensation cost for employee stock options.
The impact of adoption of Statement 123(R) cannot be predicted at this time
because it will depend on levels of share-based payments granted in the future.
However, had we adopted Statement 123(R) in prior periods, the impact of that
standard would have approximated the impact of Statement 123 as described in the
disclosure of pro forma net income and earnings per share in our consolidated
financial statements. Statement 123(R) also requires the benefits of tax
deductions in excess of recognized compensation cost to be reported as a
financing cash flow, rather than as an operating cash flow as required under
current literature. This requirement will reduce net operating cash flows and
increase net financing cash flows in periods after adoption.

Other-than-temporary impairments of securities

In November 2003, the Financial Accounting Standards Board ("FASB")
ratified a consensus on the disclosure provisions of Emerging Issues Task Force
("EITF") Issue 03-1, "The Meaning of Other-Than-Temporary Impairment and Its
Application to Certain Investments." In March 2004, the FASB reached a consensus
regarding the application of a three-step impairment model to determine whether
investments accounted for in accordance with SFAS No. 115, "Accounting for
Certain Investments in Debt and Equity Securities," and other cost method
investments are other-than-temporarily impaired. However, with the issuance of
FASB Staff Position EITF 03-1-1,

116

the provisions of the consensus relating to the measurement and recognition of
other-than-temporary impairments have been deferred pending reassessment by the
FASB.

The remaining provisions of this standard, which primarily relate to
disclosure, have been applied to all investments accounted for in accordance
with SFAS No. 115 and other cost method investments. We cannot determine the
impact of EITF 03-1 until after the FASB completes its reassessment.

Accounting for Certain Financial Instruments with Characteristics of both
Liabilities and Equities

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equities.
SFAS No. 150 requires issuers to classify as liabilities (or assets in some
circumstance) three classes of freestanding financial instruments that embody
obligations for the issuer. Generally, SFAS No. 150 is effective for financial
instruments entered into or modified after May 31, 2003 and is otherwise
effective at the beginning of the first interim period beginning after June 15,
2003. Adoption of SFAS No. 150 did not have a material impact on our
consolidated financial statements.

Derivative Instruments and Hedging Activities

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement No.
133 on Derivative Instruments and Hedging Activities. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133. SFAS No. 149 is effective for contracts
entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. Adoption of SFAS No. 149 did not have a material
impact on our consolidated financial statements.

117

MANAGEMENT

Directors and Executive Officers

Our board of directors, consisting of 16 members at September 23, 2005, is
responsible for the management of our business. Our organizational documents
provide for a minimum of three directors and a maximum of 21 directors,
excluding the government director and the debenture director (defined below), if
any. We may, subject to the provisions of our organizational documents and the
Companies Act, change the minimum or maximum number of directors by a resolution
which is passed at a general meeting by a majority of the present and voting
shareholders. In addition, under the Banking Regulation Act, the Reserve Bank of
India may require us to convene a meeting of our shareholders for the purposes
of appointing new directors to our board of directors.

The Banking Regulation Act requires that at least 51% of the directors
should have special knowledge or practical experience in banking and areas
relevant to banking including accounting, finance, agriculture and small scale
industry. All of our directors are professionals with special knowledge of one
or more of the above areas. Of the 16 directors, five are directors who are in
our wholetime employment, or wholetime directors. The appointment of wholetime
directors requires the approval of the Reserve Bank of India and the
shareholders. Under the terms of the loan and guarantee facilities provided by
the government of India to us, the government of India is entitled to appoint
and has appointed one representative to our board, currently Mr. Vinod Rai. Of
the remaining 10 independent directors, Mr. N. Vaghul is the non-executive
chairman of our board, Mr. T.S. Vijayan is the Managing Director of Life
Insurance Corporation of India which is among ICICI Bank's large institutional
shareholders, one director is a consultant, one is a technocrat-entrepreneur,
one is a chartered accountant and business advisor, one is a professor of
finance, one is a retired company executive, one is from a financial holding
company with investments in insurance and investment management and two are from
industrial companies. Of the 11 non-wholetime directors, three have specialized
knowledge in respect of agriculture and rural economy or small-scale industry.
The Reserve Bank of India has also prescribed `fit and proper' criteria to be
considered while appointing persons as directors of banking companies. Our
directors are required to make declarations confirming their ongoing compliance
of the `fit and proper' criteria. Our board of directors has reviewed the
declarations received from the directors in this regard and determined that all
our directors satisfy the `fit and proper' criteria.

Pursuant to the provisions of the Companies Act, at least two-thirds of
the total number of directors, excluding the government director and the
debenture director, are subject to retirement by rotation. One-third of these
directors must retire from office at each annual meeting of shareholders. A
retiring director is eligible for re-election. Pursuant to the provisions of the
Banking Regulation Act, none of the directors other than wholetime directors may
hold office continuously for a period exceeding eight years.

Our organizational documents also provide that we may execute trust deeds
in respect of our debentures under which the trustee or trustees may appoint a
director, known as the debenture director. The debenture director is not subject
to retirement by rotation and may only be removed as provided in the relevant
trust deed. Currently, there is no debenture director on our board of directors.

Our board of directors appointed Mr. T.S. Vijayan, Managing Director, Life
Insurance Corporation of India and Mr. Sridar Iyengar, a chartered accountant
and business advisor as non-wholetime directors effective April 30, 2005. The
shareholders have approved their appointments at the annual general meeting held
on August 20, 2005. Mr. S.B. Mathur, Chairman of Life Insurance Corporation of
India resigned from the Board effective March 4, 2005 consequent to his
retirement from Life Insurance Corporation of India and Mr. P.C. Ghosh,
Chairman, General Insurance Corporation of India resigned from the Board
effective May 6, 2005 consequent to his retirement from General Insurance
Corporation of India. Mr. Uday Chitale who was appointed as a non-wholetime
director effective August 21, 1997 retired from our board effective August 21,
2005 on completion of eight years as a non-wholetime director as provided in the
Banking Regulation Act.

Mr. N. Vaghul was appointed as a director on March 27, 2002. He was
appointed as non- wholetime chairman of the board effective May 3, 2002 for a
period of three years. The board at its meeting on April 30, 2005 reappointed
him as non-wholetime chairman of the board until April 30, 2009 which has been
approved by the Reserve Bank of India.

118

Our board of directors had appointed Ms. Chanda Kochhar and Dr. Nachiket
Mor as Executive Directors effective April 1, 2001, Mr. K.V. Kamath and Ms.
Lalita D. Gupte, previously non-wholetime directors on our board, as Managing
Director & CEO and Joint Managing Director respectively, effective May 3, 2002
and Ms. Kalpana Morparia as Executive Director, effective May 3, 2002. Our board
subsequently re-appointed Ms. Lalita D. Gupte, whose tenure of appointment was
until June 23, 2004, as Joint Managing Director till October 31, 2006. Our board
designated Ms. Kalpana Morparia as Deputy Managing Director effective February
1, 2004. The board and the shareholders have approved the following
re-appointments with respect to the wholetime directors of the Bank:

o Mr. K. V. Kamath, Managing Director & CEO, on the expiry of his current
term, i.e., from May 1, 2006, until April 30, 2009.
o Ms. Kalpana Morparia, Deputy Managing Director, on the expiry of her
current term, i.e., from May 1, 2006, until May 31, 2007 (up to the date of
retirement).
o Ms. Chanda Kochhar and Dr. Nachiket Mor, Executive Directors, on the expiry
of their current terms, i.e., from April 1, 2006, until March 31, 2011.

These re-appointments are subject to the approval of the Reserve Bank of
India.

In order to comply with the provisions of the Companies Act and our
organizational documents, Ms. Lalita D. Gupte and Ms. Kalpana Morparia will be
subject to retirement by rotation if at any time the number of non-rotational
directors exceeds one-third of the total number of directors. If they are
re-appointed as directors immediately upon retirement by rotation, they will
continue to hold their offices as wholetime directors, and the retirement by
rotation and re-appointment shall not be deemed to constitute a break in their
appointment. Our other executive officers may hold office until they retire,
unless they are discharged earlier by us.

119

Our board of directors at September 23, 2005 had the following members:

- ----------------------------------------------------------------------------------------------------------------------
Name, Designation and Profession Age Date of Appointment Other appointments
- ----------------------------------------------------------------------------------------------------------------------

Mr. Narayanan Vaghul 69 March 27, 2002 Chairman
Chairman Asset Reconstruction Company (India) Limited
GIVE Foundation
Chairman: Himatsingka Seide Limited
Agriculture & Small Enterprises Business ICICI Knowledge Park
Committee Mahindra Industrial Park Limited
Board Governance & Remuneration Pratham India Education Initiative
Committee Pratham Tamil Nadu Education Initiative
Business Strategy Committee Director
Credit Committee Air India Limited
Risk Committee Air India Air Transport Services Limited
Air India Engineering Services Limited
Profession: Apollo Hospitals Enterprise Limited
Development Banker Azim Premji Foundation
Hemogenomics Private Limited
Mittal Steel Europe SA
Mittal Steel Company NV
Mittal Steel Caribbean
Mahindra & Mahindra Limited
Nicholas Piramal India Limited
Technology Network (India) Private Limited
Wipro Limited

- ----------------------------------------------------------------------------------------------------------------

Mr. Sridar Iyengar 58 April 30, 2005 Director
American India Foundation
Profession: Foundation for Democratic Reforms in India Inc.
Business Advisor Infosys Technologies Limited
Progeon Limited
Rediff.com
Rediff Holdings Inc.
TiE Inc.

- ------------------------------------------------------------------------------------------------------------------

Mr. Lakshmi Niwas Mittal 55 May 3, 2002 Director
Artha Limited
Profession: Galmatias Limited
Industrialist Irish Ispat Limited
Ispat Inland Holdings Inc.
Ispat Inland Inc.
Ispat Inland L.P.
Ispat (US) Holdings Inc.
LNM Capital Limited
Lucre Limited
Mittal Canada Inc.
Mittal Steel Annaba Spa
Mittal Steel Company N.V.
Mittal Steel Company Limited
Mittal Steel Europe SA
Mittal Steel Galati SA
Mittal Steel Holdings NV

120

Mittal Steel Holdings BV
Mittal Steel Lazaro Cardenas SA de CV
Mittal Steel Mexico SA de CV
Mittal Steel Ostrava a.s.
Mittal Steel Point Lisas Limited
Mittal Steel Poland S.A.
Mittal Steel Skopje (CRM) a.d.
Mittal Steel Skopje (HRM) a.d.
Mittal Steel South Africa Limited
Mittal Steel Tebessa Spa
Mittal Steel Temirtau JSC
Mittal Steel Zenica
Nestor Limited
Nuav Limited
Pratham UK Limited
Tommyfield Limited

- --------------------------------------------------------------------------------------------------------------------------

Mr. Anupam Pradip Puri 59 May 3, 2002 Director
Dr. Reddy's Laboratories Limited
Profession: Godrej Consumer Products Limited
Management Consultant Mahindra-British Telecom Limited
Mahindra & Mahindra Limited
Patni Computer Systems Limited

- ----------------------------------------------------------------------------------------------------------------------

Mr. Vinod Rai 57 January 3, 2003 Director
Additional Secretary (Financial Sector) Bank of Baroda
IFCI Limited
Ministry of Finance, Government of India Infrastructure Development Finance Company
Limited
Profession: Small Industries Development Bank of India
Government Service

- ----------------------------------------------------------------------------------------------------------------------

Mr. Somesh Ramchandra Sathe 60 January 29, 1998 Managing Director
Arbes Tools Private Limited
Profession: ESSP Meditek Private Limited
Technocrat Entrepreneur Sukeshan Equipments Private Limited

- ----------------------------------------------------------------------------------------------------------------------

Mr. Mahendra Kumar Sharma 58 January 31, 2003 Vice-Chairman
Hindustan Lever Limited
Chairman: Chairman
Fraud Monitoring Committee Vasishti Detergents Limited
Share Transfer & Shareholders'/Investors' Director
Grievance Committee Hind Lever Trust Limited
Indexport Limited
Profession: Lever India Exports Limited
Company Executive Lever Associated Trust Limited
Nepal Lever Limited
Toc Disinfectants Limited
- ----------------------------------------- ----- ------------------- -------------------------------------------------

Mr. Priya Mohan Sinha 65 January 22, 2002 Chairman
Bata India Limited
Profession: Director
Professional Manager Azim Premji Foundation
Indian Oil Corporation Limited

121

Lafarge India Limited
Wipro Limited

- ----------------------------------------------------------------------------------------------------------------------

Prof. Marti Gurunath Subrahmanyam 59 May 3, 2002 Director
Infosys Technologies Limited
Profession: Nexgen Financial Holdings Limited
Professor Nexgen Re Limited
Nomura Asset Management (U.S.A.), Inc.
Supply Chainge Inc.
The Animi Offshore Fund Limited
The Animi Offshore Concentrated Risk Fund
Usha Communication Inc.
Director - Board of Governors
National Institute of Securities Markets
Director - Advisory Board
Metahelix Life Sciences Private Limited
Microcredit Foundation of India

- ----------------------------------------------------------------------------------------------------------------------
Mr. T.S. Vijayan 52 April 30, 2005 Managing Director
Life Insurance Corporation of India
Profession: Director
Company Executive LIC HFL Care Homes Limited

- ----------------------------------------------------------------------------------------------------------------------

Mr. V. Prem Watsa 55 January 29, 2004 Chairman & CEO
Fairfax Financial Holdings Limited
Profession: Chairman
Company Executive 4129768 Canada Inc.
Crum & Foster Holdings Corp.
Northbridge Financial Corporation
TIG Holdings, Inc.
President
1109519 Ontario Limited
810679 Ontario Limited
FFHL Share Option 1 Corp.
The Sixty Two Investment Company Limited
Vice-President
FFHL Group Limited
Vice-President & Secretary
Hamblin Watsa Investment Counsel Limited
Director
Hudson Insurance Company
Lindsey Morden Acquisitions
Lindsey Morden Group Inc.
Odyssey Re Holdings Corp.
The Sixty Four Foundation
The Sixty Three Foundation

122

Mr. Kundapur Vaman Kamath 57 April 17, 1996 Chairman
Managing Director & CEO ICICI Bank Canada
(Managing Director ICICI Bank UK Limited
Chairman: effective May 3, 20 ICICI Lombard General Insurance Company Limited
Committee of Directors ICICI Prudential Life Insurance Company Limited
ICICI Securities Limited
Profession: ICICI Venture Funds Management Company
Company Executive Limited
Investment Credit Bank Limited Liability Company
Director
Indian Institute of Management, Ahmedabad
Visa International Asia Pacific Regional Board
Director - Board of Governors
Indian Institute of Information Technology
Member - Governing Board
Indian School of Business

- ----------------------------------------------------------------------------------------------------------------------

Ms. Lalita Dileep Gupte 56 September 12, 1994 Director
Joint Managing Director (Joint Managing Dir ICICI Bank Canada
effective May 3, 20 ICICI Bank UK Limited
Chairperson: ICICI Lombard General Insurance Company Limited
Asset Liability Management Committee ICICI Prudential Life Insurance Company Limited
ICICI Securities Limited
Profession: ICICI Venture Funds Management Company
Company Executive Limited
Investment Credit Bank Limited Liability Company

- ----------------------------------------------------------------------------------------------------------------------

Ms. Kalpana Morparia 56 May 3, 2002 Chairperson
Deputy Managing Director
ICICI Investment Management Company Limited
Profession: Director
Company Executive ICICI Lombard General Insurance Company
Limited
ICICI Prudential Life Insurance Company Limited
ICICI Securities Limited
ICICI Venture Funds Management Company
Limited

- ----------------------------------------------------------------------------------------------------------------------

Ms. Chanda Kochhar 43 April 1, 2001 Chairperson
Executive Director ICICI Home Finance Company Limited
Director
Profession: ICICI Prudential Life Insurance Company Limited
Company Executive

123

Dr. Nachiket Mor 41 April 1, 2001 Director
Executive Director ICICI Home Finance Company Limited
ICICI Knowledge Park
Profession: ICICI Securities Limited
Company Executive ICICI Venture Funds Management Company Limited

Pratham India Education Initiative

- ----------------------------------------------------------------------------------------------------------------------

124

The executive officers of ICICI Bank at August 31, 2005 were as follows:

- --------------- ---- ----------------- ---------- ------------ ----------- --------- --------- ----------- ----------- -------------
Name Age Designation and Years Total Bonus Stock Stock Share- Total stock Total stock
Responsibilities of work remuneration for fiscal options options holdings options options
experience in fiscal 2005(2) granted granted at August granted outstanding
2005(1) in fiscal in April 31, 2005 till at August
2005(4) 2005 (3) August 31, 31, 2005(5)
2005(5)
- -------------- ----- ----------------- ---------- ------------ ----------- --------- --------- ----------- ----------- -------------
Mr. K.V. 57 Managing Director 34 14,620,489 4,492,800 250,000 250,000 68,500 1,025,000 936,000
Kamath & CEO

Ms. Lalita D. 56 Joint Managing 34 9,078,324 3,369,600 165,000 165,000 119,991 795,000 637,500
Gupte Director
-International
Banking

Ms. Kalpana 56 Deputy Managing 30 9,748,575 2,652,000 150,000 150,000 21,190 640,000 620,000
Morparia Director
- Corporate
Centre

Ms. Chanda D. 43 Executive Director 21 5,874,007 2,028,000 125,000 125,000 160,200 505,000 300,000
Kochhar - Retail Banking

Dr. Nachiket 41 Executive Director 18 7,023,546 2,028,000 125,000 125,000 6,000 502,000 275,000
Mor - Wholesale
Banking

Mr. Balaji 40 Senior General 16 6,268,195 3,000,000 75,000 75,000 38,500 330,000 187,500
Swaminathan Manager

Mr. Bhargav 39 Senior General 15 4,184,663 2,100,000 75,000 75,000 20,600 248,475 222,475
Dasgupta Manager

Mr. K. Ramkumar 44 Senior General 20 4,627,731 2,220,000 37,500 75,000 15,650 180,000 147,000
Manager

Ms. Madhabi 39 Senior General 16 4,375,671 2,400,000 75,000 75,000 1,411 279,900 222,450
Puri-Buch Manager

Mr. Nagesh 46 Senior General 20 4,061,046 2,220,000 37,500 45,000 37,253 202,500 141,300
Pinge Manager

Mr. P. H. 53 Senior General 33 4,707,611 - - - 22,000 154,700 22,000
Ravikumar Manager
(currently seconded
to National
Commodities &
Derivatives
Exchange Limited)

Mr. Pravir 50 Senior General 30 4,547,497 1,920,000 80,000 37,500 15,000 139,500 124,500
Vohra Manager

Ms. Ramni 53 Senior General 29 5,158,323 2,142,000 37,500 37,500 39,500 282,000 208,500
Nirula Manager

Mr. Sanjiv 54 Senior General 30 4,805,831 2,356,200 37,500 37,500 37,289 223,000 183,000
Kerkar Manager

Mr.V. 37 Senior General 15 4,827,508 2,400,000 75,000 75,000 36,210 259,900 157,150
Vaidyanathan Manager

Ms. Vishakha 36 Chief Financial 12 4,206,405 1,800,000 37,500 75,000 34,955 210,975 167,520
Mulye Officer and
Treasurer

(1) Including ICICI Bank's contribution to the superannuation fund, provident
fund and leave travel allowance and excluding bonus payable for fiscal 2004
which was paid in fiscal 2005. Includes aggregate leave travel allowance
availed during the year: K.V. Kamath - Rs. 3,350,000 (US$ 76,800), Ms.
Lalita D. Gupte - Rs. Nil (US$ Nil), Kalpana Morparia - Rs.

125

1,900,000 (US$ 43,558), Chanda D. Kochhar - Rs. Nil (US$ Nil), Nachiket Mor
- Rs. 812,500 (US$ 18,627) and all other executive officers Rs. 4,788,750
(US$ 109,783).
(2) Bonus for fiscal 2005 was paid in fiscal 2006.
(3) Executive officers and directors as a group held around 0.5% of ICICI
Bank's equity shares as of this date.
(4) Each stock option, once exercised, is equivalent to one equity share of
ICICI Bank. ICICI Bank granted these stock options to its executive
officers at no cost. See "-Compensation and Benefits to Directors and
Officers- Employee Stock Option Scheme" for a description of the other
terms of these stock options.
(5) In accordance with the Scheme of Amalgamation, directors and employees of
ICICI have received stock options in ICICI Bank equal to half the number of
the outstanding unexercised stock options they held in ICICI with the
exercise price of these options being equal to twice the exercise price for
the ICICI stock options exchanged. The stock options mentioned above
include ICICI stock options converted into ICICI Bank stock options on this
basis.

Mr. K.V. Kamath is a mechanical engineer and a post-graduate in business
management from the Indian Institute of Management, Ahmedabad. He joined ICICI
in 1971 and worked in the areas of project finance, leasing, resources and
corporate planning. In 1988, he left ICICI to join the Asian Development Bank,
where he worked for six years. In January 1995, he joined a private sector group
in Indonesia as advisor to its chairman. Mr. Kamath joined the board of
directors of ICICI in October 1995. He was appointed Managing Director & CEO of
ICICI in May 1996 and was re-appointed in May 2001. Mr. Kamath was a
non-wholetime director on the board of ICICI Bank from April 1996. Effective May
3, 2002 our board appointed Mr. Kamath as Managing Director & CEO. Our board and
shareholders have approved his re-appointment as Managing Director & CEO until
April 30, 2009 on the expiry of his tenure of appointment on April 30, 2006,
subject to the approval of the Reserve Bank of India.

Ms. Lalita D. Gupte has a Bachelor of Arts degree and also holds a Masters
degree in management science from the Jamnalal Bajaj Institute of Management
Studies, University of Mumbai. She joined ICICI in 1971, where she worked in the
areas of project finance, leasing, resources and treasury, and credit
operations. She joined the board of directors of ICICI in June 1994 as Executive
Director and was designated as Deputy Managing Director in 1996. In April 1999,
she was designated as the Joint Managing Director and Chief Operating Officer of
ICICI. From July 2001, she was designated as Joint Managing Director and Chief
Operating Officer - International Business. Ms. Gupte was a non-wholetime
director on the board of ICICI Bank from September 1994. Effective May 3, 2002,
our board appointed Ms. Gupte as Joint Managing Director. Our board and
shareholders have approved her re-appointment as Joint Managing Director until
October 31, 2006 on the expiry of her tenure of appointment on June 23, 2004.
She is currently in charge of the international operations.

Ms. Kalpana Morparia holds Bachelor's degrees in science and law. She
worked in the legal department of ICICI from 1975 to 1994. From 1996, when she
was designated as General Manager, she was in charge of the legal, planning,
treasury and corporate communications departments. In 1998, she was designated a
Senior General Manager of ICICI. She joined the board of directors of ICICI in
May 2001. Effective May 3, 2002 our board appointed Ms. Morparia as an Executive
Director. Effective February 1, 2004, our board designated her as Deputy
Managing Director. She is currently in charge of the Corporate Centre which
includes the strategy, risk management, legal, finance, treasury, secretarial,
human resources management, corporate communications and facilities management
and administration functions. Our board and shareholders have approved her
re-appointment as a wholetime director until May 31, 2007 on the expiry of her
current term of appointment on April 30, 2006, subject to the approval of the
Reserve Bank of India.

Ms. Chanda D. Kochhar holds a management degree from the Jamnalal Bajaj
Institute of Management Studies, Mumbai and a degree in cost and works
accountancy from the Institute of Cost and Works Accountants of India. She
started her career in 1984 with ICICI in its project finance department and has
worked in the areas of corporate credit, infrastructure financing, e-commerce,
strategy and retail finance. Ms. Kochhar was designated a Senior General Manager
of ICICI in 2000 and was in charge of its retail business. She was appointed to
our board as an Executive Director in April 2001. She is currently responsible
for the retail banking operations. Our board and shareholders have approved her
re-appointment as a wholetime director until March 31, 2011 on the expiry of her
current term of appointment on March 31, 2006, subject to the approval of the
Reserve Bank of India.

Dr. Nachiket Mor holds a post-graduate diploma in finance management from
the Indian Institute of Management, Ahmedabad and a Doctorate of Philosophy in
Financial Economics from the University of Pennsylvania, Philadelphia, USA. He
started his career as an officer in the corporate planning and policy cell of

126

ICICI in 1987. He has worked in the areas of project and corporate finance,
corporate planning and treasury. Dr. Mor was designated a Senior General Manager
of ICICI in 2000 and was in charge of treasury. He was appointed to our board of
directors as an Executive Director in April 2001. He is currently responsible
for wholesale banking. Our board and shareholders have approved his
re-appointment as a wholetime director until March 31, 2011 on the expiry of his
current term of appointment on March 31, 2006, subject to the approval of the
Reserve Bank of India.

Mr. Balaji Swaminathan is a graduate in commerce from Calcutta University,
a chartered accountant and a cost and works accountant. Mr. Balaji Swaminathan
started his career with KPMG International in 1989. He worked in KPMG India as
Partner/Director from 1994 to 2001. He joined ICICI in August 2001 as its Chief
Financial Officer and was the Chief Financial Officer of ICICI up to March 31,
2002. He was the Chief Financial Officer of ICICI Bank from April 1, 2002 to
March 31, 2003. Currently, he is responsible for corporate banking.

Mr. Bhargav Dasgupta is an engineer and has a post graduate degree in
management from Indian Institute of Management, Bangalore. He joined ICICI in
1992 in the project finance department. In 2003 he was designated a Senior
General Manager of ICICI Bank. Currently, he is responsible for international
banking.

Mr. K. Ramkumar is a science graduate from Madras University with
post-graduate diploma in industrial relations and labor laws. He worked with ICI
India before joining ICICI in 2001 in the human resources department. In 2004,
he was designated as Senior General Manager of ICICI Bank and he is currently in
charge of human resources management, facilities management and administration
and retail infrastructure.

Ms. Madhabi Puri-Buch is a graduate in mathematical economics and has a
post-graduate degree in management from the Indian Institute of Management,
Ahmedabad. She joined ICICI in 1989 in the project finance department. She left
ICICI in 1992 and worked in ANZ Grindlays Bank and ORG MARG Research before
joining ICICI again in January 1997 in the planning and treasury department. In
2003 she was designated a Senior General Manager of ICICI Bank. Currently, she
is responsible for operations and service delivery, wholesale banking products
and technology and the corporate brand management function.

Mr. Nagesh Pinge is a commerce and law graduate from Mumbai University, and
a chartered accountant. He joined ICICI in 1983 in the leasing department. He
left ICICI in 1989 and worked in other financial services companies before
joining ICICI again in April 1998 in the risk management department. He was
designated as Senior General Manager in 2004 and is currently in charge of
compliance and audit.

Mr. P.H. Ravikumar is a graduate from Osmania University and is a Certified
Associate of the Indian Institute of Bankers. Mr. Ravikumar started his career
with Bank of India in 1972. He joined ICICI Bank in 1994. He was designated as
Senior Executive Vice-President in 1998 and was in charge of treasury, foreign
exchange and credit. Mr. Ravikumar joined ICICI in April 2001 as a Senior
General Manager. He is currently on secondment to the National Commodity &
Derivatives Exchange Limited as its Managing Director.

Mr. Pravir Vohra is a post-graduate in economics from Delhi University. He
was Joint President in 3i Infotech Limited (formerly ICICI Infotech Limited)
before he joined ICICI Bank in 2002. He was designated as Senior General Manager
in 2005 and he is currently in charge of the technology management and retail
technology.

Ms. Ramni Nirula is a post-graduate in management studies from Delhi
University. She joined ICICI in 1975 and held various positions in the northern
regional office of ICICI. She was designated as Senior General Manager of ICICI
in fiscal 2000. She was the Managing Director & CEO of ICICI Securities from
January 1, 2003 to January 31, 2004. She is currently responsible for government
banking, rural and micro-banking and agri-business.

Mr. Sanjiv Kerkar is a chemical engineer and holds a management degree from
the Jamnalal Bajaj Institute of Management Studies, University of Mumbai. He
worked with ICICI from 1979 to 1993. Mr. Kerkar worked with Asian Finance and
Investment Company from 1993 to 1996. In 1996, he re-joined ICICI and was
designated a Senior General Manager of ICICI in 1998. Currently, Mr. Kerkar
heads the Organizational Excellence Group, which is responsible for our quality
initiatives.

Mr. V. Vaidyanathan has Bachelor's and Master's degrees in business
administration from Birla Institute of Technology & Science, Ranchi. He worked
in Citibank N.A. before joining ICICI in 2000 in the personal financial

127

services division. In 2003 he was designated a Senior General Manager of ICICI
Bank. Currently, he is responsible for retail products and distribution.

Ms. Vishakha Mulye is a commerce graduate from Mumbai University, and a
chartered accountant. Ms. Mulye joined ICICI in 1993 in the project finance
department. She was designated as Senior General Manager in 2004. Currently she
is our Chief Financial Officer and Treasurer.

Corporate Governance

Our corporate governance policies recognize the accountability of the board
and the importance of making the board transparent to all its constituents,
including employees, customers, investors and the regulatory authorities, and to
demonstrate that the shareholders are the ultimate beneficiaries of our economic
activities.

Our corporate governance framework 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, generally comprising a
majority of independent directors and chaired by an independent director, to
oversee critical areas and functions of executive management.

Our corporate governance philosophy encompasses not only regulatory and
legal requirements, such as the terms of listing agreements with stock
exchanges, but also several voluntary practices aimed at a high level of
business ethics, effective supervision and enhancement of value for all
shareholders.

Our board's role, functions, responsibility and accountability are clearly
defined. In addition to its primary role of monitoring corporate performance,
the functions of our board include:

o approving corporate philosophy and mission;

o participating in the formulation of strategic and business plans;

o reviewing and approving financial plans and budgets;

o monitoring corporate performance against strategic and business plans,
including overseeing operations;

o ensuring ethical behavior and compliance with laws and regulations; o
reviewing and approving borrowing limits;

o formulating exposure limits; and

o keeping shareholders informed regarding plans, strategies and
performance.

To enable our board of directors to discharge these responsibilities
effectively, executive management gives detailed reports on our performance to
the board on a quarterly basis.

Our board functions either as a full board or through various committees
constituted to oversee specific operational areas. These board committees meet
regularly. The constitution and main functions of the various committees are
given below.

Agriculture & Small Enterprises Business Committee

The Agriculture & Small Enterprises Business Committee comprises four
independent Directors - Mr. N. Vaghul, Mr. Somesh R. Sathe, Mr. M.K. Sharma and
Mr. P.M. Sinha. Mr. N. Vaghul is the Chairman of the Committee.

The functions of the Agriculture & Small Enterprises Business Committee
include review of our business strategy in the agri-business and small
enterprises segments and review of the quality of the agricultural lending and
small enterprises finance credit portfolio.

128

Audit Committee

The Audit Committee comprises three independent directors - Mr. Sridar
Iyengar, who is a chartered accountant, Mr. M.K. Sharma and Mr. Somesh R. Sathe.
In view of the retirement of Mr. Uday Chitale, the committee will appoint a
Chairman at its next Meeting. Mr. M.K. Sharma was appointed as Alternate
Chairman of the Committee effective July 22, 2004. Our board of directors has
determined that Mr. Sridar Iyengar qualifies as an audit committee financial
expert.

The Audit Committee provides direction to the audit and risk management
function and monitors the quality of the internal and statutory audit. The
responsibilities of the Audit Committee include overseeing of the financial
reporting process to ensure fairness, sufficiency and credibility of financial
statements, recommendation of appointment and removal of central and branch
statutory auditors and fixation of their remuneration, review of the annual
financial statements before submission to our board, review of the adequacy of
internal control systems and the internal audit function, review of customer
service initiatives and functioning of customer service council, review of
compliance with the inspection and audit reports of Reserve Bank of India and
reports of statutory auditors, review of the findings of internal
investigations, discussion on the scope of audit with external auditors and
examination of reasons for substantial defaults, if any, in payment to
stakeholders. The Committee provides direction to the internal audit function
and monitors the quality of internal and statutory audit. In addition, as
required by Rule 10A-3 under the Exchange Act, the Audit Committee is empowered
to appoint and oversee the work of any registered public accounting firm,
establish procedures for the receipt and treatment of complaints regarding
accounting and auditing matters, engage independent counsel and provide for
appropriate funding for compensation to be paid to any advisors.

All audit and non-audit services to be provided by our principal
accountants are pre-approved by the Audit Committee before such services are
provided to us.

Board Governance & Remuneration Committee

The Board Governance & Remuneration Committee comprises five independent
directors - Mr. N. Vaghul, Mr. Anupam Puri, Mr. P. M. Sinha, Mr. M.K. Sharma and
Prof Marti G. Subrahmanyam. Mr. N. Vaghul is the Chairman of the Committee.

The functions of the Board Governance & Remuneration Committee include
recommendation of appointments to our board, evaluation of the performance of
the Managing Director & CEO and other wholetime Directors on pre-determined
parameters, recommendation to our board of the remuneration (including
performance bonuses and perquisites) to wholetime directors, approving the
policy for and quantum of bonus payable to the members of the staff, framing
guidelines for the employees stock option scheme and recommendation of grant of
stock options to the staff and wholetime directors of ICICI Bank and its
subsidiary companies.

Business Strategy Committee

The Business Strategy Committee comprises five directors - Mr. N. Vaghul,
Mr. Anupam Puri, Mr. M. K. Sharma, Mr. P. M. Sinha and Mr. K. V. Kamath. The
majority of the members of this Committee are independent directors and Mr. N.
Vaghul is the Chairman of the Committee.

The functions of the Business Strategy Committee are to approve the annual
income and expenditure and capital expenditure budgets for presentation to our
board for final approval and to review and recommend to our board our business
strategy.

Credit Committee

The Credit Committee comprises four directors - Mr. N. Vaghul, Mr. Somesh
R. Sathe, Mr. M. K. Sharma and Mr. K. V. Kamath. The majority of the members of
the committee are independent directors and Mr. N. Vaghul is the Chairman of the
Committee.

The functions of this Committee include review of developments in key
industrial sectors and approval of credit proposals in accordance with the
authorization approved by our board.

129

Fraud Monitoring Committee

The Fraud Monitoring Committee was constituted by our board effective May
1, 2004. The Committee comprises five Directors - Mr. Somesh R. Sathe, Mr. M.K.
Sharma, Mr. K.V. Kamath, Ms. Kalpana Morparia and Ms. Chanda D. Kochhar. Mr.
M.K. Sharma is the Chairman of the Committee.

The functions of the Fraud Monitoring Committee include monitoring and
review of all instances of frauds involving Rs.10.0 million (US$ 229,253) and
above.

Risk Committee

The Risk Committee comprises five directors - Mr. N. Vaghul, Mr. Sridar
Iyengar, Prof. Marti G. Subrahmanyam, Mr. V. Prem Watsa and Mr. K. V. Kamath.
The majority of the members of this committee are independent directors and Mr.
N. Vaghul is the Chairman of the Committee.

This Committee reviews risk management policies in relation to various
risks (credit, portfolio, liquidity, interest rate, off-balance sheet and
operational risks), investment policies and strategy and regulatory and
compliance issues in relation thereto.

Share Transfer & Shareholders'/Investors' Grievance Committee

The Share Transfer & Shareholders'/Investors' Grievance Committee comprises
four directors - Mr. M.K. Sharma, Mr. Somesh R. Sathe, Ms. Kalpana Morparia and
Ms. Chanda D. Kochhar. Mr. M.K. Sharma, an independent director, is the Chairman
of the Committee.

The functions and powers of the Share Transfer & Shareholders'/Investors'
Grievance Committee include approval and rejection of transfer or transmission
of equity and preference shares, bonds, debentures and securities, issue of
duplicate certificates, allotment of shares and securities issued from time to
time, including those under stock options, review and redressal of shareholders'
and investors' complaints, delegation of authority for opening and operation of
bank accounts for payment of interest, dividend and redemption of securities and
the listing of securities on stock exchanges.

Committee of Directors

The Committee of Directors comprises all five wholetime directors and Mr.
K.V. Kamath, Managing Director & CEO is the Chairman of the Committee.

The powers of the Committee of Directors include review of performance
against targets for various business segments, credit approvals as per
authorization approved by our board, approvals in respect of borrowing and
treasury operations and premises and property related matters.

Asset-Liability Management Committee

The Asset Liability Management Committee comprises the Joint Managing
Director, Deputy Managing Director and two Executive Directors and Ms. Lalita D.
Gupte, Joint Managing Director is the Chairperson of the Committee.

The functions of the Committee include management of ICICI Bank's balance
sheet, review of the asset-liability profile with a view to manage the interest
rate risk and deciding the deposit rates and prime lending rate of ICICI Bank.

Code of ethics

We have adopted a Code of Business Conduct and Ethics for our directors and
all our employees, which is filed as an exhibit to this report. In fiscal 2005,
we have not made any amendments to any provision of the Code that is applicable
to our executive officers, nor have we granted a waiver from any provision of
the Code to any of our executive officers.

130

Principal Accountant Fees and Services

The total fees (excluding service tax and out of pocket expenses) paid to
our principal accountant relating to audit of consolidated financial statements
for fiscal 2004 and fiscal 2005 and the fees for other professional services
billed in fiscal 2004 and fiscal 2005 are as follows:

Convenience
translation into US$
----------------------
Year ended March 31, Year ended March 31,
------------------------- ----------------------
2004 2005 2005
----------- ----------- ----------------------
(in millions)
Audit
Audit of ICICI Bank Limited and its subsidiaries.................... Rs. 28.1 Rs. 31.8 728,857
Audit-related services
Opinion on non-statutory accounts presented in Indian Rupees.... 0.2 6.7 153,709
Sub-total............................................................... 28.3 38.5 882,566

Non-audit services
Tax services
Tax compliance.................................................. 0.7 1.5 35,335
Application for offshore banking license........................ 1.0 - -
Other services...................................................... 2.1 2.0 44,085
Sub-total............................................................... 3.8 3.5 79,420

------ ------ ---------
Total................................................................... 32.2 42.0 961,986
====== ====== =========

Fees for "other services" are principally fees related to certification
services to one of our subsidiaries. Our Audit Committee approved the fees paid
to our principal accountant relating to audit of consolidated financial
statements for fiscal 2005 and fees for other professional services billed in
fiscal 2005. Our Audit Committee preapproves all major assignments undertaken
for us by KPMG.

Summary Comparison of Corporate Governance Practices

The following is a summary comparison of significant differences between
our corporate governance practices and those required by the NYSE for US
issuers.

Independent directors. A majority of our board are independent directors,
as defined under applicable Indian legal requirements. Under these requirements,
directors are not independent if they have any material pecuniary relationship
or transactions with us, our management or our subsidiaries. We have not made a
determination as to whether our directors would be considered independent under
the NYSE rules. Though the judgment on independence must be made by our board,
there is no requirement that our board affirmatively make such determination, as
required by the NYSE rules. Further, one of our directors is a representative of
the Indian government, as required by the terms of the loan and guarantee
facilities provided by the Indian government.

Non-management directors meetings. Though there is no such requirement
under applicable Indian legal requirements, our non-management directors meet
separately before each board meeting.

Board Governance and Remuneration Committee and the Audit Committee. The
members of our Board Governance and Remuneration Committee are independent, as
defined under applicable Indian legal requirements. All members of our Audit
Committee are independent under Rule 10A-3 under the Exchange Act. The
constitution and main functions of these committees as approved by our board are
described above and comply with the spirit of the NYSE requirements for US
issuers.

Corporate Governance Guidelines. Under NYSE rules, US issuers are required
to adopt and disclose corporate governance guidelines addressing matters such as
standards of director qualification, responsibilities of directors, director
compensation, director orientation and continuing education, management
succession and annual

131

performance review of the board of directors. As a foreign private issuer, we
are not required to adopt such guidelines.

Compensation and Benefits to Directors and Officers

Remuneration

Under ICICI Bank's organizational documents, each non-wholetime director,
except the government director, is entitled to receive remuneration for
attending each meeting of our board or of a board committee. The amount of
remuneration payable to non-wholetime directors is set by our board from time to
time in accordance with limitations prescribed by the Indian Companies Act or
the government of India. The remuneration for attending each board or committee
meeting is currently fixed at Rs. 20,000 (US$ 459). In addition, ICICI Bank
reimburses directors for travel and related expenses in connection with board
and committee meetings and related matters. If a director is required to perform
services for ICICI Bank beyond attending meetings, ICICI Bank may remunerate the
director as determined by our board of directors and this remuneration may be
either in addition to or as substitution for the remuneration discussed above.
We have not paid any remuneration to non-wholetime directors other than the
remuneration for attending each meeting of our board or of a board committee.
Non-wholetime directors are not entitled to the payment of any benefits at the
end of their term of office.

Our board or any committee thereof may fix within the range stated below,
the salary payable to the wholetime directors.

Mr. K.V. Kamath, Managing Director & CEO.........Rs. 600,000 - Rs. 1,050,000 (US$ 13,755 to US$ 24,072) per month
Ms. Lalita D. Gupte, Joint Managing Director.....Rs. 400,000 - Rs. 900,000 (US$ 9,170 to US$ 20,633) per month
Ms. Kalpana Morparia, Deputy Managing Director...Rs. 300,000 - Rs. 900,000 (US$6,877 to US$ 20,633) per month
Ms. Chanda D. Kochhar, Executive Director........Rs. 200,000 - Rs. 500,000 (US$ 4,585 to US$ 11,463) per month
Dr. Nachiket Mor, Executive Director.............Rs. 200,000 - Rs. 500,000 (US$ 4,585 to US$ 11,463) per month

We are required to obtain specific approval of the Reserve Bank of India
for the actual monthly salary and performance bonus paid each year to the
wholetime directors. The Reserve Bank of India has approved the payment of
performance bonus to our wholetime directors for fiscal 2005 and the monthly
salary payable for fiscal 2006. None of the service contracts with our directors
provide for benefits upon termination of engagement.

The wholetime directors are entitled to perquisites (evaluated pursuant to
Indian Income-Tax Rules, wherever applicable, and otherwise at actual cost to
ICICI Bank), such as furnished accommodation, gas, electricity, water and
furnishings, club fees, personal insurance, use of car and telephone at
residence or reimbursement of expenses in lieu thereof, payment of income-tax on
perquisites by ICICI Bank to the extent permissible under the Indian Income-tax
Act, 1961 and the Rules framed thereunder, medical reimbursement, leave and
leave travel concession, education benefits, provident fund, superannuation
fund, gratuity and other retirement benefits, in accordance with the scheme(s)
and rule(s) applicable to employees of ICICI Bank from time to time.

Where accommodation is not provided, each of the wholetime directors is
eligible for a house rent allowance of Rs. 50,000 (US$ 1,146) per month and
maintenance of accommodation including furniture, fixtures and furnishings, as
may be provided by ICICI Bank.

The total compensation paid by ICICI Bank to its wholetime directors and
executive officers, Mr. K.V. Kamath, Ms. Lalita D. Gupte, Ms. Kalpana Morparia,
Ms. Chanda D. Kochhar, Dr. Nachiket Mor, Mr. Sanjiv Kerkar, Ms. Ramni Nirula,
Mr. P.H. Ravikumar, Mr. Balaji Swaminathan, Mr. Bhargav Dasgupta, Mr. M. N.
Gopinath, Mr. N. S. Kannan, Ms. Madhabi Puri Buch, Mr. K. Ramkumar, Mr. Nagesh
Pinge, Mr. V. Vaidyanathan and Ms. Vishakha Mulye in fiscal 2005 was Rs. 137
million (US$ 3 million) including bonus for fiscal 2004 to wholetime directors
and other executive officers paid in fiscal 2005.

Bonus

Each year, our board of directors awards discretionary bonuses to employees
and wholetime directors on the basis of performance and seniority. The
performance of each employee is evaluated through a performance management
appraisal system. The aggregate amount paid by ICICI Bank for bonuses to all
eligible employees and wholetime directors for fiscal 2005 was Rs. 1.21 billion
(US$ 28 million). This amount was paid in fiscal 2006.

132

Employee Stock Option Scheme

On January 24, 2000, our board approved an employee stock option scheme to
attract, encourage and retain high performing employees. ICICI Bank's
shareholders approved this scheme at the extraordinary general meeting on
February 21, 2000. This scheme was drafted in accordance with guidelines issued
by the Securities and Exchange Board of India. Under this scheme, up to 5.0% of
our issued equity shares at March 31, 2000 could be allocated to employee stock
options. The employee stock option scheme as amended by the Scheme of
Amalgamation restricted the maximum number of options granted to any eligible
employee (as defined below) to 0.05% of our issued equity shares at the time of
the grant, and the aggregate of all such options to 5.0% of our issued equity
shares following the amalgamation. In April 2004, our board approved the
recommendation of the Board Governance & Remuneration Committee to modify the
limit of the aggregate number of options that could be granted under the
employee stock option scheme to 5.0% of our issued capital as on the date of
grant. The shareholders approved the modification at our annual general meeting
held on September 20, 2004.

Under the stock option scheme, eligible employees are entitled to apply for
equity shares. An eligible employee is a permanent employee or a director of
ICICI Bank or of its subsidiaries or its holding company. ICICI Bank has no
holding company.

The options granted for fiscal 2003 and earlier vest annually in a graded
manner over a three-year period, with 20.0%, 30.0% and 50.0% of the grants
vesting each year, commencing not earlier than 12 months from the date of grant.
Options granted for fiscal 2004 and thereafter vest in a graded manner over a
four-year period with 20.0%, 20.0%, 30.0% and 30.0% of grants vesting each year,
commencing from the end of 12 months from the date of grant. The options can be
exercised within 10 years from the date of grant or five years from the date of
vesting, whichever is later.

The exercise price for options granted prior to June 30, 2003 is equal to
the market price of our equity shares on the date of grant on the stock
exchange, which recorded the highest trading volume on the date of grant. On
June 30, 2003, the Securities and Exchange Board of India revised its guidelines
on employee stock options. While the revised guidelines provided that companies
were free to determine the exercise price of stock options granted by them, they
prescribed accounting rules and other disclosures, including expensing of stock
options in the income statement, which are applicable to our Indian GAAP
financial statements, in the event the exercise price was not equal to the
average of the high and low market price of the equity shares in the two week
period preceding the date of grant of the options, on the stock exchange which
recorded the highest trading volume during the two week period. Effective July
22, 2004, the Securities and Exchange Board of India revised this basis of
pricing to the latest available closing price, prior to the date of the meeting
of the board of directors in which options are granted, on the stock exchange
which recorded the highest trading volume on that date. The exercise price for
options granted by ICICI Bank on or after June 30, 2003, but before July 22,
2004 is equal to the average of the high and low market price of the equity
shares in the two week period preceding the date of grant of the options, on the
stock exchange which recorded the highest trading volume during the two week
period. The exercise price of options granted on or after July 22, 2004 is equal
to the closing price on the stock exchange which recorded the highest trading
volume preceding the date of grant of options.

133

The following table sets forth certain information regarding the stock
option grants ICICI Bank has made under its employee stock option scheme. ICICI
Bank granted all of these stock options at no cost to its employees. ICICI Bank
has not granted any stock options to its non-wholetime directors.

- --------------------------------------------------------------------------------
Date of grant Number of options granted Exercise price
- --------------------------------------------------------------------------------
February 21, 2000........ 1,713,000 Rs. 171.90 US$ 3.94
April 26, 2001........... 1,580,200 170.00 3.90
March 27, 2002........... 3,155,000 120.35 2.76
April 25, 2003........... 7,338,300 132.05 3.03
July 25, 2003............ 147,500 157.03 3.60
October 31, 2003......... 6,000 222.40 5.10
April 30, 2004........... 7,539,500 300.10 6.88
September 20, 2004....... 15,000 275.20 6.31
April 30, 2005........... 4,906,180 359.95 8.25
August 20, 2005.......... 70,600 498.20 11.42

ICICI also had an employee stock option scheme for its directors and
employees and the directors and employees of its subsidiary companies, the terms
of which were substantially similar to the employee stock option scheme of ICICI
Bank. The following table sets forth certain information regarding the stock
option grants made by ICICI under its employee stock option scheme prior to the
amalgamation. ICICI granted all of these stock options at no cost to its
employees. ICICI had not granted any stock options to its non-wholetime
directors.

- --------------------------------------------------------------------------------
Date of grant Number of options granted Exercise price (1)
- --------------------------------------------------------------------------------
August 3, 1999........... 2,323,750 Rs. 85.55 US$ 1.96
April 28, 2000........... 2,902,500 133.40 3.06
November 14, 2000........ 20,000 82.90 1.90
May 3, 2001.............. 3,145,000 82.00 1.88
August 13, 2001.......... 60,000 52.50 1.20
March 27, 2002........... 6,473,700 60.25 1.38
- --------------
(1) The exercise price is equal to the market price of ICICI's equity shares on
the date of grant. However, the share options granted on August 3, 1999
were accounted as a variable plan resulting in a compensation cost of Rs.
97 million (US$ 2 million) which is being amortized over the vesting
period.

In accordance with the Scheme of Amalgamation, directors and employees of
ICICI and its subsidiary companies received stock options in ICICI Bank equal to
half the number of their outstanding unexercised stock options in ICICI. The
exercise price for these options is equal to twice the exercise price for the
ICICI stock options. All other terms and conditions of these options are similar
to those applicable to ICICI Bank's stock options pursuant to its employee stock
option scheme.

The following table sets forth certain information regarding the options
granted by ICICI Bank (including options granted by ICICI adjusted in accordance
with the Scheme of Amalgamation) at August 31, 2005.

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- ----------------------------------------------------------------------------
Particulars ICICI Bank
- ----------------------------------------------------------------------------
Options granted.................................... 33,933,755

Options vested..................................... 17,283,736

Options exercised.................................. 11,555,804

Options forfeited/lapsed........................... 3,186,365

Extinguishment or modification of options.......... None

Amount realized by sale of options................. Rs. 1,725,660,773

Total number of options in force................... 19,191,586

In April 2000, 3i Infotech Limited (formerly ICICI Infotech Limited)
approved an employee stock option plan. Under the plan, 3i Infotech is
authorized to issue up to 5.0% of its issued equity shares at the time of grant
of the options to an eligible employee and 25.0% of its issued equity shares at
the time of grant of the options, in aggregate, to all the eligible employees.
Eligible employees are granted an option to purchase shares subject to vesting
conditions. The options vest in a graded manner over a three-year period with
20.0%, 30.0% and 50.0% of the options vesting at the end of each year from the
date of grant of the options. The options can be exercised within 10 years from
the date of grant or five years from the date of vesting, whichever is later.
During fiscal 2005, 3i Infotech consolidated its equity shares and
re-denominated the face value of its equity shares from Rs. 5 per share to Rs.
10 per share. The number of stock options and their grant prices were also
changed accordingly. In April 2005, 3i Infotech made an initial public offering
of shares and its shares were listed on stock exchanges in India. 3i Infotech
had granted a total of 3,844,050 options from fiscal years 2001 through fiscal
year 2005 at the fair value of the underlying shares on the respective grant
dates, ranging from Rs. 75 (US$ 1.72) per share to Rs. 200 (US$ 4.59) per share.
The fair values were determined by an external valuation specialist and
represented management's best estimates considering all known factors. In fiscal
2005, 3i Infotech granted 3,645,775 options in addition to the above, prior to
its initial public offering, at Rs. 100 (US$ 2.29) per share. Of the stock
options granted since fiscal 2001, 910,820 were forfeited by year-end fiscal
2005. Of the stock options granted since fiscal 2001, 2,443,050 were granted to
our directors and executive officers.

In October 2002, the board of directors of ICICI Venture Funds Management
Company approved a Carry Plan for its employees. The Carry Plan provides for
ICICI Venture Funds Management Company to directly pay carry from the
performance fee earned by it from the funds managed or advised on by it, to its
employees through specific carry trusts created for the purpose. Pursuant to the
approval of the board of directors of ICICI Venture Funds Management Company,
carry documents have been finalized and the Carry Plan is being implemented.

ICICI OneSource has two employee stock option plans. Under the first of
these plans, the Compensation Committee of ICICI OneSource is authorized to
issue stock options to eligible employees of ICICI OneSource and its
subsidiaries, up to 10.0% of the paid up share capital of ICICI OneSource.
Eligible employees are granted an option to purchase equity shares of ICICI
OneSource at pre-determined exercise price, subject to vesting conditions. The
options vest in a graded manner over a four-year period with 25.0% of the
options vesting at the end of first year and 12.5% of the options vesting every
six months. The options granted may be exercised within nine years from the date
of grant. The terms and conditions of the second plan are essentially similar to
the first plan, except the following:

o The aggregate number of shares to be allotted under the new employee
stock option plan, to all persons resident outside India shall not
exceed 5.0% of the fully diluted share capital of ICICI OneSource.

o The exercise period, within which the employees would exercise the
options, would be five years from the date of the grant.

135

The aggregate of stock options to be granted to the employees and directors
of ICICI OneSource under both the employee stock option plans may not exceed
10.0% of the fully diluted share capital of ICICI OneSource.

ICICI OneSource had granted 3,855,000 options during fiscal 2003 under the
first employee stock option plan, at the fair value of Rs. 11.25 per equity
share. ICICI OneSource granted 14,120,500 options and 825,000 options during
fiscal 2004 under the second employee stock option plan, at the fair value of
Rs. 12.89 per equity share and Rs. 18.53 per equity share respectively. ICICI
OneSource also granted 375,000 options during fiscal 2004, under the first
employee stock option plan, at the fair value of Rs. 12.83 per equity share.
ICICI OneSource further granted 200,000 and 3,830,000 stock options during the
fiscal 2005 under the second employee stock option plan at the fair value of Rs.
18.53 and Rs. 19.85 per equity share, respectively. The fair values for the
fiscal years 2003, 2004 and 2005 have been determined either by an external
valuation specialist or based on the highest valuation of the ICICI OneSource
received from prospective investors who had indicated their willingness to
invest in ICICI OneSource at that valuation. As the shares of ICICI OneSource
are not quoted on stock exchanges, the fair value represents management's best
estimates considering all known factors.

In fiscal 2005, ICICI Prudential Life Insurance Company Limited approved an
employee stock option scheme. Under the scheme, ICICI Prudential is authorized
to issue options up to 3.0% of its issued capital as on the date of grant. In
fiscal 2005, ICICI Prudential issued 3,169,500 founder employee options which
vest over a three-year period, with 50% of the options vesting at the end of one
year from the date of grant, 25% at the end of the second year and 25% at the
end of the third year and authorized the issue of 3,661,250 options for fiscal
2005 that will vest in four equal installments starting from the end of one year
from the date of grant. The options can be exercised within 10 years from the
date of grant or five years from the date of vesting, whichever is later. The
exercise price for founder employee options is Rs. 45 (US$ 1.04) per equity
share. The exercise price for options granted for fiscal 2005 is Rs. 51 (US$
1.17) per equity share. Currently, the shares of ICICI Prudential are not quoted
on stock exchanges and hence the fair value represents management's best
estimates considering all known factors and taking into account prevalent
practices for valuation of life insurers.

ICICI Lombard General Insurance Company has approved an employee stock
option plan under which it is authorised to issue up to 0.10% of its issued
equity shares at the time of grant of the options to an eligible employee in a
financial year and 5% of its issued equity shares at the time of grant of the
options, in aggregate, to all the eligible employees. Eligible employees are
granted an option to purchase shares subject to vesting conditions. The options
vest in a graded manner over a four-year period with 20%, 20%, 30% and 30% of
the options vesting at the end of each year from the date of grant of the
options. The options can be exercised within 10 years from the date of grant or
five years from the date of vesting, whichever is later. ICICI Lombard has
granted 3,399,560 options during fiscal 2006 at the fair value of the underlying
shares, on the grant date, of Rs. 35 (US$ 0.80) per equity share. In addition,
ICICI Lombard has also granted 917,500 one-time founders stock options during
fiscal 2006 at the same rate, which would vest in a graded manner over a
two-year period, with 50% of the grants vesting each year, commencing from the
end of 12 months from the date of grant. The fair value for fiscal year 2006,
has been determined by an external valuation specialist. As the shares of ICICI
Lombard are not quoted on stock exchanges, the fair value, as determined by the
valuation specialist represents management's best estimates considering all
known factor.

Loans

ICICI Bank has internal rules and regulations to grant loans to employees
and wholetime directors to acquire certain assets such as property, vehicles and
other consumer durables. ICICI Bank's loans to employees have been made at
interest rates ranging from 2.5% to 3.5% per annum and are repayable over fixed
periods of time. The loans are generally secured by the assets acquired by the
employees. ICICI Bank had given loans to its employees for purchasing its shares
in the offering made by ICICI in June 1997 at the public offering price. Bank of
Madura had also given loans to employees for purchasing preferential shares in
the offering made by Bank of Madura in August 1995. Pursuant to the Banking
Regulation Act, ICICI Bank's non-wholetime directors are not eligible for any
loans. At year-end fiscal 2005, there were loans of Rs. 4.5 billion (US$ 103
million), compared to loans of Rs. 3.8 billion (US$ 87 million) at year-end
fiscal 2004, outstanding to ICICI Bank employees. This amount included loans of
Rs. 70 million (US$ 2 million), compared to Rs. 27 million (US$ 618,982) at
year-end fiscal 2004, to certain of its directors and executive officers
(including employees who became executive officers during fiscal 2005), made on
the same terms, including interest rates and collateral, as loans to other
employees.

136

Gratuity

Under Indian law, ICICI Bank is required to pay a gratuity to employees who
retire or resign after at least five years of continuous service. ICICI Bank
makes contributions to three separate gratuity funds, for employees inducted
from ICICI, employees inducted from Bank of Madura and employees of ICICI Bank
other than employees inducted from ICICI and Bank of Madura.

The gratuity funds for employees inducted from ICICI and Bank of Madura are
separate gratuity funds managed by ICICI Prudential Life Insurance Company.
Actuarial valuation of the gratuity liability is determined by an actuary
appointed by ICICI Prudential Life Insurance Company. The investments of the
funds are made according to rules prescribed by the government of India. The
accounts of the funds are audited by independent auditors. The total corpus of
these funds at year-end fiscal 2005 based on their unaudited financial
statements was Rs. 478 million (US$ 11 million).

The gratuity fund for employees of ICICI Bank other than employees inducted
from ICICI and Bank of Madura, is administered by the Life Insurance Corporation
of India. In accordance with the gratuity fund's rules, actuarial valuation of
gratuity liability is calculated based on certain assumptions regarding rate of
interest, salary growth, mortality and staff turnover. The total corpus of the
funds at year-end fiscal 2005 was Rs. 184 million (US$ 4 million) compared to
Rs. 89 million (US$ 2 million) at year-end fiscal 2004.

Superannuation Fund

ICICI Bank contributes 15.0% of the total annual salary of each employee to
a superannuation fund for ICICI Bank employees. The fund is administered by the
Life Insurance Corporation of India. ICICI Bank's employees get an option on
retirement or resignation to receive one-third of the total balance and a
monthly pension based on the remaining two-third balance. In the event of death
of an employee, his or her beneficiary receives the remaining accumulated
balance of 66.7%. ICICI Bank also gives a cash option to its employees, allowing
them to receive the amount contributed by ICICI Bank in their monthly salary
during their employment. The total corpus of the superannuation fund was Rs. 812
million (US$ 19 million) at year-end fiscal 2005 compared to Rs. 683 million
(US$ 16 million) at year-end fiscal 2004.

Subsequent to year end fiscal 2005, the superannuation fund is being
administered by Life Insurance Corporation of India and ICICI Prudential Life
Insurance Company Limited. Employees have the option to retain the existing
balance with Life Insurance Corporation of India or seek a transfer to ICICI
Prudential Insurance Company Limited.

Provident Fund

ICICI Bank is statutorily required to maintain a provident fund as a part
of its retirement benefits to its employees. There are separate provident funds
for employees inducted from Bank of Madura (other than those employees who have
opted for pensions), and for other employees of ICICI Bank. These funds are
managed by in-house trustees. Each employee contributes 12.0% of his or her
basic salary (10.0% for clerks and sub-staff of Bank of Madura) and ICICI Bank
contributes an equal amount to the funds. The investments of the funds are made
according to rules prescribed by the government of India. The accounts of the
funds are audited by independent auditors. The total corpuses of the funds for
employees inducted from Bank of Madura, and other employees of ICICI Bank, based
on the latest audited figures, at year-end fiscal 2005 were Rs. 338 million (US$
8 million), and Rs. 1.7 billion (US$ 39 million) respectively. ICICI Bank made
aggregate contributions of Rs. 280 million (US$ 6 million) to these funds during
fiscal 2005, compared to Rs. 236 million (US$ 5 million) in fiscal 2004.

Pension Fund

Out of the employees inducted from Bank of Madura and employed with ICICI
Bank at end of fiscal 2005, 433 employees opted for pensions and 595 employees
opted for a provident fund. For employees who opted for a provident fund, ICICI
Bank's contribution of 12.0% of his or her basic salary (10% for clerks and
sub-staff of Bank of Madura) is credited to the provident fund every month. For
employees who opted for pensions, ICICI Bank's contribution of 12.0% of his or
her basic salary (10% for clerks and sub-staff of Bank of Madura) is credited to
the pension fund every month. These funds are managed by in-house trustees. The
investments of the funds are made

137

according to rules prescribed by the government of India. The accounts of the
fund are audited by independent auditors. The employees who opted for pensions
are entitled to a monthly pension from the day after their retirement. ICICI
Bank also gives a cash option to employees, allowing them to receive the present
value of one-third of their monthly pension in total satisfaction. Upon death of
an employee, family members are entitled to payment of a family pension pursuant
to the rules in this regard. The corpus of the fund at year-end fiscal 2005 was
Rs. 923 million (US$ 21 million), compared to Rs. 961 million (US$ 22 million)
at year-end fiscal 2004.

Interest of Management in Certain Transactions

Except as otherwise stated in this annual report, no amount or benefit has
been paid or given to any of our directors or executive officers.

138

OVERVIEW OF THE INDIAN FINANCIAL SECTOR

The information in this section has been extracted from publicly available
documents from various sources, including officially prepared materials from the
government of India and its various ministries and the Reserve Bank of India,
and has not been prepared or independently verified by us. This is the latest
available information to our knowledge at September 20, 2005.

Introduction

The Reserve Bank of India, the central banking and monetary authority of
India, is the central regulatory and supervisory authority for the Indian
financial system. A variety of financial intermediaries in the public and
private sectors participate in India's financial sector, including the
following:

o commercial banks;

o long-term lending institutions;

o non-bank finance companies, including housing finance companies;

o other specialized financial institutions, and state-level financial
institutions;

o insurance companies; and

o mutual funds.

Until the early 1990s, the Indian financial system was strictly controlled.
Interest rates were administered, formal and informal parameters governed asset
allocation, and strict controls limited entry into and expansion within the
financial sector. The government of India's economic reform program, which began
in 1991, encompassed the financial sector. The first phase of the reform process
began with the implementation of the recommendations of the Committee on the
Financial System, the Narasimham Committee I. The second phase of the reform
process began in 1999. See "--Banking Sector Reform--Committee on Banking Sector
Reform (Narasimham Committee II)".

This discussion presents an overview of the role and activities of the
Reserve Bank of India and of each of the major participants in the Indian
financial system, with a focus on the commercial banks. This is followed by a
brief summary of the banking reform process along with the recommendations of
various committees that have played a key role in the reform process. A brief
discussion on the impact of the liberalization process on long-term lending
institutions and commercial banks is then presented. Finally, reforms in the
non-banking financial sector are briefly reviewed.

Reserve Bank of India

The Reserve Bank of India, established in 1935, is the central banking and
monetary authority in India. The Reserve Bank of India manages the country's
money supply and foreign exchange and also serves as a bank for the government
of India and for the country's commercial banks. In addition to these
traditional central banking roles, the Reserve Bank of India undertakes certain
developmental and promotional roles.

The Reserve Bank of India issues guidelines on exposure limits, income
recognition, asset classification, provisioning for non-performing and
restructured assets, investment valuation and capital adequacy for commercial
banks, long-term lending institutions and non-bank finance companies. The
Reserve Bank of India requires these institutions to furnish information
relating to their businesses to it on a regular basis. For further discussion
regarding the Reserve Bank of India's role as the regulatory and supervisory
authority of India's financial system and its impact on us, see "Supervision and
Regulation".

Commercial Banks

Commercial banks in India have traditionally focused only on meeting the
short-term financial needs of industry, trade and agriculture. At year-end
fiscal 2005, there were 284 scheduled commercial banks in the country, with a
network of 68,116 branches serving approximately Rs. 17.53 trillion (US$ 401.9
billion) in deposit accounts.

139

Scheduled commercial banks are banks that are listed in the schedule to the
Reserve Bank of India Act, 1934, and are further categorized as public sector
banks, private sector banks and foreign banks. Scheduled commercial banks have a
presence throughout India, with approximately 69.5% of bank branches located in
rural or semi-urban areas of the country. A large number of these branches
belong to the public sector banks.

Public Sector Banks

Public sector banks make up the largest category in the Indian banking
system. They include the State Bank of India and its seven associate banks, 19
nationalized banks and 196 regional rural banks. Excluding the regional rural
banks, the remaining public sector banks have 47,320 branches, and accounted for
70.4% of the outstanding gross bank credit and 74.0% of the aggregate deposits
of the scheduled commercial banks at year-end fiscal 2005. The public sector
banks' large network of branches enables them to fund themselves out of low cost
deposits.

The State Bank of India is the largest bank in India. At year-end fiscal
2005, the State Bank of India and its seven associate banks had 13,722 branches.
They accounted for 24.2% of aggregate deposits and 23.1% of outstanding gross
bank credit of all scheduled commercial banks.

Regional rural banks were established from 1976 to 1987 by the central
government, state governments and sponsoring commercial banks jointly with a
view to develop the rural economy. Regional rural banks provide credit to small
farmers, artisans, small entrepreneurs and agricultural laborers. There were 196
regional rural banks at year-end fiscal 2005 with 14,433 branches, accounting
for 3.5% of aggregate deposits and 2.8% of gross bank credit outstanding of
scheduled commercial banks.

Private Sector Banks

After the first phase of bank nationalization was completed in 1969, public
sector banks made up the largest portion of Indian banking. The focus on public
sector banks was maintained throughout the 1970s and 1980s. In addition,
existing private sector banks which showed signs of an eventual default were
merged with state-owned banks. In July 1993, as part of the banking reform
process and as a measure to induce competition in the banking sector, the
Reserve Bank of India permitted entry of the private sector into the banking
system. This resulted in the introduction of private sector banks, including
ICICI Bank. These banks are collectively known as the "new" private sector
banks. At the end of June 2005, there were nine "new" private sector banks. A
merger between two of these banks, Centurion Bank and Bank of Punjab, has been
announced and will be effective October 1, 2005. In addition, 21 private sector
banks existing prior to July 1993 were operating at year-end fiscal 2005.

At year-end fiscal 2005, private sector banks accounted for approximately
18.1% of aggregate deposits and 20.0% of gross bank credit outstanding of the
scheduled commercial banks. Their network of 6,143 branches accounted for 9.0%
of the total branch network of scheduled commercial banks in the country. At the
year-end fiscal 2005, ICICI Bank accounted for approximately 5.3% of aggregate
deposits and 8.0% of non-food credit outstanding of the scheduled commercial
banks.

Foreign Banks

At the year-end fiscal 2005, there were 31 foreign banks with 220 branches
operating in India. Foreign banks accounted for 4.4% of aggregate deposits and
6.7% of outstanding gross bank credit of scheduled commercial banks at year-end
fiscal 2005. As part of the liberalization process, the Reserve Bank of India
has permitted foreign banks to operate more freely, subject to requirements
largely similar to those imposed on domestic banks. Foreign banks operate in
India through branches of the parent bank. In a circular dated July 6, 2004, the
Reserve Bank of India stipulated that banks should not acquire any fresh stake
in a bank's equity shares, if by such acquisition, the investing bank's holding
exceeded 5.0% of the investee bank's equity capital. This also applies to
holdings of foreign banks with a presence in India, in Indian banks.

The Reserve Bank of India issued a notification on "Roadmap for presence of
foreign banks in India" on February 28, 2005, announcing the following measures
with respect to the presence of foreign banks:

140

o During the first phase (up to March 2009), foreign banks will be
allowed to establish a presence by setting up wholly-owned
subsidiaries or by converting existing branches into wholly-owned
subsidiaries.

o In addition, during the first phase, foreign banks would be allowed to
acquire a controlling stake in a phased manner only in private sector
banks that are identified by the Reserve Bank of India for
restructuring.

o For new and existing foreign banks, it has been proposed to go beyond
the existing World Trade Organization commitment of allowing increases
of 12 branches per year. A more liberal policy will be followed for
under-banked areas.

During the second phase (from April 2009 onwards), after a review of the
first phase, foreign banks would be allowed to acquire up to 74.0% in private
sector banks in India.

The primary activity of most foreign banks in India has been in the
corporate segment. However, some of the larger foreign banks have made consumer
financing a larger part of their portfolios. These banks offer products such as
automobile finance, home loans, credit cards and household consumer finance.

Cooperative Banks

Cooperative banks cater to the financing needs of agriculture, small
industry and self-employed businessmen in urban and semi-urban areas of India.
The state land development banks and the primary land development banks provide
long-term credit for agriculture. In the light of liquidity and insolvency
problems experienced by some cooperative banks in fiscal 2001, the Reserve Bank
of India undertook several interim measures, pending formal legislative changes,
including measures related to lending against shares, borrowings in the call
market and term deposits placed with other urban cooperative banks. Presently
the Reserve Bank of India is responsible for supervision and regulation of urban
cooperative banks, and the National Bank for Agriculture and Rural Development
for state cooperative banks and district central cooperative banks. The Banking
Regulation (Amendment) and Miscellaneous Provisions Bill, 2003, which has been
introduced in the Indian Parliament, provides for the regulation of all
cooperative banks by the Reserve Bank of India. See also "-- Recent Structural
Reforms - Proposed Amendments to the Banking Regulation Act". In its Annual
Policy Statement for fiscal 2005, the Reserve Bank of India announced that it
proposed to consider issuance of fresh licenses to urban cooperative banks only
after a comprehensive policy on urban cooperative banks was in place, including
an appropriate legal and regulatory framework for the sector. In the mid-term
review of the annual policy statement for fiscal 2005, the Reserve Bank of India
announced that a vision document for the future role of urban cooperative banks
is being evolved to ensure depositors' interests and avoid contagion while
providing useful service to local communities. With respect to structural
issues, the Reserve Bank of India has stated that it would be encouraging growth
of strong and viable entities within this sector through consolidation. A task
force appointed by the government of India to examine the reforms required in
the cooperative banking system submitted its report in December 2004. It
recommended several structural, regulatory and operational reforms for
cooperative banks, including the provision of financial assistance by the
government for revitalizing this sector. In the Union Budget for fiscal 2006,
the Finance Minister accepted the recommendations of the Task Force in principle
and proposed to call state governments for consultation and begin to implement
the recommendations in the states willing to do so. In the Annual Policy
Statement for fiscal 2006, the Reserve Bank of India has stated that it is in
the process of preparing a medium-term framework for urban cooperative banks up
to 2010.

Long-Term Lending Institutions

The long-term lending institutions were established to provide medium-term
and long-term financial assistance to various industries for setting up new
projects and for the expansion and modernization of existing facilities. These
institutions provide fund-based and non-fund-based assistance to industry in the
form of loans, underwriting, direct subscription to shares, debentures and
guarantees. The primary long-term lending institutions included Industrial
Development Bank of India, IFCI Limited, Industrial Investment Bank of India as
well as ICICI prior to the amalgamation.

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The long-term lending institutions were expected to play a critical role in
Indian industrial growth and, accordingly, had access to concessional government
funding. However, in recent years, the operating environment of the long-term
lending institutions has changed substantially. Although the initial role of
these institutions was largely limited to providing a channel for government
funding to industry, the reform process required them to expand the scope of
their business activities, including into:

o fee-based activities like investment banking and advisory services;
and

o short-term lending activity including issuing corporate finance and
working capital loans.

Pursuant to the recommendations of the Narasimham Committee II and the Khan
Working Group, a working group created in 1999 to harmonize the role and
operations of long-term lending institutions and banks, the Reserve Bank of
India, in its mid-term review of monetary and credit policy for fiscal 2000,
announced that long-term lending institutions would have the option of
transforming themselves into banks subject to compliance with the prudential
norms as applicable to banks. In April 2001, the Reserve Bank of India issued
guidelines on several operational and regulatory issues which were required to
be addressed in evolving the path for transition of a long-term lending
institution into a universal bank. See "-- Recent Structural Reforms - Universal
Banking Guidelines". In April 2002, ICICI merged with ICICI Bank. The Industrial
Development Bank (Transfer of Undertaking and Repeal) Act, 2003 converted the
Industrial Development Bank of India into a banking company incorporated under
the Companies Act, 1956 on September 27, 2004, with exemptions from certain
statutory and regulatory norms applicable to banks, including an exemption for a
period of five years from the statutory liquidity ratio. IDBI Bank Limited, a
new private sector bank that was a subsidiary of the Industrial Development Bank
of India, was merged with the Industrial Development Bank of India in April
2005.

Non-Bank Finance Companies

There are over 10,000 non-bank finance companies in India, mostly in the
private sector. All non-bank finance companies are required to register with the
Reserve Bank of India. The non-bank finance companies may be categorized into
entities which take public deposits and those which do not. The companies which
accept public deposits are subject to strict supervision and capital adequacy
requirements of the Reserve Bank of India. ICICI Securities Limited, our
subsidiary, is a non-bank finance company, which does not accept public
deposits. The primary activities of the non-bank finance companies are consumer
credit, including automobile finance, home finance and consumer durable products
finance, wholesale finance products such as bill discounting for small and
medium-sized companies, and fee-based services such as investment banking and
underwriting. In 2003, Kotak Mahindra Finance Limited, a large non-bank finance
company was granted a banking license by the Reserve Bank of India and converted
itself into Kotak Mahindra Bank.

Over the past few years, certain non-bank finance companies have defaulted
to investors and depositors, and consequently actions (including bankruptcy
proceedings) have been initiated against them, many of which are currently
pending. See also "-- Reforms of the Non-Bank Finance Companies".

Housing Finance Companies

Housing finance companies form a distinct sub-group of the non-bank finance
companies. As a result of the various incentives given by the government for
investing in the housing sector in recent years, the scope of this business has
grown substantially. Until recently, Housing Development Finance Corporation
Limited was the premier institution providing housing finance in India. In
recent years, several other players including banks have entered the housing
finance industry. We are a major housing finance provider and also have a
housing finance subsidiary, ICICI Home Finance Company Limited. The National
Housing Bank and the Housing and Urban Development Corporation Limited are the
two government-controlled financial institutions created to improve the
availability of housing finance in India. The National Housing Bank Act provides
for securitization of housing loans, foreclosure of mortgages and setting up of
the Mortgage Credit Guarantee Scheme.

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Other Financial Institutions

Specialized Financial Institutions

In addition to the long-term lending institutions, there are various
specialized financial institutions which cater to the specific needs of
different sectors. They include the National Bank for Agricultural and Rural
Development, Export Import Bank of India, Small Industries Development Bank of
India, Risk Capital and Technology Finance Corporation Limited, Tourism Finance
Corporation of India Limited, National Housing Bank, Power Finance Corporation
Limited and the Infrastructure Development Finance Corporation Limited.

State Level Financial Institutions

State financial corporations operate at the state level and form an
integral part of the institutional financing system. State financial
corporations were set up to finance and promote small and medium-sized
enterprises. The state financial institutions are expected to achieve balanced
regional socio-economic growth by generating employment opportunities and
widening the ownership base of industry. At the state level, there are also
state industrial development corporations, which provide finance primarily to
medium-sized and large-sized enterprises.

Insurance Companies

Currently, there are 29 insurance companies in India, of which 14 are life
insurance companies, 14 are general insurance companies and one is a
re-insurance company. Of the 14 life insurance companies, 13 are in the private
sector and one is in the public sector. Among the general insurance companies,
eight are in the private sector and five are in the public sector including the
Export Credit Guarantee Corporation of India Limited, which is a central
government enterprise providing insurance to exporters and counter-guarantees to
banks for credit given to exporters. The re-insurance company, General Insurance
Corporation of India, is in the public sector. Life Insurance Corporation of
India, General Insurance Corporation of India and public sector general
insurance companies also provide long-term financial assistance to the
industrial sector. We have joint ventures in each of the life insurance and the
general insurance sectors. Our life insurance joint venture, ICICI Prudential
Life Insurance Company Limited and our general insurance joint venture, ICICI
Lombard General Insurance Company Limited, are both major players in their
respective segments. During fiscal 2005, the gross premiums underwritten by all
general insurance companies and the total new premiums of all life insurance
companies amounted to Rs. 181.0 billion (US$ 4.1 billion) and Rs. 253.4 billion
(US$ 5.8 billion) respectively.

The insurance sector in India is regulated by the Insurance Regulatory and
Development Authority. In December 1999, the parliament passed the Insurance
Regulatory and Development Authority Act, 1999. This Act opened up the Indian
insurance sector for foreign and private investors. The Act allows foreign
equity participation in new insurance companies of up to 26.0%. The new company
should have a minimum paid up equity capital of Rs. 1.0 billion (US$ 22.9
million) to carry on the business of life insurance or general insurance or Rs.
2.0 billion (US$ 45.9 million) to carry on exclusively the business of
reinsurance.

In the monetary and credit policy for fiscal 2001, the Reserve Bank of
India issued guidelines governing the entry of banks and financial institutions
into the insurance business. The guidelines permit banks and financial
institutions to enter the business of insurance underwriting through joint
ventures provided they meet stipulated criteria relating to their net worth,
capital adequacy ratio, profitability track record, level of impaired loans and
the performance of their existing subsidiary companies. The promoters of
insurance companies have to divest in a phased manner their shareholding in
excess of 26% (or such other percentage as may be prescribed), after a period of
10 years from the date of commencement of business or within such period as may
be prescribed by the Indian government. The Indian government, while presenting
its budget for fiscal 2005, proposed an increase in the limit on foreign equity
participation in private sector insurance companies from 26.0% to 49.0%.
However, this requires an amendment to the Insurance Regulatory and Development
Authority Act 1999 and has not been implemented as yet.

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Mutual Funds

At the end of August 2005, there were 30 mutual funds in India with total
assets under management of Rs. 1,957.3 billion (US$ 44.6 billion). From 1963 to
1987, Unit Trust of India was the only mutual fund operating in the country. It
was set up in 1963 at the initiative of the government and the Reserve Bank of
India. From 1987 onwards, several other public sector mutual funds entered this
sector. These mutual funds were established by public sector banks, the Life
Insurance Corporation of India and General Insurance Corporation of India. The
mutual funds industry was opened up to the private sector in 1993. In this year,
the SEBI (Mutual Fund) Regulation 1993 was issued by the Securities and Exchange
Board of India, under which all mutual funds (except for the Unit Trust of
India) were to be registered and governed. The industry is now regulated by a
more comprehensive SEBI (Mutual Fund) Regulation, 1996 which replaced the SEBI
(Mutual Fund) Regulation, 1993. The total number of private sector mutual funds
at the end of August 2005 was 24 with a 79.0% market share in terms of total
assets under management.

In 2001, Unit Trust of India, with a high level of investment in equity
securities, started to face difficulties in meeting redemption and assured
return obligations due to a significant decline in the market value of its
securities portfolio. In response, the government of India implemented a package
of reform measures for Unit Trust of India, including guaranteeing redemption
and assured return obligations to the unit holders, subject to restrictions on
the maximum permissible redemption amount. As part of the reforms, Unit Trust of
India was divided into two mutual funds structured in accordance with the
regulations of the Securities and Exchange Board of India, one comprising
assured return schemes and the other comprising net asset value based schemes.

Impact of Liberalization on the Indian Financial Sector

Until 1991, the financial sector in India was heavily controlled and
commercial banks and long-term lending institutions, the two dominant financial
intermediaries, had mutually exclusive roles and objectives and operated in a
largely stable environment, with little or no competition. Long-term lending
institutions were focused on the achievement of the Indian government's various
socio-economic objectives, including balanced industrial growth and employment
creation, especially in areas requiring development. Long-term lending
institutions were extended access to long-term funds at subsidized rates through
loans and equity from the government of India and from funds guaranteed by the
government of India originating from commercial banks in India and foreign
currency resources originating from multilateral and bilateral agencies.

The focus of the commercial banks was primarily to mobilize household
savings through demand and time deposits and to use these deposits to meet the
short-term financial needs of borrowers in industry, trade and agriculture. In
addition, the commercial banks provided a range of banking services to
individuals and business entities.

However, since 1991, there have been comprehensive changes in the Indian
financial system. Various financial sector reforms, implemented since 1991, have
transformed the operating environment of the banks and long-term lending
institutions. In particular, the deregulation of interest rates, emergence of a
liberalized domestic capital market, and entry of new private sector banks,
along with the broadening of long-term lending institutions' product portfolios,
have progressively intensified the competition between banks and long-term
lending institutions. The Reserve Bank of India has permitted the transformation
of long-term lending institutions into banks subject to compliance with the
prudential norms applicable to banks.

Banking Sector Reform

Most large banks in India were nationalized in 1969 and thereafter were
subject to a high degree of control until reform began in 1991. In addition to
controlling interest rates and entry into the banking sector, these regulations
also channeled lending into priority sectors. Banks were required to fund the
public sector through the mandatory acquisition of low interest-bearing
government securities or statutory liquidity ratio bonds to fulfill statutory
liquidity requirements. As a result, bank profitability was low, impaired assets
were comparatively high, capital adequacy was diminished, and operational
flexibility was hindered.

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Committee on the Financial System (Narasimham Committee I)

The Committee on the Financial System (The Narasimham Committee I) was set
up in August 1991 to recommend measures for reforming the financial sector. Many
of the recommendations made by the committee, which addressed organizational
issues, accounting practices and operating procedures, were implemented by the
government of India. The major recommendations that were implemented included
the following:

o with fiscal stabilization and the government increasingly resorting to
market borrowing to raise resources, the statutory liquidity ratio or
the proportion of the banks' net demand and time liabilities that were
required to be invested in government securities was reduced from
38.5% in the pre-reform period to 25.0% in October 1997;

o similarly, the cash reserve ratio or the proportion of the bank's net
demand and time liabilities that were required to be deposited with
the Reserve Bank of India was reduced from 15.0% in the pre-reform
period to 4.5%. In a circular dated September 11, 2004, the Reserve
Bank of India has raised the cash reserve ratio to 4.75% with effect
from September 18, 2004 and 5.0% with effect from October 2, 2004;

o special tribunals were created to resolve bad debt problems;

o most of the restrictions on interest rates for deposits were removed.
Commercial banks were allowed to set their own level of interest rates
for all deposits except savings bank deposits; and

o substantial capital infusion to several state-owned banks was approved
in order to bring their capital adequacy closer to internationally
accepted standards. By the end of fiscal 2002, aggregate
recapitalization amounted to Rs. 217.5 billion (US$ 5.0 billion). The
stronger public sector banks were given permission to issue equity to
further increase capital.

Committee on Banking Sector Reform (Narasimham Committee II)

The second Committee on Banking Sector Reform (Narasimham Committee II)
submitted its report in April 1998. The major recommendations of the committee
were in respect of capital adequacy requirements, asset classification and
provisioning, risk management and merger policies. The Reserve Bank of India
accepted and began implementing many of these recommendations in October 1998.

Recent Structural Reforms

Proposed Amendments to the Banking Regulation Act

Legislation seeking to amend the Banking Regulation Act has been introduced
in the Indian Parliament. As presently drafted, the main amendments propose to:

o permit banking companies to issue non-redeemable and redeemable
preference shares that will not carry any voting rights;

o make prior approval of the Reserve Bank of India mandatory for the
acquisition of more than 5.0% of a banking company's paid up capital
by any individual or firm or group;

o prohibit lending to relatives of directors and to non-subsidiary
companies that are under the same management as the banking company,
joint ventures, associates or the holding company of the banking
company. Lending to directors and to companies with directors common
to the banking company is already prohibited;

o remove the minimum statutory liquidity ratio requirement of 25.0%,
giving the Reserve Bank of India discretion to reduce the statutory
liquidity ratio to less than 25.0%. See also "Supervision and
Regulation - Legal Reserve Requirements - Statutory Liquidity Ratio";

o bring mergers of non-bank finance companies with banking companies
into the governance of the Indian Banking Regulation Act. Mergers of
non-bank finance companies with banking companies are currently
governed by the Indian Companies Act, 1956. The Banking Regulations
(Amendment) and Miscellaneous Provisions Bill, 2003 will, if passed,
require mergers of non-bank finance companies with banking

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companies to be approved by the majority of the shareholders of both
companies and by the Reserve Bank of India. It also provides, if the
merger is approved, for dissenting shareholders at their option to be
paid in exchange for their shares the value of their shares as
determined by the Reserve Bank of India;

o bring all cooperative banks under the supervision of the Reserve Bank
of India; and

o remove the limit of 10.0% on the maximum voting power exercisable by a
shareholder in a banking company.

Legislative Framework for Recovery of Debts due to Banks

In fiscal 2003, the Indian Parliament passed the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security Interest Act,
2002. This Act provides that a secured creditor may, in respect of loans
classified as non-performing in accordance with the Reserve Bank of India
guidelines, give notice in writing to the borrower requiring it to discharge its
liabilities within 60 days, failing which the secured creditor may take
possession of the assets constituting the security for the loan, and exercise
management rights in relation thereto, including the right to sell or otherwise
dispose of the assets. This Act also provides for the setting up of asset
reconstruction companies regulated by the Reserve Bank of India to acquire
assets from banks and financial institutions. The Reserve Bank of India has
issued guidelines for asset reconstruction companies in respect of their
establishment, registration and licensing by the Reserve Bank of India, and
operations. Asset Reconstruction Company (India) Limited, set up by us,
Industrial Development Bank of India, State Bank of India and certain other
banks and institutions, has received registration from the Reserve Bank of India
and commenced operation in August 2003.

Several petitions challenging the constitutional validity of the
Securitisation and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 were filed before the Indian Supreme Court. The
Supreme Court, in April 2004, upheld the constitutionality of the Act, other
than the requirement originally included in the Act that the borrower deposit
75.0% of the dues with the debt recovery tribunal as a pre-condition for appeal
by the borrower against the enforcement measures. The government of India, while
announcing its budget for fiscal 2005, proposed to amend the Act to further
strengthen the recovery process. In November 2004, the government of India
issued an ordinance amending the Securitisation Act. The Indian Parliament has
subsequently passed this ordinance as an Act. This Act, as amended, now provides
that a borrower may make an objection or representation to a secured creditor
after a notice is issued by the secured creditor to the borrower under the Act
demanding payment of dues. The secured creditor has to give reasons to the
borrower for not accepting the objection or representation. The Act also
introduces a deposit requirement for borrowers if they wish to appeal the
decision of the debt recovery tribunal. Further, the Act permits a lender to
take over the business of a borrower under the Securitisation Act under certain
circumstances (unlike the earlier provisions under which only assets could be
taken over). See "Supervision and Regulation - Reserve Bank of India Regulations
- - Regulations relating to Sale of Assets to Asset Reconstruction Companies."

Earlier, following the recommendations of the Narasimham Committee, the
Recovery of Debts due to Banks and Financial Institutions Act, 1993 was enacted.
This legislation provides for the establishment of a tribunal for speedy
resolution of litigation and recovery of debts owed to banks or financial
institutions. The Act creates tribunals before which the banks or the financial
institutions can file a suit for recovery of the amounts due to them. However,
if a scheme of reconstruction is pending before the Board for Industrial and
Financial Reconstruction, under the Sick Industrial Companies (Special
Provision) Act, 1985, no proceeding for recovery can be initiated or continued
before the tribunals. This protection from creditor action ceases if the secured
creditor takes action under Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act. While presenting its budget for
fiscal 2002, the government of India announced measures for the setting up of
more debt recovery tribunals and the eventual repeal of the Sick Industrial
Companies (Special Provision) Act, 1985. To date, however, this Act has not been
repealed.

Corporate Debt Restructuring Forum

To put in place an institutional mechanism for the restructuring of
corporate debt, the Reserve Bank of India has devised a corporate debt
restructuring system. The objective of this framework is to ensure a timely and
transparent mechanism for the restructuring of corporate debts of viable
entities facing problems, outside the purview of the

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Board of Industrial and Financial Rehabilitation, debt recovery tribunals and
other legal proceedings. In particular, this framework aims to preserve viable
corporates that are affected by certain internal and external factors and
minimize the losses to the creditors and other stakeholders through an orderly
and coordinated restructuring program. The corporate debt restructuring system
is a non-statutory mechanism and a voluntary system based on debtor-creditor and
inter-creditor agreements.

Universal Banking Guidelines

Universal banking in the Indian context means the transformation of
long-term lending institutions into banks. Pursuant to the recommendations of
the Narasimham Committee II and the Khan Working Group, the Reserve Bank of
India, in its mid-term review of monetary and credit policy for fiscal 2000,
announced that long-term lending institutions would have the option of
transforming themselves into banks subject to compliance with the prudential
norms as applicable to banks. If a long-term lending institution chose to
exercise the option available to it and formally decided to convert itself into
a universal bank, it could formulate a plan for the transition path and a
strategy for smooth conversion into a universal bank over a specified time
frame. In April 2001, the Reserve Bank of India issued guidelines on several
operational and regulatory issues which were required to be addressed in
evolving the path for transition of a long-term lending institution into a
universal bank.

Pension Reforms

Currently, there are three categories of pension schemes in India: pension
schemes for government employees, pension schemes for employees in the organized
sector and voluntary pension schemes. In case of pension schemes for government
employees, the government pays its employees a defined periodic benefit upon
their retirement. Further, the contribution towards the pension scheme is funded
solely by the government and not matched by a contribution from the employees.
The Employees Provident Fund, established in 1952, is a mandatory program for
employees of certain establishments. It is a contributory program that provides
for periodic contributions of 10% to 12% of the basic salary by both the
employer and the employees. The contribution is invested in prescribed
securities and the accumulated balance in the fund (including the accretion
thereto) is paid to the employee as a lump sum on retirement. Besides these,
there are voluntary pension schemes administered by the government (the Public
Provident Fund to which contribution may be made up to a maximum of Rs. 70,000
or US$ 1,605 per annum) or offered by insurance companies, where the
contribution may be made on a voluntary basis. Such voluntary contributions are
often driven by tax benefits offered under the scheme.

In 1998, the government commissioned the Old Age Social and Income Security
(OASIS) project and nominated an expert committee to suggest changes to the
existing policy framework. The committee submitted its report in January 2000,
recommending a system for private sector management of pension funds to provide
market-linked returns. It also recommended the establishment of a separate
pensions regulatory authority to regulate the pensions system. Subsequently, in
the budget for fiscal 2001, the government announced that a high level committee
would be formulated to design a contribution-based pension scheme for new
government recruits. The government also requested the Insurance Regulatory and
Development Authority to draw up a roadmap for implementing the OASIS Report.
The Insurance Regulatory and Development Authority submitted its report in
October 2001. The report suggested that pension fund managers should constitute
a separate legal entity to conduct their pension business. In August 2003, the
government announced that it would be mandatory for its new employees (excluding
defense personnel) to join a new defined contribution pension scheme where both
the government and the employee would make monthly contributions of 10% of the
employee's salary. The government also announced that a Pension Fund Development
and Regulatory Authority would be set up to regulate the pension industry. The
government constituted the interim Pension Fund Development and Regulatory
Authority on October 11, 2003. In December 2003, the government announced that
the new pension scheme would be applicable to all new recruits to Indian
government service (excluding defense personnel) from January 1, 2004. Further,
on December 30, 2004, the government promulgated an ordinance establishing the
statutory regulatory body, Pension Fund Regulatory and Development Authority
(PFRDA) to undertake promotional, developmental and regulatory functions with
respect to the pension sector. The Union Budget for fiscal 2006 has recognized
the opportunities for foreign direct investment in the pension sector and it has
also announced that the government would issue guidelines for such investment.

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Credit Policy Measures

As part of its effort to continue bank reform, the Reserve Bank of India
has announced a series of measures in its monetary and credit policy statements
aimed at deregulating and strengthening the financial system.

Annual Policy Statement for Fiscal 2005

In its annual policy statement for fiscal 2005 announced in May 2004, the
Reserve Bank of India kept the bank rate and reverse repo rate (the annualized
interest earned by the lender in a repurchase transaction between two banks or
between a bank and the Reserve Bank of India) unchanged at 6.0% and 4.5%
respectively and introduced the following key measures:

o Banks were permitted to raise long-term bonds with a minimum maturity
of five years to the extent of their exposure of residual maturity of
more than five years to the infrastructure sector;

o the scope of definition of infrastructure lending was expanded to
include construction relating to projects involving agro-processing
and supply of inputs to agriculture, construction of preservation and
storage facilities for processed agro-products and construction of
educational institutions and hospitals;

o measures were announced to facilitate the flow of credit to
agricultural and related sectors by including loans for storage
facilities and securitized agricultural loans as priority sector
advances;

o resident individuals were permitted to remit freely up to US$ 25,000
per calendar year, for any current or capital account transaction or a
combination of these. Indian corporates and partnership firms are
allowed to invest up to 100.0% of their net worth overseas;

o banks were permitted, under exceptional circumstances, with the
approval of their Boards, to consider enhancement of the exposure to
the borrower up to a maximum of 5.0% of capital funds, subject to the
borrower consenting to the bank making appropriate disclosures in its
annual report; and

o a graded higher provisioning requirement according to the age of
non-performing assets, which are included under "doubtful for more
than three years' category, was introduced with effect from March 31,
2005. See "Supervision and Regulation".

Mid-term Review of the Annual Policy Statement for Fiscal 2005

In the mid-term review of the annual policy statement announced in October
2004, the Reserve Bank of India raised the reverse repo rate by 25 basis points
to 4.75% with effect from October 27, 2004. The bank rate, however, was kept
unchanged at 6.0%. The following measures were also introduced:

o ceiling on non resident external deposit rates were raised to
LIBOR/SWAP rates of US Dollar of corresponding maturities plus 50
basis points from the existing level of USD LIBOR/SWAP rates; and

o as a temporary counter-cyclical measure, the risk weight was increased
from 50.0% to 75.0% in the case of housing loans and from 100.0% to
125.0% in the case of consumer credit including personal loans and
credit cards.

Annual Policy Statement for Fiscal 2006

In its annual policy statement for fiscal 2006 announced in April
2005, the Reserve Bank of India:

o raised the reverse repo rate by 25 basis points to 5.0% and reduced
the spread between the reverse repo and the repo rate to 100 basis
points from 125 basis points;

o proposed to issue guidelines for voluntary mergers between private
sector banks and non-banking finance companies (see "Supervision and
Regulation - Reserve Bank of India Regulations"); and

148

o urged banks to refocus on deposit mobilization and to empower
depositors. It also proposed to set up an independent Banking Codes
and Standards Board of India in order to (i) ensure a comprehensive
code of conduct for fair treatment of customers; (ii) issue guidelines
prescribing card issuing banks to ensure transparency and disclosure
of information; and (iii) widen the authority of the Banking Ombudsman
to cover individual grievances relating to non-adherence to the fair
practices code evolved by Indian Banks Association.

Reforms of the Non-Bank Finance Companies

The standards relating to income recognition, provisioning and capital
adequacy were prescribed for non-bank finance companies in June 1994. The
registered non-bank finance companies were required to achieve a minimum capital
adequacy of 6.0% by year-end fiscal 1995 and 8.0% by year-end fiscal 1996 and to
obtain a minimum credit rating. To encourage the companies complying with the
regulatory framework, the Reserve Bank of India announced in July 1996 certain
liberalization measures under which the non-bank finance companies registered
with it and complying with the prudential norms and credit rating requirements
were granted freedom from the ceiling on interest rates on deposits and amount
of deposits. Other measures introduced include requiring non-bank finance
companies to maintain a certain percentage of liquid assets and to create a
reserve fund. The percentage of liquid assets to be maintained by non-bank
finance companies has been revised uniformly upwards and since April 1999, 15.0%
of public deposits must be maintained. From January 1, 2000 the requirement
should not be less than 10.0% in approved securities and the remaining in
unencumbered term deposits in any scheduled commercial bank, the aggregate of
which shall not be less than 15.0%. of the "public deposit" outstanding at the
close of business on the last working day of the second preceding quarter. The
maximum rate of interest that non-bank finance companies could pay on their
public deposits was reduced from 12.5% per annum to 11.0% per annum effective
March 4, 2003.

Efforts have also been made to integrate non-bank finance companies into
the mainstream financial sector. The first phase of this integration covered
measures relating to registrations and standards. The focus of supervision has
now shifted to non-bank finance companies accepting public deposits. This is
because companies accepting public deposits are required to comply with all the
directions relating to public deposits, prudential norms and liquid assets. A
task force on non-bank finance companies set up by the government of India
submitted its report in October 1998, and recommended several steps to
rationalize the regulation of non-bank finance companies. Accepting these
recommendations, the Reserve Bank of India issued new guidelines for non-bank
finance companies, which were as follows:

o a minimum net owned fund of Rs. 2.5 million (US$ 57,313) is mandatory
before existing non-bank finance companies may accept public deposits;

o a minimum investment grade rating is compulsory for loan and
investment companies accepting public deposits, even if they have the
minimum net owned funds;

o permission to accept public deposits was also linked to the level of
capital to risk assets ratio. Different capital to risk assets ratio
levels for non-bank finance companies with different ratings were
specified; and

o non-bank finance companies were advised to restrict their investments
in real estate to 10.0% of their net owned funds.

In the monetary and credit policy for fiscal 2000, the Reserve Bank of
India stipulated a minimum capital base of Rs. 20 million (US$ 458,505) for all
new non-bank finance companies. In the government of India's budget for fiscal
2002, the procedures for foreign direct investment in non-bank finance companies
were substantially liberalized.

During fiscal 2003, the Reserve Bank introduced a number of measures to
enhance the regulatory and supervisory standards of non-bank finance companies,
especially in order to bring them at par with commercial banks, in select
operations, over a period of time. Other regulatory measures adopted and
subsequently revised in November 2004 included aligning interest rates in this
sector with the rates prevalent in the rest of the economy, tightening
prudential norms and harmonizing supervisory directions with the requirements of
the Companies Act, procedural changes in nomination facilities, issuance of a
Know Your Customer policy and allowing non-bank finance companies to take up
insurance agency business.

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SUPERVISION AND REGULATION

The main legislation governing commercial banks in India is the Banking
Regulation Act. Other important laws include the Reserve Bank of India Act, the
Negotiable Instruments Act and the Banker's Books Evidence Act. Additionally,
the Reserve Bank of India, from time to time, issues guidelines to be followed
by the bank. Compliance with all regulatory requirements is evaluated with
respect to financial statements under Indian GAAP.

Reserve Bank of India Regulations

Commercial banks in India are required under the Banking Regulation Act to
obtain a license from the Reserve Bank of India to carry on banking business in
India. Before granting the license, the Reserve Bank of India must be satisfied
that certain conditions are complied with, including (i) that the bank has the
ability to pay its present and future depositors in full as their claims accrue;
(ii) that the affairs of the bank will not be or are not likely to be conducted
in a manner detrimental to the interests of present or future depositors; (iii)
that the bank has adequate capital and earnings prospects; and (iv) that the
public interest will be served if such license is granted to the bank. The
Reserve Bank of India can cancel the license if the bank fails to meet the above
conditions or if the bank ceases to carry on banking operations in India.

ICICI Bank, being licensed as a banking company, is regulated and
supervised by the Reserve Bank of India. The Reserve Bank of India requires
ICICI Bank to furnish statements, information and certain details relating to
its business. It has issued guidelines for commercial banks on recognition of
income, classification of assets, valuation of investments, maintenance of
capital adequacy and provisioning for impaired assets. The Reserve Bank of India
has set up a Board for Financial Supervision, under the chairmanship of the
Governor of the Reserve Bank of India. The appointment of the auditors of banks
is subject to the approval of the Reserve Bank of India. The Reserve Bank of
India can direct a special audit in the interest of the depositors or in the
public interest.

Regulations relating to the Opening of Branches

Section 23 of the Banking Regulation Act provides that banks must obtain
the prior approval of the Reserve Bank of India to open new branches. Permission
is granted based on factors such as the financial condition and history of the
company, its management, adequacy of capital structure and earning prospects and
the public interest. The Reserve Bank of India may cancel the license for
violations of the conditions under which it was granted. Under the banking
license granted to ICICI Bank by the Reserve Bank of India, ICICI Bank is
required to have at least 25.0% of its branches located in rural and semi-urban
areas. A rural area is defined as a center with a population of less than
10,000. A semi-urban area is defined as a center with a population of greater
than 10,000 but less than 100,000. These population figures relate to the 1991
census conducted by the government of India. In September 2005, the Reserve Bank
of India issued a new branch authorization policy in terms of which the existing
system of granting authorizations for opening individual branches from time to
time will be replaced by a system of aggregated approvals on an annual basis.
The Reserve Bank of India will discuss with individual banks their branch
expansion strategies and plans over the medium term. The term "branch" for this
purpose has been defined to also include extension counters, offsite ATMs,
administrative offices and back offices as well as call centers where banking
transactions are undertaken. While processing authorization requests, the
Reserve Bank of India will give importance to the availability of banking
services in under-banked areas, credit flow to the priority sector and efforts
to promote financial inclusion, the need to induce enhanced competition in the
banking sector, the bank's regulatory compliance, quality of governance, risk
management and relationships with subsidiaries and affiliates.

Capital Adequacy Requirements

ICICI Bank is subject to the capital adequacy requirements of the Reserve
Bank of India, which, based on the guidelines of the Basel Committee on Banking
Regulations and Supervisory Practices, 1998, require ICICI Bank to maintain a
minimum ratio of capital to risk adjusted assets and off-balance sheet items of
9.0%, at least half of which must be Tier 1 capital.

The total capital of a banking company is classified into Tier 1 and Tier 2
capital. Tier 1 capital, the core capital, provides the most permanent and
readily available support against unexpected losses. It comprises paid-up
capital and reserves consisting of any statutory reserves, free reserves and
capital reserve pursuant to the Indian

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Income-tax Act as reduced by equity investments in subsidiaries, intangible
assets and losses in the current period and those brought forward from the
previous period. In fiscal 2003, the Reserve Bank of India issued a guideline
requiring a bank's deferred tax asset to be treated as an intangible asset and
deducted from its Tier 1 capital.

Tier 2 capital consists of undisclosed reserves, revaluation reserves (at a
discount of 55.0%), general provisions and loss reserves (allowed up to a
maximum of 1.25% of risk weighted assets), hybrid debt capital instruments
(which combine certain features of both equity and debt securities) and
subordinated debt. Any subordinated debt is subject to progressive discounts
each year for inclusion in Tier 2 capital and total subordinated debt considered
as Tier 2 capital cannot exceed 50.0% of Tier 1 capital. Tier 2 capital cannot
exceed Tier 1 capital.

Risk adjusted assets and off-balance sheet items considered for determining
the capital adequacy ratio are the risk weighted total of specified funded and
non-funded exposures. Degrees of credit risk expressed as percentage weighting
have been assigned to various balance sheet asset items and conversion factors
to off-balance sheet items. The value of each item is multiplied by the relevant
weight or conversion factor to produce risk-adjusted values of assets and
off-balance-sheet items. Standby letters of credit/ guarantees and documentary
credits are treated as similar to funded exposure and are subject to similar
risk weight. All foreign exchange open position limits of the bank carry a
100.0% risk weight. Capital requirements have also been prescribed for open
positions in gold. In December 2004, the Reserve Bank of India increased the
risk weights on housing loans from 50.0% to 75.0% and on consumer credit
including personal loans and credit card receivables from 100.0% to 125.0% as a
temporary counter-cyclical measure given the rapid growth of these segments. In
July 2005, the Reserve Bank of India increased the risk weights on capital
market exposure and exposure to commercial real estate from 100.0% to 125.0%. In
April 2005, the Reserve Bank of India issued draft guidelines on securitization,
which if implemented in their present form would require a significantly higher
level of capital to be maintained for securitized assets.

Effective March 31, 2001, banks and financial institutions were required to
assign a risk weight of 2.5% in respect of the entire investment portfolio to
cover market risk, over and above the existing risk weights for credit risk in
non-government and non-approved securities. In fiscal 2002, with a view to the
building up of adequate reserves to guard against any possible reversal of the
interest rate environment in the future due to unexpected developments, the
Reserve Bank of India advised banks to build up an investment fluctuation
reserve of a minimum of 5.0% of the bank's investment portfolio within a period
of five years, by fiscal 2006. This reserve has to be computed with respect to
investments in held for trading and available for sale categories. Investment
fluctuation reserve is included in Tier 2 capital. In June 2004, the Reserve
Bank of India issued guidelines on capital for market risk. The guidelines
prescribe the method of computation of risk-weighted assets in respect of market
risk. The aggregate risk weighted assets are required to be taken into account
for determining the capital adequacy ratio. Banks are required to maintain a
capital charge for market risk in respect of their trading book exposure
(including dividend) by year-end fiscal 2005 and securities included under
available for sale category by year-end fiscal 2006. In April 2005, the Reserve
Bank of India specified that banks which have maintained capital of at least
9.0% of the risk weighted assets for both credit risk and market risk for
investments under the held for trading and available for sale categories, open
gold position limit, open foreign exchange position limit, trading positions in
derivatives and derivatives entered into for hedging trading book exposures may
treat the balance in excess of 5.0% in the investment fluctuation reserve as
Tier 1 capital. Banks satisfying the above criteria may also transfer the amount
in excess of the said 5.0% in the investment fluctuation reserve to the
statutory reserve.

In February 2005, the Reserve Bank of India issued draft guidelines for the
implementation of the revised capital adequacy framework of the Basel Committee.
These draft guidelines, which are proposed to be effective from April 1, 2006,
specify that all banks in India will adopt the standardized approach for credit
risk and the basic indicator approach for operational risk with effect from
March 31, 2007. After adequate expertise has been developed, both at the banks
and at the supervisory levels, some banks may be allowed to migrate to the
internal ratings based approach after obtaining the approval of the Reserve Bank
of India. The guidelines also prescribe a 75.0% risk weight for retail credit
exposures, differential risk weights for other credit exposures linked to their
credit rating, and a capital charge for operational risk based on a factor of
15.0% of the sum of a bank's net interest income and non-interest income
(excluding extraordinary income).

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Loan Loss Provisions and Non-Performing Assets

In April 1992, the Reserve Bank of India issued formal guidelines on income
recognition, asset classification, provisioning standards and valuation of
investments applicable to banks, which are revised from time to time. These
guidelines are applied for the calculation of impaired assets and loan loss
provisions under Indian GAAP.

The principal features of these Reserve Bank of India guidelines, which
have been implemented with respect to ICICI Bank's loans, debentures, lease
assets, hire purchases and bills are set forth below.

Asset Classification

An impaired asset (also called non-performing assets pursuant to the
Reserve Bank of India guidelines) is an asset in respect of which any amount of
interest or principal is overdue for more than 90 days (180 days until year-end
fiscal 2003). In particular, an advance is an impaired asset where:

o interest and/or installment of principal remains overdue for a period
of more than 90 days in respect of a term loan;

o the account remains "out-of-order" for a period of more than 90 days
in respect of an overdraft or cash credit;

o the bill remains overdue for a period of more than 90 days in case of
bills purchased and discounted;

o interest and/or principal remains overdue for two harvest seasons but
for a period not exceeding two half years in the case of an advance
granted for agricultural purposes; and

o any amount to be received remains overdue for a period of more than 90
days in respect of other accounts.

Interest in respect of non-performing assets is not recognized or credited
to the income account unless collected.

Non-performing assets are classified as described below.

Sub-Standard Assets. Assets that are non-performing assets for a period not
exceeding 12 months (18 months until year-end fiscal 2004). In such cases, the
current net worth of the borrower / guarantor or the current market value of the
security charged is not enough to ensure recovery of dues to the banks in full.
Such an asset has well-defined credit weaknesses that jeopardize the liquidation
of the debt and are characterized by the distinct possibility that the bank will
sustain some loss, if deficiencies are not corrected.

Doubtful Assets. Assets that are non-performing assets for more than 12
months (18 months until year-end fiscal 2004). A loan classified as doubtful has
all the weaknesses inherent in assets that are classified as sub-standard, with
the added characteristic that the weaknesses make collection or liquidation in
full, on the basis of currently known facts, conditions and values, highly
questionable and improbable.

Loss Assets. Assets on which losses have been identified by the bank or
internal or external auditors or the Reserve Bank India inspection but the
amount has not been written off fully.

There are separate guidelines for projects under implementation which are
based on the achievement of financial closure and the date of approval of the
project financing.

The Reserve Bank of India also has separate guidelines for restructured
loans. A fully secured restructured standard asset can be restructured by
reschedulement of principal repayment and/or the interest element, but must be
separately disclosed as a restructured asset. The amount of sacrifice, if any,
in the element of interest, measured in present value terms, is either written
off or provision is made to the extent of the sacrifice involved. Similar
guidelines are applicable to sub-standard assets. The sub-standard accounts
which have been subjected to restructuring, whether in respect of principal
installment or interest amount, by whatever modality, are eligible to be
upgraded to the standard category only after the specified period, i.e., a
period of one year after the date when first payment of interest or of
principal, whichever is earlier, falls due, subject to satisfactory performance
during the period.

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To put in place an institutional mechanism for the restructuring of
corporate debt, the Reserve Bank of India has devised a corporate debt
restructuring system. See "Overview of the Indian Financial Sector - Recent
Structural Reforms -- Corporate Debt Restructuring Forum".

Provisioning and Write-Offs

Provisions are based on guidelines specific to the classification of the
assets. The following guidelines apply to the various asset classifications:

o Standard Assets. A general provision of 0.25% is required.

o Sub-Standard Assets. A general provision of 10.0% is required.
However, unsecured exposures which are identified as substandard would
attract an additional provision of 10.0%, i.e., a total of 20.0% on
the outstanding balance.

o Doubtful Assets. A 100.0% write-off is required to be taken against
the unsecured portion of the doubtful asset and charged against
income. The value assigned to the collateral securing a loan is the
amount reflected on the borrower's books or the realizable value
determined by third party appraisers. Until year-end fiscal 2004, in
cases where there was a secured portion of the asset, depending upon
the period for which the asset remained doubtful, a 20.0% to 50.0%
provision was required to be taken against the secured asset as
follows:

o Up to one year: 20.0% provision

o One to three years: 30.0% provision

o More than three years: 50.0% provision

In July 2004, the Reserve Bank of India introduced additional provisioning
requirements for non-performing assets classified as `doubtful for more than
three years'. Effective year-end fiscal 2005, 100.0% provision is required for
the secured portion of assets classified as doubtful for more than three years
on or after April 1, 2004. For the secured portion of assets classified as
doubtful for more than three years at year-end fiscal, 2004, a provision of
60.0% is required to be made by year-end fiscal 2005, 75.0% by year-end fiscal
2006 and 100.0% by year-end fiscal 2007.

o Loss Assets. The entire asset is required to be written off or
provided for, i.e. a 100.0% provision.

o Restructured Assets. The amount of sacrifice, if any, in the element
of interest, measured in present value terms, is either written off or
provision is made to the extent of the sacrifice involved.

Regulations relating to Making Loans

The provisions of the Banking Regulation Act govern the making of loans by
banks in India. The Reserve Bank of India issues directions covering the loan
activities of banks. Some of the major guidelines of Reserve Bank of India,
which are now in effect, are as follows:

o The Reserve Bank of India has prescribed norms for bank lending to
non-bank financial companies and financing of public sector
disinvestment.

o Banks are free to determine their own lending rates but each bank must
declare its prime lending rate as approved by its board of directors.
Banks are required to declare a benchmark prime lending rate based on
various parameters including cost of funds, operating expenses,
capital charge and profit margin. Each bank should also indicate the
maximum spread over the prime lending rate for all credit exposures
other than retail loans. The interest charged by banks on advances up
to Rs. 200,000 (US$ 4,585) to any one entity (other than certain
permitted types of loans including loans to individuals for acquiring
residential property, loans for purchase of consumer durables and
other non-priority sector personal loans) must not exceed the prime
lending rate. Banks are also given freedom to lend at a rate below the
prime lending rate in respect of

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creditworthy borrowers and exposures. Interest rates for certain
categories of advances are regulated by the Reserve Bank of India.

o In terms of Section 20(1) of the Banking Regulation Act, a banking
company is prohibited from entering into any commitment for granting
any loans or advances to or on behalf of any of its directors, or any
firm in which any of its directors is interested as partner, manager,
employee or guarantor, or any company (not being a subsidiary of the
banking company or a company registered under Section 25 of the
Companies Act, 1956, or a government company) of which, or the
subsidiary or the holding company of which any of the directors of the
bank is a director, managing agent, manager, employee or guarantor or
in which he holds substantial interest, or any individual in respect
of whom any of its directors is a partner or guarantor. There are
certain exemptions in this regard as the explanation to the section
provides that `loans or advances' shall not include any transaction
which Reserve Bank of India may specify by general or special order as
not being a loan or advance for the purpose of such section. ICICI
Bank is in compliance with these requirements.

Legislation introduced in the Parliament to amend the Banking Regulation
Act has proposed to prohibit lending to relatives of directors and to
non-subsidiary companies that are under the same management as the banking
company, joint ventures, associates or the holding company of the banking
company. See also "Overview of the Indian Financial Sector--Recent Structural
Reforms--Proposed Amendments to the Banking Regulation Act".

There are guidelines on loans against equity shares in respect of amount,
margin requirement and purpose.

In June 2005, the Reserve Bank of India issued guidelines requiring banks
to put in place a policy for exposure to real estate with the approval of their
boards. The policy is required to include exposure limits, collaterals to be
considered, collateral cover and margins and credit authorization. The Reserve
Bank of India has also permitted banks to extend financial assistance to Indian
companies for acquisition of equity in overseas joint ventures or wholly owned
subsidiaries or in other overseas companies, new or existing, as strategic
investment. Banks are not permitted to finance acquisitions by companies in
India.

Regulations relating to Sale of Assets to Asset Reconstruction Companies

The Securitisation and Reconstruction of Financial Assets and Enforcement
of Security Interest Act, 2002 (as subsequently amended) provides for sale of
financial assets by banks and financial institutions to asset reconstruction
companies. The Reserve Bank of India has issued guidelines to banks on the
process to be followed for sales of financial assets to asset reconstruction
companies. These guidelines provide that a bank may sell financial assets to an
asset reconstruction company provided the asset is a non-performing asset. These
assets are to be sold on `without recourse' basis only. A bank may sell a
standard asset only if the borrower has a consortium or multiple banking
arrangement, at least 75.0% by value of the total loans to the borrower are
classified as non-performing and at least 75.0% by value of the banks and
financial institutions in the consortium or multiple banking arrangement agree
to the sale. The banks selling financial assets should ensure that there is no
known liability devolving on them and that they do not assume any operational,
legal or any other type of risks relating to the financial assets sold. Further,
banks may not sell financial assets at a contingent price with an agreement to
bear a part of the shortfall on ultimate realization. However, banks may sell
specific financial assets with an agreement to share in any surplus realized by
the asset reconstruction company in the future. While each bank is required to
make its own assessment of the value offered in the sale before accepting or
rejecting an offer for purchase of financial assets by an asset reconstruction
company, in consortium or multiple banking arrangements where more than 75.0% by
value of the banks or financial institutions accept the offer, the remaining
banks or financial institutions are obliged to accept the offer. Consideration
for the sale may be in the form of cash, bonds or debentures or security
receipts or pass through certificates issued by the asset reconstruction company
or trusts set up by it to acquire the financial assets. See also "Overview of
the Indian Financial Sector - Recent Structural Reforms - Legislative Framework
for Recovery of Debts Due to Banks".

Guidelines on Sale and Purchase of Non-performing Assets

In July 2005, the Reserve Bank of India issued guidelines on sales and
purchases of non-performing assets between banks, financial institutions and
non-bank finance companies. These guidelines require that the board of

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directors of the bank must establish a policy for purchases and sales of
non-performing assets. Purchases and sales of non-performing assets must be
without recourse to the seller and on a cash basis, with the entire
consideration being paid upfront. An asset must have been classified as
non-performing for at least two years by the seller to be eligible for sale. The
purchasing bank must hold the non-performing asset on its books for at least 15
months before it can sell the asset to another bank. The asset cannot be sold
back to the original seller.

Directed Lending

Priority Sector Lending

The Reserve Bank of India requires commercial banks to lend a certain
percentage of their net bank credit to specific sectors (the priority sectors),
such as agriculture, small-scale industry, small businesses and housing finance.
Total priority sector advances should be 40.0% of net bank credit with
agricultural advances required to be 18.0% of net bank credit and advances to
weaker sections required to be 10.0% of net bank credit, and 1.0% of the
previous year's net bank credit required to be lent under the Differential Rate
of Interest scheme. Any shortfall in the amount required to be lent to the
priority sectors may be required to be deposited with the National Bank for
Agriculture and the Rural Development. These deposits can be for a period of one
year or five years.

Prior to the amalgamation, the advances of ICICI were not subject to the
requirement applicable to banks in respect of priority sector lending. Pursuant
to the terms of the Reserve Bank of India's approval of the amalgamation, ICICI
Bank is required to maintain a total of 50.0% of its net bank credit on the
residual portion of its advances (i.e., the portion of its total advances
excluding advances of ICICI at year-end fiscal 2002) in the form of priority
sector advances. This additional requirement of 10.0% by way of priority sector
advances will apply until such time as the aggregate priority sector advances
reach a level of 40.0% of the total net bank credit of ICICI Bank.

Export Credit

The Reserve Bank of India also requires commercial banks to make loans to
exporters at concessional rates of interest. This enables exporters to have
access to an internationally competitive financing option. Pursuant to existing
guidelines, 12.0% of a bank's net bank credit is required to be in the form of
export credit. ICICI Bank provides export credit for pre-shipment and
post-shipment requirements of exporter borrowers in rupees and foreign
currencies.

Credit Exposure Limits

As a prudent measure aimed at better risk management and avoidance of
concentration of credit risk, the Reserve Bank of India has prescribed credit
exposure limits for banks and long-term lending institutions in respect of their
lending to individual borrowers and to all companies in a single group (or
sponsor group).

The limits currently set by the Reserve Bank of India are as follows:

o The exposure ceiling for a single borrower is 15.0% of capital funds
and group exposure limit is 40.0% of capital funds. In case of
financing for infrastructure projects, the exposure limit to a single
borrower is extendable by another 5.0%, i.e., up to 20.0% of capital
funds and the group exposure limit is extendable by another 10.0%,
i.e., up to 50.0% of capital funds. Banks may, in exceptional
circumstances, with the approval of their board of directors, consider
enhancement of the exposure to a borrower up to a maximum of further
5.0% of capital funds, subject to the borrower consenting to the banks
making appropriate disclosures in their annual reports.

o Capital funds is the total capital as defined under capital adequacy
norms (Tier 1 and Tier 2 capital).

o Non-fund based exposures are calculated at 100.0% and in addition,
banks include forward contracts in foreign exchange and other
derivative products, like currency swaps and options, at their
replacement cost value in determining individual or group borrower
exposure ceilings, effective April 1, 2003.

At year-end fiscal 2005, ICICI Bank was in compliance with these
guidelines.

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To ensure that exposures are evenly spread, the Reserve Bank of India
requires banks to fix internal limits of exposure to specific sectors. These
limits are subject to periodical review by the banks. ICICI Bank has fixed a
ceiling of 15.0% on its exposure to any one industry (other than retail loans)
and monitors its exposures accordingly.

Regulations relating to Investments and Capital Market Exposure Limits

Pursuant to the Reserve Bank of India guidelines, the exposure of banks to
capital markets by way of investments in shares, convertible debentures, units
of equity oriented mutual funds and loans to brokers, should not exceed 5.0% of
total advances (including commercial paper) at March 31 of the previous fiscal
year and investments in shares, convertible debentures and units of equity
oriented mutual funds should not exceed 20.0% of the bank's net worth. However
the exposure to capital markets in excess of 5.0% is permitted by the Reserve
Bank of India on a case by case basis. Pursuant to the terms of the Reserve Bank
of India's approval for the amalgamation, ICICI's project finance related
investments are excluded from the computation of these limits for a period of
five years from the amalgamation. In addition, the Reserve Bank of India has
approved the exclusion of specific equity investments acquired by conversion of
debt under restructuring schemes approved by the Corporate Debt Restructuring
Forum.

In November 2003, Reserve Bank of India issued guidelines on investments by
banks in non-Statutory Liquidity Ratio securities issued by companies, banks,
financial institutions, central and state government sponsored institutions and
special purpose vehicles. These guidelines apply to primary market subscriptions
and secondary market purchases. Pursuant to these guidelines, banks are
prohibited from investing in non-Statutory Liquidity Ratio securities with an
original maturity of less than one year, other than commercial paper and
certificates of deposits. Banks are also prohibited from investing in unrated
securities. A bank's investment in unlisted non-Statutory Liquidity Ratio
securities may not exceed 10.0% of its total investment in non-Statutory
Liquidity Ratio securities as at the end of the preceding fiscal year with a
sub-ceiling of 5.0% for investments in bonds of public sector undertakings.
These guidelines do not apply to investments in security receipts issued by
securitization or reconstruction companies registered with Reserve Bank of India
and asset backed securities and mortgage backed securities with a minimum
investment grade credit rating. These guidelines were effective April 1, 2004,
with provision for compliance in a phased manner by January 1, 2005.

In April 1999, the Reserve Bank of India, in its monetary and credit
policy, stated that the investment by a bank in subordinated debt instruments,
representing Tier 2 capital, issued by other banks and financial institutions
should not exceed 10.0% of the investing bank's capital including Tier 2 capital
and free reserves. In July 2004, the Reserve Bank of India imposed a ceiling of
10.0% of capital funds (Tier 1 plus Tier 2 capital) on investments by banks and
financial institutions in equity shares, preference shares eligible for capital
status, subordinated debt instruments, hybrid debt capital instruments and any
other instrument approved as in the nature of capital, issued by other banks and
financial institutions. Investments in the instruments which are not deducted
from Tier 1 capital of the investing bank or financial institution, are subject
to a 100.0% risk weight for credit risk for capital adequacy purposes. The risk
weight for credit risk exposure in capital markets has been increased to 125.0%
from 100.0% in July 2005. Further, banks and financial institutions cannot
acquire any fresh stake in a bank's equity shares, if by such acquisition, the
investing bank's or financial institution's holding exceeds 5.0% of the investee
bank's equity capital. Banks with investments in excess of the prescribed limits
were required to apply to the Reserve Bank of India with a roadmap for reduction
of the exposure. We have equity shareholding in excess of the prescribed limits
in two Indian private sector banks, Federal Bank Limited and South Indian Bank
Limited, and are in dialogue with the Reserve Bank of India for reduction of our
shareholding.

Consolidated Supervision Guidelines

In fiscal 2003, the Reserve Bank of India issued guidelines for
consolidated accounting and consolidated supervision for banks. These guidelines
became effective April 1, 2003. The principal features of these guidelines are:

Consolidated Financial Statements. Banks are required to prepare
consolidated financial statements intended for public disclosure.

Consolidated Prudential Returns. Banks are required to submit to the
Reserve Bank of India, consolidated prudential returns reporting their
compliance with various prudential norms on a consolidated basis, excluding

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insurance subsidiaries. Compliance on a consolidated basis is required in
respect of the following main prudential norms:

o Single borrower exposure limit of 15.0% of capital funds (20.0% of
capital funds provided the additional exposure of up to 5.0% is for
the purpose of financing infrastructure projects);

o Borrower group exposure limit of 40.0% of capital funds (50.0% of
capital funds provided the additional exposure of up to 10.0% is for
the purpose of financing infrastructure projects);

o Deduction from Tier 1 capital of the bank, of any shortfall in capital
adequacy of a subsidiary for which capital adequacy norms are
specified; and

o Consolidated capital market exposure limit of 2.0% of consolidated
advances and 10.0% of consolidated net worth.

ICICI Bank is in compliance with these guidelines, except for the
consolidated capital market exposure limits. ICICI Bank has submitted to the
Reserve Bank of India that the limit of 2.0% of consolidated advances and 10.0%
of consolidated net worth effectively reduces the standalone capital market
exposure limit of 5.0% of advances and 20.0% of net worth. See also "-- Credit
Exposure Limits".

In June 2004, the Reserve Bank of India published the report of a working
group on monitoring of financial conglomerates, which proposed the following
framework:

o identification of financial conglomerates that would be subjected to
focused regulatory oversight;

o monitoring intra-group transactions and exposures and large exposures
of the group to outside counter parties;

o identifying a designated entity within each group that would collate
data in respect of all other group entities and furnish the same to
its regulator; and

o formalising a mechanism for inter-regulatory exchange of information.

The proposed framework covers entities under the jurisdiction of the
Reserve Bank of India, the Securities and Exchange Board of India, the Insurance
Regulatory and Development Authority and the National Housing Bank and would in
due course be extended to entities regulated by the proposed Pension Fund
Regulatory and Development Authority. The Reserve Bank of India has identified
ICICI Bank and its related entities as a financial conglomerate with ICICI Bank
as the designated entity responsible for reporting to the Reserve Bank of India.

Banks' Investment Classification and Valuation Norms

The key features of the Reserve Bank of India guidelines on categorization
and valuation of banks' investment portfolio are given below.

o The entire investment portfolio is required to be classified under
three categories: (a) held to maturity, (b) held for trading and (c)
available for sale. Held to maturity includes securities acquired with
the intention of being held up to maturity; held for trading includes
securities acquired with the intention of being traded to take
advantage of the short-term price/interest rate movements; and
available for sale includes securities not included in held to
maturity and held for trading. Banks should decide the category of
investment at the time of acquisition.

o Held to maturity investments compulsorily include (a) recapitalization
bonds, (b) investments in subsidiaries and joint ventures and (c)
investments in debentures deemed as advance. Held to maturity
investments also include any other investment identified for inclusion
in this category subject to the condition that such investments cannot
exceed 25.0% of the total investment excluding recapitalization bonds
and debentures.

157

o Profit on the sale of investments in the held to maturity category is
appropriated to the capital reserve account after being taken in the
income statement. Loss on any sale is recognized in the income
statement.

o The market price of the security available from the stock exchange,
the price of securities in subsidiary general ledger transactions, the
Reserve Bank of India price list or prices declared by Primary Dealers
Association of India jointly with the Fixed Income Money Market and
Derivatives Association of India serves as the "market value" for
investments in available for sale and held for trading securities.

o Investments under the held for trading category should be sold within
90 days; in the event of inability to sell due to adverse factors
including tight liquidity, extreme volatility or a unidirectional
movement in the market, the unsold securities should be shifted to the
available for sale category.

o Profit or loss on the sale of investments in both held for trading and
available for sale categories is taken in the income statement.

o Shifting of investments from or to held to maturity may be done with
the approval of the board of directors once a year, normally at the
beginning of the accounting year; shifting of investments from
available for sale to held for trading may be done with the approval
of the board of directors, the Asset Liability Management Committee or
the Investment Committee; shifting from held for trading to available
for sale is generally not permitted.

In September 2004, the Reserve Bank of India announced that it would set up
an internal group to review the investment classification guidelines to align
them with international practices and the current state of risk management
practices in India, taking into account the unique requirement applicable to
banks in India of maintenance of a statutory liquidity ratio equal to 25.0% of
their demand and time liabilities. In the meanwhile, the Reserve Bank of India
has permitted banks to exceed the limit of 25.0% of investments for the held to
maturity category provided the excess comprises only statutory liquidity ratio
investments and the aggregate of such investments in the held to maturity
category do not exceed 25.0% of the demand and time liabilities. The Reserve
Bank of India has permitted banks to transfer additional securities to the held
to maturity category as a one time measure during fiscal 2005, in addition to
the transfer permitted under the earlier guidelines. The transfer would be done
at the lower of acquisition cost, book value or market value on the date of
transfer.

Held to maturity securities are not marked to market and are carried at
acquisition cost or at an amortized cost if acquired at a premium over the face
value.

Available for sale and held for trading securities are valued at market or
fair value as at the balance sheet date. Depreciation or appreciation for each
basket within the available for sale and held for trading categories is
aggregated. Net appreciation in each basket, if any, that is not realized is
ignored, while net depreciation is provided for.

Investments in security receipts or pass through certificates issued by
asset reconstruction companies or trusts set up by asset reconstruction
companies should be valued at the net asset value announced periodically by the
asset reconstruction company based on the valuation of the underlying assets.

Limit on Transactions through Individual Brokers

Guidelines issued by the Reserve Bank of India require banks to empanel
brokers for transactions in securities. These guidelines also require that a
disproportionate part of the bank's business should not be transacted only
through one broker or a few brokers. The Reserve Bank of India specifies that
not more than 5.0% of the total transactions through empanelled brokers can be
transacted through one broker. If for any reason this limit is breached, the
Reserve Bank of India has stipulated that the board of directors of the bank
concerned should ratify such action.

Prohibition on Short-Selling

The Reserve Bank of India does not permit short selling of securities by
banks. The Reserve Bank of India has permitted banks to sell government of India
securities already contracted for purchase provided the purchase contract is
confirmed and the contract is guaranteed by Clearing Corporation of India
Limited or the security is

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contracted for purchase from the Reserve Bank of India. Each security is
deliverable or receivable on a net basis for a particular settlement cycle.

Subsidiaries and Other Financial Sector Investments

We need the prior permission of the Reserve Bank of India to incorporate a
subsidiary. We are required to maintain an "arms' length" relationship with our
subsidiaries and with mutual funds sponsored by us in regard to business
parameters such as taking undue advantage in borrowing/lending funds,
transferring/selling/buying of securities at rates other than market rates,
giving special consideration for securities transactions, in
supporting/financing the subsidiary and financing our clients through them when
we are not able or not permitted to do so ourselves. We have to observe the
prudential norms stipulated by the Reserve Bank of India, from time to time, in
respect of our underwriting commitments. Pursuant to such prudential norms, our
underwriting or the underwriting commitment of our subsidiaries under any single
obligation shall not exceed 15.0% of an issue. We also need the prior specific
approval of the Reserve Bank of India to participate in the equity of financial
services ventures including stock exchanges and depositories notwithstanding the
fact that such investments may be within the ceiling (lower of 30.0% of the
paid-up capital of the investee company and 30.0% of the investing bank's own
paid up capital and reserves) prescribed under Section 19(2) of the Banking
Regulation Act. Our investment in a subsidiary, financial services company or
financial institution cannot exceed 10.0% of our paid-up capital and reserves
and our aggregate investments in all such companies and financial institutions
put together cannot exceed 20.0% of our paid-up capital and reserves.

Regulations relating to Deposits

The Reserve Bank of India has permitted banks to independently determine
rates of interest offered on term deposits. However, banks are not permitted to
pay interest on current account deposits. Further, banks may only pay interest
of up to 3.5% per annum on savings deposits. In respect of savings and time
deposits accepted from employees, ICICI Bank is permitted by the Reserve Bank of
India to pay an additional interest of 1.0% over the interest payable on
deposits from the public.

Domestic time deposits have a minimum maturity of seven days. Time deposits
from non-resident Indians denominated in foreign currency have a minimum
maturity of one year and a maximum maturity of three years. Starting April 1998,
the Reserve Bank of India has permitted banks the flexibility to offer varying
rates of interests on domestic deposits of the same maturity subject to the
following conditions:

o Time deposits are of Rs. 1.5 million (US$ 34,388) and above; and

o Interest on deposits is paid in accordance with the schedule of
interest rates disclosed in advance by the bank and not pursuant to
negotiation between the depositor and the bank.

ICICI Bank stipulates a minimum balance of Rs. 10,000 (US$ 229) for a
non-resident rupee savings deposit. Interest rates on non-resident rupee term
deposits of one to three years maturity are not permitted to exceed the
LIBOR/SWAP rates for US dollar of corresponding maturity plus 50 basis points.
Interest rates on non-resident rupee savings deposits are not permitted to
exceed the LIBOR/SWAP rate plus 50 basis points for six months maturity on US
dollar deposits and are fixed quarterly on the basis of the LIBOR/SWAP rate of
US dollar on the last working day of the preceding quarter.

Regulations relating to Knowing the Customer and Anti-Money Laundering

The Reserve Bank of India issued a notification dated November 29, 2004
prescribing guidelines for Know Your Customer and anti money laundering
procedures. Banks are required to have a customer acceptance policy laying down
explicit criteria for acceptance of customers and defining risk parameters. A
profile of the customers should be prepared based on risk categorization. Banks
have been advised to apply enhanced due diligence for high-risk customers. The
guidelines provide that banks should undertake customer identification
procedures while establishing a banking relationship or carrying out a financial
transaction or when the bank has a doubt about the authenticity or the adequacy
of the previously obtained customer identification data. Banks need to obtain
sufficient information necessary to establish the identity of each new customer
and the purpose of the intended banking

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relationship. The guidelines also provide that banks should monitor transactions
depending on the account's risk sensitivity.

In August 2005, the Reserve Bank of India has simplified the KYC procedure
for opening accounts for those persons who intend to keep balances not exceeding
Rs. 50,000 in all their accounts taken together and the total credit in all the
accounts taken together is not expected to exceed Rs. 100,000 in a year in order
to ensure that the implementation of the KYC guidelines do not result in the
denial of the banking services to those who are financially or socially
disadvantaged.

The Indian Parliament had enacted the Prevention of Money Laundering Act in
2002. This Act has been amended and implemented with effect from July 1, 2005.
The Act seeks to prevent money laundering and to provide for confiscation of
property derived from, or involved in, money laundering. In addition the
applicable exchange control regulations prescribe reporting mechanisms for
transactions in foreign exchange and require authorized dealers to report
identified suspicious transactions to the Reserve Bank of India. In December
2004, the Indian Parliament passed the Unlawful Activities (Prevention)
Amendment Ordinance/Act, 2004 incorporating the provisions considered necessary
to deal with various facets of terrorism. The Narcotic Drugs and Psychotropic
Substances Act, 1985 deals with drug related proceeds of crime.

Regulations on Asset Liability Management

At present, the Reserve Bank of India's regulations for asset liability
management require banks to draw up asset-liability gap statements separately
for rupee and for four major foreign currencies. These gap statements are
prepared by scheduling all assets and liabilities according to the stated and
anticipated re-pricing date, or maturity date. These statements have to be
submitted to the Reserve Bank of India on a quarterly basis. The Reserve Bank of
India has advised banks to actively monitor the difference in the amount of
assets and liabilities maturing or being re-priced in a particular period and
place internal prudential limits on the gaps in each time period, as a risk
control mechanism. Additionally, the Reserve Bank of India has asked banks to
manage their asset-liability structure such that the negative liquidity gap in
the 1-14 day and 15-28 day time periods does not exceed 20.0% of cash outflows
in these time periods. This 20.0% limit on negative gaps was made mandatory with
effect from April 1, 2000. In respect of other time periods, up to one year,
Reserve Bank of India has directed banks to lay down internal norms in respect
of negative liquidity gaps.

Foreign Currency Dealership

The Reserve Bank of India has granted ICICI Bank a full-fledged authorized
dealers' license to deal in foreign exchange through its designated branches.
Under this license, ICICI Bank has been granted permission to:

o engage in foreign exchange transactions in all currencies;

o open and maintain foreign currency accounts abroad;

o raise foreign currency and rupee denominated deposits from non
resident Indians;

o grant foreign currency loans to on-shore and off-shore corporations;

o open documentary credits;

o grant import and export loans;

o handle collection of bills, funds transfer services;

o issue guarantees; and

o enter into derivative transactions and risk management activities that
are incidental to its normal functions authorized under its
organizational documents.

ICICI Bank's foreign exchange operations are subject to the guidelines
specified by the Reserve Bank of India in the exchange control manual. As an
authorized dealer, ICICI Bank is required to enroll as a member of the Foreign
Exchange Dealers Association of India, which prescribes the rules relating to
foreign exchange business in India.

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Authorized dealers, like ICICI Bank, are required to determine their limits
on open positions and maturity gaps in accordance with the Reserve Bank of
India's guidelines and these limits are approved by the Reserve Bank of India.
Further, ICICI Bank is permitted to hedge foreign currency loan exposures of
Indian corporations in the form of interest rate swaps, currency swaps and
forward rate agreements, subject to certain conditions.

Ownership Restrictions

The government of India regulates foreign ownership in Indian banks. The
total foreign ownership in a private sector bank, like ICICI Bank, cannot exceed
74.0% of the paid-up capital and shares held by foreign institutional investors
under portfolio investment schemes through stock exchanges cannot exceed 49.0%
of the paid-up capital.

The Reserve Bank of India's acknowledgement is required for the acquisition
or transfer of a bank's shares which will take the aggregate holding (both
direct and indirect, beneficial or otherwise) of an individual or a group to
equivalent of 5.0% or more of its total paid up capital. Reserve Bank of India,
while granting acknowledgement, may take into account all matters that it
considers relevant to the application, including ensuring that shareholders
whose aggregate holdings are above specified thresholds meet fitness and
propriety tests. In determining whether the acquirer or transferee is fit and
proper to be a shareholder, Reserve Bank of India may take into account various
factors including, but not limited to the acquirer or transferee's integrity,
reputation and track record in financial matters and compliance with tax laws,
proceedings of a serious disciplinary or criminal nature against the acquirer or
transferee and the source of funds for the investment.

While granting acknowledgement for acquisition or transfer of shares that
takes the acquirer's shareholding to 10.0% or more and up to 30.0% of a private
sector bank's paid-up capital, Reserve Bank of India may consider additional
factors, including but not limited to:

o the source and stability of funds for the acquisition and ability to
access financial markets as a source of continuing financial support
for the bank,

o the business record and experience of the applicant including any
experience of acquisition of companies,

o the extent to which the acquirer's corporate structure is in
consonance with effective supervision and regulation of its
operations; and

o in case the applicant is a financial entity, whether the applicant is
a widely held entity, publicly listed and a well established regulated
financial entity in good standing in the financial community.

While granting acknowledgment for acquisition or transfer of shares that
takes the acquirer's shareholding to 30.0% or more of a private sector bank's
paid-up capital, the Reserve Bank of India may consider additional factors,
including but not limited to whether or not the acquisition is in the public
interest and shareholder agreements and their impact on the control and
management of the bank's operations.

In February 2005, the Reserve Bank of India issued guidelines on ownership
and governance in private sector banks. This policy became effective on February
28, 2005. The key provisions of the guidelines on ownership are:

o No single entity or group of related entities would be permitted to
directly or indirectly hold or control more than 10.0% of the paid, up
equity capital of a private sector bank and any higher level of
acquisition would require the Reserve Bank of India's prior approval;

o In respect of corporate shareholders, the objective will be to ensure
that no entity or group of related entities has a shareholding in
excess of 10.0% in the corporate shareholder. In case of shareholders
that are financial entities, the objective will be to ensure that it
is widely held, publicly listed and well regulated;

o The Reserve Bank of India may permit a higher level of shareholding in
case of restructuring of problem banks or weak banks or in the
interest of consolidation in the banking industry;

o Banks would be responsible for compliance of the "fit and proper"
criteria for shareholders on an ongoing basis; and

161

o Banks with shareholders with holdings in excess of the prescribed
limit would have to indicate a plan for compliance.

The Reserve Bank of India has recently announced guidelines stating that
these regulations would also apply in the event an existing shareholder's
shareholding exceed the specified limit as a result of a rights issue of shares
where other shareholders do not subscribe to the issue.

Restrictions on Payment of Dividends

In May 2005, the Reserve Bank of India issued guidelines stating that a
bank may declare dividends only if all of the following conditions are met:

o Capital adequacy ratio is at least 9.0% for the preceding two
completed years and the accounting year for which the bank proposes to
declare a dividend.

o Net non-performing asset ratio is less than 7.0%.

o The bank is in compliance with the prevailing regulations and
guidelines issued by the Reserve Bank of India, including the creation
of adequate provision for the impairment of assets, staff retirement
benefits, transfer of profits to statutory reserves, etc.

o The proposed dividend will be paid out of the current year's profit.

o The Reserve Bank of India has not placed any explicit restrictions on
the bank for declaration of dividends.

In case the bank does not meet the capital adequacy norms, but has a
capital adequacy ratio of at least 9.0% for the accounting year for which it
proposes to declare a dividend, it would be eligible to do so if its net
non-performing asset ratio is less than 5.0%.

Banks that are eligible to declare dividends under the above rules can do
so subject to the following:

o The dividend payout ratio (calculated as a percentage of dividend
payable in a year to net profit during the year) must not exceed
40.0%. The maximum permissible dividend payout ratio would vary from
bank to bank, depending on the capital adequacy ratio in each of the
last three years and the net non-performing asset ratio.

o In case the profit for the relevant period includes any extraordinary
income, the payout ratio must be calculated after excluding that
income for compliance with the prudential payout ratio.

o The financial statements pertaining to the financial year for which
the bank is declaring a dividend should be free of any qualification
by the statutory auditors, which might have an adverse effect on the
profit during that year. In case there are any such qualifications,
the net profit should be suitably adjusted while computing the
dividend payout ratio.

Regulations on Mergers of Private Sector Banks and Banks and Non-banking
Finance Companies

In May 2005, the Reserve Bank of India issued guidelines to facilitate
mergers between private sector banks and between banks and non-banking finance
companies. The guidelines particularly emphasize the examination of the
rationale for amalgamation, the systemic benefits arising from it and the
advantages accruing to the merged entity. With respect to a merger between two
private sector banks, the guidelines require the draft scheme of amalgamation to
be approved by the shareholders of both banks with a two-thirds majority after
approval by the boards of directors of the two banks concerned. The draft scheme
should also consider the impact of amalgamation on the valuation, profitability
and capital adequacy ratio of the amalgamating bank and verify that the
reconstituted board conforms to the Reserve Bank of India norms. The approved
scheme needs to be submitted to the Reserve Bank of India for valuation and
sanction in accordance with the Banking Regulation Act, along with other
documentation such as the draft document of proposed merger, copies of all
relevant notices and certificates, swap ratio, share prices, etc. With respect
to a merger of a bank and a non-banking company, the guidelines specify that

162

the non-banking finance company has to comply with Know Your Customer norms for
all accounts and all relevant norms issued by the Reserve Bank of India and the
Securities and Exchange Board of India. The non-banking finance company should
also conform to insider trading norms issued by the Securities and Exchange
Board of India, whether it is listed or not, in order to regulate the promoter's
trading of shares before and after the amalgamation discussion period.

Credit Information Bureaus

The Parliament of India has enacted the Credit Information Companies
(Regulation) Act, 2005, pursuant to which every credit institution, including a
bank, has to become a member of a credit information bureau and furnish to it
such credit information as may be required of the credit institution by the
credit information bureau about persons who enjoy a credit relationship with it.
Other credit institutions, credit information bureaus and such other persons as
the Reserve Bank of India specifies may access such disclosed credit
information.

Deposit Insurance

Demand and time deposits of up to Rs. 100,000 (US$ 2,293) accepted by
Indian banks have to be mandatorily insured with the Deposit Insurance and
Credit Guarantee Corporation, a wholly-owned subsidiary of the Reserve Bank of
India. Banks are required to pay the insurance premium for the eligible amount
to the Deposit Insurance and Credit Guarantee Corporation on a semi-annual
basis. The cost of the insurance premium cannot be passed on to the customer.

Statutes Governing Foreign Exchange and Cross-Border Business Transactions

The foreign exchange and cross border transactions undertaken by banks are
subject to the provisions of the Foreign Exchange Management Act. All branches
should monitor all non-resident accounts to prevent money laundering.

The Reserve Bank of India issued guidelines on External Commercial
Borrowings vide its Master Circular in July 2004, which stated that no financial
intermediary, including banks, will be permitted to raise such borrowings or
provide guarantees in favor of overseas lenders for such borrowings. Eligible
borrowers may raise such borrowings to finance the import of equipment and to
meet foreign exchange needs of infrastructure projects. In a guideline dated
August 1, 2005 the Reserve Bank of India has announced that external commercial
borrowing proceeds can be utilized for overseas direct investment in joint
ventures/wholly owned subsidiaries subject to the existing guidelines on Indian
Direct Investment in joint ventures/wholly owned subsidiaries abroad. Further
utilization of external commercial borrowing proceeds is not permitted for
lending, capital market investments, acquisitions in India or real estate
investments.

Legal Reserve Requirements

Cash Reserve Ratio

A bank is required to maintain a specified percentage of its net demand and
time liabilities, excluding inter-bank deposits, by way of cash reserve with
itself and by way of balance in current account with the Reserve Bank of India.
The cash reserve ratio can be a minimum of 3.0% and a maximum of 20.0% pursuant
to section 42 of the Reserve Bank of India Act. Effective October 2, 2004, the
cash reserve ratio is 5.0%.

The following liabilities are excluded from the calculation of the demand
and time liabilities to determine the cash reserve ratio:

o inter-bank liabilities;

o liabilities to primary dealers; and

o refinancing from the Reserve Bank of India and other institutions
permitted to offer refinancing to banks.

The Reserve Bank of India pays no interest on the cash reserves up to 3.0%
of the demand and time liabilities and pays interest on the balance at 3.5% per
annum.

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The cash reserve ratio has to be maintained on an average basis for a
fortnightly period and should not be below 70.0% of the required cash reserve
ratio on any day of the fortnight.

Statutory Liquidity Ratio

In addition to the cash reserve ratio, a bank is required to maintain a
specified percentage of its net demand and time liabilities by way of liquid
assets like cash, gold or approved unencumbered securities. The percentage of
this liquidity ratio is fixed by the Reserve Bank of India from time to time,
and it can be a minimum of 25.0% and a maximum of 40.0% pursuant to section 24
of the Banking Regulation Act. At present, the Reserve Bank of India requires
banking companies to maintain a liquidity ratio of 25.0%. The Banking Regulation
(Amendment) and Miscellaneous Provisions Bill, 2003 recently introduced in the
Indian Parliament proposes to amend section 24 of the Banking Regulation Act to
remove the minimum Statutory Liquidity Ratio stipulation, thereby giving the
Reserve Bank of India the freedom to fix the Statutory Liquidity Ratio below
this level. See also "Overview of the Indian Financial Sector - Recent
Structural Reforms - Proposed Amendments to the Banking Regulation Act".

Requirements of the Banking Regulation Act

Prohibited Business

The Banking Regulation Act specifies the business activities in which a
bank may engage. Banks are prohibited from engaging in business activities other
than the specified activities.

Reserve Fund

Any bank incorporated in India is required to create a reserve fund to
which it must transfer not less than 25.0% of the profits of each year before
dividends. If there is an appropriation from this account, the bank is required
to report the same to the Reserve Bank of India within 21 days, explaining the
circumstances leading to such appropriation. The government of India may, on the
recommendation of the Reserve Bank of India, exempt a bank from requirements
relating to its reserve fund.

Payment of Dividend

Pursuant to the provisions of the Banking Regulation Act, a bank can pay
dividends on its shares only after all its capitalized expenses (including
preliminary expenses, share selling commission, brokerage, amounts of losses and
any other item of expenditure not represented by tangible assets) have been
completely written off. The Indian government may exempt banks from this
provision by issuing a notification on the recommendation of the Reserve Bank of
India. We have been exempted from this provision in respect of expenses relating
to the Early Retirement Option offered by us in fiscal 2004. We have obtained
permission from the Reserve Bank of India to write off these expenses over a
five-year period in our Indian GAAP accounts. Further, the payment of the
dividend by banks is subject to the eligibility criteria specified by the
Reserve Bank of India from time to time.

Restriction on Share Capital and Voting Rights

Banks can issue only ordinary shares. The Banking Regulation Act specifies
that no shareholder in a banking company can exercise voting rights on poll in
excess of 10.0% of total voting rights of all the shareholders of the banking
company.

Only banks incorporated before January 15, 1937 can issue preferential
shares. Prior to the amalgamation, ICICI had preference share capital of Rs. 3.5
billion (US$ 81 million). The government of India, on the recommendation of the
Reserve Bank of India, has granted an exemption to ICICI Bank which allows the
inclusion of preference capital in the capital structure of ICICI Bank for a
period of five years, though ICICI Bank is a bank incorporated after January 15,
1937.

Legislation recently introduced in the Indian Parliament proposes to amend
the Banking Regulation Act to remove the limit of 10.0% on the maximum voting
power exercisable by an shareholder in a banking company and allow banks to
issue redeemable and non-redeemable preference shares. See also "Overview of the
Indian Financial Sector - Recent Structural Reforms - Proposed Amendments to the
Banking Regulation Act".

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Restrictions on Investments in a Single Company

No bank may hold shares in any company exceeding 30.0% of the paid up share
capital of that company or 30.0% of its own paid up share capital and reserves,
whichever is less.

Regulatory Reporting and Examination Procedures

The Reserve Bank of India is empowered under the Banking Regulation Act to
inspect a bank. The Reserve Bank of India monitors prudential parameters at
quarterly intervals. To this end and to enable off-site monitoring and
surveillance by the Reserve Bank of India, banks are required to report to the
Reserve Bank of India on aspects such as:

o assets, liabilities and off-balance sheet exposures;

o the risk weighting of these exposures, the capital base and the
capital adequacy ratio;

o the unaudited operating results for each quarter;

o asset quality;

o concentration of exposures;

o connected and related lending and the profile of ownership, control
and management; and

o other prudential parameters.

The Reserve Bank of India also conducts periodical on-site inspections on
matters relating to the bank's portfolio, risk management systems, internal
controls, credit allocation and regulatory compliance, at intervals ranging from
one to three years. ICICI Bank has been and at present also, is, subject to the
on-site inspection by the Reserve Bank of India at yearly intervals. The
inspection report, along with the report on actions taken by ICICI Bank, has to
be placed before our board of directors. On approval by our board of directors,
we are required to submit the report on actions taken by it to the Reserve Bank
of India. The Reserve Bank of India also discusses the report with the
management team including the Managing Director & CEO.

The Reserve Bank of India also conducts on-site supervision of selected
branches of ICICI Bank with respect to their general operations and foreign
exchange related transactions.

Appointment and Remuneration of the Chairman, Managing Director and Other
Directors

ICICI Bank is required to obtain prior approval of the Reserve Bank of
India before it appoints its chairman and managing director and any other
wholetime directors and fixes their remuneration. The Reserve Bank of India is
empowered to remove an appointee to the posts of chairman, managing director and
wholetime directors on the grounds of public interest, interest of depositors or
to ensure the proper management of ICICI Bank. Further, the Reserve Bank of
India may order meetings of our board of directors to discuss any matter in
relation to ICICI Bank, appoint observers to such meetings and in general may
make such changes to the management as it may deem necessary and may also order
the convening of a general meeting of the shareholders of ICICI Bank to elect
new directors. ICICI Bank cannot appoint as a director any person who is a
director of another banking company. In July 2004, the Reserve Bank of India
issued guidelines on `fit and proper' criteria for directors of banks.

Issue of Bonus Shares

ICICI Bank would require the prior permission of Reserve Bank of India and
its shareholders' approval to issue bonus shares.

Penalties

The Reserve Bank of India may impose penalties on banks and its employees
in case of infringement of regulations under the Banking Regulation Act. The
penalty may be a fixed amount or may be related to the amount involved in any
contravention of the regulations. The penalty may also include imprisonment. A
press release has been issued by the Reserve Bank of India giving details of the
circumstances under which the penalty is imposed on

165

the bank along with the communication on the imposition of the penalty in public
domain. The bank is also required to disclose the penalty in its annual report.

Assets to be Maintained in India

Every bank is required to ensure that its assets in India (including
import-export bills drawn in India and Reserve Bank of India approved
securities, even if the bills and the securities are held outside India) are not
less than 75.0% of its demand and time liabilities in India.

Restriction on Creation of Floating Charge

Prior approval of the Reserve Bank of India is required for creating
floating charge on ICICI Bank's undertaking or property. Currently, all ICICI
Bank's borrowings including bonds are unsecured.

Secrecy Obligations

ICICI Bank's obligations relating to maintaining secrecy arise out of
common law principles governing its relationship with its customers. ICICI Bank
cannot disclose any information to third parties except under clearly defined
circumstances. The following are the exceptions to this general rule:

o where disclosure is required to be made under any law;

o where there is an obligation to disclose to the public;

o where ICICI Bank needs to disclose information in its interest; and

o where disclosure is made with the express or implied consent of the
customer.

ICICI Bank is required to comply with the above in furnishing any
information to any parties. ICICI Bank is also required to disclose information
if ordered to do so by a court. The Reserve Bank of India may, in the public
interest, publish the information obtained from the bank. Under the provisions
of the Banker's Books Evidence Act, a copy of any entry in a bankers' book, such
as ledgers, day books, cash books and account books certified by an officer of
the bank may be treated as prima facie evidence of the transaction in any legal
proceedings.

Regulations governing Offshore Banking Units

The government and Reserve Bank of India have permitted banks to set up
Offshore Banking Units in Special Economic Zones, which are specially delineated
duty free enclaves deemed to be foreign territory for the purpose of trade
operations, duties and tariffs. ICICI Bank has an Offshore Banking Unit located
in the Santacruz Electronic Exports Promotion Zone, Mumbai. The key regulations
applicable to offshore bank units include, but are not limited to, the
following:

o No separate assigned capital is required. However, the parent bank is
required to provide a minimum of US$ 10 million to its offshore
banking unit.

o Offshore Banking Units are exempt from cash reserve ratio
requirements.

o Reserve Bank of India may exempt a bank's offshore banking unit from
statutory liquidity ratio requirements on specific application by the
bank.

o An offshore banking unit may not enter into any transactions in
foreign exchange with residents in India, unless such a person is
eligible to enter into or undertake such transactions under the
Foreign Exchange Management Act, 1999.

o All prudential norms applicable to overseas branches of Indian banks
apply to Offshore Banking Units.

o Offshore banking units are required to adopt liquidity and interest
rate risk management policies prescribed by Reserve Bank of India in
respect of overseas branches of Indian banks as well as within the
overall risk

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management and asset and liability management framework of the bank
subject to monitoring by the bank's board of directors at prescribed
intervals.

o Offshore banking units may raise funds in convertible foreign currency
as deposits and borrowings from non-residents including non-resident
Indians but excluding overseas corporate bodies.

o Offshore banking units may operate and maintain balance sheets only in
foreign currency.

o The loans and advances of Offshore Banking Units would not be reckoned
as net bank credit for computing priority sector lending obligations.

o Offshore banking units must follow the Know Your Customer guidelines
and must be able to establish the identity and address of the
participants in a transaction, the legal capacity of the participants
and the identity of the beneficial owner of the funds.

Regulations and Guidelines of the Securities and Exchange Board of India

The Securities and Exchange Board of India was established to protect the
interests of public investors in securities and to promote the development of,
and to regulate, the Indian securities market. ICICI Bank is subject to
Securities and Exchange Board of India regulations for its capital issuances, as
well as its underwriting, custodial, depositary participant, investment banking,
registrar and transfer agents, brokering and debenture trusteeship activities.
These regulations provide for its registration with the Securities and Exchange
Board of India for each of these activities, functions and responsibilities.
ICICI Bank is required to adhere to a code of conduct applicable for these
activities.

Public Financial Institution Status

ICICI was a public financial institution under the Indian Companies Act,
1956. The special status of public financial institutions is also recognized
under other statutes including the Indian Income-tax Act, 1961, Sick Industrial
Companies (Special Provisions) Act, 1985 and Recovery of Debts Due to Banks and
Financial Institutions Act, 1993. ICICI Bank is not a public financial
institution. As a public financial institution, ICICI was entitled to certain
benefits under various statutes. These benefits included the following:

o For income tax purposes, ICICI's deposits and bonds were prescribed
modes for investing and depositing surplus money by charitable and
religious trusts. Since ICICI Bank is a scheduled bank, its deposits
and bonds are also prescribed modes for investment by religious and
charitable trusts.

o The government of India had permitted non-government provident,
superannuation and gratuity funds to invest up to 40.0% of their
annual accretion of funds in bonds and securities issued by public
financial institutions. Further, the trustees of these funds could at
their discretion invest an additional 20.0% of such accretions in
these bonds and securities. These funds can invest up to only 10.0% of
their annual accretion in bonds and securities issued by private
sector banks, such as ICICI Bank.

o Indian law provides that a public financial institution cannot, except
as provided by law or practice, divulge any information relating to,
or to the affairs of, its customers. ICICI Bank has similar
obligations relating to maintaining secrecy arising out of common law
principles governing its relationship with its customers.

o The Recovery of Debts Due to Banks and Financial Institutions Act,
1993 provides for establishment of debt recovery tribunals for
recovery of debts due to any bank or public financial institution or
to a consortium of banks and public financial institutions. Under this
Act, the procedures for recoveries of debt were simplified and time
frames were fixed for speedy disposal of cases. Upon establishment of
the debt recovery tribunal, no court or other authority can exercise
jurisdiction in relation to matters covered by this Act, except the
higher courts in India in certain circumstances. This Act applies to
banks as well as public financial institutions and therefore applies
to ICICI Bank.

ICICI's cessation as a public financial institution would have constituted
an event of default under certain of ICICI's loan agreements related to its
foreign currency borrowings. Prior to the amalgamation becoming

167

effective, such event of default was waived by the respective lenders pursuant
to the terms of such foreign currency borrowing agreements.

Special Status of Banks in India

The special status of banks is recognised under various statutes including
the Sick Industrial Companies Act, 1985, Recovery of Debts Due to Banks and
Financial Institutions Act, 1993, and the Securitisation Act. As a bank, ICICI
Bank is entitled to certain benefits under various statutes including the
following:

o The Recovery of Debts Due to Banks and Financial Institutions Act,
1993 provides for establishment of Debt Recovery Tribunals for
expeditious adjudication and recovery of debts due to any bank or
Public Financial Institution or to a consortium of banks and Public
Financial Institutions. Under this Act, the procedures for recoveries
of debt have been simplified and time frames been fixed for speedy
disposal of cases. Upon establishment of the Debt Recovery Tribunal,
no court or other authority can exercise jurisdiction in relation to
matters covered by this Act, except the higher courts in India in
certain circumstances.

o The Sick Industrial Companies Act, 1985, provides for reference of
sick industrial companies, to the Board for Industrial and Financial
Reconstruction. Under the Act, other than the Board of Directors of a
company, a scheduled bank (where it has an interest in the sick
industrial company by any financial assistance or obligation, rendered
by it or undertaken by it) may refer the company to the BIFR.

o The Securitisation Act focuses on improving the rights of banks and
financial institutions and other specified secured creditors as well
as asset reconstruction companies by providing that such secured
creditors can take over management control of a borrower company upon
default and/or sell assets without the intervention of courts, in
accordance with the provisions of the Securitisation Act.

Income Tax Benefits

As a banking company, ICICI Bank is entitled to certain tax benefits under
the Indian Income-tax Act including the following:

o ICICI Bank is allowed a deduction of up to 40.0% of its taxable
business income derived from the business of long-term financing
(defined as loans and advances extended for a period of not less than
five years) which is transferred to a special reserve, provided that
the total amount of this reserve does not exceed two times the paid-up
share capital and general reserves. ICICI Bank is entitled to this
benefit because it is a financial corporation. Effective fiscal 1998,
if a special reserve is created, it must be maintained and if it is
utilized, it is treated as taxable income in the year in which it is
utilized.

o ICICI Bank is entitled to a tax deduction on the provisioning towards
bad and doubtful debts equal to 7.5% of ICICI Bank's total business
income, computed before making any deductions permitted pursuant to
Chapter VIA of the Indian Income-tax Act, and to the extent of 10.0%
of the aggregate average advances made by its rural branches computed
in the manner prescribed. ICICI Bank has the option of claiming a
deduction in respect of the provision made by it for any assets
classified pursuant to the Reserve Bank of India's guidelines as
doubtful or loss assets to the extent of 10.0% of the amount of such
assets as on the last day of the year.

o ICICI Bank is eligible to issue tax saving bonds approved in
accordance with the provisions of the Indian Income-tax Act. The
subscription to such bonds by certain categories of investors is a
prescribed mode of investing for the purposes of availing of a tax
rebate.

o For income tax purposes, ICICI Bank's deposits and bonds are
prescribed modes of investing and depositing surplus money by
charitable and religious trusts.

Regulations governing Insurance Companies

ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance
Company, the subsidiaries of ICICI Bank offering life insurance and non-life
insurance respectively, are subject to the provisions of the Insurance

168

Act, 1938 and the various regulations prescribed by the Insurance Regulatory and
Development Authority. These regulations regulate and govern, among other
things, registration as an insurance company, investment, solvency margin
requirements, licensing of insurance agents, advertising, sale and distribution
of insurance products and services and protection of policyholders' interests.
In May 2002, the Indian parliament approved the Insurance (Amendment) Act 2002,
which facilitates the appointment of corporate agents by insurance companies and
prohibits intermediaries and brokers from operating as surrogate insurance
agents.

Regulations governing International Operations

Our international operations are governed by regulations in the countries
in which we have a presence.

Overseas Banking Subsidiaries

Our wholly-owned subsidiary in the United Kingdom, ICICI Bank UK Limited is
authorized by the Financial Services Authority, which granted our application
under Part IV of the Financial Services and Markets Act, 2000 on August 8, 2003.
Our wholly-owned subsidiary in Canada, ICICI Bank Canada, was incorporated on
September 12, 2003 as a Schedule II Bank in Canada. ICICI Bank Canada has
obtained the approval of the Canada Deposit Insurance Corporation (CDIC) for
deposit insurance and is regulated by the Office of the Superintendent of
Financial Institutions. Our wholly-owned subsidiary in Russia, Investment Credit
Bank, is regulated by the Central Bank of the Russian Federation.

Offshore Branches

In Singapore, we have an offshore branch, regulated by the Monetary
Authority of Singapore. The Branch is allowed to accept deposits from Singapore
residents with a minimum size of US$ 100,000 or S$ 250,000. It is also subject
to minimum reserve requirements with respect to its Domestic Banking Unit book.
The Asian Currency Unit book is not subject to reserve requirements, but the
Branch is required to maintain minimum adjusted capital funds of S$ 10 million.
In Bahrain, we have an offshore branch, regulated by the Bahrain Monetary
Agency. The branch is permitted to transact banking business with approved
financial institutions within Bahrain and individuals or institutions outside
Bahrain. It is also permitted to offer banking services to non-resident Indians
in Bahrain.

Representative Offices

Our representative office in New York in the United States is licensed and
regulated by the State of New York Banking Department and the Federal Reserve
Board. Our representative office in Dubai in the United Arab Emirates is
regulated by the Central Bank of the United Arab Emirates. Our representative
office in Shanghai in China is regulated by the China Banking Regulatory
Commission. Our representative office in Bangladesh is regulated by the
Bangladesh Bank. Our representative office in South Africa is regulated by the
South African Reserve Bank.

169

EXCHANGE CONTROLS

Restrictions on Conversion of Rupees

There are restrictions on the conversion of rupees into dollars. Before
February 29, 1992, the Reserve Bank of India determined the official value of
the rupee in relation to a weighted basket of currencies of India's major
trading partners. In the February 1992 budget, a new dual exchange rate
mechanism was introduced by allowing conversion of 60.0% of the foreign exchange
received on trade or current account at a market-determined rate and the
remaining 40.0% at the official rate. All importers were, however, required to
buy foreign exchange at the market rate except for certain specified priority
imports. In March 1993, the exchange rate was unified and allowed to float. In
February 1994 and again in August 1994, the Reserve Bank of India announced
relaxations in payment restrictions in case of a number of transactions. Since
August 1994, the government of India has substantially complied with its
obligations owed to the International Monetary Fund, under which India is
committed to refrain from using exchange restrictions on current international
transactions as an instrument in managing the balance of payments. Effective
July 1995, the process of current account convertibility was advanced by
relaxing restrictions on foreign exchange for various purposes, such as foreign
travel and medical treatment.

In December 1999, the Indian parliament passed the Foreign Exchange
Management Act, 1999, which became effective on June 1, 2000, replacing the
earlier Foreign Exchange Regulation Act, 1973. This legislation indicated a
major shift in the policy of the government with regard to foreign exchange
management in India. While the Foreign Exchange Regulation Act, 1973 was aimed
at the conservation of foreign exchange and its utilization for the economic
development of the country, the objective of the Foreign Exchange Management
Act, 1999 was to facilitate external trade and promote the orderly development
and maintenance of the foreign exchange market in India.

The Foreign Exchange Management Act, 1999 regulates transactions involving
foreign exchange and provides that certain transactions cannot be carried out
without the general or special permission of the Reserve Bank of India. The
Foreign Exchange Management Act, 1999 has eased restrictions on current account
transactions. However, the Reserve Bank of India continues to exercise control
over capital account transactions (i.e., those which alter the assets or
liabilities, including contingent liabilities, of persons). The Reserve Bank of
India has issued regulations under the Foreign Exchange Management Act, 1999 to
regulate the various kinds of capital account transactions, including certain
aspects of the purchase and issuance of shares of Indian companies. The Reserve
Bank of India has also permitted authorized dealers to freely allow remittances
by individuals up to US$ 25,000 per calendar year for any permissible current or
capital account transactions or a combination of both.

Restrictions on Sale of the Equity Shares underlying the ADSs and Repatriation
of Sale Proceeds

ADSs issued by Indian companies to non-residents have free transferability
outside India. Under current Indian regulations and practice, approval of the
Reserve Bank of India is not required for the sale of equity shares underlying
the ADSs by a non-resident of India to a resident of India if the sale has been
executed on a recognized stock exchange in India through a registered broker at
the prevailing market price. Approval of the Reserve Bank of India is neither
required for a sale of shares of a company other than a company engaged in
financial services sector, even if the transfer is other than on a recognized
stock exchange in India or through a registered broker, as long as conditions
generally prescribed by Reserve Bank of India are complied with. The same
restrictions apply to a renunciation of rights to a resident of India. Approval
of the Reserve Bank of India is neither required for sale of shares under the
portfolio investment scheme prescribed by the Reserve Bank of India provided the
sale is made on a recognized stock exchange and through a registered stock
broker.

If a sale of equity shares has taken place in terms of the Reserve Bank of
India guidelines and other applicable regulations, as briefly described in the
previous paragraph, then provided the shares were held on repatriation basis and
a no objection/tax clearance certificate from income tax authority has been
obtained, the sale proceeds may be freely remitted. If a sale was made pursuant
to specific approval of Reserve Bank of India then sale proceeds can be remitted
as per the terms of such an approval. If the equity shares underlying the ADSs
are sold under the portfolio investment scheme then the sale proceeds may be
remitted through an authorized dealer, without the approval of the Reserve Bank
of India provided that the equity shares are sold on a recognized stock exchange
through a registered stock broker and a no objection/tax clearance certificate
from the income-tax authority has been produced.

170

After the announcement of India's budget for fiscal 2002, the Reserve Bank
of India issued certain notifications for the liberalization of the capital
account. Pursuant to the notifications, in contrast to prior regulations,
two-way fungibility in ADS/GDR issues of Indian companies was introduced,
subject to sectoral caps, wherever applicable.

An Indian company may sponsor an issue of ADSs with an overseas depositary
against shares held by its shareholders at a price to be determined by the lead
manager. The proceeds of the issue have to be repatriated to India within a
period of one month. The sponsoring company must comply with the provisions of
the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depositary Receipt Mechanism) Scheme, 1993 and the guidelines issued
thereunder by the government of India from time to time. The sponsoring company
must also furnish full details of the issue in the prescribed forms to the
Reserve Bank of India within 30 days from the date of closure of the issue.

The Reserve Bank of India has issued a notification under the provisions of
the Foreign Exchange Management Act, 1999 permitting a registered broker in
India to purchase shares of any Indian company on behalf of a person resident
outside India, for the purpose of converting the shares so purchased into ADSs
provided that:

o the shares are purchased on a recognized stock exchange;

o the Indian company has issued ADSs;

o the shares are purchased with the permission of the custodian of the
ADSs of the concerned Indian company and are deposited with the
custodian;

o the number of shares so purchased shall not exceed the number of ADSs
converted into underlying shares and shall be subject to sectoral caps
as applicable; and

o the non-resident investor, broker, custodian and the overseas
depositary comply with the provisions of the Scheme for Issue of
Foreign Currency Convertible Bonds and Ordinary Shares (through
Depositary Receipt Mechanism) Scheme, 1993 and the guidelines issued
thereunder by the government of India from time to time.

On November 23, 2002, the government of India's Ministry of Finance issued
Operative Guidelines for Disinvestment of Shares by the Indian Companies in the
Overseas Market through the Issue of ADSs. Under these guidelines, the
shareholders may divest their holdings in the overseas market through the
mechanism of a sponsored ADS issue by the Indian company. The holdings which may
be divested are holdings in Indian companies which are listed either in India or
on an overseas exchange. The divestment process is initiated when the Indian
company whose shares are being offered for divestment in the overseas market
sponsors an ADS issue against the block of existing shares offered by the
shareholders under these guidelines. Such ADS issues against existing shares
offered for divestment must also comply with the Securities and Exchange Board
of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997, if
the ADSs are cancelled and the underlying shares are to be registered with the
company. Such divestment would result in foreign equity investment and would
also need to conform to the foreign direct investment sectoral policy. All
mandatory approvals including those under the Companies Act, 1956 and the
approval of the Foreign Investment Promotion Board for foreign equity induction
through the offer of existing shares would have to be obtained.

The Reserve Bank of India has permitted Indian companies to retain abroad
for any period, the funds raised through an issue of ADSs, in order to meet
their future foreign exchange requirement. Further, pending repatriation or
utilization, the Indian company may invest the foreign currency funds raised in:

o deposits or certificates of deposit or other products offered by banks
who have been rated not less than AA(-) by Standard and Poor's Ratings
Service/Fitch IBCA or Aa3 by Moody's Investors Service;

o deposits with an overseas branch of an authorized dealer in India; and

o treasury bills and other monetary instruments of one-year maturity
having a minimum rating as indicated above.

The Reserve Bank of India has permitted resident shareholders of Indian
companies, who offer their shares for conversion to ADSs, to receive the sale
proceeds in foreign currency. However, the conversion to such ADSs should have
the approval of the Foreign Investment Promotion Board. Further, the sale
proceeds received by residents are

171

also permitted to be credited to their Exchange Earners' Foreign
Currency/Resident Foreign Currency (Domestic) accounts or to their rupee
accounts in India at their option.

172

MARKET PRICE INFORMATION

Equity Shares

Our outstanding equity shares are currently listed and traded on the Bombay
Stock Exchange or the BSE and on the National Stock Exchange of India Limited or
the NSE.

At August 31, 2005, 740 million equity shares were outstanding. The prices
for equity shares as quoted in the official list of each of the Indian stock
exchanges are in Indian rupees.

The following table shows:

o the reported high and low closing prices quoted in rupees for our
equity shares on the NSE; and

o the reported high and low closing prices for our equity shares,
translated into US dollars, based on the noon buying rate on the last
business day of each period presented.

Price per equity share(1)
----------------------------------------
High Low High Low
----------------------------------------
Annual prices:
Fiscal 2001.......................... 247.45 109.20 5.28 2.33
Fiscal 2002 ......................... 188.35 67.95 3.86 1.39
Fiscal 2003 ......................... 161.75 110.55 3.40 2.32
Fiscal 2004 ......................... 348.25 120.80 8.02 2.78
Fiscal 2005 ......................... 413.05 230.40 9.47 5.28
Quarterly prices:
Fiscal 2004:
First Quarter........................ 150.15 120.80 3.24 2.60
Second Quarter....................... 204.50 145.10 4.47 3.17
Third Quarter........................ 302.20 204.40 6.63 4.49
Fourth Quarter....................... 348.25 267.75 8.02 6.17
Fiscal 2005:
First Quarter........................ 319.35 230.40 6.94 5.01
Second Quarter....................... 295.35 234.40 6.43 5.11
Third Quarter........................ 374.00 285.35 8.64 6.59
Fourth Quarter....................... 413.05 337.50 9.47 7.74
Fiscal 2006:
First Quarter........................ 433.95 359.95 9.97 8.27
Second Quarter
(through September 23, 2005)....... 593.00 421.25 13.54 9.62
Monthly prices:
March 2005........................... 413.05 372.25 9.47 8.53
April 2005........................... 425.45 359.95 9.78 8.28
May 2005............................. 402.55 360.35 9.23 8.26
June 2005............................ 433.95 392.15 9.97 9.01
July 2005............................ 534.45 421.25 12.31 9.71
August 2005 ......................... 538.40 467.95 12.24 10.64
September 2005
(through September 23, 2005)....... 593.00 481.50 13.54 10.99
---------------
(1) Data from the NSE. The prices quoted on the BSE may be different.

At September 23, 2005 the closing price of equity shares on the NSE was Rs.
578.00 equivalent to US$ 13.20 per equity share (US$ 26.39 per ADS on an imputed
basis) translated at the noon buying rate of Rs. 43.80 per US$ 1.00 on September
23, 2005.

173

At September 2, 2005, there were approximately 415,316 holders of record of
our equity shares, of which 115 had registered addresses in the United States
and held an aggregate of approximately 102,689 equity shares.

ADSs

Our ADSs, each representing two equity shares, were originally issued in
March 2000 in a public offering and are listed and trade on the New York Stock
Exchange under the symbol IBN. The equity shares underlying the ADSs are listed
on the BSE and the NSE.

At August 31, 2005, ICICI Bank had approximately 101 million ADSs,
equivalent to 201 million equity shares, outstanding. At this date, there were
107 record holders of ICICI Bank's ADSs, out of which 105 have registered
addresses in the United States.

The following table sets forth, for the periods indicated, the reported
high and low closing prices on the New York Stock Exchange for our outstanding
ADSs traded under the symbol IBN.

Price per ADS
--------------------------
High Low
--------------------------
Annual prices:
Fiscal 2001.......................................... 18.75 4.62
Fiscal 2002.......................................... 7.50 2.70
Fiscal 2003.......................................... 8.26 4.84
Fiscal 2004.......................................... 18.33 5.27
Fiscal 2005.......................................... 22.65 11.25
Quarterly prices:
Fiscal 2004:
First Quarter........................................ 7.27 5.27
Second Quarter....................................... 10.56 7.23
Third Quarter........................................ 17.91 10.90
Fourth Quarter....................................... 18.33 13.50
Fiscal 2005:
First Quarter........................................ 17.25 11.57
Second Quarter....................................... 13.91 11.25
Third Quarter........................................ 20.45 13.76
Fourth Quarter....................................... 22.65 18.27
Fiscal 2006:
First Quarter........................................ 22.23 18.08
Second Quarter (through September 23, 2005).......... 26.94 22.00
Monthly prices:
March 2005........................................... 22.50 18.87
April 2005........................................... 20.75 18.08
May 2005............................................. 20.21 18.50
June 2005............................................ 22.23 19.80
July 2005............................................ 26.41 22.00
August 2005.......................................... 25.65 22.77
September 2005 (through September 23, 2005).......... 26.94 23.35

See also "Risk Factors - Risks relating to the ADSs and Equity Shares -
Conditions in the Indian securities market may adversely affect the price or
liquidity of our equity shares and ADSs".

174

RESTRICTION ON FOREIGN OWNERSHIP OF INDIAN SECURITIES

India strictly regulates ownership of Indian companies by foreigners.
Foreign investment in Indian securities, including the equity shares represented
by the ADSs, is generally regulated by the Foreign Exchange Management Act,
1999, which permits transactions involving the inflow or outflow of foreign
exchange and empowers the Reserve Bank of India to prohibit or regulate such
transactions.

Under the foreign investment rules, the following are the restrictions on
foreign ownership applicable to us:

o Foreign investors may own up to 74.0 % of our equity shares subject to
conformity with guidelines issued by the Reserve Bank of India from
time to time. This limit is under the so-called automatic route and
does not require specific approval of the Foreign Investment Promotion
Board. This limit includes foreign direct investment, ADSs, Global
Depositary Receipts and investment under the Portfolio Investment
Scheme by foreign institutional investors and non-resident Indians,
and also includes shares acquired by subscription to private
placements and public offerings and acquisition of shares from
existing shareholders.

o Under the Issue of Foreign Currency Convertible Bonds and Equity
Shares (Through Depositary Receipt Mechanism) Scheme, 1993, foreign
investors may purchase ADSs or GDRs, subject to the receipt of all
necessary government approvals at the time the depositary receipt
program is set up.

o Under the portfolio investment scheme, (i) foreign institutional
investors, subject to registration with the Securities and Exchange
Board of India and the Reserve Bank of India, may hold in aggregate up
to 49.0% of our paid-up equity capital, provided that no single
foreign institutional investor may own more than 10.0% of our total
paid-up equity capital; and (ii) the shareholding of an individual
non-resident Indian or overseas corporate body is restricted to 5.0%
of our total paid-up equity capital.

o The Reserve Bank of India's guidelines relating to acquisition by
purchase or otherwise of shares of a private sector bank, if such
acquisition results in any person owning or controlling 5.0 % or more
of the paid up capital of the bank, are also applicable to foreign
investors investing in our shares. For more details on the Reserve
Bank of India guidelines relating to acquisition by purchase or
otherwise of shares of a private bank, see "Supervision and Regulation
- Reserve Bank of India Regulations - Ownership Restrictions".

o Since we have joint ventures in the insurance sector, applications for
foreign direct investment in ICICI Bank when required by applicable
law or regulation, have to be addressed to the Reserve Bank of India
for consideration in consultation with the Insurance Regulatory and
Development Authority in order to ensure that the 26% limit of foreign
shareholding applicable for the insurance sector is not breached.

Pursuant to a circular dated November 29, 2001, the Reserve Bank of India
notified that, as of that date, overseas corporate bodies are not permitted to
invest under the portfolio investment scheme, though they may continue to hold
investments that have already been made under the portfolio investment scheme
until such time as these investments are sold on the stock exchange.

An Indian company may sponsor an issue of ADSs with an overseas depositary
against shares held by its shareholders at a price to be determined by the lead
manager. The proceeds of the issue must be repatriated to India within a period
of one month. The sponsoring company must comply with the provisions of the
Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares
(Through Depositary Receipt Mechanism) Scheme, 1993 and the guidelines issued
thereunder by the government of India from time to time. The sponsoring company
must

175

also furnish full details of the issue in the prescribed forms to the Reserve
Bank of India within 30 days from the date of closure of the issue.

The divestment process is initiated when the Indian company whose shares
are being offered for divestment in the overseas market sponsors an ADS issue
against the block of existing shares offered by the shareholders under these
guidelines. Such ADS issues against existing shares offered for divestment must
also comply with the Securities and Exchange Board of India (Substantial
Acquisition of Shares and Takeover) Regulations, 1997, if the ADSs are cancelled
and the underlying shares are to be registered with the company. Such divestment
would result in foreign equity investment and would also need to conform to the
foreign direct investment sectoral policy. All mandatory approvals including
those under the Companies Act, 1956 and the approval of the Foreign Investment
Promotion Board for foreign equity induction through the offer of existing
shares, would have to be obtained.

o the shares are purchased on a recognized stock exchange;

o the Indian company has issued ADSs;

o the shares are purchased with the permission of the custodian of the
ADSs of the concerned Indian company and are deposited with the
custodian;

o the number of shares so purchased shall not exceed the number of ADSs
converted into underlying shares and shall be subject to sectoral caps
as applicable; and

We obtained the approval of the Foreign Investment Promotion Board for our
ADS offering in March 2000 and sponsored ADS offering in March 2005 which were
foreign direct investments. The investments through the portfolio investment
scheme in the secondary market in India by foreign institutional investors,
non-resident Indians and overseas corporate bodies and investments through the
foreign direct investment scheme are distinct schemes that are available
concurrently. As of September 23, 2005, foreign investors owned approximately
73.3% of our equity in total, of which 27.2% was through the ADS program.

As an investor in ADSs, you do not need to seek the specific approval from
the government of India to purchase, hold or dispose of your ADSs. In the ADS
offerings, we obtained the approval of the government of India's Department of
Company Affairs and the relevant stock exchanges.

Equity shares which have been withdrawn from the depositary facility and
transferred on our register of shareholders to a person other than the
depositary or its nominee may be voted by that person provided the necessary
procedural requirements have been met. However, you may not receive sufficient
advance notice of shareholder meetings to enable you to withdraw the underlying
equity shares and vote at such meetings.

Notwithstanding the foregoing, if a foreign institutional investor,
non-resident Indian or overseas corporate body were to withdraw its equity
shares from the ADS program, its investment in the equity shares would be
subject to the general restrictions on foreign ownership noted above and may be
subject to the portfolio investment restrictions. Secondary purchases of
securities of a banking company in India by foreign direct investors or

176

investments by non-resident Indians, overseas corporate bodies and foreign
institutional investors above the ownership levels set forth above require
government of India approval on a case-by-case basis. It is unclear whether
similar case-by-case approvals of ownership of equity shares withdrawn from the
depositary facility by foreign institutional investors, non-resident Indians and
overseas corporate bodies would be required.

You will be required to make a public offer to the remaining shareholders
if you withdraw your equity shares from the ADS program and your direct or
indirect holding in us exceeds 15.0% of our total equity under the Securities
and Exchange Board of India (Substantial Acquisition of Shares and Takeover)
Regulations, 1997.

Any new issue of equity shares of a banking company, either through the
automatic route or with the specific approval of the Foreign Investment
Promotion Board, does not require further approval of the Reserve Bank of India,
but must comply with certain reporting requirements.

177

DIVIDENDS

Under Indian law, a company pays dividends upon a recommendation by its
board of directors and approval by a majority of the shareholders at the annual
general meeting of shareholders held within six months of the end of each fiscal
year. The shareholders have the right to decrease but not increase the dividend
amount recommended by the board of directors. Dividends may be paid out of the
company's profits for the fiscal year in which the dividend is declared or out
of undistributed profits of prior fiscal years. ICICI Bank paid dividends
consistently every year from fiscal 1996, the second year of its operations.
ICICI Bank paid the dividend for fiscal 2002 as an interim dividend during
fiscal 2002 itself and accordingly there was no dividend outflow during fiscal
2003 in respect of dividends declared for fiscal 2002. For fiscal 2003, we paid
a dividend, excluding dividend tax, of Rs. 7.50 (US$ 0.17) per equity share
aggregating to Rs. 4.6 billion (US$ 105 million) which was paid in fiscal 2004.
For fiscal 2004, we paid a dividend, excluding dividend tax, of Rs. 7.50 (US$
0.17) per equity share aggregating to Rs. 5.4 billion (US$ 125 million). The
amount of Rs. 5.4 billion (US$ 125 million) excludes the impact of the issue of
6,992,187 equity shares on May 24, 2004 through the exercise of the
overallotment option in the issue of equity shares in April 2004. The dividend
for fiscal 2004 was paid in fiscal 2005. For fiscal 2005, we paid a dividend,
excluding dividend tax, of Rs. 7.50 (US$ 0.17) per equity share and a special
dividend, excluding dividend tax, of Rs. 1.00 (US$ 0.02) per equity share to
mark the completion of 50 years in finance by ICICI group aggregating to Rs. 6.3
billion (US$ 145 million), which we paid out in August 2005.

The following table sets forth, for the periods indicated, the dividend per
equity share and the total amount of dividends paid out on the equity shares
during the fiscal year by ICICI Bank, each exclusive of dividend tax. This may
be different from the dividend declared for the year.

Dividend per Total amount of
equity share dividends paid
----------------- ---------------
(in millions)
Dividend paid during the fiscal year

2001................................... 1.50 247
2002(1) ............................... 4.00(1) 881
2003................................... - -
2004................................... 7.50 4,598
2005................................... 7.50 5,507
- --------------
(1) Includes dividend of Rs. 2.00 per share declared for each of the fiscal
years 2001 and 2002.

Dividend income is tax-exempt in the hands of shareholders. However, we are
required to pay a tax on distributed profits. We were required to pay a 13.1%
tax (including surcharge) on distributed profits in fiscal 2005. In fiscal 2006,
we are required to pay a 14.0% tax (including surcharge) on distributed profits.

Future dividends will depend upon our revenues, cash flow, financial
condition, the regulations of the Reserve Bank of India and other factors.
Owners of ADSs will be entitled to receive dividends payable in respect of the
equity shares represented by such ADSs. The equity shares represented by ADSs
rank pari passu with existing equity shares. At present, we have equity shares
issued in India and equity shares represented by ADSs.

Pursuant to guidelines issued by the Securities and Exchange Board of India
in February 2000, with respect to equity shares issued by us during a particular
fiscal year, dividends declared and paid for such fiscal year are paid in full
and are no longer prorated from the date of issuance to the end of such fiscal
year.

Before paying any dividend on its shares, we are required under the Indian
Banking Regulation Act to write off all capitalized expenses (including
preliminary expenses, organization expenses, share-selling commission,
brokerage, amounts of losses incurred or any other item of expenditure not
represented by tangible assets) under Indian GAAP. Before declaring dividends,
we are required to transfer at least 20.0% of the balance of profits of each
year before payment of dividend to a reserve fund. The government of India may,
however, on the recommendation of the Reserve Bank of India, exempt us from such
a requirement. As per the revised guidelines issued by Reserve Bank of India,
only those banks, which comply with certain minimum prudential

178

requirements with respect to capital adequacy, net non-performing asset ratio
and other criteria, are eligible to declare dividends without prior approval of
Reserve Bank of India. Further, the guidelines prescribe a matrix for the
maximum permissible range of dividend payout ratios with a ceiling of 40.0%,
excluding dividend tax, for banks. Banks, which comply with the prudential
requirements of the above guidelines, but desire to declare dividends higher
than the specified ceiling must obtain prior approval of Reserve Bank of India
for declaration of such higher dividend. In case any bank does not meet the
criteria prescribed above, it has to obtain the prior approval of Reserve Bank
of India before declaring any dividend. For a description of the revised
guidelines issued by the Reserve Bank of India, please see "Supervision and
Regulation - Restrictions on Payment of Dividends". We also need the prior
approval from the Reserve Bank of India to pay an interim dividend.

For a description of the tax consequences of dividends paid to
shareholders, see "Taxation -- Indian Tax -- Taxation of Distributions".

The following table sets forth, for the periods indicated, the dividend per
equity share and the total amount of dividends paid out on the equity shares
during the year, each exclusive of dividend tax, for ICICI, prior to the
amalgamation. This may be different from the dividend declared for the year.

Dividend per Total amount of
equity share(1) dividends paid
------------------ ------------------
(in millions)
Dividend paid during the fiscal year

1999.................................. Rs. 11.00 Rs. 2,618
2000.................................. 11.00 2,641
2001.................................. 11.00 3,505
2002(2)............................... 22.00 8,639
- -----------------
(1) For fiscal 1999, 2000, 2001 and 2002, based on the exchange ratio of 1:2 in
which shareholders of ICICI were issued shares of ICICI Bank, number of
shares have been adjusted by dividing by two. Hence, these numbers are
different from the numbers reported in the annual report on Form 20-F for
fiscal 2002.
(2) Includes dividend of Rs. 11.00 per share declared for each of the fiscal
years 2001 and 2002, both of which were paid during fiscal 2002.

179

TAXATION

Indian Tax

The following discussion of material Indian tax consequences to investors
in ADSs and equity shares who are not resident in India whether of Indian origin
or not (each a "non-resident") is based on the provisions of the Indian
Income-tax Act, 1961 (the "Income-tax Act"), including the special tax regime
for ADSs contained in Section 115AC, which has been extended to cover additional
ADSs that an investor may acquire in an amalgamation or restructuring of the
company, and certain regulations implementing the Section 115AC regime. The
Income-tax Act is amended every year by the Finance Act of the relevant year.
Some or all of the tax consequences of described herein may be amended or
modified by future amendments to the Income-tax Act.

The summary is not intended to constitute a complete analysis of the tax
consequences under Indian law of the acquisition, ownership and sale of ADSs and
equity shares by non-resident investors. Potential investors should, therefore,
consult their own tax advisers regarding the tax consequences of such
acquisition, ownership and sale, including the tax consequences under Indian
law, the law of the jurisdiction of their residence, any tax treaty between
India and their country of residence, and in particular the application of the
regulations implementing the Section 115AC regime.

Residence

For the purpose of the Income-tax Act, an individual is a resident of India
during any fiscal year, if he (i) is in India in that year for 182 days or more
or (ii) having been in India for a period or periods aggregating 365 days or
more during the four years preceding that fiscal year, is in India for a period
or periods aggregating 60 days or more in that fiscal year. The period of 60
days is substituted by 182 days in the case of an Indian citizen or person of
Indian origin who being resident outside India comes on a visit to India during
the fiscal year or an Indian citizen who leaves India for the purposes of his
employment during the fiscal year. A company is resident in India in any fiscal
year if it is registered in India or the control and management of its affairs
is situated wholly in India in that year. A firm or other association of persons
is resident in India except where the control and the management of its affairs
are situated wholly outside India.

Taxation of Distributions

Dividends paid are not subject to any Indian withholding or other tax.
However, we are required to pay tax at the rate of 14.025% on the dividends
distributed by us. The dividend so paid is not taxable under section 115AC in
the hands of the ADS holders.

Taxation on Redemption of ADSs

The acquisition of equity shares upon redemption of ADSs by a non-resident
investor will not give rise to a taxable event for Indian tax purposes.

Taxation on Sale of ADSs or Equity Shares

Any transfer of ADSs outside India by a non-resident investor to another
non-resident investor will not give rise to Indian capital gains tax in the
hands of the transferor.

Subject to any relief under any relevant double taxation treaty, gain
arising from the sale of an equity share will generally give rise to a liability
for Indian capital gains tax in the hands of the transferor. Such tax is
required to be withheld at source. Where the equity share has been held for more
than 12 months (measured from the date of advice of redemption of the ADS by the
Depositary as specified below), the rate of tax is 10.2% (including education
cess) where the total income does not exceed Rs. 1,000,000 (US$ 22,925) or
11.22% (including applicable surcharges and an additional surcharge by way of
education cess) where the total income exceeds Rs. 1,000,000 (US$ 22,925). Where
the equity share has been held for 12 months or less, the rate of tax varies and
the gain will be subject to tax at normal rates of income-tax applicable to
non-residents under the provisions of the Income-tax Act, subject to a maximum
of 41.82% (including applicable surcharges and education cess) in the case of
foreign companies. The actual rate depends on a number of factors, including
without limitation the nature of the non-

180

resident investor. The Finance (No. 2) Act, 2004, introduced the securities
transaction tax effective October 1, 2004 which is levied on transactions of
purchase /sale of equity shares entered into on a recognized stock exchange in
India at the specified rates in accordance with the provisions of Chapter VII
there under. The transaction of sale of equity shares entered into a recognised
stock exchange in India settled by actual delivery or transfer will be subject
to securities transaction tax at the rate of 0.1%, on the value of the
transaction, payable by the seller and buyer respectively. In cases where
securities transaction tax is payable by the seller, the resulting long-term
capital gains would be exempt from tax and short-term capital gains would be
taxable at a lower tax rate of 10.2% (including education cess) where the total
income does not exceed Rs. 1,000,000 (US$ 22,925) or 11.22% (including
applicable surcharges and an additional surcharge by way of education cess)
where the total income exceeds Rs. 1,000,000 (US$ 22,925). For transactions that
are not subject to securities transaction tax, the normal capital gains tax
regime will apply. During the period the underlying equity shares are held by
non-resident investors on a transfer from the Depositary upon redemption, the
provisions of the double taxation treaty entered into by the government of India
with the country of residence of the non-resident investors will apply in
determining the taxation of any capital gains arising on a transfer of the
equity shares. The double taxation treaty between the United States and India
does not provide US residents with any relief from Indian tax on capital gains.

For purposes of determining the amount of capital gains arising on a sale
of an equity share for Indian tax purposes, the cost of acquisition of an equity
share received upon redemption of an ADS will be the price of the share
prevailing on the Stock Exchange, Mumbai or the National Stock Exchange on the
date on which the Depositary advises the custodian of such redemption, not the
acquisition cost of the ADS being redeemed. The holding period of an equity
share received upon redemption of an ADS will commence on the date of advice of
redemption by the Depositary.

Rights

Distributions to non-resident investors of additional ADSs or equity shares
or rights to subscribe for equity shares made with respect to ADSs or equity
shares are not subject to Indian tax in the hands of the non-resident investor.

It is unclear as to whether capital gains derived from the sale of rights
outside India by a non-resident investor that is not entitled to exemption under
a tax treaty to another non-resident investor will be subject to Indian capital
gains tax. If the rights are deemed by the Indian tax authorities to be situated
within India, as our situs is in India, then the capital gains realized on the
sale of rights will be subject to customary Indian capital gains taxation as
discussed above.

Stamp Duty

Upon the issuance of the equity shares underlying the ADSs, we are required
to pay a stamp duty of 0.1% per share of the issue price. A transfer of ADSs is
not subject to Indian stamp duty. Normally, upon the receipt of equity shares in
physical form from the depositary in exchange for ADSs representing such equity
shares, a non-resident investor would be liable for Indian stamp duty applicable
on re-issuance in physical form, which is the same as stamp duty payable on the
original issuance in physical form subject to a maximum of Rs. 20 per share
certificate. Similarly, a sale of equity shares in physical form by a
non-resident investor would also be subject to Indian stamp duty at the rate of
0.25% of the market value of the equity shares on the trade date, although
customarily such tax is borne by the transferee, that is, the purchaser.
However, our equity shares are compulsorily delivered in non-physical form
except for trades up to 500 shares only, which may be delivered in physical
form. Under Indian stamp law, no stamp duty is payable on the acquisition or
transfer of equity shares in non-physical form. The State of Maharashtra has,
inter alia, provided that transactions effected by a trading member of a stock
exchange through a stock exchange are subject to payment of stamp duty. As per
the Finance Act, 2004, all delivery based sales on a recognized stock exchange
in India of inter-alia all equity shares shall attract transaction tax at the
rates of 0.1% of the value of the securities transacted.

Other Taxes

At present, there are no taxes on wealth, gifts or inheritance which apply
to the ADSs or underlying equity shares.

181

Service Tax

Brokerage fees paid to stockbrokers in connection with the sale or purchase
of shares which are listed on any recognized stock exchange in India are subject
to a service tax at a rate of 10.2% (including applicable education cess). The
stockbroker is responsible for collecting the service tax and paying it to the
relevant authority.

United States Tax

The following discussion describes certain US federal income tax
consequences of the acquisition, ownership and sale of ADSs or equity shares
that are generally applicable to US investors. For these purposes, you are an US
investor if, for US federal income tax purposes, you are:

1. a citizen or resident of the United States;

2. a corporation, or other entity taxable as a corporation, organized
under the laws of the United States or of any political subdivision of
the United States; or

3. an estate or trust the income of which is includable in gross income
for US federal income tax purposes regardless of its source.

This discussion only applies to ADSs or equity shares that you own as
capital assets.

Please note that this discussion does not discuss all of the tax
consequences that may be relevant in light of your particular circumstances. In
particular, it does not address investors subject to special rules, including:

1. insurance companies;

2. tax-exempt entities;

3. dealers and certain traders in securities;

4. certain financial institutions;

5. persons who own the ADSs or equity shares as part of an integrated
investment (including a straddle, hedging or conversion transaction)
comprised of the ADS or equity shares, and one or more other positions
for US federal income tax purposes;

6. persons whose functional currency is not the US dollar;

7. persons who own, actually or constructively, 10.0% or more of ICICI
Bank's voting stock; or

8. partnerships or other entities classified as partnerships for US
federal income tax purposes.

This discussion is based on the tax laws of the United States currently in
effect (including the Internal Revenue Code of 1986, as amended, referred to as
the "Code"), Treasury Regulations, Revenue Rulings and judicial decisions. These
laws may change, possibly with retroactive effect.

This discussion is also based in part on representations by the depositary
and assumes that each obligation under the deposit agreement and any related
agreement will be performed in accordance with its terms. Furthermore, the US
Treasury has expressed concerns that parties to whom ADSs are pre-released may
be taking actions that are inconsistent with the claiming of foreign tax credits
for US investors of ADSs. Such actions would also be inconsistent with the
claiming of the reduced rate of tax, described below, applicable to dividends
received by certain non-corporate US investors. Accordingly, the analysis of the
creditability of Indian taxes and the availability of the reduced tax rate for
dividends received by certain non-corporate US investors, each described below,
could be affected by actions taken by parties to whom ADSs are pre-released.

For US federal income tax purposes, if you own an ADS, you will generally
be treated as the owner of the equity shares underlying the ADS.

182

Please consult your tax adviser with regard to the application of the US
federal income tax laws to the ADSs or equity shares in your particular
circumstances, including the passive foreign investment company rules described
below, as well as any tax consequences arising under the laws of any state,
local or other taxing jurisdiction.

This discussion assumes that ICICI Bank is not, and will not become, a
passive foreign investment company (as discussed below).

Taxation of Dividends

Dividends you receive on the ADSs or equity shares, other than certain pro
rata distributions of ADSs or equity shares or rights to acquire ADSs or equity
shares, will generally constitute foreign source dividend income for US federal
income tax purposes. The amount of the dividend you will be required to include
in income will equal the US dollar value of the Rs., calculated by reference to
the exchange rate in effect on the date the payment is received by the
depositary (in the case of ADS) or by you (in the case of equity shares)
regardless of whether the payment is converted into US dollars on the date of
receipt. If you realize gain or loss on a sale or other disposition of rupees,
it will be US source ordinary income or loss. If you are a corporate US
investor, you will not be entitled to claim a dividends-received deduction for
dividends paid by ICICI Bank. Subject to applicable limitations, if you are a
non-corporate US investor, dividends paid to you in taxable years beginning
before January 1, 2009 will be taxable at a maximum rate of 15.0%. If you are a
non-corporate US investor, you should consult your own tax adviser to determine
whether you are subject to any special rules that limit your ability to be taxed
at this favorable rate.

Taxation of Capital Gains

You will recognize capital gain or loss for US federal income tax purposes
on the sale or exchange of ADSs or equity shares in the same manner as you would
on the sale or exchange of any other shares held as capital assets. The gain or
loss will generally be US source income or loss. You should consult your own tax
advisers about the treatment of capital gains, which may be taxed at lower rates
than ordinary income for non-corporate taxpayers, and capital losses, the
deductibility of which may be limited.

Under certain circumstances as described under "Taxation - Indian Tax -
Taxation on Sale of ADSs or Equity Shares", you may be subject to Indian tax
upon the disposition of equity shares. You should consult your own tax adviser
with respect to your ability to credit this Indian tax against your US federal
income tax liability.

Passive Foreign Investment Company Rules

Based upon certain proposed Treasury regulations, which are proposed to be
effective for taxable years beginning after December 31, 1994, and upon certain
management estimates, ICICI Bank does not expect to be a passive foreign
investment company (a "PFIC") for its taxable year that ended March 31, 2005 or
in the foreseeable future. In general, a foreign corporation is a PFIC for any
taxable year in which (i) 75.0% or more of its gross income consists of passive
income (such as dividends, interest, rents and royalties) or (ii) 50.0% or more
of the average quarterly value of its assets consists of assets that produce, or
are held for the production of, passive income. Since there can be no assurance
that the proposed regulations will be finalized in their current form, the
manner of the application of the proposed regulations is not entirely clear, and
the composition of ICICI Bank's income and assets will vary over time, there can
be no assurance that ICICI Bank will not be considered a PFIC for any taxable
year.

If ICICI Bank were treated as a PFIC for any year during your holding
period and you have not made the mark-to-market election, as described below,
you will be subject to special rules generally intended to eliminate any
benefits from the deferral of US federal income tax that a holder could derive
from investing in a foreign corporation that does not distribute all of its
earnings on a current basis. Upon a disposition of ADSs or equity shares,
including, under certain circumstances, a disposition pursuant to an otherwise
tax-free reorganization, gain recognized by you would be allocated ratably over
your holding period for the ADSs or equity shares. The amounts allocated to the
taxable year of the disposition and to any year before ICICI Bank became a
passive foreign investment company would be taxed as ordinary income. The amount
allocated to each other taxable year would be subject to tax at the highest rate
in effect for individuals or corporations, as appropriate, and an interest
charge would be imposed on the amount allocated to such taxable year. Further,
any distribution in respect of ADSs or equity shares in excess of

183

125.0% of the average of the annual distributions on ADSs or equity shares
received by you during the preceding three years or your holding period,
whichever is shorter, would be subject to taxation as described above.

If the ADSs or equity shares are "regularly traded" on a "qualified
exchange", you may make a mark-to-market election. The ADSs or equity shares
will be treated as "regularly traded" in any calendar year in which more than a
de minimis quantity of the ADSs or equity shares, as the case may be, are traded
on a qualified exchange on at least 15 days during each calendar quarter. A
"qualified exchange" includes a foreign exchange that is regulated by a
governmental authority in which the exchange is located and with respect to
which certain other requirements are met. The Internal Revenue Service has not
yet identified specific foreign exchanges that are "qualified" for this purpose.
The New York Stock Exchange on which the ADSs are traded is a qualified exchange
for US federal income tax purposes.

If you make the election, you generally will include as ordinary income the
excess, if any, of the fair market value of the ADSs or equity shares at the end
of each taxable year over their adjusted basis, and will be permitted an
ordinary loss in respect of the excess, if any, of the adjusted basis of the
ADSs or equity shares over their fair market value at the end of the taxable
year (but only to the extent of the net amount of previously included income as
a result of the mark-to-market election). If you make the election, your basis
in the ADSs or equity shares will be adjusted to reflect any such income or loss
amounts. Any gain recognized on the sale or other disposition of ADSs or equity
shares will be treated as ordinary income.

If you own ADSs or equity shares during any year in which ICICI Bank is a
PFIC, you must file Internal Revenue Service Form 8621.

In addition, if we were to be treated as a PFIC in a taxable year in which
we pay a dividend or the prior taxable year, the 15.0% dividend rate discussed
above with respect to payment of dividends to certain non-corporate US investors
would not apply.

Information reporting and backup withholding

Payment of dividends and sales proceeds that are made within the United
States or through certain US-related financial intermediaries generally are
subject to information reporting and to backup withholding unless (i) you are a
corporation or other exempt recipient or (ii) in the case of backup withholding,
you provide a correct taxpayer identification number and certify that no loss of
exemption from backup withholding has occurred.

The amount of any backup withholding from a payment to you will be allowed
as a credit against your US federal income tax liability and may entitle you to
a refund, provided that the required information is timely furnished to the
Internal Revenue Service.

184

PRESENTATION OF FINANCIAL INFORMATION

ICICI Bank and ICICI prepared their historical financial statements in
accordance with Indian generally accepted accounting principles. Starting in
fiscal 2000, ICICI Bank published in its annual shareholders' report its
financial statements in US GAAP as well as in Indian GAAP. Starting in fiscal
1999, ICICI published in its annual shareholders' report its financial
statements in US GAAP as well as in Indian GAAP.

The financial information in this annual report has been prepared in
accordance with US GAAP, unless indicated otherwise. Our fiscal year, like ICICI
Bank's and ICICI's fiscal year prior to the amalgamation, ends on March 31 of
each year so all references to a particular fiscal year are to the year ended
March 31 of that year. Our financial statements, including the notes to these
financial statements, audited by KPMG India, independent accountants, are set
forth at the end of this annual report.

The Statement on Financial Accounting Standard No. 141 on "Business
Combinations", issued by the Financial Accounting Standards Board, requires that
business combinations be accounted for in the period in which the combination is
consummated. The effective date of the amalgamation for accounting purposes
under US GAAP was April 1, 2002. Accordingly, under US GAAP, the amalgamation
has been reflected in the financial statements contained in this annual report
for fiscal 2003, as it was consummated in April 2002. Under US GAAP, the
amalgamation was accounted for as a reverse acquisition. This means that ICICI
was recognized as the accounting acquirer in the amalgamation, although ICICI
Bank was the legal acquirer. Accordingly, the financial statements and other
financial information contained in this annual report for fiscal 2002 and prior
years, except where specifically stated otherwise, present the assets,
liabilities and results of operations of ICICI.

Under Indian GAAP, the amalgamation was accounted for on March 30, 2002,
the Appointed Date specified in the Scheme of Amalgamation, with ICICI Bank
being recognized as the accounting acquirer.

ICICI's consolidated subsidiaries for and at year-end fiscal 2002 and
year-end fiscal 2001 did not include ICICI Bank. Effective March 10, 2001, ICICI
Bank acquired Bank of Madura, an old private sector bank in India, in an all
stock merger and, as a result, the ownership interest of ICICI was reduced from
62.2% to 55.6%. In addition, during March 2001, ICICI reduced its interest in
ICICI Bank to 46% through sales of equity shares in the Indian secondary markets
to institutional investors. As a result of the foregoing, ICICI Bank ceased to
be one of ICICI's subsidiaries as of March 22, 2001 and was accounted for under
the equity method of accounting from April 1, 2000, the beginning of the fiscal
year in which ICICI's majority ownership interest in ICICI Bank was deemed to be
temporary.

The consolidation of ICICI's majority ownership interest in two insurance
companies, ICICI Prudential Life Insurance Company Limited and ICICI Lombard
General Insurance Company Limited, in each of fiscal 2001 and 2002 was deemed
inappropriate because of substantive participative rights retained by the
minority shareholders. Accordingly, such investees have not been consolidated
from fiscal 2003 but have been accounted for by the equity method. Prior period
financial statements have been restated and as a result, the financial
statements for fiscal 2002 and fiscal 2001 contained in this annual report are
not the same as those contained in our annual report for fiscal 2002 and fiscal
2001. There was no resultant impact on net income or stockholders' equity for
fiscal 2002.

Although we have translated in this annual report certain rupee amounts
into dollars for convenience, this does not mean that the rupee amounts referred
to could have been, or could be, converted into dollars at any particular rate,
the rates stated earlier in this annual report, or at all. Except in the section
on "Market Price Information", all translations from rupees to dollars are based
on the noon buying rate in the City of New York for cable transfers in rupees at
March 31, 2005. The Federal Reserve Bank of New York certifies this rate for
customs purposes on each date the rate is given. The noon buying rate on March
31, 2005 was Rs. 43.62 per US$ 1.00.

185

ADDITIONAL INFORMATION

Memorandum and Articles of Association

Objects and Purposes

Pursuant to Clause III. A. 1 of ICICI Bank's Memorandum of Association,
ICICI Bank's main objective is to carry on the business of banking in any part
of India or outside India.

Directors' Powers

ICICI Bank's directors' powers include the following:

o Article 140 of the Articles of Association provides that no director
of ICICI Bank shall, as a director, take any part in the discussion of
or vote on any contract or arrangement if such director is directly or
indirectly concerned or interested.

o Directors have no powers to vote in absence of a quorum.

o Article 83 of the Articles of Association provides that the directors
may raise and secure the payment of amounts in a manner and upon such
terms and conditions in all respects as they think fit and in
particular by the issue of bonds, debenture stock, or any mortgage or
charge or other security on the undertaking or the whole or any part
of the property of ICICI Bank (both present and future) including its
uncalled capital.

Amendment to Rights of Holders of Equity Shares

Any change to the existing rights of the equity holders can be made only by
amending the Articles of Association which would require a special resolution of
the shareholders, which must be passed by not less than three times the number
of votes cast against the resolution.

Change in Control Provisions

Article 59 of the Articles of Association provides that the board of
directors may at their discretion decline to register or acknowledge any
transfer of shares in respect of shares upon which we have a lien. Moreover, the
board of directors may refuse to register the transfer of any shares if the
total nominal value of the shares or other securities intended to be transferred
by any person would, together with the total nominal value of any shares held in
ICICI Bank, exceed 1% of the paid up equity share capital of the merged entity
or if the board of directors is satisfied that as a result of such transfer, it
would result in the change in the board of directors or change in the
controlling interest of ICICI Bank and that such change would be prejudicial to
the interests of ICICI Bank. However, under the Indian Companies Act, the
enforceability of such transfer restrictions is unclear.

186

Documents on Display

The documents concerning us which are referred to herein may be inspected
at the Securities and Exchange Commission ("SEC"). You may read and copy any
document filed or furnished by us at the SEC's public reference rooms in
Washington D.C., New York and Chicago, Illinois or obtain them by mail upon
payment of prescribed rates. Please call the SEC at 1-800-SEC-0330 for further
information. The SEC also maintains a website at www.sec.gov, which contains, in
electronic form, each of the reports and other information that we have filed
electronically with the SEC. Information about ICICI Bank is also available on
the web at www.icicibank.com.

Incorporation by Reference

We incorporate by reference the information disclosed under "Description of
Equity Shares" and "Description of the American Depositary Shares" in ICICI
Bank's Registration Statement on Form F-1 (File No. 333-30132).

187

Index to Consolidated Financial Statements

Contents
Page

Report of independent registered public accounting firm

F-2

Consolidated balance sheets

F-3

Consolidated statements of operations

F-4

Consolidated statements of stockholders’ equity and other comprehensive income

F-6

Consolidated statements of cash flows

F-7

Notes to the consolidated financial statements

F-9

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders

ICICI Bank Limited

We have audited the accompanying consolidated balance sheets of ICICI Bank Limited and subsidiaries (‘the Company’) as of March 31, 2004 and 2005, and the related consolidated statements of operations,
stockholders’ equity and other comprehensive income, and cash flows for each of the years in the three-year period ended March 31, 2005. These consolidated financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of ICICI Bank Limited and subsidiaries as of March 31, 2004 and 2005, and the results
of their operations and their cash flows for each of the years in the three-year period ended March 31, 2005, in conformity with accounting principles generally accepted in the United States of America.

The United States dollar amounts are presented in the accompanying consolidated financial statements solely for the convenience of the readers and have been translated into United States dollar on the basis described in
Note 1 to the consolidated financial statements.

Mumbai, India

April 30, 2005
KPMG

F-2

ICICI Bank Limited and Subsidiaries

Consolidated balance sheets

In millions, except share data

As of March 31

2004

2005
Convenience

translation

into US$,

As of March 31,

2005

Assets

Cash and cash equivalents

Rs.

98,985

Rs.

155,639

US$

3,568

Trading assets

75,155

75,538

1,732

Securities:

Available for sale

296,605

369,818

8,478

Non-readily marketable equity securities

8,621

7,209

165

Venture capital investments

5,142

3,932

Investments in affiliates

3,619

4,725

108

Loans, net of allowance for loan losses, security deposits and

unearned income

728,520

999,858

22,922

Customers’ liability on acceptances

65,142

74,116

1,699

Property and equipment, net

23,183

26,055

597

Assets held for sale

4,829

3,741

Goodwill

5,403

7,407

170

Intangible assets, net

4,513

4,199

Deferred tax assets

7,937

12,111

278

Interest and fees receivable

6,529

17,211

395

Other assets

74,948

101,888

2,336

Total assets

Rs.

1,409,131

Rs.

1,863,447

US$

42,720

Liabilities

Interest bearing deposits

Rs.

611,178

Rs.

889,626

US$

20,395

Non-interest bearing deposits

73,777

126,908

2,909

Trading liabilities

26,079

24,258

556

Short-term borrowings

57,364

91,951

2,108

Bank acceptances outstanding

65,142

74,116

1,699

Long-term debt

373,449

367,499

8,425

Redeemable preferred stock

944

1,044

Taxes and dividends payable

20,180

17,885

410

Deferred tax liabilities

614

550

Other liabilities

84,829

139,546

3,199

Total liabilities

Rs.

1,313,556

Rs.

1,733,383

US$

39,738

Commitments and contingencies (Note 29)

Minority interest

1,050

2,068

Stockholders’ equity:

Common stock at Rs. 10 par value: 800,000,000 and

1,550,000,000 shares authorized as of March 31, 2004 and 2005;

Issued and outstanding 616,391,905 and 736,738,564 shares as of

March 31, 2004 and 2005, respectively

6,164

7,368

169

Additional paid-in capital

65,341

96,818

2,220

Retained earnings

18,279

20,581

472

Deferred compensation costs

(60
)

(1
)

Accumulated other comprehensive income

4,741

3,289

Total stockholders' equity

94,525

127,996

2,935

Total liabilities and stockholders' equity

Rs.

1,409,131

Rs.

1,863,447

US$

42,720

See accompanying notes to the consolidated financial statements.

F-3

ICICI Bank Limited and Subsidiaries

Consolidated statements of operations

In millions, except share data

Convenience

translation

into US$,

Year ended

March 31,

2005

Year ended March
31

2003
2004
2005

Interest and dividend income

Interest and fees on loans

Rs.

75,080

Rs.

69,221

Rs.

70,968

US$

1,627

Interest and dividends on securities

17,022

15,695

15,733

361

Interest and dividends on trading assets

2,754

3,232

1,946

Interest on balances and deposits with banks

1,151

1,148

1,512

Other interest income

2,096

1,823

2,101

Total interest and dividend income

98,103

91,119

92,260

2,116

Interest expense

Interest on deposits

26,033

30,680

33,105

759

Interest on long-term debt

48,163

38,412

31,310

718

Interest on short-term borrowings

3,829

1,374

2,037

Interest on trading liabilities

3,114

1,815

1,747

Other interest expense

2,069

210

Total interest expense

83,208

72,375

68,409

1,569

Net interest income

14,895

18,744

23,851

547

Provision for loan losses

19,649

20,055

14,677

336

Net interest income/ (loss) after provision for

loan losses

(4,754
)

(1,311
)

9,174

211

Non-interest income

Fees, commission and brokerage

5,397

8,988

15,660

359

Net gain on trading activities

3,075

4,433

286

Net gain/(loss) on venture capital investments

(1,278
)

357

Net gain on other securities

956

12,443

5,863

134

Net gain on sale of loans and credit substitutes

3,120

4,687

5,414

124

Foreign exchange income

2,061

2,130

Software development and services

1,062

903

1,731

Gain on sale of property and equipment

345

Transaction processing services

696

1,756

3,219

Other non-interest income

117

705

247

Total non-interest income

13,253

36,678

34,645

795

Non-interest expense

Salaries and employee benefits

5,383

9,976

11,292

259

General and administrative expenses

12,581

16,440

21,193

486

Amortization of intangible assets

645

685

604

Total non-interest expense

18,609

27,101

33,089

759

Income/(loss) before equity in loss of

affiliates, minority interest, income taxes

(10,110
)

8,266

10,730

247

Equity in loss of affiliates

(958
)

(1,437
)

(577
)

(13
)

Minority interest

Income/(loss) before income taxes

(11,044
)

6,857

10,167

234

Income tax (expense)/benefit

3,061

(1,638
)

(1,637
)

(38
)

Net income/(loss)

Rs.
(7,983
)
Rs.
5,219
Rs.

8,530

US$

196

F-4

ICICI Bank Limited and Subsidiaries

Consolidated statements of operations (Continued)

In millions, except share data

Convenience

translation

into US$,

Year ended

March 31,

2005

Year ended March
31

2003
2004
2005

Earnings per equity share: (Rs.)

Basic

Rs.

(14.18
)
Rs.

8.50

Rs.

11.72

US$

0.27

Diluted

(14.18
)

8.43

11.60

0.27

Weighted average number of equity shares

used in computing earnings per equity share

(millions)

Basic

563

614

728

Diluted

563

619

734

See accompanying notes to the consolidated financial statements.

F-5

ICICI Bank Limited and
Subsidiaries

Consolidated statements of stockholders’ equity and other comprehensive income

In millions, except share data

Common stock

Treasury stock

No. of shares ⁽¹⁾

Amount

No. of shares

Amount

Additional

paid-in

capital

Retained
earnings

Deferred

compensation

Accumulated other

comprehensive

Income, net of tax

Total

stockholders’

equity

Balance as of March 31, 2002
392,672,724

Rs.
3,922

Rs.
42,036

Rs.
26,229

Rs.
(7
)
Rs.
(832
)
Rs.
71,348

Common stock issued on reverse acquisition
118,962,731

1,190

10,838

12,028

Fair value of stock options assumed
on reverse

acquisition
-

409

Treasury stock arising due to reverse acquisition
101,395,949

(101,395,949
)

(8,204
)

8,204

Sale of treasury stock
-

1,015

101,395,949

8,204

3,336

12,555

Common stock issued on exercise of stock options
3,000

Increase in carrying value on direct
issuance of stock

by subsidiary
-

Amortization of compensation
-

Comprehensive income
-

Net income/ (loss)
-

(7,983
)

Net unrealized gain/(loss)
on securities,

net
of realization (net of tax)
-

3,731

Translation adjustments (net of nil tax)
-

Comprehensive income/ (loss)

(4,174
)

Balance as of March 31, 2003
613,034,404

Rs.
6,127

Rs.
-

Rs.
64,863

Rs.
18,246

Rs.
-

Rs.
2,977

Rs.
92,213

Common stock issued on exercise of stock options
3,370,604

478

512

Receipt of calls in arrears

Forfeiture of shares
(13,103
)

Amortization of compensation
-

Comprehensive income
-

Net income/(loss)
-

5,219

Net unrealized gain/(loss) on
securities,

net of realization (net of tax)
-

1,858

Translation adjustments (net of nil tax)
-

(94
)

Comprehensive income/ (loss)
-

6,983

Cash dividends declared (Rs.7.5 per common share)
-

(5,186
)

Balance as of March 31, 2004
616,391,905

Rs.
6,164

Rs.
-

Rs.
65,341

Rs.
18,279

Rs.
-

Rs.
4,741

Rs.
94,525

Common stock issued, net of issue expenses
115,920,758

1,159

30,771

31,930

Common stock issued on exercise of stock options
4,480,121

605

650

Compensation related to employee stock option plan
-

108

(108
)

Forfeiture of shares
(54,220
)

(7
)

Amortization of compensation
-

Comprehensive income
-

Net income/(loss)
-

8,530

Net unrealized gain/(loss)
on securities, net of

realization
(net of tax)
-

(1,426
)

Translation adjustments (net of nil tax)
-

(26
)

Comprehensive income/ (loss)
-

7,078

Cash dividends declared (Rs.7.5 per common share)
-

(6,228
)

Balance as of March 31, 2005
736,738,564

Rs.
7,368

Rs.
-

Rs.

Rs.
96,818

Rs.
20,581

Rs.
(60
)
Rs.
3,289

Rs.
127,996

Balance as of March 31, 2005 (US$)

169

2,220

472

(1
)

2,935

See accompanying notes to the consolidated financial statements.

1) Restated for reverse acquisition.

F-6

ICICI Bank Limited and Subsidiaries

Consolidated statements of cash flows

In millions, except share data

Year ended March 31,

2003
2004
2005
Convenience

translation

into US$

Year ended

March 31,

2005

Operating activities

Net income/(loss)
Rs.

(7,983

)
Rs.

5,219

Rs.

8,530

US$

196

Adjustments to reconcile net income to net cash (used

in)/provided by operating activities:

Provision for loan and other credit losses

19,649

20,055

14,677

336

Depreciation

2,438

2,791

3,560

Amortization of intangibles and deferred income

5,815

(1,902

)

(1,005

)

(23

)

Amortization of discounts and expenses on borrowings

607

856

272

Deferred income tax

(4,348
)

(2,046
)

(1,766
)

(40
)

Unrealized loss/(gain) on trading assets

(1,126
)

(835

)

1,840

Unrealized loss/(gain) on venture capital investments

1,278

(499

)

(62

)

(1
)

Other than temporary decline in value of other securities

2,098

944

663

Undistributed equity in (earning)/loss of affiliates

958

1,631

577

Minority interest.

(24
)

(28
)

(14

)

(Gain)/loss on sale of property and equipment, net

(16

)

(345

)

(33

)

(Gain)/loss on sale of securities available for sale

(956

)

(12,443

)

(5,863

)

(134
)

Gain on sale of loans

(2,795
)

(4,687

)

(5,414

)

(124
)

Change in assets and liabilities

Trading account assets .

29,944

(34,686

)

(2,223

)

(51

)

Interest and fees receivable

(2,990

)

5,943

(10,682
)

(245

)

Other assets

(34,295

)

(18,535

)

(30,616

)

(702

)

Trading account liabilities

(13,656

)

(1,821

)

(42

)

Taxes payable

5,830

3,300

(2,295
)

(53

)

Other liabilities

4,663

18,750

55,849

1,280

Net cash (used in)/provided by operating activities

5,091

(16,524)

24,174

554

Investing activities

Purchase of available for sale securities.

(717,765

)

(270,405

)

(329,174

)

(7,546

)

Purchase of venture capital investments

(1,268

)

(3,097

)

(3,399

)

(78

)

Purchase of non-readily marketable equity securities

(1,150

)

(561

)

(3,292
)

(75

)

Proceeds from sale of available for sale securities

684,769

255,316

261,110

5,986

Proceeds from sale of venture capital investments

207

2,157

4,671

107

Proceeds from sale of non-readily marketable equity securities

1,358

4,704

108

Origination of loans, net

(108,023

)

(237,709

)

(497,107

)

(11,396

)

Proceeds from sale of loans

51,780

128,269

218,566

5,011

Purchase of property and equipment

(6,943

)

(5,740
)

(6,664

)

(153

)

Proceeds from sale of property and equipment

504

1,305

265

Investments in affiliates

(1,691

)

(2,635
)

(1,684

)

(39

)

Payment for business acquisition, net of cash acquired

98,487

(1,322

)

(1,957

)

(45

)

Net cash (used in)/provided by investing activities

(1,093
)

(133,064
)

(353,961
)

(8,114)

F-7

ICICI Bank Limited and Subsidiaries

Consolidated statements of cash flows (Continued)

In millions, except share data

Year ended March 31,

2003
2004
2005
Convenience

translation

into US$

Year ended

March 31,

2005

Financing activities

Increase in deposits, net
Rs.

158,290

Rs.

193,741

Rs.

331,636

US$

7,603

Proceeds/ repayment from short-term borrowings, net

(30,118

)

15,269

34,587

793

Proceeds from issuances of long-term debt

10,631

114,712

86,725

1,988

Repayment of long-term debt

(124,979

)

(142,931

)

(92,947

)

(2,131

)

Proceeds from issuance of common stock

13,155

515

32,668

749

Cash dividends paid

(5,186
)

(6,228

)

(143
)

Net cash provided by/(used in) financing activities

26,979

176,120

386,441

8,859

Net increase/(decrease) in cash and cash equivalents

30,977

26,532

56,654

1,299

Cash and cash equivalents at the beginning of the year

41,476

72,453

98,985

2,269

Cash and cash equivalents at the end of the year
Rs.

72,453

Rs.

98,985

Rs.

155,639

US$

3,568

Supplementary information:

Cash paid for:

Taxes

Rs.

1,027

Rs.

3,313

Rs.

8,401

US$

193

Non-cash items:

Foreclosed assets

673

1,087

3,677

Conversion of loan to equity shares

4,495

1,162

2,385

Change in unrealized gain/(loss) on securities available

for sale, net

3,731

1,858

(1,426

)

(33
)

Acquisitions

Fair value of net assets acquired, excluding cash and

cash equivalents

(37,948

)

642

1,957

Shares issued

118,965,731

Treasury stock

8,204

See accompanying notes to the consolidated financial statements

F-8

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements

1. Significant accounting policies

Overview

ICICI Bank Limited (ICICI Bank) together with its subsidiaries and affiliates (collectively, the Company) is a diversified financial services group providing a variety of banking and financial services including project and
corporate finance, working capital finance, venture capital finance, investment banking, treasury products and services, retail banking, broking and insurance. Further, the Company also has interests in the software development, software services
and business process outsourcing businesses. The Company is headquartered in Mumbai, India.

Effective April 1, 2002, ICICI Bank (which for periods prior to April 1, 2002 is referred to as the ‘acquiree’) and ICICI Limited (ICICI) consummated a transaction whereby shareholders of ICICI were issued shares
of the acquiree in the ratio of 1:2. The transaction has been treated as a reverse acquisition for financial reporting purposes with ICICI (the ‘acquirer’) as the accounting acquirer.

Principles of consolidation

The consolidated financial statements include the accounts of ICICI Bank and all of its subsidiaries. The Company consolidates subsidiaries in which it holds, directly or indirectly, more than 50% of the voting rights or
where it exercises control. Entities where the Company holds 20% to 50% of the voting rights and/or has the ability to exercise significant influence, other than investments of designated venture capital subsidiaries, are accounted for under the
equity method, and the pro rata share of their income (loss) is included in income. Income from investments in less than 20%-owned companies is recognized when dividends are received. The Company consolidates entities deemed to be Variable Interest
Entities (VIEs) where the Company is determined to be the primary beneficiary under FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46). All significant intercompany accounts and transactions are eliminated
on consolidation.

Basis of preparation

The accounting and reporting policies of the Company used in the preparation of these consolidated financial statements reflect general industry practices and conform to generally accepted accounting principles in the
United States (US GAAP).

The preparation of consolidated financial statements in conformity with US GAAP requires that management make estimates and assumptions that affect the reported amount of assets and liabilities and disclosures of contingent
assets and liabilities as of the date of the consolidated financial statements and the reported income and expense for the reporting period. The Company makes estimates for valuation of derivatives and securities, where no ready market exists,
determining the level of allowance for loan losses and assessing recoverability of goodwill, intangible assets and deferred tax assets. Management believes that the estimates used in the preparation of the consolidated financial statements are
prudent and reasonable. The actual results could differ from these estimates.

F-9

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Foreign currencies

The consolidated financial statements are reported in Indian rupees (Rs.), the national currency of India. The functional currency of each entity within the Company is determined based on the economic environment in which
the entity operates.

The assets and liabilities of the Company’s foreign operations are translated into Indian rupees at current exchange rates, and revenues and expenses are translated at average exchange rates for the year. Resulting
translation adjustments are reflected as a component of accumulated other comprehensive income.

Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in the results of operations as incurred.

Solely for the convenience of the readers, the financial statements as of and for the year ended March 31, 2005, have been translated into United States dollar at the noon buying rate in New York City on March 31, 2005, for
cable transfers in Indian rupees, as certified for customs purposes by the Federal Reserve of New York of US$ 1 = Rs. 43.62. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States
dollars at such a rate or any other certain rate on March 31, 2005, or at any other certain date.

Revenue recognition

Interest income is accounted on an accrual basis except in respect of impaired loans, where it is recognized on a cash basis. Income under direct finance leasing arrangements are accrued in a manner to provide a fixed rate
of return on outstanding investments. Customer payments under lease or hire purchase operations which do not meet the provisions for classification as direct finance leasing arrangements are accrued on a straight line basis over the contractual
minimum lease payment period.

Fees for guarantees and letters of credit are amortized over the contracted period of the commitment.

Revenues from software development, software services and business process outsourcing comprise income from time-and-material and fixed-price contracts. Revenue with respect to time-and-material contracts is recognized as
related services are performed. Revenue with respect to fixed-price contracts is recognized in accordance with the percentage of completion method of accounting. Provisions for estimated losses on contracts-in-progress are recorded in the period in
which such losses become probable based on the current contract estimates.

Cash equivalents

The Company considers all highly liquid investments, which are readily convertible into cash and have contractual maturities of three months or less from the date of purchase, to be cash equivalents. The carrying value of
cash equivalents approximates fair value.

F-10

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Securities and trading activities

The Company classifies investments in debt and readily marketable equity securities, other than investments held by certain venture capital subsidiaries, into two categories based upon management’s intention at the
time of purchase: trading securities and securities available for sale. Realized gains and losses on the sale of securities available for sale are recorded at the time of sale. For computing realized gains and losses on securities, other than equity
shares, the cost is ascertained using the first-in-first-out method. The realized gains and losses on equity shares are computed using the weighted average method.

Trading assets, primarily debt securities and foreign exchange products, are recorded at fair value with realized and unrealized gains and losses included in non-interest income. Interest on trading securities is recorded
in interest income. The fair value of trading assets is based upon quoted market prices or, if quoted market prices are not available, estimates using similar securities or pricing models.

Securities not classified as trading securities are classified as available for sale. These include securities used as part of the Company’s asset liability management strategy, which may be sold in response to changes
in interest rates, prepayment risk, liquidity needs and similar factors. Securities available for sale are recorded at fair value with unrealized gains and losses recorded, net of tax, as a component of accumulated other comprehensive
income.

Equity securities, which are traded on a securities exchange within six months of the balance sheet date are considered as publicly traded. The last quoted price of such securities is taken as their fair value. Non-readily
marketable equity securities for which there is no readily determinable fair value are recorded at cost.

Securities on which there is an unrealized loss that is deemed to be other than temporary are written down to fair value with the loss recorded in non-interest income as a loss on other securities. Other than temporary
decline is identified by management based on an evaluation of all significant factors including the length of time and the extent to which the fair value has been less than the cost, the financial condition and prospects of the issuer and the extent
and ability of the Company to retain the investment for a period of time sufficient to allow for any probable recovery in fair value.

Securities acquired through conversion of loans in a troubled debt restructuring are recorded at the fair value on the date of conversion and subsequently accounted for as if acquired for cash.
The Company’s venture
capital subsidiaries carry their investments at fair value, with changes in fair value recognized in gain/loss on venture capital investments. The fair values of publicly traded venture capital investments are generally based upon quoted market
prices. In certain situations, including thinly traded securities, large-block holdings, restricted shares or other special situations, the quoted market price is adjusted to produce an estimate of the attainable fair value for the securities. For
securities that are not publicly traded, fair value is determined in good faith pursuant to procedures established by the venture capital subsidiaries. In determining the fair value of these securities, consideration is given to the financial
conditions, operating results and prospects of the underlying companies, and any other factors deemed relevant. Generally, these investments are carried at cost during the first year, unless a significant event occurs that affects the long-term
value of the investment. Because of the inherent uncertainty of the valuations, those estimated values may differ significantly from the values that would have been used had a ready market for the investments existed.

Trading liabilities represent borrowings from banks in the inter-bank call money market, borrowings from banks and corporates in the course of trading operations and balances arising from repurchase transactions.

F-11

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)
Loans
Loans are reported at the principal amount outstanding, inclusive of interest accrued and due per the contractual terms, except for certain non-readily marketable privately placed debt instruments, which are considered
credit substitutes and are, therefore classified as loans but accounted for as debt securities. Loan origination fees (net of loan origination costs) are deferred and recognized as an adjustment to yield over the life of the loan. Interest is
accrued on the unpaid principal balance and is included in interest income.

Loans include aggregate rentals on lease financing transactions and residual values, net of security deposits and unearned income. Lease financing transactions substantially represent direct financing leases. Loans also
include the aggregate value of purchased securitized receivables, net of unearned income.

The Company identifies a commercial loan as impaired and places it on non-accrual status when it is probable that it will be unable to collect the scheduled payments of principal and interest due under the contractual terms
of the loan agreement. A commercial loan is also considered to be impaired and placed on a non-accrual basis if interest or principal is greater than 90 days overdue. Delays or shortfalls in loan payments are evaluated along with other factors to
determine if a loan should be classified as impaired. The decision to classify a loan as impaired is also based on an evaluation of the borrower’s financial condition, collateral, liquidation value and other factors that affect the
borrower’s ability to pay.

The Company classifies a loan as a restructured loan where it has made concessionary modifications, that it would not otherwise consider, to the contractual terms of a loan to a borrower experiencing financial difficulties.
Such loans are placed on non-accrual status. Generally, at the time a loan is placed on non-accrual status, interest accrued and uncollected on the loan in the current fiscal year is reversed from income, and interest accrued and uncollected from
the prior year is charged off against the allowance for loan losses. Thereafter, interest on non-accrual loans is recognized as interest income only to the extent that cash is received. When borrowers demonstrate over an extended period the ability
to repay a loan in accordance with the contractual terms of a loan, which the Company classified as non-accrual, the loan is returned to accrual status. With respect to restructured loans, performance prior to the restructuring or significant events
that coincide with the restructuring are evaluated in assessing whether the borrower can meet the rescheduled terms and may result in the loan being returned to accrual status after a performance period.

Consumer loans are generally identified as impaired not later than a predetermined number of days overdue on a contractual basis. The number of days is set at an appropriate level by loan product. The policy for suspending
accruals of interest and impairment on consumer loans varies depending on the terms, security and loan loss experience characteristics of each product.

Allowance for loan losses

The allowance for loan losses represents management’s estimate of probable losses inherent in the portfolio. Larger balance, non-homogenous exposures representing significant individual credit exposures are evaluated
based upon the borrower’s overall financial condition, resources and payment record and the realizable value of any collateral. Within the allowance of loan losses, a valuation allowance is maintained for larger-balance, non-homogenous loans
that have been individually determined to be impaired. This estimate considers all available evidence including the present value of the expected future cash flows discounted at the loan’s contractual effective rate and the fair value of
collateral. Allowances recognized by the Company on account of reductions of future interest rates as a part of troubled debt restructurings are accreted as a credit to the provision for loan losses over the tenor of the restructured
loan.

F-12

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Each portfolio of smaller-balance, homogenous loans, including consumer mortgage, installment, revolving credit and most other consumer loans, is individually evaluated for impairment. The allowance for loan losses
attributed to these loans is established via a process that includes an estimate of probable losses inherent in the portfolio, based upon various statistical analysis. These include migration analysis, in which historical delinquency and credit loss
experience is applied to the current aging of the portfolio, together with an analysis that reflects current trends and conditions.

While determining the adequacy of the allowance for loan losses, management also considers overall portfolio indicators including historical credit losses, delinquent and non-performing loans, and trends in volumes and
terms of loans; an evaluation of overall credit quality and the credit process, including lending policies and procedures; consideration of economic, geographical, product, and other environmental factors.

The Company also includes in the allowances provision for credit losses on its performing portfolio based on the estimated probable losses inherent in the portfolio. The allowances on the performing portfolio are
established after considering historical and projected default rates and loss severities, internal risk rating and geographic, industry and other environmental factors; and model imprecision.

The Company evaluates its impaired loan portfolio at the end of every period and loan balances which are deemed irrecoverable are charged off against related allowances for credit losses.

Transfers and servicing of financial assets

The Company transfers
commercial and consumer loans through securitization transactions. The transferred
loans are de-recognized and gains/losses are recorded only if the transfer qualifies
as a sale under SFAS No. 140. Transfers that do not meet the criteria for a sale
under SFAS No. 140, are required to be recorded as secured borrowings with a
pledge of collateral, and such secured borrowings are required to be reported
as a component of other borrowings.
Recourse and servicing obligations
and put options written are recorded as proceeds of the sale. For a
transfer of financial assets to be considered a sale, financial assets
transferred by the Company must have been isolated from the seller,
even in bankruptcy or other receivership; the purchaser must have the
right to sell the assets transferred or the purchaser must be a qualifying
special purpose entity meeting certain significant restrictions on
its activities, whose investors have the right to sell their ownership
interests in the entity; and the seller must not continue to control
the assets transferred through an agreement to repurchase them or have
a right to cause the assets to be returned (known as a call option).

The Retained interests in the securitization include subordinated interest-only strips and subordinated tranches. Retained beneficial interests in the loans and servicing rights are measured by allocating the carrying value
of the loans between the assets sold and the retained interest, based on the relative fair value at the date of the securitization. The fair values are determined using either financial models, quoted market prices or sales of similar
assets.

Loans held-for-sale

Loans originated for sale are classified as loans held-for-sale and are accounted for at the lower of cost or fair value. Such loans are reported as other assets. Market value of such loans are determined at rates
applicable to similar loans.

F-13

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Derivatives instruments and hedging activities

The Company may designate a derivative as either a hedge of the fair value of a recognized fixed rate asset or liability or an unrecognized firm commitment (fair value hedge), a hedge of a forecasted transaction or the
variability of future cash flows of a floating rate asset or liability (cash flow hedge) or a foreign-currency fair value or cash flow hedge (foreign currency hedge). All derivatives are recorded as assets or liabilities on the balance sheet at
their respective fair values with unrealized gains and losses recorded either in accumulated other comprehensive income or in the consolidated statement of operations, depending on the purpose for which the derivative is held. Derivatives that do
not meet the criteria for designation as a hedge under Statement of Financial Accounting Standard No.133 “Accounting for Derivative Instruments and Hedging Activities” (SFAS No. 133) at inception, or fail to meet the criteria thereafter,
are accounted for in other assets with changes in fair value recorded in the consolidated statement of operations.

Changes in the fair value of a derivative that is designated and qualifies as a fair value hedge along with the gain or loss on the hedged asset or liability that is attributable to the hedged risk, are recorded in the
consolidated statement of operations as other non-interest income. To the extent of the effectiveness of a hedge, changes in the fair value of a derivative that is designated and qualifies as a cash flow hedge, are recorded in accumulated other
comprehensive income, net of tax. For all hedge relationships, ineffectiveness resulting from differences between the changes in fair value or cash flows of the hedged item and changes in the fair value of the derivative are recognized in the
consolidated statement of operations as other non-interest income.

At the inception of a hedge transaction, the Company formally documents the hedge relationship and the risk management objective and strategy for undertaking the hedge. This process includes identification of the hedging
instrument, hedged item, risk being hedged and the methodology for measuring effectiveness. In addition, the Company assesses, both at the inception of the hedge and on an ongoing quarterly basis, whether the derivative used in the hedging
transaction has been highly effective in offsetting changes in fair value or cash flows of the hedged item, and whether the derivative is expected to continue to be highly effective.
The Company discontinues hedge accounting prospectively
when either it is determined that the derivative is no longer highly
effective in offsetting changes in the fair value or cash flows of
a hedged item; the derivative expires or is sold, terminated or exercised;
the derivative is de-designated because it is unlikely that a forecasted
transaction will occur; or management determines that designation of
the derivative as a hedging instrument is no longer appropriate. When
a fair value hedge is discontinued, the hedged asset or liability is
no longer adjusted for changes in fair value and the existing basis
adjustment is amortized or accreted over the remaining life of the
asset or liability.
When a cash flow hedge is discontinued but the
hedged cash flow or forecasted transaction is still expected to
occur, gains and losses that were accumulated in other comprehensive
income are amortized or accreted into the consolidated statement of
operations. Gains and losses are recognized in the consolidated statement
of operations immediately if the cash flow hedge was discontinued because
a forecasted transaction becomes probable not to occur.

The Company may occasionally enter into a contract (host contract) that contains a derivative that is embedded in the financial instrument. If required, an embedded derivative is separated from the host contract and
accounted for as a free standing derivative. The derivative may be designated as a hedging instrument subject to the requirements of SFAS No. 133. otherwise, the derivative is recorded as a freestanding derivative.

F-14

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Guarantees and indemnifications

In November 2002, the FASB issued Financial Interpretation No. 45, ‘Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others’ (FIN 45), which
requires that, for guarantees within the scope of FIN 45 issued or amended after December 31, 2002, a liability for the fair value of the obligation undertaken in issuing the guarantee be recognized. FIN 45 also requires additional disclosures in
financial statements for periods ending after December 15, 2002. Accordingly, the required disclosures are included in Note 30 to the consolidated financial statements of the Company. The recognition and measurement provisions of FIN 45 were adopted
effective January 1, 2003 and did not have a material impact on the consolidated financial statements of the Company.

Property and equipment

Property and equipment are stated at cost, less accumulated depreciation. The cost of additions, capital improvements and interest during the construction period are capitalized, while maintenance and repairs are charged to
expense when incurred. Property and equipment held to be disposed off are reported as assets held for sale at the lower of carrying amount or fair value, less cost to sell.

Depreciation is provided over the estimated useful lives of the assets or lease term whichever is shorter.

Property under construction and advances paid towards acquisition of property and equipment are disclosed as capital work in progress. The interest costs incurred for funding an asset during its construction period are
capitalized based on the average outstanding investment in the asset and the average cost of funds. The capitalized interest cost is included in the cost of the relevant asset and is depreciated over the estimated useful life of the asset.

Capitalized costs of computer software obtained for internal use represent costs incurred to purchase computer software from third parties and direct costs of materials and services incurred on internally developed
software. The capitalized costs are amortized on a straight-line basis over the estimated useful life of the software.

Assets held for sale

Assets held for sale represent assets acquired through foreclosure of loans and are accounted for at the lower of cost or fair value.

Impairment of long-lived assets

Long-lived assets and certain intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be
held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceeds the fair value of the assets.

F-15

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Goodwill and intangible assets

The Company does not amortize goodwill but instead tests goodwill for impairment at least annually. The annual impairment test did not indicate an impairment loss for either of the years ended March 31, 2005 or March 31,
2004.

Intangible assets are amortized over their estimated useful lives in proportion to the economic benefits consumed in each period.

The useful life of other intangible assets is as follow:

No. of years

Customer-related intangibles

3-10

Other intangibles

In October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial Institutions. SFAS No. 147 requires that business combinations involving financial institutions within its scope, be accounted for under SFAS
No. 141. Previously, generally accepted accounting principles for acquisitions of financial institutions provided for recognition of the excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible
assets acquired as an unidentifiable intangible asset. Under SFAS No. 147, such excess is accounted for as goodwill. Adoption of SFAS No. 147 resulted in a reclassification of previously recorded unidentifiable intangible asset and deferred tax
liability to goodwill with effect from April 1, 2001.

Liabilities and Equity

On July 1, 2003, the Company adopted SFAS No 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS No.150 establishes standards for how an issuer measures certain
financial instruments with characteristics of both liabilities and equity and classifies them in its statement of financial position. It requires that an issuer classify a financial instrument that is within scope as a liability (or an asset in some
circumstances) when that financial instrument embodies an obligation of the issuer. SFAS No. 150 is effective for financial instruments entered into or modified after May 31, 2003, and otherwise effective July 1, 2003, and did not have any impact on
the Company’s consolidated financial statements.

Income taxes

The Company accounts for income taxes under the provisions of SFAS No. 109, Accounting for Income Taxes. SFAS No. 109 requires recognition of deferred tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between the amount for financial reporting and tax basis of assets and
liabilities, using enacted tax rates expected to apply to taxable income in the years the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the
consolidated statement of operations in the period of enactment. Deferred tax assets are recognized subject to a valuation allowance based upon management’s judgment as to whether realization is considered more likely than not.

F-16

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Issue of shares by subsidiary/affiliate

An issuance of shares by a subsidiary/affiliate to third parties reduces the proportionate ownership interest of the Company in the investee. A change in the carrying value of the investment in a subsidiary/affiliate due to
such direct sale of unissued shares by the investee is accounted for as a capital transaction, and is recognized in stockholders’ equity when the transaction occurs.

Trading assets and liabilities

Trading assets and liabilities include securities and derivatives and are recorded either at market value or, where market prices are not readily available, fair value, which is determined under an alternative approach. The
determination of market or fair value considers various factors including stock exchange quotations, time value and volatility factors underlying derivatives, counterparty credit quality and derivative transaction cash maintenance during that
period. Trading derivatives in a net receivable position are reported as trading assets. Similarly trading derivatives in a net payable position are reported as trading liabilities.

Employee benefit plans

The Company provides a variety of benefit plans to eligible employees. Contributions to defined contribution plans are charged to income in the period in which they accrue. Current service costs for defined benefit plans
are accrued in the period to which they relate. Prior service costs, if any, resulting from amendments to the plans are recognized and amortized over the remaining period of service of the employees.

Stock-based compensation

The Company uses the intrinsic value based method of Accounting Principle Board (APB) Opinion No. 25, Accounting for Stock Issued to Employees and related interpretations including FASB Interpretation No. 44, Accounting for
Certain transactions involving Stock Compensation an interpretation of APB Opinion 25, issued in March 2000, to account for its employee stock-based compensation plans. Compensation cost for fixed and variable stock based awards is measured by the
excess, if any, of the fair market price of the underlying stock over the exercise price. Compensation cost for fixed awards is measured at the grant date, while compensation cost for variable awards is estimated until the number of shares an
individual is entitled to receive and the exercise price are known (measurement date).

Recently, the FASB issued SFAS No. 123 (Revised 2004) ‘Share – Based Payment’ requiring companies to change their accounting policies to record the fair value of stock options issued to employees as an
expense. Currently, the Bank does not deduct the expense of stock option grant from its income statement based on the fair value method as the Bank has adopted pro-forma disclosure provisions of SFAS No. 123 ‘Accounting for Stock based
Compensation’. The Bank is required to adopt SFAS No. 123 (R) for period beginning after June 15, 2005. Had compensation cost been determined in a manner consistent with the fair value approach described in SFAS No. 123, the Company’s net
income and earnings per share as reported would have changed to the amounts indicated below.

F-17

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Year ended March 31,

2003
2004
2005

Net income/(loss) (in millions)

As reported
Rs.

(7,983

5,219

Rs.

8,530

Add:

Stock based employee compensation expense included in

reported net income, net of tax effects

Less :

Stock based employee compensation expense determined

under fair value based method, net of tax effects

(358

)

(309

)

(478

)

Pro forma net income/ (loss)

(8,334
)

4,910

8,100

Earnings/ (loss) per share: Basic (in Rs. )

As reported

(14.18

)

8.50

11.72

Pro forma

(14.80

)

8.00

11.13

Earnings/ loss) per share: Diluted (in Rs. )

As reported

(14.18

)

8.43

11.60

Pro forma

(14.80

)

7.93

11.02

The fair value of the options is estimated on the date of the grant using the Black-Scholes options pricing model, with the following assumptions:

Year ended March 31,

2003
2004
2005

Dividend yield

1.7

4.1

2.7

Expected life

10 years

3-6 years

Risk free interest rate

8.9

5.1% - 5.9

4.6%-6.1

Volatility

Dividends

Dividends on common stock and the related dividend tax are recognized on approval by the Board of Directors.

Earnings/ (Loss) per share

Basic earnings/ (loss) per share is computed by dividing net income/ (loss) by the weighted average number of common stock outstanding during the period. Diluted earnings/ (loss) per share reflects the potential dilution
that could occur if securities or other contracts to issue equity shares were exercised or converted.

Reclassifications

Certain other reclassifications have been made in the financial statements of prior years to conform to classifications used in the current year. These changes had no impact on previously reported results of operations or
stockholders’ equity.

F-18

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

2. Acquisitions

Reverse acquisition

Effective April 1, 2002, the acquiree and ICICI consummated a transaction whereby shareholders of the ICICI were issued shares of the acquiree in the ratio of 1:2. The transaction has been treated as a reverse acquisition,
with the acquiree as the surviving legal entity but ICICI as the accounting acquirer.

On the acquisition date, ICICI held a 46% ownership interest in the acquiree. Accordingly, the acquisition of the balance 54% ownership interest has been accounted for as a step-acquisition The operations of the acquiree
have been consolidated in these financial statements effective April 1, 2002.

As a result of the acquisition, ICICI Bank became a universal banking company offering the entire spectrum of financial services. The acquisition was expected to reduce the cost of funds for the Company through access to
the extensive branch network and deposit base of the acquiree. Further, the acquisition was expected to benefit the Company through greater opportunities to generate fee-based income, participation in the payment networks and ability to provide
transaction banking services. Subsequent to the acquisition, the operations of the acquirer are being governed by the Banking Regulation Act, 1949.

The components of the purchase price and allocation are as follows:

(in millions)

Fair value of common stock issued on reverse acquisition

Rs.

12,028

Direct acquisition costs

1,627

Fair value of stock options assumed on reverse acquisition

409

Total

Rs.

14,064

The fair value of common stock issued on reverse acquisition was based on the average prices of the equity shares for the two trading days before and after October 25, 2002, the date, the terms of the acquisition were
agreed to and announced.

Consequent to the acquisition, the 46% ownership interest held by the Company in the acquiree was recorded as treasury stock at its historical carrying value. In September 2002, the treasury stock was sold to institutional
investors for Rs. 13,154 million. The difference between the sale proceeds and the carrying value, net of related tax effects of Rs. 599 million, was recognized in the statement of stockholder’s equity as a capital transaction.

Other acquisitions

During the year ended March 31, 2005, the Company recorded
a goodwill of Rs. 2,004 million (US$ 46 million) in relation to the acquisitions
of business process outsourcing and research companies in India and United States
for an aggregate cash consideration of Rs. 2,140 million (US$ 49 million). The
revenue and total assets of the acquired companies are immaterial to the consolidated
results of operations and financial position of the Company. The Company has
also entered into a contract with some of these companies acquired to pay additional
amounts if, certain criteria are met. Further in one of the acquisitions, the
Company has the option to acquire a majority stake in property companies owned
by the sellers.

During the year ended March 31, 2004, the Company recorded goodwill of Rs. 616 million in relation to acquisitions of certain finance and service companies for an aggregate cash consideration of Rs. 757 million. The
revenues and total assets of the acquired companies are immaterial to the consolidated results of operations and financial position of the Company.

F-19

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

During the year ended March 31, 2003, the Company acquired certain software development and services companies in India and the United States for an aggregate cash consideration of Rs. 959 million. The transactions were
accounted for under the purchase method of accounting and resulted in goodwill of Rs. 617 million.

Pro forma information

Pro forma results of the operations for the years ended March 31, 2004 and 2005 as if the acquisitions had been made at the beginning of the periods is given below. The pro forma results include estimates and assumptions
which management believes are reasonable. However, these do not reflect any benefits from economies or synergies, which might be achieved from combining the operations. The pro forma consolidated results of operations include adjustments to give
effect to amortization of acquired intangible assets other than goodwill. The pro forma information is not necessarily indicative of the operating results that would have occurred had the purchase been made at the beginning of the periods presented.

Year ended March 31,

2004
2005

Revenues (in millions)
Rs.

128,508

127,620

Net income/(loss) (in millions)

5,292

8,532

EPS (Basic) (in Rs.)

8.62

11.72

3. Cash and cash equivalents

Cash and cash equivalents as of March 31, 2005, includes deposits with the Reserve Bank of India of Rs. 57,966 million (2004: Rs. 49,633 million) including Rs. 57,966 million (2004: Rs. 46,016 million) in accordance with
the guidelines governing minimum cash reserve requirements and interest-bearing deposits with other banks of Rs. 51,105 million (2004: Rs. 28,404 million). The balances maintained with the Reserve Bank of India towards cash reserve requirements are
subject to withdrawal and usage restrictions.

4. Trading assets

A listing of the trading assets is set out below.

As of March 31

2004
2005

(in millions)

Government of India securities

Rs.

30,374

Rs.

6,934

Securities purchased under agreements to resell

34,974

24,000

Corporate debt securities

6,403

3,202

Equity securities

1,018

3,222

Mutual fund units

37,383

Fair value of derivative and foreign exchange contracts

2,386

797

Total

Rs.

75,155

Rs.

75,538

As of March 31, 2005, trading assets include Government of India (GOI) securities amounting to Rs. 144 million (2004: Rs. 768 million), which are held as and towards repurchase transactions undertaken and telegraphic
transfer drawing arrangements.

F-20

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

5. Securities

The portfolio of securities is set out below.

As of March 31, 2004
As of March 31, 2005

Amortized

cost
Gross

unrealized

gain
Gross

unrealized

loss
Fair

value
Amortized

cost
Gross

unrealized

gain
Gross

unrealized

loss
Fair

value

Available for sale

(in millions)

Corporate debt securities
Rs.
18,791
Rs.
183
Rs.
(154
)
Rs.

18,820

Rs.

25,714

Rs.

(159

)
Rs.

25,620

Other government securities

256,284

4,488

(192
)

260,580

335,991

2,700

(4,694

)

333,997

Total debt securities

275,075

4,671

(346

)

279,400

361,705

2,765

(4,853

)

359,617

Equity securities

15,475

2,072

(342

)

17,205

5,809

4,566

(174

)

10,201

Total securities available for sale
Rs.

290,550

Rs.

6,743

Rs.

(688

)
Rs.

296,605

Rs.

367,514

Rs.

7,331

Rs.

(5,027

)
Rs.

369,818

Non-readily marketable equity securities ⁽¹⁾

Rs.

8,621

Rs.

7,209

Venture capital investments ⁽²⁾

Rs.

5,142

Rs. 3,932

Primarily represents securities acquired as a part of project financing activities or conversion of loans in debt restructurings.

Represents venture capital investments held by venture capital subsidiaries of the Company.

During the year ended March 31, 2005, as part of its ongoing evaluation of its securities portfolio, the Company recorded an impairment charge of Rs. 663 million (2004: Rs. 944 million, 2003: Rs. 2,098 million) for other
than temporary decline in value of available for sale and non-readily marketable equity securities.

Privately placed corporate debt securities reported as loans (credit substitutes)

The portfolio of credit substitutes is set out below.

As of March 31, 2004
As of March 31, 2005

Amortized

cost
Gross

unrealized

gain
Gross

unrealized

loss
Fair
value
Amortized

cost
Gross

unrealized

gain
Gross

unrealized

loss
Fair

value

(in millions)

Available for sale
Rs.

49,103
Rs.

1,330
Rs.

(364
)
Rs.

50,069
Rs.

30,733.
Rs

744
Rs.

(209
)
Rs.

31,268

Other than temporary impairment

The Company has determined that the unrealized losses on the Company’s investments in equity and debt securities are temporary in nature. The Company conducts a review each year to identify and evaluate investments
that have indications of possible impairment. An investment in an equity or debt security is impaired if its fair value falls below its cost and the decline is considered other than temporary. Factors considered in determining whether a loss is
temporary include length of time and extent to which fair value has been below cost; the financial condition and near term prospects of the issuer, and the Company’s ability and intent to hold the investment for a period sufficient to allow for
any anticipated recovery. The Company’s review of impairment generally entails:

•
identification and evaluation of investments that have indications of possible impairment;

F-21

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

analysis of individual investments that have fair values less than 75% of amortized cost, including consideration of the length of time the investment has been in an unrealized loss
position;

discussion of evidential matter, including an evaluation
of factors or triggers that would or could cause
individual investments to qualify as having other-than temporary impairment
and those that would not support other-than temporary
impairment; and

documentation of the results of these analyses, as required under business policies.

The fair value of the investment in equity and debt securities in an unrealized loss position as of March 31, 2005 is set out below.

Less than 12 months
12 months or longer
Total

Description of Securities
Fair
Value
Unrealized

Losses
Fair
Value
Unrealized

Losses

(in millions)

Corporate debt securities

Rs.

7606

Rs.

111

Rs.

598

Rs.

8,204

Rs.

159

Government securities

110,505

4,649

274

110, 780

4,694

Credit substitutes

3,886

437

143

4,323

209

Equity Securities

174

Total

Rs.

122,048

Rs.

4,998

Rs.

1,309

Rs.

236

Rs.

123,358

Rs.

5,236

Income from securities available for sale

A listing of income from securities available for sale is set out below.

Year ended March 31,

2003
2004
2005

(in millions)

Interest

Rs.

16,633

Rs.

15,264

Rs.

15,248

Dividends

389

431

485

Total

Rs.

17,022

Rs.

15,695

Rs.

15,733

Gross realized gain

Rs.

6,845

Rs.

16,211

Rs.

7,897

Gross realized loss

(5,022
)

(2,467
)

(1,309
)

Total

Rs.

1,823

Rs.

13,744

Rs.

6,588

Income from credit substitutes available for sale

A listing of income from credit substitutes available for sale is set out below.

Year ended March
31,

2004
2005

(in million)

Interest

Rs.

6,003

Rs.

2,820

Dividends

159

Total

Rs.

6,048

Rs.

2,979

Gross realized gain

Rs.

733

Rs.

627

Gross realized loss

(108
)

(64
)

Total

Rs.

625

Rs.

563

F-22

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Maturity profile of debt securities

A listing of each category of available for sale debt securities as of March 31, 2005, by maturity is set out below.

Available for
sale

Amortized cost
Fair value

(in millions)

Corporate debt securities

Less than one year

Rs.

5,033

Rs.

5,041

One to five years

14,620

14,624

Five to ten years

5,672

5,551

Greater than ten years

389

404

Total corporate debt securities

Rs.

25,714

Rs.

25,620

GOI securities

Less than one year

Rs.

57,949

Rs.

57,918

One to five years

138,687

138,084

Five to ten years

84,739

83,265

Greater than ten years

54,616

54,730

Total GOI securities

Rs.

335,991

Rs.

333,997

Total debt securities

Rs.

361,705

Rs.

359,617

Credit substitutes

Less than one year

Rs.

6,232

Rs.

6,256

One to five years

14,462

14,589

Five to ten years

5,818

6,229

Greater than ten years

4,221

4,194

Total credit substitutes

Rs.

30,733

Rs.

31,268

6. Repurchase transactions

The Company has undertaken repurchase and reverse repurchase transactions in GOI securities. The average level of repurchase transactions outstanding during the year ended March 31, 2005, was Rs. 11,773 million (2004: Rs.
7,551 million). The average level of reverse repurchase transactions outstanding during the year ended March 31, 2005, was Rs. 14,316 million (2004: Rs. 1,010 million). As of March 31, 2005, outstanding repurchase and reverse repurchase transactions
were Rs. 13,076 (2004: Nil) and Rs. 24,000 million (2004: Rs. 34,974 million) respectively.

7. Investments in affiliates

Insurance companies

The Company accounts for its 74% ownership interest in ICICI Prudential Life Insurance Limited (‘ICICI Prulife’) and ICICI Lombard General Insurance Company Limited (‘ICICI Lombard’) by the equity method
of accounting because of substantive participative rights held by the minority shareholders.

The carrying value of the investment in these companies as of March 31, 2005, was Rs. 4,294 million (2004: Rs. 3,165 million). The Company’s equity in the loss of these affiliates for the year ended March 31, 2005 was
Rs. 645 million (2004: Rs. 1,561 million, 2003: Rs. 971 million).

The summarized balance-sheets and statements of operations of these entities as of and for the year ended March 31, 2005 is set out below.

F-23

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Balance sheet
As of March 31,

2004
2005

ICICI

Prulife
ICICI

Lombard
ICICI

Prulife
ICICI

Lombard

(Rs. millions)

Cash and cash equivalents

Rs.

318

Rs.
629

Rs.

2,033

Rs.

500

Securities

8,186

3,366

11,026

4,703

Assets held to cover linked liabilities

8,650

26,541

Other assets

2,597

1,639

5,852

2,975

Total assets

Rs.

19,751

Rs.

5,634

Rs.

45,452

Rs.

8,178

Provision for linked liabilities

Rs. 8,650

Rs.

26,541

Rs.

Other liabilities

8,827

3,516

15,477

5,811

Stockholders’ equity

2,274

2,118

3,434

2,367

Total liabilities and stockholders’ equity

Rs.

19,751

Rs.

5,634

Rs.

45,452

Rs.

8,178

Statement
of income
As of March
31,

2004
2005

ICICI

Prulife
ICICI

Lombard
ICICI

Prulife
ICICI

Lombard

(in millions)

Interest income

Rs.

630

Rs.

184

Rs.

661

Rs.

218

Interest expense
-
-
-
-

Net interest income

630

184

661

218

Insurance premium

3,516

790

5,744

2,154

Other Non-interest income

491

754

245

929

Non-interest expense

(6,764
)

(1,622
)

(7,483
)

(2,827
)

Income tax (expense)/ benefit

(97
)

(9
)

(477
)

(37
)

Net income/(loss)

Rs.

(2,224
)

Rs.

(1,310
)
Rs.

437

Others
The other affiliates of the Company are Prudential ICICI Asset Management Company Limited (Pru-ICICI), Prudential ICICI Trust Limited (Pru-Trust), TCW/ICICI Investment Partners LLC (TCW) and Semantik Solutions Gmbh,
Germany. The carrying value of the investment in such affiliates as of March 31, 2005, was Rs. 431 million (2004: Rs. 454 million). The Company’s equity in the income of such affiliates for the year ended March 31, 2004, was Rs.70 million
(2004: Rs. 123 million, 2003: Rs. 13 million).

F-24

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

8. Loans

A listing of loans by category is set out below.

As of March 31,

2004
2005

(in millions)

Project and corporate finance⁽¹⁾⁽²⁾

Rs.

319,646

Rs.

329,169

Working capital finance (including working capital term loans)

80,505

135,573

Lease financing

26,165

18,400

Consumer loans and credit card receivables

309,006

526,515

Other

70,059

68,660

Gross loans

Rs.

805,381

Rs.

1,078,317

Unearned income

(7,482
)

Security deposits

(2,612
)

(2,627
)

Loans, net of unearned income and security deposits

Rs.

795,287

Rs.

1,075,758

Allowances for loan losses

(66,767
)

(75,900
)

Loans, net

Rs.

728,520

Rs.

999,858

Non-readily marketable
privately placed debt instruments are classified as loans to reflect the substance of
such transactions as substitutes for direct lending (credit substitutes).

Includes Rs. 31,268 million (2004: Rs. 50,069 million)
of credit substitutes classified as loans.

Project and corporate finance loans are generally secured by property, plant and equipment and other tangible assets. Generally, the working capital loans are secured by a first lien on current assets, principally
comprising inventory and receivables. Additionally, in certain cases the Company may obtain additional security for working capital loans through a first or second lien on property and equipment, pledge of financial assets like marketable securities
and corporate/personal guarantees.
Lease financing

Contractual maturities of the Company’s investment in lease financing and its components, which are included in loans are set out below.

As of March 31,

2005

(in millions)

Gross finance receivables
for the year ending March 31,

2006

Rs.

8,558

2007

1,810

2008

2,530

2009

2,292

2010

1,846

Thereafter

1,364

Rs.

18,400

Unearned income

(2,420
)

Security deposits

(2,627
)

Investment in lease financing

Rs.

13,353

F-25

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Maturity profile of loans

A maturity profile of gross loans, other than investment in lease financing is set out below.

As of March 31,

2004
2005

(in millions)

Less than one year

Rs.

186,326

Rs.

280,702

One to five years

365,924

442,789

Greater than five years

226,966

336,426

Total

Rs.

779,216

Rs.

1,059,917

Interest and fees on loans

A listing of interest and fees on loans (net of unearned income) is set out below.

As of March 31,

2003
2004
2005

(in millions)

Project and corporate finance

Rs.

45,307

Rs.

31,242

Rs.

23,723

Working capital finance (including working capital term loans)

8,241

6,760

7,234

Lease financing

2,484

1,438

1,221

Consumer loans and credit card receivables

15,372

26,097

36,551

Other

3,676

3,684

2,239

Total

Rs.

75,080

Rs.

69,221

Rs.

70,968

Restructured loans

The Company classifies a loan as a restructured loan where it has made concessionary modifications that it would not otherwise consider, to the contractual terms of a loan to a borrower experiencing financial difficulties.
As of March 31, 2005, the Company had committed to lend Rs. 2,892 million (2004: Rs. 13,684 million), to borrowers who are parties to troubled debt restructurings.

Impaired loans, including restructured loans

A listing of restructured loans is set out below.

As of March 31,

2004
2005

(in millions)

Project and corporate finance

Rs.

149,724

Rs.

140,866

Working capital finance (including working capital term loans)

11,525

8,393

Other

1,149

259

Restructured loans

Rs.

162,398

Rs.

149,518

Allowance for loan losses

(40,981
)

(53,929
)

Restructured loans, net

Rs.

121,417

Rs.

95,589

Restructured loans:

With a valuation allowance

Rs.

162,398

Rs.

149,518

Without a valuation allowance

Restructured loans

Rs.

162,398

Rs.

149,518

F-26

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

A listing of other impaired loans is set out below.

As of March
31,

2004
2005

(in millions)

Project and corporate finance

Rs.

42,842

Rs.

21,959

Working capital finance (including working capital term loans)

2,978

1,868

Lease financing

746

446

Consumer loans and credit card receivables

3,672

5,440

Other impaired loans

Rs.

50,238

Rs.

29,713

Allowance for loan losses

(21,474
)

(15,517
)

Other impaired loans, net

Rs.

28,764

Rs.

14,196

Other impaired loans:

With a valuation allowance

Rs.

50,238

Rs.

29,713

Without a valuation allowance

Other impaired loans

Rs.

50,238

Rs.

29,713

During the year ended March 31, 2005, interest income of Rs. 6,398 million (2004: Rs. 9,072 million, 2003: Rs. 2,358 million) was recognized on impaired loans on a cash basis. Gross impaired loans (including restructured
loans) averaged Rs. 195,934 million during the year ended March 31, 2005 (2004: Rs. 221,592 million).

Concentration of credit risk

Concentration of credit risk exists when changes in economic, industry or geographic factors similarly affect groups of counterparties whose aggregate credit exposure is material in relation to Company’s total credit
exposure. The Company’s portfolio of financial instruments is broadly diversified along industry, product and geographic lines primarily within India.

The Company’s 20 largest borrowers, based on gross
outstanding balances, totaled approximately Rs. 147,597 million as of March 31,
2005 (2004: Rs. 149,620 million), which represented 13.7% (2004: 18.6%) of the
gross loans outstanding. The single largest borrower as of March 31, 2005 was
Rs. 23,636 million (2004: Rs. 17,448 million) which represented 2.2% (2004: 2.2%)
of the gross loans outstanding. The largest group of companies under the same
management control accounted for approximately 3.5% (2004: 4.5%) of our total
gross loans outstanding.

9. Allowance for loan losses

Changes in the allowance for loan losses

Movements in the allowance for loan losses are set out below.

Year ended March
31,

2003
2004
2005

(in millions)

Allowance for loan losses at the beginning of the year

Rs.

36,647

Rs.

54,219

Rs.

66,767

Effect of reverse acquisition on allowance for loan losses

1,297

Provisions for loan losses, net of releases of provisions as a result of

cash collections

19,649

20,055

14,677

Rs.

57,593

Rs.

74,274

Rs.

81,444

Loans charged-off

(3,374
)

(7,507
)

(5,544
)

Allowance for loan losses at the end of the year

Rs.

54,219

Rs.

66,767

Rs.

75,900

F-27

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

10. Securitization activity

The Company primarily securitizes commercial loans through ‘pass-through’ securitizations. After the securitization, the Company generally continues to maintain customer account relationships and services loans
transferred to the securitization trust. The securitizations are either with or without recourse. In a few cases, the Company may enter into derivative transactions such as written put options and interest rate swaps with the transferees.

During the year ended March 31, 2005, the Company securitized loans and credit substitutes with a carrying value of Rs. 217,430 million (2004: Rs. 128,269 million), which resulted in gains of Rs. 5,067 million (2004: Rs.
4,248 million, 2003: Rs. 2,070 million). The gains are reported as a component of gain on sale of loans and credit substitutes.

As discussed above, the Company has written put options, which require the Company to purchase, upon request of the holders, securities issued in certain securitization transactions. The put options seek to provide
liquidity to holders of such instruments. If exercised, the Company will be obligated to purchase the securities at the predetermined exercise price.
As of March 31, 2005, the Company sold loans and
credit substitutes with an aggregate put option exercise price of Rs.
57,208 million (2004: Rs. 38,267 million). Subsequent to their initial
issuance, such options are recorded at fair values with changes reported
in the consolidated statement of operations.

The following table summarizes certain cash flows received from and paid to securitization trusts during the year ended March 31, 2005:

Auto loans
Personal

loans
Two wheeler

loans
Mortgage

loans
Corporate

loans
Others

(in millions)

Principal securitized

Rs.

75,764

Rs.

16,478

Rs.

7,920

Rs.

70,487

Rs.

42,937

Rs.

3,370

Pre-tax gains

1,576

1,051

322

713

1,188

217

Proceeds from

securitization

75,764

16,478

7,920

70,487

44,337

3,580

Servicing fees received

Cash flows received on

retained interests and

other cash flows

2,021

1,066

322

2,945

Closing balance of

retained interest on

March 31, 2005

4,501

3,183

918

6,442

Cash collateral not

included above

3,689

1,259

474

1,813

Auto loans, personal loans, two wheeler loans and mortgage loans form part of consumer loans.

Key assumptions during the year ended March 31, 2005 in measuring the fair value of retained interests at the date of sale or securitization

Auto loans
Personal loans
Two wheeler loans
Mortgage loans

Discount rate

8.35% - 16.22%

19.03% - 24.07%

18.19% - 20.77%

7.98% - 9.53%

Constant prepayment rate (per annum)

3.96% - 39%

12% - 51%

12.00%

6.00% - 10.00%

Anticipated net credit losses (per annum)

0.55% - 3.50%

3.00%

2.00%

0.25% - 0.30%

F-28

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

At March 31, 2005, the sensitivity of the fair value to adverse changes of 10% and 20% in each of the key assumptions were as follows:

( in millions)

Carrying value of retained interests

Rs. 17,713

Discount Rate

10%

(230
)

20%

(446
)

Constant prepayment rate (per annum)

10%

(214
)

20%

(415
)

Anticipated net credit losses (per annum)

10%

(192
)

20%

(382
)

As at March 31, 2005 Bank has a outstanding servicing asset of Rs. 81 million and servicing liability of Rs. 200 million. The following table summarises the movement in servicing asset and servicing liability

Servicing

asset
Servicing

liability

(in millions)

Balance as on March 31, 2004

Rs.

149

Additions during the year

146

193

Amortisation during the year

(73
)

(142
)

Balance as on March 31, 2005

Rs.

200

11. Variable Interest Entities

During the year, the Company transferred certain impaired loans to borrower specific funds/trusts managed by an asset reconstruction company. The trusts/funds (which are separate legal entities) issued Security Receipts
(‘SRs’) to the Company and other transferors as consideration for the transaction. The trusts/funds have been set up by the asset reconstruction company under a recently enacted debt recovery legislation in India and aim to improve the
recoveries of banks from impaired assets by aggregating lender interests and speeding up enforcement of security interest by lenders. Certain transfers involving 113 loans (2004: 33 loans) amounting to Rs. 17.36 billion (2004: Rs. 7.13 billion), did
not qualify for sale accounting under SFAS No. 140 and continue to be reflected as loans on the balance sheet of the Company. Other transfers qualified for sale accounting but were impacted by FIN 46/ FIN 46R.

The funds/trusts to which these loans have been transferred are VIEs within the definition contained in FIN 46. The Company is the ‘Primary Beneficiary’ of 10 trusts/funds and accordingly has consolidated these
entities at March 31, 2005. These trusts relate to the transfers of 10 loans (2004: 9 loans) amounting to Rs. 7.30 billion (2004: Rs. 3.90 billion) and the total assets of these trusts amount to Rs. 9.29 billion (2004: Rs. 4.89 billion).

11 trusts/ funds (2004: 10 trusts/funds) with total assets of Rs. 2.95 billion (2004: Rs. 2.93 billion) are VIEs but the Company is not deemed to be the Primary Beneficiary. The Company has transferred loan amounting to Rs.
0.81 billion (2004: Rs. 0.81 billion) to these entities. Accordingly, the Company has not consolidated these VIEs at March 31, 2005. The Company accounts for the SRs relating to this category of transfers as AFS securities but classifies them as
loans.

F-29

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

The Company’s venture capital business is involved with entities that may be deemed VIEs. The FASB permitted non-registered investment companies to defer consolidation of VIEs with which they are involved until the
proposed Statement of Position on the clarification of the scope of the Investment Company Audit Guide is finalized, which is expected in 2005. Following issuance of the Statement of Position, the FASB will consider further modification to FIN 46R
to provide an exception for companies that qualify to apply the revised Audit Guide. The Company applied this deferral provision and did not consolidate Rs. 2.29 billion (2004: Rs. 0.96 billion) of additional assets in potential VIEs with which the
Company is involved as of March 31, 2005. Following issuance of the revised Audit Guide and further modification, if any, to FIN 46R, the Company will assess the effect of such guidance on its venture capital business.

12. Derivative instruments and hedging activities

The Company manages its exposures to market rate movements by modifying its mix of assets and liabilities, either directly or through the use of derivative financial products including interest rate swaps, cross currency
swaps, foreign currency options, and forward exchange contracts.

All such freestanding derivatives, whether held for trading or non-trading purposes, are carried at their fair value as either assets or liabilities and related gains and losses for derivatives which are not designated as
hedging instrument in a qualifying hedging relationship are included in other non-interest income.

Fair values for derivatives are based on market prices, which take into account current market and contractual prices of the underlying instrument as well as time value underlying the positions.

All the designated hedges entered into by the Company qualify as fair value hedges under SFAS No. 133. There are no cash flow hedges or hedges of net investments in foreign operations. For fair value hedges, changes in the
fair value of the hedged asset or liability due to the risk being hedged are recognized in the statement of operations along with changes in the fair value of the derivative. The Company assesses the effectiveness of the hedge instrument at
inception and continually on a quarterly basis. The ineffectiveness, to the extent to which offsetting gains or loss are not achieved, is recorded through the statement of operations.

The table below summarizes certain information relating to the Company’s hedging activities:

As of March 31,

2004
2005

(in millions)

Fair value of derivatives designated as fair value hedges

Rs.

1,084

Rs.

802

Hedge ineffectiveness recognized in earnings

248

On March 31, 2005, the Company designated certain interest rate swaps as fair value hedges of securities and certain long term liabilities. As the hedges were designated on March 31, 2005, no ineffectiveness was required to
be recorded in the earnings for the current fiscal.

F-30

ICICI Bank Limited and Subsidiaries
Notes to the consolidated financial statements (Continued)

13. Property and equipment

A listing of property and equipment by asset category is set out below.

As of March
31,

2004
2005

(in millions)

Land

Rs.

1,526

Rs.

1,648

Buildings

12,313

14,555

Equipment and furniture

7,081

11,200

Capital work-in-progress

988

1,237

Others

9,318

9,901

Gross value of property and equipment

31,226

38,541

Accumulated depreciation

(8,043
)

(12,486
)

Property and equipment, net

Rs.

23,183

Rs.

26,055

As of March 31, 2005, land and buildings include certain assets of Rs. 398 million (2004: Rs. 570 million), which have not yet been registered in the Company’s name pending regulatory transfer approvals.

14. Assets held for sale

As of March 31, 2005, assets held for sale represent certain assets of Rs.3,741 million (2004: Rs. 4,829 million) acquired through foreclosure of loans.
15. Goodwill
and intangible assets, net
A listing of goodwill and intangible assets by category
is set out below.

As of March
31,

2004
2005

(in millions)

Goodwill

Rs.

5,403

Rs.

7,407

Customer-related intangibles

Rs.

5,701

Rs.

5,991

Accumulated amortization

(1,245
)

(1,835
)

Customer related intangibles, net

Rs.

4,456

Rs.

4,156

Other intangibles

Rs.

Accumulated amortization

(19
)

(33
)

Other intangibles, net

Rs.

Goodwill and intangible assets, net

Rs.

9,916

Rs.

11,606

The following table presents the changes in goodwill during the year ended March 31, 2005.

(in millions)

Balance as of March 31, 2004

Rs.

5,403

Goodwill relating to acquisitions consummated during the period

2,004

Balance as of March 31, 2005

Rs.

7,407

The purchase consideration relating to acquisitions consummated during the year has been preliminary allocated
to the assets and liabilities assumed as of the date of acquisition based on
managements estimates. Finalization of the purchase price allocation, which is
expected to be completed within six months from the date of the acquisition,
may result in certain adjustments to the purchase price allocation.

F-31

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

No goodwill impairment loss has been recorded during the years ended March 31, 2003, March 31, 2004 and March 31, 2005.

Goodwill as of March 31, 2005 has been allocated to the following reporting units:

Reporting Unit

(in millions)

Commercial banking

Rs.

2,275

3i Infotech

1,895

ICICI OneSource

3,237

Total

Rs.

7,407

Amortization of intangible assets

The estimated amortization schedule for intangible assets, on a straight line basis, for the next five years is set out below.

Year ended March 31

(in millions)

2006

Rs.

687

2007

678

2008

597

2009

547

2010

547

Thereafter

1,143

Total

Rs.

4,199

16. Other assets

Other assets consist of the following:

As of March 31,

2004

2005

(in millions)

Debtors

Rs.

13,263

Rs.

20,506

Staff advances

3,766

4,591

Advance taxes

33,512

38,625

Security deposits

8,485

15,226

Advance for purchases of securities

8,191

262

Prepaid expenses

596

881

Others ⁽¹⁾

7,135

21,797

Total

Rs.

74,948

Rs.

101,888

1) Others include loans held for sale of Rs. 12,421 million (2004: Rs. 2,260 million).

17. Deposits

Deposits include demand deposits, which are non-interest-bearing, and savings and time deposits, which are interest bearing. A listing of deposits is set out below.

As of March 31,

2004

2005

( in millions)

Interest bearing

Savings deposits
Rs.

86,403

Rs.

117,261

Time deposits

524,775

772,365

Total interest-bearing deposits
Rs.

611,178

Rs.

889,626

Non-interest bearing

Demand deposits
Rs.

73,777

Rs.

126,908

Total
Rs.

684,955

Rs.

1,016,534

F-32

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Contractual maturities of time deposits as of March 31, 2005 are set out below.

( in millions)

Deposits maturing during the year ending March 31,

2006

Rs.

664,846

2007

44,605

2008

36,603

2009

11,625

2010

4,858

Thereafter

9,828

Total deposits

Rs.

772,365

As of March 31, 2005, the aggregate of time deposits with individual balances greater than Rs. 5 million was Rs. 595,735 million (2004: Rs. 359,770 million).

18. Short-term borrowings

Short-term borrowings represent non-trading borrowings
with an original maturity of one year or less.

19. Long-term debt and redeemable preferred stock

Long-term debt

Long-term debt represents debt with an original maturity of greater than one year. Maturity distribution is based on contractual maturities or earlier dates at which the debt is callable at the option of the holder. A
significant portion of the long-term debt bears a fixed rate of interest. Interest rates on floating-rate debt are generally linked to the London Inter-Bank Offer Rate or similar money market rates. The segregation between fixed-rate and
floating-rate obligations is based on the contractual terms.

A listing of long-term debt as of March 31, 2005, by maturity and interest rate profile is set out below.

Fixed-rate

Obligations
Floating-rate

obligations

Total

(in millions)

Long-term debt maturing during the year ending March 31,

2006

Rs.

83,045

Rs.

5,844

Rs.

88,889

2007

59,283

6,588

65,871

2008

43,112

9,234

52,346

2009

36,603

1,831

38,434

2010

44,340

4,889

49,229

Thereafter

60,408

12,975

73,383

Total

Rs.
326,791
Rs.

41,361

Rs.

368,152

Less: Unamortized debt issue cost

653

Total

Rs.

367,499

All long-term debt is unsecured. Debt aggregating Rs. 32,864 million (2004: Rs. 32,209 million) is guaranteed by the Government of India (GOI).

Long-term debt is denominated in various currencies. As of March 31, 2005, long-term debt comprises Indian rupee debt of Rs. 284,979 million (2004: Rs. 314,825 million) and foreign currency debt of Rs. 82,520 million (2004:
Rs. 58,624 million).

F-33

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Indian rupee debt

A listing of major category of Indian rupee debt is set out below.

As of March 31,

2004
2005

Category
Amount
Weighted

average

interest

rate
Range
Average

residual

maturity
Amount
Weighted

average

interest

rate
Range
Average

residual

maturity

(In millions)

Bonds issued to

institutional/individual

investors⁽¹⁾

Rs.

246,463

10.35

3.57-16.4
%

3.20

Rs.

196,345

9.90

4.56 - 25.29

3.24

Bonds eligible for

statutory reserve

requirements⁽²⁾

14,815

11.60

11.5-12.00

6.21

14,815

11.60

11.5 - 12
%

5.21

Borrowings from GOI⁽³⁾

5,338

9.88

0-13.00

2.92

4,230

10.24

0 - 13

2.58

Refinance from

financial institutions

48,209

6.69

5.5-17.00

2.42

69,589

6.57

5.5 - 12

2.97

Total

Rs.

314,825

9.95

3.3 years

Rs.

284,979

8.87

3.27

Includes application money received on bonds outstanding at the end of the year.

Banks in India are required to mandatorily maintain a specified percentage of certain liabilities as cash or in approved securities. These bonds issued by the Company are approved securities under the rules.

Includes interest-free borrowing from the GOI aggregating Rs. 398 million (2004: Rs. 343 million). In connection with the business combination, the borrowing was initially recorded at its fair value of Rs. 100 million based
on the prevailing interest rate of 16% for borrowings of a similar term and risk. Interest is being imputed for each reporting period using this rate.

Foreign currency debt

A listing of major category of foreign currency debt is set out below.

As of March 31,

2004
2005

Category
Amount
Weighted

average

interest

rate
Range
Average

residual

maturity
Amount
Weighted

average

interest

rate
Range
Average

residual

maturity

(In millions)

Borrowings from

international

development

agencies^(1)(2)(3)

Rs.

27,249

3.00

0.0-8.50

9.63

Rs.

24,970

3.84

0 % - 6.75

8.71

Other borrowings

from international

markets

31,375

3.90

0.0-7.55

3.23

57,550

4.58

0 % - 7.55

3.18

Total

Rs.

58,624

3.50

7.08 years

Rs.

82,520

4.33
%

4.85

These borrowings have been raised under specific lines of credit from international development agencies. The borrowings have lender-imposed restrictions that limit the use of the funds for specified purposes, which include
lending to specified sectors.

As of March 31, 2005, under these lines of credit, the Company has an unutilized option to borrow Rs. 3,221 million (2004: Rs. 4,718 million) as per an agreed schedule over a period of five years at various interest
rates.

Exchange rate fluctuations on certain borrowings are guaranteed by the GOI.

F-34

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Mandatorily Redeemable preferred stock

The Company issued preferred stock with a face value of Rs. 3,500 million during the year ended March 31, 1998 under the scheme of business combination with ITC Classic Finance Limited. This preferred stock bears a dividend
yield of 0.001% and is redeemable at face value after 20 years. The preferred stock was initially recorded at its fair value of Rs. 466 million. Subsequently, interest is being imputed for each reporting period. The imputed interest rate of 10.6%
was determined based on the then prevailing interest rate for securities of similar maturity. The carrying amount of this redeemable preferred stock as of March 31, 2005 is Rs. 1,044 million (2004: Rs. 944 million). Certain Government securities
amounting to Rs. 1,952 million (2004: Rs 1455 million) have been earmarked against redemption of preference shares.

Banks in India are generally not allowed to issue preferred stock. However, the Company has been currently exempted from this restriction.

20. Other liabilities

Interest accrued

Other liabilities as of March 31, 2005, include Rs.13,178 million (2004: Rs. 13,561 million) of interest accrued but not due on interest bearing liabilities.

Borrowings from Kreditanstalt fur Wiederaufbau

The Company has borrowings from Kreditanstalt fur Wiederaufbau (KfW), an international development agency, under specific lines of credit. The terms of the borrowings provide for limitations on usage, whereby funds can be
used only for specified purposes. The borrowings are guaranteed by the GOI.

With respect to certain borrowings, the terms of the borrowing agreement provide that a portion of the interest payable on the borrowing shall be paid to the GOI instead of the lender. KfW and the GOI have entered into an
agreement whereby the interest paid to the GOI is repaid to the Company either in the form of a grant or a loan. While the loan is repayable as per a specified schedule, the grants do not have a repayment schedule. The interest amounts received from
the GOI bear limitations on usage and are required to be advanced as loans/contributions for specified purposes. Similarly, with respect to certain other borrowings from KfW, the terms of the borrowing agreement provide that a portion of the
interest payable on the borrowings shall be retained by the Company and used to be advanced as loans/contributions for specified purposes.

The Company periodically advances loans/contributions for specified purposes out of these funds and reports such utilizations to the GOI/KfW. However, no time schedule has been specified for the usage of the funds. In the
event that the funds are not utilized for specified purposes, the GOI/KfW have the right to require repayment of the grant/retained interest. Additionally, KfW can modify the scope of the specified purposes. The Company retains the income derived
from the loans made out of the funds. Similarly, it bears the risks of default on the loans.

F-35

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

The interest repaid by the GOI in the form of grants and the interest retained under the agreement with KfW do not represent contributions as they specify donor-imposed conditions, the breach of which, would enable the
donor to demand repayment of the grants/retained interest. Accordingly, the grants/retained interest have been reported as liabilities.

Other liabilities as of March 31, 2005, also include grants of Rs. 2,454 million (2004: Rs. 2,800 million) and retained interest of Rs.567 million (2004: Rs. 678 million).

21. Common stock

The Company presently has only one class of common stock. In the event of liquidation of the affairs of the Company, all preferential amounts, if any, shall be discharged by the Company. The remaining assets of the Company,
after such discharge, shall be distributed to the holders of common stock in proportion to the common stock held by shareholders.

The Company has issued American Depository Shares (ADS)
representing underlying common stock. The common stock represented by the ADS
is similar to other common stock, except for voting rights. Under the depository
agreement, the depository of the ADS will vote as directed by the Board of Directors
of the Company.

As discussed in Note 2, the Company consummated the reverse acquisition with the acquiree effective April 1, 2002, whereby shareholders of the Company were issued common shares of the acquiree in the ratio of 1:2. On
consummation of the reverse acquisition, adjustments were made to the value of the common stock and the additional paid in capital.

22. Retained earnings and dividends

Retained earnings at March 31, 2005 computed as per generally accepted accounting principles of India amounting to Rs. 118,132 million (2004: Rs. 73,942 million) include reserves aggregating to:

•

Rs. 14,627 million (2004: Rs. 9,607 million) which are not distributable as dividends
under the Banking Regulation Act, 1949. These relate to requirements regarding
earmarking a part of the profits under banking laws in India. Utilization of these
balances is subject to approval of the Board of Directors and needs to be reported to
Reserve Bank of India. Statutes governing the operations of the Company mandate that
dividends be declared out of distributable profits only after the transfer of at least 25%
of net income each year, computed in accordance with current banking regulations, to a
statutory reserve. Additionally, the remittance of dividends outside India is governed
by Indian statutes on foreign exchange transactions.

•

Rs. 49,902 million (2004: Rs. 20,476 million) which are not distributable as dividends
under the Indian company law.

•

Rs. 11,940 million (2004: Rs. 11,690 million) earmarked under Indian tax laws to avail
tax benefits and which are not distributable as dividends. Any transfer of balances from
such earmarked reserves would result in withdrawal of the tax exemption on the
transferred amounts.

F-36

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

23. Earnings per share

A computation of the earnings per share is set out below.

Year ended March 31,

2003
2004
2005

(in millions, except earnings per share data)

Basic
Fully

diluted
Basic
Fully

Diluted

Earnings

Net income (before dilutive impact)

Rs.

(7,983
)
Rs.

(7,983

)

Rs.

5,219

Rs.

5,219

Rs.
8,530
Rs.

8,530

Contingent issuances of subsidiaries

(14

)

Net income (adjusted for full dilution)
Rs.

(7,983

)
Rs.

(7,983

)

Rs.

5,219

Rs.

5,219

Rs.

8,530

Rs.

8,516

Common stock

Weighted-average common stock outstanding

563

614

728

Dilutive effect of employee stock options

Total

563

614

619

728

734

Earnings per share

Net income
Rs.

(14.18

)
Rs.
(14.18
)

Rs.

8.50

Rs.

8.43

Rs.

11.72

Rs.

11.60

Options to purchase Nil equity shares (March 31, 2004:
1,098,225) granted to employees at a weighted average exercise price of Rs. Nil
(March 31, 2004: Rs. 266.56) were outstanding during the year ended March 31,
2005, but were not included in the computation of diluted earnings per share
because the exercise price of the options was greater than the average market
price of the equity shares during the period.

24. Segmental disclosures and related information

Segmental disclosures

SFAS No. 131, Disclosure about Segments of an Enterprise and Related Information, establishes standards for the reporting of information about operating segments. Operating segments are defined as components of an
enterprise for which separate financial information is available that is regularly evaluated by the Chief Operating Decision Maker (CODM) in deciding how to allocate resources and in assessing performance. As discussed in Note 3, the Company
consummated the reverse acquisition with the acquiree effective April 1, 2002. Subsequent to the reverse acquisition, the Company changed the structure of its internal organization, which changed the composition of its operating segments. The
Company’s operations have been classified into the following segments: Commercial Banking segment, Investment Banking segment and Others. Segment data for previous periods have been reclassified on a comparable basis.

The Commercial Banking segment provides medium-term and long-term project and infrastructure financing, securitization, factoring, lease financing, working capital finance and foreign exchange services to clients. Further,
it provides deposit and loan products to retail customers. The Investment Banking segment deals in the debt, equity and money markets and provides corporate advisory products such as mergers and acquisition advice, loan syndication advice and issue
management services.

F-37

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Others consist of various operating segments that do not meet the requirements to be reported as on individual reportable segment as defined in SFAS No. 131.

The CODM evaluates the Company’s performance and allocates resources based on performance indicators (components of profit and loss) of each of the segments. Further, the CODM specifically reviews assets of the
consumer loans division, which is a part of commercial banking segment.

The profit and loss of reportable segments is set out below.

Commercial Banking
Investment Banking

Year ended March 31,
Year ended March 31,

2003
2004
2005
2003
2004
2005

(in millions)
(in millions)

Income from external customers

Interest income

Rs.

76,498

Rs.

71,143

Rs.

72,917

Rs.
21,595
Rs.

19,954

Rs.

19,341

Non - interest income

4,771

16,023

21,496

6,792

17,167

8,145

Income from other operating

segments

Interest income

8,533

8,881

9,479

189

174

124

Non – interest income

384

351

390

251

254

433

Total income

Rs.

90,186

Rs.

96,398

Rs.

104,282

Rs.

28,827

Rs.

37,549

Rs.

28,043

Interest expense

Rs.

69,462

Rs.

62,327

Rs.

58,982

Rs.

23,916
Rs.

18,904

Rs.

18,777

Depreciation

2,008

2,108

2,748

231

739

280

Provision for loan losses

19,645

20,040

14,681

(5
)

Other expenses

10,343

17,358

22,729

2,921

3,991

3,392

Income/ (loss) before taxes

Rs.

(11,272
)

Rs.
(5,435
)
Rs.

5,142

Rs.

1,755

Rs.
13,900

Rs.

5,598

Income tax (expense)/ benefit

3,420

1,077

(828
)

(529
)

(2,749
)

(901
)

Net income/ (loss)

Rs.

(7,852
)

Rs.
(4,358
)

Rs.

4,314

Rs.

1,226

Rs.

11,151

Rs.

4,697

A listing of certain assets of reportable segments is set out below.

Commercial
Banking

Investment Banking

Others

Total

As of March 31,
2004
2005
2004
2005
2004
2005
2004
2005

(in millions)

Property and equipment

Rs.

18,133

Rs.

20,701

Rs.

2,303

Rs.

1,683

Rs.

2,747

Rs.

3,671

Rs.

23,183

Rs.

26,055

Investment in equity
affiliates

3,572

4,678

3,619

4, 725

Inter segment transactions are generally based on transfer pricing measures as determined by management. Income, expenses, assets and liabilities are either specifically identifiable with individual segments or have been
allocated to segments on a systematic basis. Corporate overheads and assets have also been allocated to segments on a systematic basis.

A reconciliation between the segment income and consolidated
totals of the Company is set out below.

Total income
Income/
(loss) before taxes and

accounting changes
Net income/
(loss)

Year ended March
31,
Year ended March
31,
Year ended March
31,

2003
2004
2005
2003
2004
2005
2003
2004
2005

(in millions)

Commercial banking
Rs.

90,186

Rs.

96,398

Rs.

104,282

Rs.

(11,272
)
Rs.

(5,435
)
Rs.

5,142
Rs.

(7,852
)
Rs.

(4,358
)
Rs.

4,314

Investment banking

28,827

37,549

28,043

1,755

13,900

5,598

1,226

11,151

4,697

Others

2,874

4,334

5,891

(1,527
)

(1,608
)

(573
)

(1,357
)

(1,574
)

(481
)

Other reconciling adjustments

(10,531
)

(10,484
)

(11,311
)

Consolidated Total
Rs.

111,681

Rs.

127,797

Rs.

126,905

Rs.

(11,044

)
Rs.

6,857

10,167

Rs.

(7,983

)
Rs.

5,219

Rs.

8,530

F-38

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

below.
A reconciliation between the segments and consolidated total assets of the Company is set out

As of March 31

2004
2005

(in millions)

Commercial Banking⁽¹⁾

Rs.

902,442

Rs.

1,207,789

Investment Banking

484,439

641,722

Others

12,232

9,229

Total segment assets

Rs.

1,399,113

Rs.

1,858,740

Unallocable assets

20,718

27,052

Eliminations

(10,700
)

(22,345
)

Consolidated total assets

Rs.

1,409,131

Rs.

1,863,447

Commercial banking includes assets of consumer loans division of Rs. 529,003 million (March 2004: Rs. 297,517 million), which are reviewed separately by the CODM.

Geographic distribution

The business operations of the Company are largely concentrated in India. Activities outside India include resource mobilization in the international markets and operations of certain software development, services and
banking subsidiaries in the United States, United Kingdom and Canada. The assets and income from foreign operations are not significant to the overall operations of the Company.

Major customers

The Company provides banking and financial services to a wide base of customers. There is no major customer, which contributes more than 10% of total income.

25. Employee benefits
Gratuity
In accordance with Indian regulations, the Company provides for gratuity, a defined benefit retirement plan covering all employees. The plan provides a lump sum payment to vested employees at retirement or termination of
employment based on the respective employee’s salary and the years of employment with the Company. The gratuity benefit provided by the Company to its employees is equal to or greater than the statutory minimum.

In respect of the parent company, the gratuity benefit is provided to the employee either through a fund administered by a Board of Trustees and managed by Life Insurance Corporation of India (LIC) or through ICICI Prulife.
The Company is responsible for settling the gratuity obligation through contributions to the fund. The plan is fully funded.

In respect of the remaining entities within the group, the gratuity benefit is provided through annual contributions to a fund administered and managed by the LIC. Under this scheme, the settlement obligation remains with
the Company, although the LIC administers the scheme and determines the contribution premium required to be paid by the Company.

F-39

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

The following table sets forth the funded status of the plans and the amounts recognized in the financial statements:

As of March 31,

2004
2005

(in millions)

Change in benefit obligations

Projected benefit obligations at beginning of the year

Rs.

893

Rs.

804

Service cost

106

153

Interest cost

Benefits paid

(470
)

(25
)

Actuarial (gain)/loss on obligations

176

(42
)

Projected benefit obligations at the end of the year

Rs.

804

Rs.

946

Change in plan assets

Fair value of plan assets at beginning of the year

Rs.

873

Rs.

514

Actual return on plan assets

Employer contributions

174

Benefits paid

(470
)

(25
)

Plan assets at the end of the year

Rs.

514

Rs.

716

Funded status

Rs.

(290
)

Rs.

(230
)

Unrecognized actuarial loss

290

236

Unrecognized transitional obligation

(16
)

(15
)

Unrecognized prior service cost

Net prepaid gratuity cost

Rs.

Accumulated benefit obligation at year end

Rs.

336

Rs.

402

The components of the net gratuity cost are set out below.

Year ended March
31,

2003
2004
2005

(in millions)

Service cost

Rs.

106

Rs.

153

Interest cost

Expected return on assets

(70
)

(68
)

(45
)

Amortization of transition asset/liability

(1
)

Amortization of prior service cost

Actuarial (gain)/loss

Curtailment (gain)/ loss

Net gratuity cost

Rs.

169

Rs.

179

Weighted average assumptions used to determine net periodic benefit cost for the period:

As of March 31,

2003
2004
2005

Discount rate

7.5%

Rate of increase in the compensation levels

Rate of return on plan assets

7.5%

F-40

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Weighted average assumptions used to determine benefit obligations:

As of March 31,

2004
2005

Discount rate

7.0%

7.5%

Rate of increase in the compensation levels

7.0%

As of March 31, 2005, of the total plan assets Rs. 2 million (2004: Rs. 113 million) has been invested in debt securities of the Company.

Plan Assets

The Company determines its assumptions for the expected rate of return on plan assets based on the expected average long term rate of return over the next 15 to 20 years.

The Company’s asset allocation for the gratuity
at the end of the year ended March 31, 2005 and March 31, 2004 and the target
allocation for year ending March 31, 2006 by asset category based on fair values
is as follows:

Asset Category
Target asset allocation

2006
Post-retirement asset at Mar
31,

2005
Post-retirement asset at Mar
31,

2004

Debt Securities

Other investments

100%

Total

100%

The plan assets are either maintained by LIC or ICICI Prulife.

Investment strategy for plan assets maintained by ICICI Prulife

The ICICI Prulife administers the plan fund and it independently determines the target allocation by asset category. The investment strategy is to invest in a prudent manner for providing benefits to the participants of the
scheme. ICICI Prulife primarily invests in debt securities or relatively low risk securities. The strategies are targeted to produce a return that, when combined with the Company’s contribution to the funds will maintain the fund’s ability
to meet all required benefit obligations. The insurance industry in the country is highly regulated and ICICI Prulife functions within regulated investment norms.

Investment strategy for plan assets maintained by the LIC

LIC administers the plan fund and it independently
determines the target allocation by asset category. LIC primarily investments
in government securities and other debt instruments. The selection of investments
and the asset category is determined by LIC. LIC’s strategy is to invest
in a prudent manner to produce a return that will enable the fund to meet the
required benefit obligations. The insurance industry in the country is highly
regulated and LIC, which is majority owned by the Government of India, functions
within regulated investment norms. As such, while the return on investments is
subject to market interest rate and other risks, no untoward losses are expected
to the plan assets. No such events have occurred in the history of operations
of the fund.

F-41

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements
(Continued)

The benefit expected be paid in each of the next five fiscal year and in the five fiscal years thereafter is as follows:

(in millions)

Expected company contributions to the fund during the
year ended March 31, 2006

Rs.

198

Expected benefit payments from the fund during :

2005 – 2006

2006 – 2007

2007 – 2008

2008 – 2009

2009 – 2010

Thereafter

621

Pension

The Company provides for pension, a deferred retirement
plan covering certain employees. The plan provides for a pension payment on a
monthly basis to these employees on their retirement based on the respective
employee’s salary and years of employment with the Company. Employees covered
by the pension plan are not eligible for benefits under the provident fund plan,
a defined contribution plan. The pension plan pertained to the acquiree which
was acquired with effect from April 2002.

The pension plan is funded through periodic contributions to a fund set-up by the Company and administrated by a Board of Trustees. Such contributions are actuarially determined.

The following table sets forth the funded status of the plan and the amounts recognized in the financial statements.

As of March
31,

2004
2005

(in million)

Change in benefit obligations

Projected benefit obligations at beginning of the year

Rs.

853

Rs.

1,034

Service cost

Interest cost

Benefits paid

(165
)

(61
)

Actuarial (gain)/loss on obligations

248

(35
)

Projected benefit obligations at the end of the year

Rs.

1,034

Rs.

1,019

Change in plan assets

Fair value of plan assets at beginning of the year

Rs.

1,156

Rs.

1,047

Actual return on plan assets

160

Employer contributions

Benefits paid

(165
)

(61
)

Plan assets at the end of the year

Rs.

1,047

Rs.

1,154

Funded status

Rs.

135

Unrecognized actuarial loss/(gain)

(18
)

(136
)

Net amount recognized

Rs.

(5
)

Rs.

(1
)

Accumulated benefit obligation at year end

Rs.

961

Rs.

950

F-42

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

The components of the net pension cost are set out below.

Year ended March 31,

2004
2005

(in millions)

Service cost

Rs.

Interest cost

Expected return on assets

(84
)

(77
)

Net pension cost

Rs.

Weighted average assumptions used to determine net periodic benefit cost for the period:

As of March
31,

2004
2005

Discount rate

7.0%

7.5%

Rate of increase in the compensation levels

7.0%

Rate of return on plan assets

7.5%

Pension increases

3.0%

Weighted average assumptions used to determine benefit obligations:

As of March 31,

2004
2005

Discount rate

7.0%

7.5%

Rate of increase in the compensation levels

7.0%

Pension increases

3.0%

Plan Assets

The Company determines its assumptions for the expected rate of return on plan assets based on the expected average long-term rate of return over the next 15 to 20 years.

The Company’s asset allocation for the pension
at the end of the year ended March 31, 2005 and March 31, 2004 and the target
allocation for year ending March 31, 2006 by asset category based on fair values
are as follows:

Asset Category
Target asset

allocation

2006
Pension assets

at March 31,

2005
Pension assets

at March 31,

2004

Debt securities

100%

Other investments

Total

100%

The plan assets are maintained through a fund administered and managed by a Board of Trustees.

The investment strategy of the Company is to invest in a prudent manner for providing benefits to the participants of the scheme. The strategies are targeted to produce a return that, when combined with the Company’s
contribution to the funds will maintain the fund’s ability to meet all required benefit obligations. Risk is reduced by investment in GOI Securities or relatively low risk securities.

F-43

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

The benefit expected be paid in each of the next five fiscal years thereafter is as follows:

(in millions)

Expected company contributions to the fund during the
year ended March 31, 2006

Rs.

Expected benefit payments from the fund during :

2005 – 2006

2006 – 2007

2007 – 2008

2008 – 2009

2009 – 2010

Thereafter

418

Superannuation

The permanent employees of the Company are entitled to receive retirement benefits under the superannuation scheme operated by the Company. Superannuation is a defined contribution plan under which the Company contributes
annually a sum equivalent to 15% of the employee’s eligible annual salary to LIC, the manager of the fund, which undertakes to pay the lump sum and annuity payments pursuant to the scheme. The Company contributed Rs. 97 million, Rs. 103 million
and Rs. 109 million to the employees superannuation plan for the years ended March 31, 2003, 2004 and 2005 respectively.

Provident fund

In accordance with Indian regulations, employees of the Company (excluding those covered under the pension scheme) are entitled to receive benefits under the provident fund, a defined contribution plan, in which, both the
employee and the Company contribute monthly at a determined rate. These contributions are made to a fund set up by the Company and administered by a Board of Trustees. The contribution to the employees provident fund amounted to Rs. 106 million, Rs.
236 million and Rs. 280 million for the years ended March 31, 2003, 2004 and 2005 respectively.

26. Early Retirement Option (ERO)

The Bank has implemented Early Retirement Option Scheme 2003 to its employees in July 2003. All employees who had completed 40 years of age and seven years of service with the Bank (including period of service with entities
amalgamated with the Bank) were eligible for the ERO.

For a period of one month commencing on July 1, 2003 the Company offered its employees special benefits in connection with their early retirement option of employment. The early retirement option was offered to employees
who have completed a minimum service period of seven years and have completed minimum 40 years of age. The employees opting for the plan were paid a lump-sum consideration.

An aggregate of 1,495 employees opted for this plan. The termination benefits in respect of the plan aggregated Rs. 1,910 million, which has been reflected in the consolidated statement of operations under the salaries and
employee benefits.

F-44

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements
(Continued)

27. Employee Stock Option Plan

In August 1999, the Company approved an Employee Stock
Option Plan (ICICI Plan). Under the ICICI Plan, the Company is authorized to
grant up to 5% of its issued capital as of the date of grant to its eligible
employees. Eligible employees are granted an option to purchase shares subject
to vesting. The options issued upto March 31, 2004 vest in a graded manner over
three years with 20%, 30% and 50% of the options vesting at the end of each year,
while options issued subsequent to March 31, 2004 vest in a graded manner over
four years with 20%, 20%, 30% and 30% of the options vesting at the end of each
year. The options can be exercised within 10 years from the date of the grant.
Compensation expense under the ICICI Plan for the year ended March 31, 2005 is
Rs. 48 million (2004: Nil, 2003: Rs. 7 million).

As a reflex action acquisition, all outstanding options of the Company were exchanged for options of the acquiree in the ratio of 1:2 with an adjustment to the exercise price in the same ratio. This transaction is similar
to an equity restructuring. In accordance with FIN 44, Accounting for Certain Transactions involving Stock Compensation, the above transaction had no accounting consequence.

Under the terms of the reverse acquisition, the Company assumed the employee options outstanding under the acquiree’s option plan. As the intrinsic value of all the assumed options was negative on the date of
consummation, no amount has been allocated to deferred compensation under FIN 44.

Stock option activity

Stock option activity under the above stock option plans is set out below.

Year ended March 31, 2003

ICICI Bank Limited

Option shares outstanding
Range of exercise

prices and grant

date fair values
Weighted average exercise
price
Weighted average

remaining

contractual

life (months)

Outstanding at the beginning of the year

7,015,800

Rs.

105.0-266.8

Rs.

162.6

114

Granted during the year

6,327,825

120.4 - 171.9

146.0

110

Forfeited during the year

(730,350)

120.4 – 266.8

154.6

Exercised during the year

(3,000)

105.0

Outstanding at the end of the year

12,610,275

105.0- 266.8

154.7

Outstanding at the end of the year by

different price range

6,143,900

105.0-120.4

120.4

108

5,263,250

164.0-171.9

169.3

1,203,125

266.8

Exercisable at the end of the year

5,222,317

105.0- 266.8

169.9

Exercisable at the end of the year by

different price range

1,226,380

105.0-120.4

120.4

3,394,375

164.0-171.9

170.6

601,562

266.8

F-45

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements
(Continued)

Year ended
March 31, 2004

ICICI Bank
Limited

Option Shares outstanding
Range of exercise

prices and grant

date fair values
Weighted average exercise
price
Weighted average

remaining

contractual

life (months)

Outstanding at the beginning of the year

12,610,275

Rs.

105.0- 266.8

Rs.

154.7

Granted during the year

7,491,800

132.1-222.4

132.6

109

Forfeited during the year

(766,489)

120.4-266.8

129.4

Exercised during the year

(3,370,604)

105.0-266.8

151.7

Outstanding at the end of the year

15,964,982

105.0-266.8

146.2

Outstanding at the end of the year by different price
range

11,495,579

105.0-157.0

127.9

104

3,367,178

164.0-222.4

169.1

1,102,225

266.8

Exercisable at the end of the year

6,080,121

105.0-266.8

167.3

Exercisable at the end of the year by different
price range

2,466,890

105.0-120.4

120.4

2,511,007

164.0-171.9

169.7

1,102,224

266.8

Year ended
March 31, 2005

ICICI Bank
Limited

Option Shares outstanding
Range of exercise

prices and grant

date fair values
Weighted average exercise
price
Weighted average

remaining

contractual

life (months)

Outstanding at the beginning of the year

15,964,982

Rs.

105.0-266.8

Rs.

146.2

Granted during the year

7,554,500

275.2-300.1

300.1

111

Forfeited during the year

(846,496)

120.4-300.1

207.3

Exercised during the year

(4,480,121)

105.0-266.8

145.1

Outstanding at the end of the year

18,192,865

120.4-300.1

207.4

Outstanding at the end of the year by different
price range

10,103,215

120.4-171.9

136.1

8,089,650

266.8-300.1

296.5

105

Exercisable at the end of the year

5,935,015

120.4-266.8

158.2

Exercisable at the end of the year by different
price range

5,066,365

120.4-171.9

139.6

868,650

266.8

3i Infotech

In April 2000, 3i Infotech (formerly ICICI Infotech) approved an Employee Stock Option Plan (Infotech Plan). Under the Infotech Plan, 3i Infotech is authorized to issue up to 25% of its paid up equity share capital to its
employees and employees of the parent company. Eligible employees are granted an option to purchase shares subject to vesting conditions. The options vest in a graded manner over three years with 20%, 30% and 50% of the options vesting at the end of
each year. The options can be exercised within 10 years from the date of the grant.
During the year ended March 31, 2003, 2004 and 2005,
the Company has not recorded any compensation cost as the exercise
price was equal to the fair value of the underlying equity shares on
the grant date. As shares of 3i Infotech are not quoted on exchanges,
the fair value represents management’s best estimates considering all available factors.

F-46

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Stock option activity under the above stock option plan is set out below.

Year ended March 31, 2003

3i Infotech

Option
shares

outstanding
Range of exercise

prices and grant

date fair values
Weighted
average

exercise
price
Weighted average

remaining

contractual

life (months)

Outstanding at the beginning of the year

3,863,020

Rs.

37.5- 68

Rs.

52.7

104

Granted during the year

783,500

68.0-100

97.1

108

Forfeited during the year

(435,360)

37.5-100

59.1

Exercised during the year

(10,200)

37.5-68

55.7

Outstanding at the end of the year

4,200,960

37.5-100

60.3

Outstanding at the end of the year by

different price range

1,764,060

37.5

2,436,900

68.0-100

76.8

Exercisable at the end of the year

1,235,070

37.5-68.0

46.2

Exercisable at the end of the year by

882,030

37.5

different price range

353,040

68.0

Year ended March 31, 2004

3i Infotech

Option
shares

outstanding
Range of exercise

prices and
grant

date fair values
Weighted
average

exercise
price
Weighted average

remaining

contractual

life (months)

Outstanding at the beginning of the year

4,200,960

Rs.

37.5-100

Rs.

60.3

Granted during the year

1,148,000

37.5-100

45.0

Forfeited during the year

(859,320)

37.5-100

37.5

Exercised during the year

(2,660)

37.5-100

54.4

Outstanding at the end of the year

4,486,980

37.5-100

57.5

Outstanding at the end of the year by

different price range

2,437,380

37.5-45.0

40.8

2,049,600

68.0-100.0

77.5

Exercisable at the end of the year

2,044,704

37.5-100

50.5

Exercisable at the end of the year by

different price range

1,644,360

37.5

400,344

68.0-100.0

72.0

Year ended March 31, 2005

3i Infotech

Option
shares

outstanding
Range of exercise

prices and
grant

date fair values
Weighted
average

exercise
price
Weighted average

remaining

contractual

life (months)

Outstanding at the beginning of the year

2,243,490

Rs.

75 – 200

Rs.

115.1

Granted during the year

4,570,865

75-136

98.3

116

Forfeited during the year

(283,840)

75 – 200

119.8

Exercised during the year

(23,700)

75 – 90

76.5

Outstanding at the end of the year

6,506,815

75 – 200

103.2

102

Outstanding at the end of the year by

5,530,815

75-100

94.5

107

different price range

976,000

136-200

152.4

Exercisable at the end of the year

1,696,000

75-200

111.1

Exercisable at the end of the year by

844,800

75-100

76.6

different price range

851,200

136-200

145.4

F-47

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

ICICI OneSource Limited

In September 2002, ICICI OneSource, a consolidated
subsidiary, approved an Employee Stock Options Plan (OneSource Plan). Under the
OneSource Plan, ICICI OneSource is authorized to issue equity shares up to 10%
of the share capital to the employees. Eligible employees are granted an option
to purchase shares subject to vesting conditions. The options vest in a graded
manner over four years with 25% at the end of the first year and 12.5% of the
options vesting at the end of each subsequent six month period. The options
can be exercised within 10 years from the date of the grant.

Stock option activity under the above stock option plan is set out below.

Year ended March 31, 2003

ICICI OneSource
Limited

Option shares

outstanding
Range of exercise

prices and grant

date fair values
Weighted average

Exercise
price
Weighted average

remaining contractual

life (months)

Outstanding at the beginning of the year

Granted during the year

4,250,000

Rs.

11.3

Rs.

11.3

113

Forfeited during the year

(395,000)

11.3

Exercised during the year

Outstanding at the end of the year

3,855,000

11.3

113

Exercisable at the end of the year

Year ended March 31, 2004

ICICI OneSource
Limited

Option shares

outstanding
Range of exercise

prices and grant

date fair values
Weighted average

Exercise
price
Weighted average

remaining contractual

life (months)

Outstanding at the beginning of the year

3,855,000

Rs.

11.3

Rs.

11.3

113

Granted during the year

15,320,500

12.8-18.5

13.2

Forfeited during the year

(1,207,500)

11.3-18.5

11.3

Exercised during the year

Outstanding at the end of the year

17,968,000

11.3-18.5

12.9

Outstanding at the end of the

3,192,500

11.3

101

year by different price range

14,775,500

12.8-18.5

13.2

Exercisable at the end of the year

815,000

11.3

For the year ended March 31, 2005

ICICI One Source Limited

Option shares

outstanding
Range of exercise

prices and grant

date fair values
Weighted average

Exercise
price
Weighted average

remaining contractual

life (months)

Outstanding at the beginning of the year

17,968,000

Rs.

11.3 – 18.5

Rs.

12.9

Granted during the year

4,030,000

18.5 – 19.9

19.8

Forfeited during the year

(2,187,500)

11.3 – 19.9

12.9

Exercised during the year

(471,250)

11.3 – 12.8

12.2

Outstanding at the end of the year

19,339,250

11.3 – 19.9

14.3

Outstanding at the end of the

14,609,250

11.3-12.8

12.7

year by different price range

4,730,000

18.5-19.9

19.6

Exercisable at the end of the year

4,715,125

11.3 – 18.5

12.7

Exercisable at the end of the

4,513,875

11.3-12.8

12.4

year by different price range

201,250

18.5

The Company has not recorded any compensation cost,
as the exercise price was equal to the fair value of the underlying equity shares
on the grant date. As shares of ICICI OneSource Limited are not quoted on exchanges,
the fair value represents management’s best estimates considering all available
factors.

F-48

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

28. Income taxes

Components of deferred tax balances

The tax effects of temporary differences are reflected through a deferred tax asset/liability, which is included in the balance sheet of the Company.

The components of the deferred tax balances are set out below.

As of March 31,

2004

2005

Deferred tax assets

Allowance for loan losses

Rs.

17,902

Rs.

18,931

Available for sale securities

1,384

Investments in trading securities

Employee retirement

685

392

Capital loss carry forward

881

Business loss carry forward

286

559

Deposits

Investments in affiliates

642

991

Other

232

226

Rs.

20,729

Rs.

23,456

Valuation allowance

(893

)

(135
)

Total deferred tax asset

Rs.

19,836

Rs.

23,321

Deferred tax liabilities

Property and equipment

Rs.

(8,329

)

Rs.

(7,916

)

Investments in subsidiaries and affiliates

(450

)

(432

)

Intangibles

(1,625

)

(1,531

)

Unearned income

(896

)

(1,580

)

Investment in trading securities

(63

)

Long-term debt

(336

)

(239

)

Available for sale securities

(202

)

Others

(612

)

(62

)

Total deferred tax liability

Rs.

(12,513

)

Rs.

(11,760
)

Net deferred tax asset

Rs.

7,323

Rs.

11,561

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of the
deferred tax asset is dependent on the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, the projected future taxable
income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable incomes over the periods in which the deferred tax assets are deductible, management believes that it
is more likely than not that the Company will realize the benefits of those deductible differences. The amount of deferred tax assets considered realizable, however could be reduced in the near term if estimates of future taxable income are
reduced.

F-49

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

The Company would require taxable income of Rs.31,614 million in the future periods to be able to fully realize the benefit of net deferred asset recognized in these consolidated financial statements.

The Company had a valuation allowance of Rs. 226 million
as at April 1, 2002. The net change in the total valuation allowance for the
years ended March 31, 2003, March 31, 2004 and March 31, 2005 was an increase
of Rs. 298 million, an increase of Rs. 369 million and a decrease of Rs. 758
million respectively. The majority of the valuation allowance as of March 31,
2005 related to business loss carried forward and capital loss carried forward.

As at March 31, 2005, the Company has total business
loss carry forwards of Rs. 857 million. Of this amount, Rs. 164 million expire
in 2012. Business loss carry forwards pertaining to the Company’s US subsidiary
are Rs. 186 million which expires in 2024, Canada subsidiary are Rs. 367 million,
which expire Rs. 1 million in 2010 and Rs.366 million in 2014. Business loss
carry forwards of Rs. 140 million relating to the Company’s Australian operations
have no expiration date.

The Company has capital loss carry forward of Rs. 4,294 million, with expiration dates as follows: March 31, 2006 – Rs. 98 million and March 31, 2012 – Rs. 4,196 million.

Reconciliation of tax rates

The Indian statutory tax rate is 35% plus a surcharge. During each of the years presented, legislation was enacted in the first few months of the fiscal year that changed the amount of the surcharge for that fiscal year and
future years. The surcharge was changed to 5%, 2.5% and 4.55% during the years ended March 31, 2003, 2004 and 2005, respectively, and resulted in a total statutory tax rate of 36.75%, 35.875% and 36.5925% for the years ended March 31, 2003, 2004 and
2005, respectively.

The following is the reconciliation of expected income taxes at statutory income tax rate to income tax expense /benefit as reported:

Year ended March 31,

2003
2004
2005

(in million)

Income/(loss) before income taxes
Rs.

(11,044

)

Rs.

6,857

Rs.

10,166

Statutory tax rate

36.75

35.875

36.5925%

Income tax expense/(benefit) at the statutory tax rate

(4,059

)

2,460

3,720

Increases/(reductions) in taxes on account of:

Special tax deductions available to financial institutions

(38

)

(32
)

(40)

Exempt interest and dividend income

(558

)

(906

)

(479)

Income charged at rates other than statutory tax rate

916

(741
)

(1,005)

Changes in the statutory tax rate

(109

)

137

(147)

Expenses disallowed for tax purposes

486

270

245

Tax on undistributed earnings of subsidiary

134

Change in valuation allowance

298

371

(758)

Tax adjustments in respect of prior year tax assessments

(31

)

(9
)

Tax adjustment on account of change in tax status of

subsidiary

(97

)

Other

(46
)

Income tax expense/ (benefit) reported

Rs.

(3,061
)

Rs.
1,638
Rs.

1,637

F-50

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

Components of income tax expense from continuing operations

The components of income tax expense/(benefit) from continuing operations are set out below.

Year ended March 31,

2003
2004
2005

(in millions)

Current

Rs.

1,287

Rs.

3,684

Rs.

3,403

Deferred

(4,348

)

(2,046
)

(1,766

)

Income tax expense/(benefit) reported

Rs.

(3,061

)

Rs.

1,638

Rs.

1,637

Only an insignificant amount of the Company’s income/(loss) before income taxes and income tax expense/(benefit) was from outside India.

Allocation of income taxes

The total income tax expense/(benefit) was recorded as follows:

Year ended March 31,

2003
2004
2005

(in millions)

Income/(loss) from continuing operations

Rs.

(3,061

)

Rs.

1,638

Rs.

1,637

Unrealized gain/(loss) on securities available for sale

1,461

655

(2,552

)

Additional paid in capital

599

Income tax expense/(benefit) reported

Rs.

(1,001

)

Rs.

2,293

Rs.

(915

)

29. Commitments and contingencies

Loan commitments

The Company has outstanding undrawn commitments to provide loans and financing to customers. These loan commitments aggregated Rs. 37,818 million as of March 31, 2005 (2004: Rs. 73,903 million). The interest rate on these
commitments is dependent on the lending rates on the date of the loan disbursement. Further, the commitments have fixed expiration dates and are contingent upon the borrower’s ability to maintain specific credit standards.

Guarantees

As a part of its project financing and commercial banking activities, the Company has issued guarantees to enhance the credit standing of its customers. These generally represent irrevocable assurances that the Company will
make payments in the event that the customer fails to fulfill its financial or performance obligations. Financial guarantees are obligations to pay a third party beneficiary where a customer fails to make payment towards a specified financial
obligation. Performance guarantees are obligations to pay a third party beneficiary where a customer fails to perform a non-financial contractual obligation. The guarantees are generally for a period not exceeding 10 years.

F-51

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

The credit risk associated with these products, as well as the operating risks, are similar to those relating to other types of financial instruments.

The current carrying amount of the liability for the Company’s obligations under the guarantee amounted to Rs. 1,256 million (2004: Rs. 1,229 million).

Details of guarantees outstanding are set out below.

Nature of guarantee
Maximum potential
amount of future payments under guarantee

Less than

1 year
1 - 3 year
3 - 5 year
Over 5 year
Total

(in millions)

Financial guarantees

Rs.

35,040

Rs.

10,000

Rs.

6,228

Rs.

9,404

Rs.

60,672

Performance guarantees

37,447

39,539

17,298

5,524

99,808

Total

Rs.

72,487

Rs.

49,539

Rs.

23,526

Rs.

14,928

Rs.
160,480

The Company has collateral available to reimburse potential
losses on its guarantees. Margins available to the Company to reimburse losses
realized under guarantees amounted to Rs. 4,066 million (2004: Rs. 2,055 million).
Other property or security may also be available to the Company to cover these
losses under guarantees.

Capital commitments

The Company is obligated under a number of capital contracts. Capital contracts are job orders of a capital nature which have been committed. As of the balance sheet date, work had not been completed to this extent.
Estimated amounts of contracts remaining to be executed on capital account aggregated Rs. 604 million as of March 31, 2005 (2004: Rs. 294 million).

Tax contingencies

Various tax-related legal proceedings are pending against the Company at various levels of appeal either with the tax authorities or in the courts. Where after considering all available information in the opinion of
management a liability requires accrual, the company has accrued such liability and does not estimate any incremental liability in respect of related proceedings.

Where such proceedings are sufficiently advanced to
enable management to assess that a liability exist and is subject to reasonable
estimation management will record its best estimate of such liability. Where
a reasonable range of potential outcomes is estimated, management will record
its best estimate, or in the absence of a basis for selecting a specific estimate
within a range management will record a liability no less than the lower end
of the estimated range. The contested tax demands are adjusted by the tax authorities
against refunds due to the Company on favourable resolution of earlier years
appeals/ completion of assessments or paid or kept in abeyance in accordance
with the terms of the stay order. The payment / adjustment/ stay does not prejudice
the outcome of the appeals filed by the Company. The advanced tax payments are
recorded as advance tax payments under other asset.

F-52

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

As of March 31, 2005, the Company has been assessed an aggregate of Rs. 27,998 million in excess of the provision made in the financial statements in income tax , interest tax, wealth tax and sales tax demands by the
Government of India’s tax authorities for past years. The Company has appealed each of these tax demands. The Company believes that the tax authorities are not likely to be able to substantiate their income tax , interest tax, wealth tax and
sales tax assessments and accordingly has not provided for these tax demands as of March 31, 2005 based on views of eminent counsels/favorable decisions in own/other cases.
Of the above, Rs. 11,123 million relates to ‘disallowance of
depreciation on leased assets’. This issue is an industry wide issue, involving multiple litigations across the country.

In one of the instances relating to the above, the Income-tax Appellate Tribunal which is the second appellate level authority, has disallowed the depreciation to the Company in case of assets leased by it. The contingent
liability on this disallowance amounts to Rs. 189 million. The Company has preferred an appeal to the Mumbai High Court, which has not yet come up for hearing. The lower level tax authorities in subsequent years, have been consistently denying the
depreciation claim of the Company by treating the lease transactions as loans and have allowed only the principal portion of lease rentals as a deduction.

Based on judicial precedents and recent decisions of the Supreme Court and based on consultation with senior tax counsel, the management believes that it is more likely than not that the Company’s tax positions will be
sustained. Accordingly, no provision has been made in the accounts.

Litigation

Various litigation and claims against the Company and its subsidiaries are in process and pending. Based upon a review of open matters with legal counsel, management believes that the outcome of such matters will not have a
material effect upon the Company’s consolidated financial position, results of operations or cashflows.

Operating lease commitments

The Company has commitments under long-term operating leases principally for premises and automated teller machines. The following is a summary of future minimum lease rental commitments as of March 31, 2005, for
non-cancelable leases:

(in millions)

Lease rental commitments for the year ending March 31,

2006

Rs.

866

2007

835

2008

829

2009

813

2010

690

Thereafter

3,225

Total minimum lease commitments

Rs.

7,258

30. Related party transactions

The Company has transactions with its affiliates and directors/employees. The following represent the significant transactions between the Company and such related parties:

Insurance services

During the year ended March 31, 2005 the Company paid insurance premium to its affiliates amounting to Rs. 322 million (2004: Rs. 219 million, 2003: Rs. 224 million) and received insurance claims amounting to Rs. 17 million
(2004: Rs. 86 million).

Lease of premises and facilities

During the year ended March 31, 2005, the Company received for lease of premises, facilities and other administrative costs from ICICI Prulife, Rs. 121 million (2004: Rs. 198 million, 2003: Rs. 84 million), from Pru-AMC,
Rs. 19 million (2004: Rs. 6 million, 2003: Rs. 6 million) and from ICICI Lombard, Rs. 131 million (2004: Rs. 91 million, 2003: Rs. 82 million).

Secondment of employees

During the year ended March 31, 2005, the Company received from ICICI Prulife for seconded employees, Rs. 1 million (2004: Rs. 0.6 million, 2003: Rs. 3 million ) and from ICICI Lombard, Rs. 8 million (2004: Rs. 14 million,
2003: Rs. 10 million).

F-53

Asset management services

During the year ended March 31, 2005, the Company provided asset management services to TCW and earned fees of Rs. 5 million (2004: Rs. 14 million, 2003: Rs. 24 million).

Deposits and borrowings

During the year ended March 31, 2005, the Company paid interest on bonds/deposits/call borrowings to its affiliated companies, Rs. 74 million (2004: Rs. 27 million 2003: Rs. 12 million).

Interest and Dividend

During the year ended March 31, 2005, the Company received a dividend of Rs. 218 million from its affiliates (2004: Rs. 172 million , 2003: Nil).

Employee loans

The Company has advanced housing, vehicle and general
purpose loans to employees, bearing interest ranging from 2.5% to 6%. The tenure
of these loans range from 5 years to 25 years. The loans are generally secured
by the assets acquired by the employees. Employee loan balances outstanding
as of March 31, 2005, of Rs. 4,539 million (2004: Rs. 3,766 million, 2003: Rs.
2,273 million) are included in other assets.
Referral fees

During the year March 31, 2005 the Company received referral fees from its insurance affiliates Rs. 280 million (2004: Rs. 243 million).

Purchase of investments

During the year ended March 31, 2005, the Company purchased investments from its affiliates, Rs. 7,574 million (2004: Rs. 2,843 million).

Sale of investments

During the year ended March 31, 2005, the Company sold
investments amounting to Rs. 4,518 million (2004: Rs. 971 million) to its affiliates
and made a loss of Rs. 17 million (2004: Rs. 5 million).

Related party balances

The following balances payable to/receivable from related parties are included in the balance sheet:

As of March 31,

2004

2005

(in million)

Loans

Rs.

Other assets

3,353

Deposits

700

1,621

Other liabilities

F-54

ICICI Bank Limited and Subsidiaries
Notes to the consolidated financial statements (Continued)
31. Estimated fair value of financial instruments

The Company’s financial instruments include non-derivative financial assets and liabilities as well as derivative instruments.

Fair value estimates are generally subjective in nature, and are made as of a specific point in time based on the characteristics of the financial instruments and relevant market information. Where available, quoted market
prices are used. In other cases, fair values are based on estimates using present value or other valuation techniques. These techniques involve uncertainties and are significantly affected by the assumptions used and judgments made regarding risk
characteristics of various financial instruments, discount rates, estimates of future cash flows, future expected loss experience and other factors. Changes in assumptions could significantly affect these estimates and the resulting fair values.
Derived fair value estimates cannot necessarily be substantiated by comparison to independent markets and, in many cases, could not be realized in an immediate sale of the instruments.

Fair value estimates are based on existing financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.
Disclosure of fair values is not required for certain items such as investment accounted for under the equity method of accounting, obligations for pension and other post-retirement benefits, income tax assets and liabilities, property and
equipment, prepaid expenses, core deposit intangibles and the value of customer relationships associated with certain types of consumer loans, particularly the credit card portfolio, and other intangible assets. Accordingly, the aggregate fair value
amount presented do not purport to represent, and should not be considered representative of, the underlying market or franchise value of the Company. In addition, because of differences in methodologies and assumptions used to estimate fair values,
the Company’s fair values should not be compared to those of other financial institutions.

The following describes the methods and assumptions used by the Company in estimating the fair values of financial instruments.

Cash and cash equivalents

The carrying amounts reported in the balance sheet approximate fair values because maturities are less than three months.

Trading assets and liabilities

Trading account assets and liabilities are carried at fair value in the balance sheet. Values for trading securities are generally based on quoted, or other independent, market prices. Values for interest rate and foreign
exchange products are based on quoted, or other independent, market prices, or are estimated using pricing models or discounted cash flows.

Securities

Fair values are based primarily on quoted, or other independent, market prices. For certain debt and equity investments that do not trade on established exchanges, and for which markets do not exist, estimates of fair value
are based upon management’s review of the investee’s financial results, condition and prospects.

F-55

ICICI Bank Limited and Subsidiaries
Notes to the consolidated financial statements (Continued)
Loans

The fair values of certain commercial and consumer loans are estimated by discounting the contractual cash flows using interest rates currently being offered for loans with similar terms to borrowers of similar credit
quality. The carrying value of certain other loans approximates fair value due to the short-term and/or repricing characteristics of these loans. For impaired loans, the impairment is considered when arriving at the fair value.

Deposits

The carrying amount of deposits with no stated maturity is considered to be equal to their fair value. Fair value of fixed-rate time deposits is estimated by discounting contractual cash flows using interest rates currently
offered on the deposit products. Fair value for variable-rate time deposits approximates their carrying value. Fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the deposit liabilities
compared to the cost of alternative forms of funding (core deposit intangibles).

Long-term debt, short-term borrowings and redeemable preferred stock

The fair value of the Company’s debt, including short-term borrowings, is estimated based on quoted market prices for the issues for which there is a market, or by discounting cash flows based on current rate available
to the Company for similar types of borrowing arrangements.

A listing of the fair values by category of financial assets and financial liabilities is set out below.

As of March 31, 2004
As of March 31, 2005

Carrying

value
Estimated

fair value
Carrying

value
Estimated

fair value

Financial assets

(in millions)

Trading account assets
Rs.

75,155

Rs.

75,155

Rs.

75,538

Rs.

75,538

Securities (Note 1)

310,368

380,959

Loans (Note 2)

728,520

740,786

999,858

1,005,215

Other financial assets (Note 3)

164,127

229,755

Total
Rs.

1,278,170

Rs.

1,290,436

Rs.

1,686,110

Rs.

1,691,467

Financial liabilities

Interest-bearing deposits
Rs.

611,178

Rs.

612,225

Rs.

889,626

Rs.

876,460

Non-interest-bearing deposits

73,777

126,908

Trading account liabilities

26,079

24,258

Short-term borrowings

57,364

91,951

Long-term debt

373,449

397,649

367,499

381,165

Redeemable preferred stock

944

1,056

1,044

1,277

Other financial liabilities (Note 4)

65,142

74,116

Total

Rs.

1,207,933

Rs.

1,233,292

Rs.

1,575,402

Rs.

1,576,135

Includes non-readily marketable equity securities of Rs. 7,209 million (2004: Rs. 8,621 million) for which there are no readily determinable fair values.

The carrying value of loans is net of the allowance for loan losses, security deposits and unearned income.

Includes cash and cash equivalents and customers acceptance liability for which the carrying value is a reasonable estimate of fair value.

Represents acceptances outstanding, for which the carrying value is a reasonable estimate of fair value.

F-56

ICICI Bank Limited and Subsidiaries

Notes to the consolidated financial statements (Continued)

32. Regulatory matters

Subsequent to the reverse acquisition of the acquiree, the Company is a banking company within the meaning of the Indian Banking Regulation Act, 1949, registered with and subject to examination by the Reserve Bank of India.

Statutory liquidity requirements

In accordance with the Banking Regulation Act, 1949, the Company is required to maintain a specified percentage of its net demand and time liabilities by way of liquid unencumbered assets like cash, gold and approved
securities. The amount of securities required to be maintained at March 31, 2005 was Rs. 325,140 million (2004: Rs. 303,432 million).

Capital adequacy requirements

The Company is subject to the capital adequacy requirements set by the Reserve Bank of India, which stipulate a minimum ratio of capital to risk adjusted assets and off-balance sheet items of 9% to be maintained. The
capital adequacy ratio of the Company calculated in accordance with the Reserve Bank of India guidelines at March 31, 2005, was 11.78% .

For and on behalf of the Board

K.V. KAMATH

Managing Director &

Chief Executive Officer

KALPANA MORPARIA

Deputy Managing Director

JYOTIN MEHTA
N. S. KANNAN
G.VENKATAKRISHNAN

General Manager &

Company Secretary
Chief Financial Officer

& Treasurer
General Manager

Accounting &Taxation Group

F-57

EXHIBIT INDEX

Exhibit No.
Description of Document

1.1

ICICI Bank Memorandum of Association, as amended (incorporated by reference to ICICI Bank’s Annual Report on Form 20-F for the year ended March 31, 2004 filed on September 29, 2004).

1.2

ICICI Bank Articles of Association, as amended.

2.1

Deposit Agreement among ICICI Bank, Deutsche Bank and the holders from time to time of American Depositary Receipts issued thereunder (including as an exhibit, the form of American Depositary Receipt) (incorporated herein
by reference to ICICI Bank’s Registration Statement on Form F-1 (File No. 333-30132)).

2.2

Letter Agreements dated February 19, 2002 and April 1, 2002 (incorporated herein by reference to ICICI Bank’s Annual Report on Form 20-F for the year ended March 31, 2002 filed on September 30, 2002) and Letter
Agreement dated March 8, 2005 (incorporated by reference to ICICI Bank’s Registration Statement on Form F-3 (File No. 333-121664) amending and supplementing the Deposit Agreement.

2.3

ICICI Bank’s Specimen Certificate for Equity Shares (incorporated herein by reference to ICICI Bank’s Registration Statement on Form F- 1 (File No. 333-30132)).

4.1

ICICI Bank’s Employee Stock Option Plan, as amended (incorporated by reference to ICICI Bank’s Annual Report on Form 20-F for the year ended March 31, 2004 filed on September 29, 2004).

4.2

3i Infotech (formerly ICICI Infotech) Employee Stock Option Plan (incorporated herein by reference to Exhibit 4.2 to ICICI Bank’s Annual Report on Form 20-F for the year ended March 31, 2002 filed on September 30,
2002).

8.1

List of Subsidiaries (included under “Business – Subsidiaries and Affiliates” herein).

11.1

Code of Business Conduct and Ethics (incorporated by reference to ICICI Bank’s Annual Report on Form 20-F for the year ended March 31, 2004 filed on September 29, 2004).

12.1

Certification of the principal executive officer of the Company required by Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.

12.2

Certification of the principal financial officer of the Company required by Rule 13a-14(a) of the Securities and Exchange Act of 1934, as amended.

188

Certification required by Rule 13a-14(b) of the Securities and
Exchange Act of 1934, as amended and Section 1350 of Chapter 63 of
Title 18 of the United States Code.

189

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

For ICICI BANK LIMITED

By:

/s/ Jyotin Mehta

Name:

Mr. Jyotin Mehta

Title:

General Manager and Company Secretary.

Place:

Mumbai

Date:

September 30, 2005

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	6th grade Good

	Year ended March 31,

		2003			2004			2005

	(in millions)

Allowance for loan losses at the beginning of the year	Rs.	36,647		Rs.	54,219		Rs.	66,767
Effect of reverse acquisition on allowance for loan losses		1,297			-			-
Provisions for loan losses, net of releases of provisions as a result of
cash collections		19,649			20,055			14,677

	Rs.	57,593		Rs.	74,274		Rs.	81,444
Loans charged-off		(3,374	)		(7,507	)		(5,544	)

Allowance for loan losses at the end of the year	Rs.	54,219		Rs.	66,767		Rs.	75,900

	As of March 31,

		2004			2005

	(in millions)

Goodwill	Rs.	5,403		Rs.	7,407

Customer-related intangibles	Rs.	5,701		Rs.	5,991
Accumulated amortization		(1,245	)		(1,835	)

Customer related intangibles, net	Rs.	4,456		Rs.	4,156

Other intangibles	Rs.	76		Rs.	76
Accumulated amortization		(19	)		(33	)

Other intangibles, net	Rs.	57		Rs.	43

Goodwill and intangible assets, net	Rs.	9,916		Rs.	11,606

	As of March 31,

		2004		2005

		( in millions)
*Interest bearing*
Savings deposits	Rs.	86,403	Rs.	117,261
Time deposits		524,775		772,365

Total interest-bearing deposits	Rs.	611,178	Rs.	889,626

*Non-interest bearing*
Demand deposits	Rs.	73,777	Rs.	126,908

Total	Rs.	684,955	Rs.	1,016,534

ICICI Bank Limited (IBN) 20-F2005 FY Annual report (foreign)

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