Quantitative and Qualitative Disclosures About Market Risk

Market risk is the exposure to 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 asset prices. The prime source of market risk for the merged entity is the interest rate risk it is exposed to as a financial intermediary, which arises on account of its asset liability management activities. The other elements

of market risk to which it has exposures are liquidity risk, price risk on its trading positions, equity risk on its investments in equity securities and exchange risk on account of foreign currency exposures.

Market Risk Management Procedures

The board of directors of the merged entity, reviews and approves the policies for the management of market risks. The board has delegated the responsibility for market risk management to the Risk Committee and the Asset Liability Management Committee. The Joint Managing Director chairs the Asset Liability Management Committee and all four executive directors are members of the Committee. The Committee generally meets on a monthly basis and reviews the merged entity's interest rate and liquidity gap position, 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 business strategy, as deemed fit, in light of the current and expected business environment. The committee reports to the Risk Committee of the Board of Directors. A majority of the members of the Risk Committee are non-executive directors and the Committee is chaired by a non-executive director.

The Asset Liability Support Group which reports to the Chief Financial Officer, is responsible for measuring and monitoring liquidity and interest rate risk on the merged entity's asset-liability positions. An independent Market Risk Management Group, which is part of the Risk, Compliance and Audit Group, exercises control over the process of market risk management in the merged entity, and recommends changes in processes and methodologies for quantifying and assessing market risk, that it feels are necessary. All new products and market risk policies are submitted for consideration to this group and only thereafter presented to the Asset-Liability Management Committee for approval. The Asset-Liability Management Committee also sets market risk limits for the trading activities of the merged entity.

Interest Rate Risk

ICICI Bank

Since ICICI Bank's balance sheet consisted predominantly of rupee assets and liabilities, movements in domestic interest rates constituted the main source of interest rate risk. Its portfolio of traded debt securities and its loan portfolio were negatively impacted by an increase in interest rates. Exposure to fluctuations in interest rates was 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 prepared interest rate risk reports on a weekly basis. The same were reported to the Reserve Bank of India on a quarterly basis up to September 2001 and on a monthly basis thereafter.

ICICI Bank's core business was deposit taking and lending, in both rupees and foreign currencies, as permitted by the Reserve Bank of India. As the rupee market differs significantly from the foreign markets, the gap positions in these markets are different.

In the Indian market, ICICI Bank's liabilities were mostly at fixed rates of interest for fixed periods. However, it had a mix of floating and fixed interest rate assets. ICICI Bank had term-based prime lending rates. ICICI Bank quoted interest rates for its short-term working capital loan products as a mark-up over the relevant prime lending rate, effectively making these floating rate loans. ICICI Bank's corporate loan portfolio consisted principally of working capital loans, which were on a floating rate basis.

ICICI Bank's foreign currency liabilities, which were primarily deposits from non-resident Indians, were at fixed rates. A large portion of its foreign currency loans were on a floating rate basis. On account of this re-pricing mismatch, ICICI Bank had entered into Interest Rate Swaps (ICICI Bank paid a floating rate and received a fixed rate). Foreign currency liabilities, net of foreign currency loans, enabled ICICI Bank to raise rupee liquidity quickly by way of currency swaps, which helped it to address liquidity risk, if any.

The following tables set forth for both ICICI Bank's loan portfolio and trading portfolio, at the date indicated, its asset-liability gap position.

                                                              At March 31, 2002(1)-(7)
                      ---------------------------------------------------------------------------------------------------------
                                                                                          Greater
                                                                                         than one
                                                                                         year and
                                                                         Total within   up to five   Greater than
                      0-28 days   29-90 days  91-180 days  6-12 months     one year        years      five years       Total
                      ----------  ----------  -----------  -----------   ------------    ---------   -------------  -----------
                                                                    (in millions)
Loans, net........    Rs.  6,679  Rs. 37,925  Rs.   2,354  Rs.   7,901    Rs.  54,859    Rs. 15,453    Rs.  2,162   Rs.  72,474
Securities........         3,507      17,525       11,479       79,882        112,393        41,216        26,443       180,052
Fixed assets......             -           -            -            -              -             -         4,831         4,831
Trading assets....           812       2,245       10,931        7,468         21,456           338         4,281        26,075
Cash and cash
  equivalents.....        58,396       1,175        8,164            -         67,735           212        20,018        87,965
Other assets(6)...         2,229       3,480        3,772       12,608         22,089         1,041        10,278        33,408
                      ----------  ----------  -----------  -----------    -----------    ----------    ----------   -----------
Total assets......    Rs. 71,623  Rs. 62,350  Rs.  36,700  Rs. 107,859    Rs. 278,532    Rs. 58,260    Rs. 68,013   Rs. 404,805
                      ==========  ==========  ===========  ===========    ===========    ==========    ==========   ===========
Stockholders'
  equity..........    Rs.      -  Rs.      -  Rs.       -  Rs.       -    Rs.       -    Rs.      -    Rs. 18,150   Rs.  18,150

Debt(6)...........             -          38          452          882          1,372         2,101         2,267         5,740
Deposits..........        44,166      58,552       60,166       95,689        258,573        29,298        37,350       325,221
Other
  liabilities(6)..        23,144           4            -       12,608         35,756             -        19,938        55,694
                      ----------  ----------  -----------  -----------    -----------    ----------    ----------   -----------
Total liabilities.    Rs. 67,310  Rs. 58,594  Rs.  60,618  Rs. 109,179    Rs. 295,701    Rs. 31,399    Rs. 77,705   Rs. 404,805
                      ==========  ==========  ===========  ===========    ===========    ==========    ==========   ===========
Total gap.........    Rs.  4,313  Rs.  3,756  Rs. (23,918) Rs.  (1,320)   Rs. (17,169)   Rs. 26,861    Rs. (9,692)
                      ==========  ==========  ===========  ===========    ===========    ==========    ==========

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

                                          At March 31, 2002
                             ------------------------------------------
                               Fixed rate     Variable       Total
                                 loans       rate loans
                             ------------------------------------------
                                           (in millions)
Loans........................  Rs.14,441    Rs.  8,769    Rs.  23,211

ICICI

ICICI's balance sheet consisted predominantly of rupee assets and liabilities. Hence, movements in rupee interest rates were the main source of interest rate risk. ICICI also monitored interest rate risk associated with its trading activities and its asset and liability management activities, by different approaches, as described below. Based on ICICI's asset-liability position at year-end fiscal 2002 and fiscal 2001, ICICI's portfolio of traded debt securities and loan portfolio were negatively impacted by an increase in interest rates.

ICICI also measured exposure to interest rate risk primarily by the use of gap analysis, which provides a static view of the maturity and re-pricing characteristics of balance sheet positions. ICICI prepared interest rate sensitivity reports on a fortnightly basis for fiscal 2002. Interest rate risk was further monitored by the interest rate risk limits approved by the Resources, Treasury and Asset-Liability Management Committee.

ICICI's business activities involved lending and borrowing in rupees as well as foreign currencies. These activities exposed ICICI to interest rate risk. As the rupee market is significantly different from the international currency markets, gap positions in these markets differ significantly.

In the rupee market, most of ICICI's borrowing and lending took place at fixed rates of interest. ICICI usually borrowed 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, ICICI's loans generally were repaid more gradually, with principal repayments being made over the life of the loan. ICICI had well-established systems to monitor and minimize asset and liability mismatches.

In contrast to ICICI's rupee loans, a large proportion of ICICI's foreign currency loans were floating rate loans. These loans were generally funded with floating rate foreign currency funds. In addition, ICICI's fixed rate foreign currency loans were generally funded with fixed rate foreign currency funds. ICICI generally converted all its foreign currency borrowings into floating rate dollar liabilities through the use of interest rate and currency swaps with leading international banks. As a consequence of all these steps, the foreign currency gaps were generally significantly lower than rupee gaps, representing a considerably lower exposure to fluctuations in foreign currency interest rates.

For fiscal 2002, ICICI continued to follow a three-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 and a long-term prime rate for loans with maturities greater than three years. Interest rate risk on undisbursed commitments was sought to be eliminated by fixing interest rates on rupee loans at the time of loan disbursement.

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

                                                                    At March 31, 2002 (1)-(6)
                                               ---------------------------------------------------------------------
                                                 Less than or     Greater than     Greater than
                                                 equal to one   one year and up      five years         Total
                                                     year        to five years
                                               ---------------------------------------------------------------------
                                                                          (in millions)
Loans, net...................................     Rs.   140,137     Rs.  214,803     Rs.   168,661    Rs.   523,601
Securities...................................             6,807           21,845            42,963           71,615
Fixed assets.................................                 -                -            12,949           12,949
Other assets(6)..............................            81,572            2,905            53,188          137,665
                                               ---------------------------------------------------------------------
Total assets.................................           228,516          239,553           277,761          745,830
Stockholders' equity.........................                 -                -            71,161           71,161
Debt(6)......................................           202,926          229,234            87,415          519,575
Other liabilities(6).........................            92,681            5,787            56,626          155,094
                                               ---------------------------------------------------------------------
Total liabilities............................           295,607          235,021           215,202          745,830
Total gap before risk management positions...          (67,091)            4,532            62,559                -
Risk management positions....................          (22,697)           13,422             9,275                -
                                               ---------------------------------------------------------------------
Total gap after risk management positions....     Rs.  (89,788)    Rs.    17,954     Rs.    71,834    Rs.         -
                                               =====================================================================

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

                                                At March 31, 2002
                                   ------------------------------------------
                                     Fixed rate     Variable       Total
                                       Loans       rate loans
                                   ------------------------------------------
                                                 (in millions)
Loans..............................  Rs. 306,311    Rs. 92,349   Rs. 398,661

         Merged entity

The merged entity's core business is deposit taking and lending, in both rupees and foreign currencies, as permitted by the Reserve Bank of India. In the Indian market, the merged entity's liabilities are mostly at fixed rates of interest for fixed periods. However, it has a mix of floating and fixed interest rate assets. The merged entity follows a three-tier prime rate structure namely, a short-term prime rate for one year term loans or loans that re-price at the end of one year, a medium-term prime rate for one to three year loans and a long-term prime rate for loans with maturities greater than three years. In addition, it follows a specific short-term prime rate for short-term working capital products. Immediately after the merger, the loan portfolio consists of project lending which is largely on a fixed rate basis, working capital loans which are largely on a floating rate basis and retail loans which include fixed and floating rate loans. The term loans portfolio has principal amortizing over the life of the loan.

The merged entity's foreign currency liabilities consist of commercial borrowings, multi-lateral/bilateral lines of credit and deposits from non-resident Indians. The deposits bear a fixed rate of interest. A large portion of the foreign currency loan portfolio is floating rate. These are generally funded with floating rate foreign currency funds. The merged entity generally converts a substantial portion of its foreign currency borrowings into floating rate dollar liabilities through the use of cross-currency interest rate swaps. Foreign currency liabilities, net of foreign currency loans, are a good source of rupee liquidity, by way of currency swaps.

The merged entity actively uses interest rate derivatives to manage its asset and liability positions. The merged entity and its subsidiary, ICICI Securities, are both active participants in the interest rate swap market. However, since these markets are currently able to support only very small-sized transactions and limited maturities, the merged entity is constrained to follow a strategy of cash flow matching on a portfolio basis in order to contain asset-liability mismatches and manage the duration of its government securities portfolio. Cash flow matching is done as far as feasible, through the management of the maturity structure of incremental assets and liabilities. However, even using this route, given the highly illiquid nature of the domestic debt market, it is not always possible to achieve a perfect hedge. Therefore, the merged entity is left with residual risk which it seeks to monitor through the interest rate gap and sensitivity analysis.

                                                                          At March 31, 2002
                                                    -------------------------------------------------------------
                                                                       Change in interest rates
                                                                          (in basis points)
                                                    -------------------------------------------------------------
                                                         (100)            (50)             50             100
                                                    --------------   --------------   ------------   ------------
                                                                  (in millions, except percentages)
Rupee portfolio................................     Rs.        232   Rs.        116   Rs.     (116)  Rs.     (232)
Foreign currency portfolio.....................                (30)             (15)            15             30
                                                    --------------   --------------   ------------   ------------
Total..........................................     Rs.        202   Rs.        101   Rs.     (101)  Rs.     (202)
                                                    ==============   ==============   ============   ============
Profit/(loss) as a % of net income.............                9.9%             5.0%          (5.0%)         (9.9%)

Based on ICICI Bank's asset and liability position at year-end fiscal 2002, the sensitivity model shows that net interest revenue from the loan portfolio for fiscal 2003 would fall by Rs. 202 million (US$ 4 million) if interest rates increased by 100 basis points during fiscal 2003. Conversely, the sensitivity model shows that if interest rates decreased by 100 basis points during fiscal 2003, net interest revenue for fiscal 2003 would rise by Rs. 202 million (US$ 4 million). The amount of Rs. 202 million constituted 9.9% of ICICI Bank's net income for fiscal 2002.

                                                                          At March 31, 2002
                                                    -------------------------------------------------------------
                                                                       Change in interest rates
                                                                          (in basis points)
                                                    -------------------------------------------------------------
                                                         (100)            (50)             50             100
                                                    --------------   --------------   ------------   ------------
                                                                  (in millions, except percentages)
Rupee portfolio................................     Rs.        298   Rs.        149   Rs.     (149)  Rs.     (298)
Foreign currency portfolio.....................                 67               34            (34)           (67)
                                                    --------------   --------------   ------------   ------------
Total..........................................     Rs.        365   Rs.        183   Rs.     (183)  Rs.     (365)
                                                    ==============   ==============   ============   ============
Profit/(loss) as a % of net income.............               26.8%            13.4%        (13.4%)        (26.8%)

Based on ICICI's asset and liability position at year-end fiscal 2002, the sensitivity model shows that net interest revenue from the loan portfolio for fiscal 2003 would fall by Rs. 365 million (US$ 7 million) if interest rates increased by 100 basis points during fiscal 2003. Conversely, the sensitivity model shows that if interest rates decreased by 100 basis points during fiscal 2003, net interest revenue for fiscal 2003 would rise by Rs. 365 million (US$ 7 million). The amount of Rs. 365 million constituted 26.8% of ICICI's net income for fiscal 2002. Though the overall interest rate risk number on the overall portfolio is not very different from fiscal 2001, there was an increase in foreign currency sensitivity. This is largely on account of the strategy of swapping foreign currency to raise cheaper rupee resources. ICICI maintained a liability-sensitive profile based on its outlook of a soft interest rate regime.

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 models above for ICICI Bank and ICICI assume that during the course of the year no other changes are made in the respective portfolios. Actual changes in net interest revenue will vary from the models above for ICICI and ICICI Bank.

It must be noted that the interest rate sensitivities shown above for ICICI Bank and ICICI are for exposures in different markets where interest rate movements may not be perfectly correlated. Thus the individual sensitivity figures need to be viewed in isolation and not as a net figure.

Price Risk (Trading Portfolio)

ICICI Bank

ICICI Bank undertook trading activities primarily to optimize the income from its regulatory fixed income portfolio and secondarily to enhance its earnings through profitable trading for its own account. A substantial proportion of ICICI Bank's trading portfolio (79.6%) consisted of investments in government of India securities at year-end fiscal 2002. ICICI Bank was required by law to invest 25.0% of its demand and time liabilities in specified securities, including government of India securities. ICICI Bank used holding period limits and stop-loss limits to manage risks for debt security positions in the trading book.

The following tables sets forth, using ICICI Bank's fixed income portfolio at year-end fiscal 2002 as the base, one possible prediction of the impact of changes in interest rates on the value of ICICI Bank's rupee fixed income trading portfolio for fiscal 2003, assuming a parallel shift in yield curve.

                                                                      At March 31, 2002
                                        ------------------------------------------------------------------------------
                                                                   Change in interest rates
                                                                      (in basis points)
                                        ------------------------------------------------------------------------------
                                          Portfolio
                                             Size             (100)          (50)            50                100
                                        --------------    -----------   -------------  --------------     ------------
                                                               (in millions except percentages)
Government of India securities(1).....  Rs.     20,765    Rs.     102   Rs.        51  Rs.        (50)    Rs.     (100)
Corporate bonds.......................  Rs.      1,265    Rs.      34   Rs.        17  Rs.        (16)    Rs.      (33)
                                        --------------    -----------   -------------  --------------     ------------
Total.................................  Rs.     22,030    Rs.     136   Rs.        68  Rs.        (66)    Rs.     (133)
                                        ==============    ===========   =============  ==============     ============
Profit/(loss) as a % of net income                                6.7%            3.3%           (3.3%)           (6.5%)
                                        ==============    ===========   =============  ==============     ============

(1) For the purpose of analysis, certain quasi-government corporate securities are included as government of India securities.

At year-end fiscal 2002, the total value of ICICI Bank's rupee fixed income portfolio was Rs. 22.0 billion (US$ 451 million). Based on ICICI Bank's fixed income portfolio at year-end fiscal 2002, the sensitivity model shows that the value of the trading portfolio would fall by Rs. 133 million (US$ 3 million) or 6.5% of ICICI Bank's net income for fiscal 2002, if interest rates increased by 100 basis points during fiscal 2003. Conversely, if interest rates fell by 100 basis points, under the model, the value of this portfolio, would rise by Rs. 136 million (US$ 3 million) or 6.7% of ICICI Bank's net income for fiscal 2002. The sensitivity of the value of ICICI Bank's trading portfolio to changes in interest rates was largely due to the government of India securities that it was required to hold under the Reserve Bank of India's statutory liquidity ratio requirement.

ICICI

ICICI undertook trading activities primarily to enhance earnings through profitable trading for its own account. ICICI Securities, formerly the wholly-owned investment banking subsidiary of ICICI and now the wholly-owned investment banking subsidiary of the merged entity, 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 2002 as the base, one possible prediction of the impact of changes in interest rates on the value of ICICI's rupee fixed income trading portfolio for fiscal 2003, assuming a parallel shift in yield curve.

                                                                    At March 31, 2002
                                                 ---------------------------------------------------------
                                                                 Change in interest rates
                                                                    (in basis points)
                                                 ---------------------------------------------------------
                                                 Portfolio
                                                    Size       (100)       (50)        50          100
                                                 ---------------------------------------------------------
                                                                      (in millions)
Government of India securities(1).........       Rs. 15,602    Rs. 788     Rs. 401  Rs.   (399)  Rs.  (781)
Corporate debt securities.................            4,627        153          77         (77)       (152)
                                                 ---------------------------------------------------------
Total.....................................       Rs. 20,229    Rs. 941    Rs.  478  Rs.   (476)  Rs. (933)
                                                 ---------------------------------------------------------
Profit/(loss) as a % of net income........                        69.2%       35.1%      (35.0%)    (68.6%)
                                                               ===========================================

At year-end fiscal 2002, the total value of ICICI's rupee fixed income portfolio was Rs. 20.2 billion (US$ 414 million). The sensitivity model shows that if interest rates increase by 100 basis points during fiscal 2003, the value of the trading portfolio, would fall by Rs. 933 million (US$ 19 million) or 68.6% of ICICI's net income for fiscal 2002. Conversely, if interest rates fell by 100 basis points during fiscal 2003, under the model, the value of this portfolio would rise by Rs. 941 million (US$ 19 million) or 69.2% of ICICI's net income for fiscal 2002. The sensitivity of the value of the trading portfolio to changes in interest rates was largely due to the government of India securities held by ICICI Securities in its capacity as a primary dealer.

As noted above, sensitivity analysis, is used for risk management purposes only and the models used above for ICICI Bank of ICICI assume 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 models above for ICICI Bank and ICICI.

Merged Entity

The total interest rate risk faced by the merged entity is a combination of non-trading risk and trading risk. A decrease in interest rates during fiscal 2003 will increase the value of the merged entity's trading portfolio. A decrease in interest rates during fiscal 2003 would increase the merged entity's non-trading income due to the increase in net interest revenue.

The merged entity revalues its trading portfolio on a daily basis and recognizes aggregate revaluation gains and losses in its 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 trading book 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 Market 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, risk monitoring tools such as a Value-at-Risk (VaR) models for measuring market risk in the merged entity's trading portfolio, are also used. This Group is also exploring the feasibility of using these models to design limits on exposures.

The Market Risk Management Group is in the process of implementing more advanced statistical tools to conduct sensitivity analysis, scenario simulations and stress testing to assess the impact of changes in market conditions on portfolio positions. The risk management processes for risk measurement and risk management conform to the Reserve Bank of India's guidelines.

Equity Risk

ICICI Bank

ICICI Bank's equity positions included both equity securities and units of mutual funds. ICICI Bank invested in equity securities only in book-entry form, which decreased the settlement and liquidity risk. ICICI Bank did not hold any equity securities at year-end fiscal 2001 and 2002. ICICI

Bank had investments of Rs. 293 million (US$ 6 million) in mutual funds at year-end fiscal 2002. Position limits, stop-loss limits and holding period limits are used to manage risks for equity positions in the trading book.

ICICI

ICICI assumed equity risk both as part of its investment book and its trading book. On the investment book, investments in equity shares and preference shares were essentially long-term in nature. Nearly all the equity investment securities were driven by its project financing activities. The decision to invest in equity shares during project financing activities was 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 was separate from the lending decision.

Trading account securities were recorded at market value. For the purpose of valuation of equity investment securities, an assessment was made whether a decline in the fair value, below the amortized cost of the investments, was other than temporary. If the decline in fair value below the amortized cost was other than temporary, the decline was provided for in the income statement. A temporary decline in value was excluded from the income statement and charged directly to the shareholders' equity. To assess whether a decline in fair value was temporary, the duration for which the decline had existed, industry and company specific conditions, and dividend record were considered. Non-readily marketable securities for which there is no readily determinable fair value were recorded at cost. Venture capital investments were carried at fair value. However, they were generally carried at cost during the first year, unless a significant event occurred that affected the long-term value of the investment. Substantially all venture capital investments were acquired during fiscal 2001.

At year-end fiscal 2002, the fair value of trading account equity securities was Rs. 742 million (US$ 15 million). The fair value of equity securities investment portfolio, including non-readily marketable securities of Rs. 8.26 billion (US$ 169 million), was Rs. 28.5 billion (US$ 584 million). It included investment of approximately Rs. 9.3 billion (US$ 190 million) in liquid mutual funds units at year-end fiscal 2002. At year-end fiscal 2001, the fair value of trading equity securities was Rs. 2.7 billion (US$ 55 million). The fair value of equity securities investment portfolio, including non-readily marketable securities of Rs. 7.1 billion (US$ 145 million), was Rs. 17.1 billion (US$ 350 million).

Exchange Rate Risk

The merged entity offers foreign currency hedge instruments like swaps and forwards to clients, which are primarily banks and highly rated corporate customers. The merged entity actively uses cross currency swaps and forwards to hedge against exchange risks arising out of these transactions. Trading activities in the foreign currency markets expose the merged entity to exchange rate risks. This risk is mitigated by setting counterparty limits, stipulating limits on the loss of the entire foreign exchange trading floor, and engaging in exception reporting.

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. In case of certain foreign currency borrowings that are on-lent in rupees, the government of India bears foreign exchange risk on these borrowings subject to certain agreements between the merged entity and the government of India. Foreign currency cash balances are generally maintained abroad in currencies matching with the underlying borrowings.

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 and fund all investment opportunities. See "Operating and Financial Review and Prospects for ICICI Bank - Financial Condition - Liquidity Risk" for a description of liquidity risk for ICICI Bank, ICICI and merged entity.

Operational Risk

The merged entity is 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. The merged entity attempts 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

The merged entity 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.

When taking a deposit from a new customer, the merged entity requires the new customer to complete a relationship form, which details the terms and conditions for providing various banking services. Photographs of customers are also obtained for the merged entity's records, and specimen signatures are scanned and stored in the system for online verification. The merged entity enters into a relationship with a customer only after the customer is properly introduced to the merged entity. When time deposits become due for repayment, the deposit is paid to the depositor. System generated reminders are sent to depositors before the due date for repayment. Where the depositor does not apply for repayment on the due date, the amount is transferred to an overdue deposits account for follow up.

The merged entity 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 delegated power to authorize larger withdrawals. The merged entity's operating system validates the check number and balance before permitting withdrawals. Cash transactions over Rs. 1 million (US$ 20,479) are subject to special scrutiny to avoid money laundering. The merged entity's banking software has multiple security features including user access rights and terminal-based security features to protect the integrity of applications and data.

The merged entity gives importance to computer security. A comprehensive computer security manual has been provided to all offices. There is a system room in each office where the server is located. Access to the server room is regulated.

Operational Controls and Procedures for Internet Banking

The opening of a bank account online by a new customer is a two-step process. First, the customer fills out an online application, giving his personal details. Based on this preliminary information, the customer is allotted a user ID and password. Second, the customer must send to the merged entity further documentation to prove the customer's identity, including a copy of the customer's passport, a photograph and specimen signature of the customer. After the customer completes these formalities satisfactorily, the merged entity gives him full access to his account online. For a description of the security features of the merged entity's technology related to Internet banking, see "-Technology".

Operational Controls and Procedures in Regional Processing Centers

To improve customer service at the merged entity's physical locations, the merged entity handles transaction processing centrally by taking away such operations from branches. The merged entity has centralized operations at regional processing centers in Mumbai, New Delhi, Chennai, Bangalore, Hyderabad, Pune, Ahmedabad, Kolkata and Coimbatore. 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, the merged entity has centralized transaction processing on a nationwide 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 post-dated cheques 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 broking services and recovery of service charges for accounts for holding shares in book-entry form.

Operational Controls and Procedures in Treasury

The merged entity has a high level of automation in trading operations. The merged entity's technology to monitor risk limits and exposures on a near real-time basis. The merged entity'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.

Domestic Treasury. The merged entity's front office consists of dealers in fixed income securities, equity securities and inter-bank money markets. The 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.

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

The merged entity's back office undertakes the settlement of funds and securities. The back office exercises controls for minimizing operational risks, including deal confirmations with counterparties, verifies authenticity of counterparty checks and securities, ensures receipt of contract notes from brokers, monitors receipt of interest and principal amounts on due dates, ensures transfer of title in the case of purchases of securities, reconciles actual security holdings with the holdings pursuant to the records, and reports any irregularity or shortcoming observed.

Foreign Exchange Treasury. The inter-bank foreign exchange operations are conducted through Reuters dealing systems. Brokered deals are concluded through voice systems. Deals done through Reuters systems are captured on a real time basis for processing. Deals carried out through voice systems are input in the system immediately by the dealers for processing. The entire process from deal origination to settlement and reconciliation takes place via straight through processing. The processing ensures adequate checks at critical stages. Trade strategies are discussed frequently and decisions are taken based on the 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, positions taken by dealers and adherence to various market risk limits set by the Risk, Compliance and Audit Group.

The merged entity's back office procedures were put in place to ensure speedy processing, confirmation, accounting, confirmation matching, deal settlements and cash balance monitoring. The

back office systems are designed to minimize settlement risk. The matching and checking of counterparty confirmation of deals is fully automated.

Audit

The Internal 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 Internal Audit group conceptualizes and implements improved systems of internal controls, to minimize operational risk. The audit plan for every fiscal year is approved by the Audit Committee of the merged entity's board of directors.

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. The merged entity has instituted systems to conduct concurrent audits, using reputed chartered accountancy firms.

Legal Risk

The uncertainty of the enforceability of the obligations of the merged entity's customers and counter-parties, including the foreclosure on collateral, creates legal risk. Changes in law and regulation could adversely affect the merged entity. Legal risk is higher in new areas of business where the law is often untested by the courts. The merged entity seeks to minimize legal risk by using stringent legal documentation, employing procedures designed to ensure that transactions are properly authorized and consulting internal and external legal advisors.

Derivative Instruments Risk

The merged entity engages in limited trading of derivative instruments on its own account and generally enters into interest rate and currency derivative transactions primarily for the purpose of hedging interest rate and foreign exchange mismatches. The merged entity provides limited 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. The merged entity's derivative transactions are subject to counter-party risk to the extent particular obligors are unable to make payment on contracts when due.

                                                                        At March 31,
                                    --------------------------------------------------------------------------------------
                                          1998           1999          2000        2001            2002          2002
                                    --------------   ------------  ----------- -------------  -------------  -------------
                                                                       (in millions)
Working capital...................    Rs.  9,256     Rs. 17,508    Rs.  31,576 Rs.   57,316     Rs. 37,340    US$    765
Term loans(1).....................         3,344          9,859         14,635       34,051         31,168           638
Retail loans......................           590          1,110          1,553        4,909          7,150           146
                                    --------------------------------------------------------------------------------------
Gross loans.......................        13,190         28,477         47,764       96,276         75,658     US$ 1,549
                                    ============== ============= ============= ============== ============= ==============
Unearned Income...................             -              -            (30)        (356)          (364)           (7)
                                    --------------------------------------------------------------------------------------
Gross loans net of unearned income    Rs. 13,190     Rs.  28,477   Rs.  47,734 Rs.   95,920     Rs. 75,294     US$ 1,542
                                    ======================================================================================
 Of which:
   Corporate debt instruments and
     preferred stock..............    Rs.  1,424     Rs.   6,762    Rs. 10,532 Rs.   23,624     Rs. 23,035     US$   472
                                    ======================================================================================

at year-end fiscal 2002 and Rs. 944 million (US$ 19 million) at year-end fiscal 2001, representing 1.08% and 0.98% of gross loans, respectively. In fiscal 1996, ICICI Bank offered lease financing to a limited number of customers due to certain tax advantages from these transactions. ICICI Bank discontinued all of its lease finance activities in fiscal 1998 once the Indian tax authorities disputed this tax treatment. For a discussion of this dispute, see "-- Legal and Regulatory Proceedings". ICICI Bank acquired a portfolio of hire purchase business, representing Rs. 8 million (US$ 163,834) at year-end fiscal 2001 from Bank of Madura. ICICI Bank has extended fund based loans as well as stand by letters of credit facilities to corporates outside India which are joint ventures and/or wholly-owned subsidiaries of Indian corporates. At year-end fiscal 2002, the balance outstanding in respect of these loans was Rs. 620 million (US$ 13 million) which represented approximately 0.8% of ICICI Bank's total gross loan portfolio.

Corporate debt instruments and preferred stock amounted to Rs. 23.0 billion (US$ 472 million) at year-end fiscal 2002, or 30.4 % of ICICI Bank's gross loans. Although trading in these corporate debt securities is not very active, the merged entity believes that as the secondary debt markets in India become more active, lenders will be able to more easily sell these corporate debt securities, thereby allowing for better management of mismatches in the maturity of assets and liabilities and providing additional liquidity. Almost all of ICICI Bank's loans at year-end fiscal 2002 were to Indian borrowers.

ICICI's gross loan portfolio, which included loans structured as debentures and preference shares, at year-end fiscal 2002 was Rs. 560.3 billion (US$ 11.5 billion), a decrease of 11.8% from Rs. 635.1 billion (US$ 13.0 billion), at year-end fiscal 2001. At year-end fiscal 2001, the gross loan portfolio increased 6.6% to Rs. 635.1 billion (US$ 13.0 billion) from Rs. 595.5 billion (US$ 12.2 billion) at year-end fiscal 2000. In the past few years, an increasing proportion of ICICI's long-term lending particularly in infrastructure financing was provided in the form of debentures since ICICI expected that in the future these debentures could be sold in secondary debt markets in India. This structure was intended to facilitate a transfer of assets and provide flexibility in managing the exposure and liquidity of the balance sheet. Approximately 87.1% of ICICI's gross loans were rupee loans at year-end fiscal 2002. All of ICICI's loans at year-end fiscal 2002 were to Indian borrowers, and ICICI had no loans outstanding to entities outside India.

Collateral -- Completion, Perfection and Enforcement

The merged entity's loan portfolio consists predominantly of working capital, corporate finance and project finance loans to corporate borrowers. Working capital loans are typically secured by a first lien on current assets, which normally consist of inventory and receivables. Additionally, in some cases, the merged entity may take further security of a first or second lien on fixed assets, a pledge of financial assets like marketable securities, corporate guarantees and personal guarantees. Corporate finance and project finance loans are typically secured by a first lien on fixed assets, which normally consist 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 Indian Companies Act. The merged entity may also take security of a pledge of financial assets like marketable securities, corporate guarantees and personal guarantees. This registration amounts to a constructive public notice to other business entities. In general, the merged entity's loans are over-collateralized. In India, there are no regulations stipulating any loan-to-collateral limits.

In India, foreclosure on collateral generally requires a written petition to an Indian court. 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 borrower makes an application for relief to a specialized quasi-judicial authority called the Board for Industrial and Financial Reconstruction, foreclosure and enforceability of collateral is stayed. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002, promulgated by the President of India in June 2002 and re-promulgated in August 2002 but yet to be approved by legislation passed by the Indian parliament, is expected to strengthen the ability of lenders to resolve non-performing assets by granting them greater rights as to

enforcement of security and recovery of dues. However, there can be no assurance that the legislation will be passed by the Indian parliament or that, if passed, it will have a favorable impact on the merged entity's efforts to resolve non-performing assets. See "Overview of the Indian Financial Sector - Recent Structural Reforms - Legislative Framework for Recovery of Debts due to Banks".

The merged entity recognizes that its ability to realize the full value of the collateral in respect of current assets is difficult, due to, among other things, delays on its 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 the merged entity is able to capture the cash flows of its customers for recovery of past due amounts. In addition, the merged entity has a right of set-off for amounts due to it on these facilities. Also, the merged entity monitors the cash flows of its working capital loan customers on a daily basis so that it can take any actions required before the loan becomes impaired. On a case-by-case basis, the merged entity may also stop or limit the borrower from drawing further credit from its facility.

Most of the merged entity's corporate borrowers having large working capital requirements borrow from more than one bank either under a consortium arrangement or under a multiple banking arrangement. Under a consortium arrangement, the financing banks formally decide on the credit proposal of the company and decide how the funding should be distributed among the consortium banks. A lead bank, usually the bank providing the largest share of the overall credit, is appointed under a consortium lending arrangement. The lead bank coordinates credit appraisals, execution of joint documents, regular review meetings and security inspections.

Under a consortium arrangement, typically the security is in the form of a first lien on current assets, which is shared on a proportionate basis among the participating banks. Theoretically, a member can exit from a consortium, with its share taken either by an existing member or by induction of a new member in the consortium. However, in the case of an impaired loan, this exit route is generally not available since the other members of the consortium are not likely to take up additional credit that is impaired. Further, a member is generally not allowed to take recovery action independent of the consortium in the case of an impaired loan. Hence, recovery from impaired companies that are under a consortium arrangement may be delayed.

Under a multiple banking arrangement, each bank stipulates its own terms and obtains identifiable collateral through individual security documents and the creation of requisite liens. Unlike a consortium arrangement lending, in a multiple bank or sole bank lending, the merged entity can independently pursue recovery of past due amounts either through full cash recovery, a negotiated settlement or a legal suit. At year-end fiscal 2002, loans with consortium arrangements accounted for 39.6% of ICICI Bank's gross impaired loans, loans with multiple bank arrangements accounted for 12.7% of ICICI Bank's gross impaired loans and sole bank lending accounted for 47.7% of ICICI Bank's gross impaired loans.

Loan Concentration

The merged entity follows a policy of portfolio diversification and evaluates its total financing exposure in a particular industry in light of its forecasts of growth and profitability for that industry. The merged entity's risk management department monitors all major sectors of the economy and specifically follows industries in which the merged entity has credit exposures. The merged entity responds 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. The merged entity, like ICICI Bank and ICICI, limits its loan portfolio to any particular industry (other than retail loans) to 15.0%.

Pursuant to the guidelines of the Reserve Bank of India, the merged entity'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. The merged

entity'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 the merged entity's capital funds. Pursuant to the Reserve Bank of India guidelines, an exposure is calculated as the sum of 100.0% of the committed funded amount or the outstanding funded amount, whichever is higher, and 50.0% of the committed non-funded amount or the outstanding non-funded amount, whichever is higher (100.0% of the committed non-funded amount or the outstanding non-funded amount, whichever is higher, with effect from fiscal 2004). The merged entity is in compliance with these limits, except in the case of two borrowers where it has breached the single exposure limit. This is mainly due to the write-down of reserves as part of the fair valuation exercise conducted at the time of the amalgamation under Indian GAAP. The merged entity was not in breach of the limit at the time of providing the assistance. Subsequent to the amalgamation, the merged entity has applied to the Reserve Bank of India for its approval for exceeding the exposure limit in respect of these two borrowers.

The following table sets forth, at the dates indicated, ICICI Bank's gross loans outstanding by the borrower's industry or economic activity and as a percentage of gross loans.

                                                                        At March 31,
                           -----------------------------------------------------------------------------------------------
                                  1998            1999              2000              2001                  2002
                           ---------------- ----------------  ---------------- ----------------- -------------------------
                                                          (in millions, except percentages)
Light manufacturing....... Rs. 1,300   9.9% Rs. 2,800   9.8%  Rs. 4,895  10.3% Rs. 6,782    7.0% Rs. 6,323 US$  129   8.4%
Chemicals, drugs and
Pharmaceuticals...........     1,092   8.3      2,420   8.5       5,772  12.0     11,032   11.4      4,840       99   6.4
Electricity...............       540   4.1      1,488   5.2       2,784   5.8      7,752    8.1      4,632       95   6.1
Other personal loans......       590   4.5      1,110   3.9       1,553   3.3      6,691    7.0      4,206       86   5.6
Agriculture...............       501   3.8        675   2.4       1,520   3.2      2,984    3.1      3,831       78   5.1
Automobiles including                                                                                3,529       72   4.7
trucks....................       600   4.5      1,006   3.5       1,680   3.5      2,111    2.2
Transport.................       360   2.7        159   0.6       1,686   3.6      4,363    4.5      2,909       60   3.8
Finance...................       780   5.9      1,949   6.9       6,113  12.8      9,375    9.7      2,753       56   3.6
Textiles..................     1,170   8.9      1,405   4.9       1,600   3.4      3,605    3.7      2,578       53   3.4
Other metals and metal                                                                               1,425       29   1.9
products..................       330   2.5      1,370   4.8       1,269   2.7      1,439    1.5
Construction..............       770   5.8        740   2.6         882   1.8      1,396    1.5      1,322       27   1.7
Computer software.........       230   1.7        460   1.6         823   1.7      1,368    1.4      1,296       27   1.7
Cement....................       170   1.3        540   1.9       1,124   2.3      2,394    2.5      1,232       25   1.6
Iron and steel............       460   3.5        620   2.2         703   1.4      1,118    1.2      1,103       23   1.5
Paper and paper products..       240   1.8        373   1.3         745   1.6      1,118    1.2      1,009       21   1.3
Other industries(1).......     4,057  30.8     11,362  39.9      14,615  30.6     32,748   34.0     32,670      669  43.2
                           -----------------------------------------------------------------------------------------------
Gross loans............... Rs.13,190 100.0% Rs.28,477 100.0%  Rs.47,764 100.0% Rs.96,276  100.0% Rs.75,658 US$1,549 100.0%
                           ===============================================================================================

At year-end fiscal 2002, no single industry accounted for more than 15.0% of ICICI Bank's gross loan portfolio.

In fiscal 1999, there was an increase in the proportion of ICICI Bank's assets in the chemicals, drugs and pharmaceuticals and other metals and metal products sectors, while there was a decrease in the proportion of assets in the construction, iron and steel, and textiles sectors. In fiscal 2000, there was an increase in the proportion of ICICI Bank's assets in the finance, chemicals, transport, agriculture and light manufacturing sectors while there was a decrease in the proportion of its assets in the construction, textiles, iron and steel, other metals and metal products sectors. In fiscal 2001, there was an increase in the proportion of ICICI Bank's assets in the cement, electricity and transport sectors while there was a decrease in the proportion of its assets in the automobiles including trucks, chemicals, drugs and pharmaceuticals, finance, other metal and metal products and light manufacturing sectors. In fiscal 2002, there was an increase in the proportion of ICICI Bank's assets in the automobiles including trucks, agriculture, other metals and metal products and iron and steel sectors while there was a decrease in the proportion of its assets in the finance, chemicals, drugs and pharmaceuticals and electricity sectors.

ICICI Bank's 20 largest borrowers at year-end fiscal 2002 totaled approximately Rs. 18.6 billion (US$ 381 million) and represented 24.6% of its total gross loan portfolio. The largest group of

companies under the same management control accounted for approximately 1.7% of ICICI Bank's portfolio at that date.

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

                                                                     At March 31,
                           ---------------------------------------------------------------------------------------------------------
                                   1998               1999                2000               2001                 2002
                           ---------------------------------------------------------------------------------------------------------
Retail Finance ........... Rs.       -     -%  Rs.    602   0.1  Rs.   6,679   1.1% Rs.  27,106   4.3% Rs.  72,789 US$  1,491  13.0%
Iron and steel ...........      34,469   8.6       48,908   9.7       59,246   9.9       70,547  11.1       71,272       1460  12.7
Power ....................      34,079   8.5       40,154   8.0       56,162   9.4       66,368  10.5       61,159      1,252  10.9
Services .................      28,047   7.0       40,500   8.0       62,997  10.6       74,425  11.7       47,676        976   8.5
Textiles .................      32,587   8.2       35,979   7.1       42,019   7.1       47,052   7.4       40,867        837   7.3
Crude petroleum and
  petroleum refining .....      22,158   5.5       44,492   8.8       51,338   8.6       54,822   8.6       32,099        657   5.7
Telecom ..................       8,235   2.2        9,867   2.0       15,903   2.7       20,244   3.2       25,547        523   4.6
Cement ...................      17,592   4.4       17,069   3.4       19,559   3.3       25,709   4.0       19,088        391   3.4
Electronics ..............       9,461   2.4       11,275   2.2       12,597   2.1       15,032   2.4       17,817        365   3.2
Basic chemicals ..........      15,589   3.9       18,864   3.7       22,058   3.7       15,825   2.5       14,115        289   2.5
Machinery ................      15,355   3.8       19,562   3.9       19,089   3.2       16,973   2.7       13,196        270   2.4
Transport equipment ......      17,692   4.4       18,226   3.6       23,020   3.9       19,613   3.1       13,086        268   2.3
Paper and paper products .      11,397   2.9       12,655   2.5       16,934   2.8       16,205   2.6       12,865        263   2.3
Plastics .................       8,185   2.1        9,022   1.8       10,988   1.8       11,213   1.8       10,086        207   1.8
Food products ............       7,793   1.9        6,293   1.2        7,736   1.3        8,755   1.4        9,264        190   1.7
Fertilizers and pesticide.      16,798   4.2       18,493   3.7       21,001   3.5       17,801   2.8        9,202        188   1.6
Transportation ...........      11,260   2.8       17,795   3.5       18,982   3.2       15,568   2.5        8,715        178   1.6
Man-made fibers ..........      11,261   2.8       11,832   2.3       11,505   1.9       11,061   1.7        8,670        178   1.5
Electrical equipment .....      10,707   2.7       12,738   2.5       18,526   3.1       14,068   2.2        8,357        171   1.5
Drugs ....................       5,677   1.4        6,616   1.3        6,936   1.2        9,950   1.6        7,766        159   1.4
Sugar ....................       7,788   2.0        7,872   1.6        9,464   1.6        9,718   1.5        7,645        157   1.4
Petrochemicals ...........       5,311   1.3        8,128   1.6        7,396   1.2       11,471   1.8        7,621        156   1.4
Metal products ...........       7,621   1.9        7,847   1.6        9,783   1.7        7,924   1.2        6,912        142   1.2
Non-ferrous metals .......       3,362   0.8        5,453   1.1        5,376   0.9        4,473   0.7        6,536        134   1.2
Mining ...................       2,566   0.6        7,918   1.6        8,330   1.4        6,503   1.0        4,970        102   0.9
Rubber and rubber
  products................       3,036   0.8        3,321   0.7        4,086   0.7        3,431   0.5        3,500         72   0.6
Other chemicals ..........         311   0.1          774   0.2          332   0.1          335   0.1          189          4   0.0
Other (1) ................      51,304  12.8       61,375  12.3       47,491   8.0       32,866   5.1       19,239        393   3.4
                           ---------------------------------------------------------------------------------------------------------
Gross loans .............. Rs. 399,641 100.0% Rs. 503,630 100.0% Rs. 595,533 100.0% Rs. 635,058 100.0% Rs. 560,248 US$ 11,473 100.0%
                                       =====              =====              =====              =====                         =====
Allowance for loan losses.     (22,457)           (28,524)           (34,085)           (33,035)           (36,647)      (750)
                           -----------        -----------        -----------        -----------        ----------------------
Net loans ................ Rs. 377,184        Rs. 475,106        Rs. 561,448        Rs. 602,023        Rs. 523,601 US$ 10,723
                           ===========        ===========        ===========        ===========        ======================

ICICI's gross loan portfolio at year-end fiscal 2002 decreased by 11.8% compared to year-end fiscal 2001. Consequently the proportion of loans to the iron and steel sector was higher at 12.7% at year-end fiscal 2002 compared to 11.1% at year-end fiscal 2001, although the gross loans to the iron and steel sector at year-end fiscal 2002 increased by only 1.0% from year-end fiscal 2001. The proportion of loans to the services sector and the crude petroleum and petroleum refining sector decreased in fiscal 2002 compared to fiscal 2001 due to the sale of loans in these sectors to banks and other financial intermediaries in fiscal 2002, as part of ICICI's strategy to improve the liquidity of its loan portfolio. The retail finance segment was the fastest growing sector and constituted 13.0% of gross loans at year-end fiscal 2002 compared to 1.1% at year-end fiscal 2000 and 4.3% at year-end fiscal 2001.

At year-end fiscal 2002, ICICI's 20 largest borrowers accounted for approximately 24.9% of its gross loan portfolio, with the largest borrower accounting for approximately 2.9% of its gross loan portfolio. The largest group of companies under the same management control accounted for approximately 4.8% of ICICI's gross loan portfolio.

Geographic Diversity

Except as described below, ICICI Bank's and ICICI's portfolios were geographically diversified throughout India, primarily reflecting the location of its corporate borrowers. The states of Maharashtra and Gujarat, the two most industrialized states in India, accounted for the largest proportion of ICICI's total gross loans outstanding, with Maharashtra accounting for about 22.4% and Gujarat accounting for about 13.5% at year-end fiscal 2002.

                                                                         At March 31
                                            ----------------------------------------------------------------------
                                               1998       1999        2000        2001              2002
                                            ----------------------------------------------------------------------
                                                                        (in millions)
Wholesale banking(1)
  Rupee..................................   Rs.256,991  Rs.335,306 Rs. 371,257  Rs.428,782 Rs.342,068   US$ 7,005
  Foreign currency.......................       92,054      88,298      88,581      82,530     68,488       1,403
Working capital finance
  Rupee..................................       10,203      22,203      72,317      42,592     39,943         818
  Foreign currency.......................          505         494       3,289       1,850      2,282          47
Leasing and related activities (2)
  Rupee..................................       30,303      49,942      33,787      38,258     22,879         468
  Foreign currency ......................          349       1,530       1,467       1,483      1,453          29
Other(3)
  Rupee .................................        9,236       5,862      24,835      39,563     83,135       1,703
  Foreign currency ......................           --          --          --          --         --          --
Gross loans
  Rupee  ................................      306,733     413,308     502,196     549,195    488,025       9,994
  Foreign currency ......................       92,908      90,322      93,337      85,863     72,223       1,479
                                            ----------------------------------------------------------------------
Total gross loans .......................      399,641     503,630     595,533     635,058    560,248      11,473
Allowance for loan losses................      (22,457)    (28,524)    (34,085)    (33,035)   (36,647)       (750)
                                            ----------------------------------------------------------------------
Net loans ...............................   Rs.377,184  Rs.475,106 Rs. 561,448  Rs. 602,023 Rs.523,601   US$10,723
                                            ======================================================================

The proportion of foreign currency loans to ICICI's total gross loans has decreased steadily from 23.2% at year-end fiscal 1998 to 12.9% at year-end fiscal 2002 due to a decrease in demand for these loans.

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".

Impact of Economic Environment on the Industrial Sector

The Indian economy has been impacted by negative trends in the global marketplace, particularly in the commodities markets, which impaired the operating environment of the industrial sector. The manufacturing sector has also been adversely impacted by several other factors, including increased competition arising from economic liberalization in India, a slowdown in industrial growth, a sharp decline in commodity prices which reduced profitability for certain of ICICI Bank's and ICICI's borrowers and the restructuring of certain Indian companies in sectors such as textiles, iron and steel and man-made fibers. Certain Indian corporations are gradually coming to terms with this new competitive reality through a process of restructuring and repositioning. This restructuring process, including rationalization of capital structures and production capacities, is taking place in several

industries such as iron and steel, man-made fibers and textiles. This has led to stress on the operating performance of Indian corporations and the impairment of some loan assets in the financial system, including some of ICICI Bank's and ICICI's assets. The processing of restructuring gained momentum during fiscal 2002, as companies in key commodity sectors continued to witness slowdown in demand and increased competitive pressures. The recessionary conditions in various economies including the United States had an adverse impact on several sectors during fiscal 2002.

Recognition of Impaired Loans

The merged entity identifies a loan as impaired when it is probable that the merged entity will be unable to collect the scheduled payments of principal and interest due under the contractual terms of the loan agreement. A loan is also considered to be impaired if interest or principal is overdue for more than 180 days. The Reserve Bank of India's revised asset classification rules effective from fiscal 2004 will require Indian banks to classify an asset as impaired when principal or interest has remained overdue for more than 90 days. Delays or shortfalls in loan payments are evaluated along with other factors to determine if a loan should be placed on non-accrual status. Generally, loans with delinquencies under 180 days are placed on non-accrual status only if specific conditions indicate that impairment is probable. 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, 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 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 the merged entity classified as non-accrual, the loan is returned to accrual status.

A loan is also considered impaired if its terms are modified in a troubled debt restructuring. The merged entity classifies a loan as a troubled debt restructuring where it has made concessionary modifications, that it 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 typically 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 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.

The value of impaired loans is measured at 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, the merged entity recognizes this impairment by creating a valuation allowance with a corresponding charge to the provision for loan losses.

ICICI Bank's Impaired Loans

At year-end fiscal 2002, ICICI Bank's gross impaired loans were Rs. 5.5 billion (US$ 112 million), an increase of 2.3% from Rs. 5.3 billion (US$ 109 million) at year-end fiscal 2001.

At year-end fiscal 2002, ICICI Bank's gross impaired loans as a percentage of gross loan assets was 7.2% (of which 1.0% represented restructured loans and 6.2% represented other impaired loans)

compared to 5.6% at year-end fiscal 2001. ICICI Bank made total valuation allowances for 50.9% of its gross impaired loans on which valuation allowances had been made. These allowances were based on the expected realization of cash flows from these assets. The merged entity cannot, however, assure you that the provisions will be adequate to cover any further increase in the amount of impaired loans or any further deterioration in its impaired loan portfolio. ICICI Bank had not made valuation allowances on 0.2% of gross impaired loans at year-end fiscal 2002 based on the fact that the discounted cash flows from these borrowers were sufficient to cover the entire exposure of these loans. Out of ICICI Bank's total impaired loans outstanding, the top 10 represented 32.4% of ICICI Bank's gross impaired loans and 2.4% of its gross loan portfolio.

ICICI Bank's impaired loans, net of allowances for loan losses, increased by Rs. 194 million (US$ 4 million) in fiscal 2002 to Rs. 2.7 billion (US$ 55 million) at year-end fiscal 2002 compared to Rs. 2.5 billion (US$ 51 million) at year-end fiscal 2001. Net impaired loans were 3.7% of total net loan assets at year-end fiscal 2002 compared to 2.7% at year-end fiscal 2001.

The following tables set forth, at the dates indicated, certain details of ICICI Bank's gross impaired portfolio, along with an analysis of impaired loans by product.

                                                                            At March 31,
                                      ----------------------------------------------------------------------------------------
                                                                                                                 % of total
                                                                                                                  at March
                                         1998        1999        2000         2001         2002        2002       31, 2002
                                      ----------------------------------------------------------------------------------------
                                                                 (in millions, except percentages)
Impaired working capital loans...     Rs.  558    Rs. 1,158    Rs. 1,127   Rs. 3,700   Rs.   3,665   US$     75       67.2%
Impaired term loans..............           46          236           61       1,242         1,041           22       19.1
Impaired lease loans.............            -          144          185         227           310            6        5.7
Impaired corporate debt
  Instruments(1).................            -           75           45         121            86            2        1.6
Impaired credit card receivable..            -            -            -          43           355            7        6.4
                                      ----------------------------------------------------------------------------------------
Gross impaired loans.............     Rs.  604    Rs. 1,613    Rs. 1,418   Rs. 5,333   Rs.   5,457   US$    112      100.0%
                                      ========================================================================================
Gross impaired loans without
  Valuation allowances(2)             Rs.   26    Rs.   466    Rs.   163   Rs.    14   Rs.       9   US$      -
Gross impaired loans with valuation
  Allowances(3)..................          578        1,147        1,255       5,319         5,448          112
Total valuation allowances(4)....          425          880          748       2,844         2,774           57
Impaired loans net of valuation
  Allowances.....................          179          733          670       2,489         2,683           55
Gross loan assets (net of unearned
  income)..........................     13,190       28,477       47,734      95,920        75,294        1,542
Net loan assets (net of unearned
  income)                               12,765       27,597       46,896      93,030        72,474        1,484

                                                                                     At March 31,
                                                                       ---------------------------------------------
                                                                       1998      1999      2000       2001      2002
                                                                       ----      ----      ----       ----      ----
                                                                           (in billions, except percentages)
Gross impaired loans as a percentage of gross loan assets......         4.6%     5.7%       3.0%      5.6%      7.2%
Gross impaired loans with valuation allowances as a percentage
   of gross loan assets........................................         4.4      4.0        2.6       5.5       7.2
Impaired loans net of valuation allowances as a percentage of
   net loan assets.............................................         1.4      2.7        1.4       2.7       3.7
Total valuation allowances as a percentage of impaired loans with
   valuation allowances........................................        73.5     76.7       59.6      53.5      50.9

Impaired working capital loans were 67.2% of total impaired loans at year-end fiscal 2002. The proportion of term loans in the gross impaired loans increased from 7.6% at year-end fiscal 1998 to 19.1% at year-end 2002. Impaired credit card receivables at year-end fiscal 2002 were 6.5% of the

gross impaired loans. Although lease finance represented 1.1% of ICICI Bank's gross loans at year-end fiscal 2002, it represented 5.7% of its gross impaired loans at year-end fiscal 2002. In fiscal 1996, ICICI Bank offered lease financing to a limited number of small and medium-sized companies because it gained certain tax advantages from these transactions. ICICI Bank discontinued these activities in 1998 after the Indian tax authorities disputed this tax treatment. For a discussion of this dispute, see "-- Legal and Regulatory Proceedings". The merged entity believes that ICICI Bank's gross impaired loans were greater for this type of exposure compared to others due to the small size of these borrowers and their concentration in industry sectors that have experienced a slowdown, such as the textiles sector.

Analysis of Impaired Loans by Directed Lending Sector

When lending under Indian directed lending requirements, the merged entity follows the same credit risk assessment and credit approval processes as in all its lending. In view of the possibility of higher incidence of asset impairment in directed lending relative to non-directed lending, the merged entity maintains the option of fulfilling its priority sector obligations by making deposits with Indian development banks since these yield a better risk adjusted return on capital, though the nominal returns are much lower than in making loans.

The following table sets forth, at the dates indicated, ICICI Bank's gross impaired loans classified into directed lending and non-directed lending.

                                                                 At March 31,
                    ---------------------------------------------------------------------------------------------------
                          1998               1999             2000               2001                    2002
                    ---------------   ---------------    ---------------    ---------------    ------------------------
                    Impaired           Impaired           Impaired           Impaired               Impaired
                      Loans     %       Loans     %        Loans     %         Loans    %              Loans          %
                    --------  -----   --------  -----    --------- -----    --------- -----    ------------------ -----
Directed
  Lending:
  Agriculture ....  Rs.   33    5.5%  Rs.   96    6.0%   Rs.    90   6.3%   Rs.   246   4.6%   Rs.   108   US$  2   2.0%
Small scale
  industries .....       170   28.1        209   13.0          154  10.9        1,530  28.7        1,547       32  28.3
Other ............        44    7.3        100    6.1          112   7.9          228   4.3           87        2   1.6
Total directed
  lending ........       247   40.9        405   25.1          356  25.1        2,004  37.6        1,742       36  31.9
Non-directed
  lending ........       357   59.1      1,208   74.9        1,062  74.9        3,329  62.4        3,715       76  68.1
                    --------  -----   --------  -----    --------- -----    --------- -----    ---------   ------ -----
Total ............  Rs.  604  100.0%  Rs.1,613  100.0%   Rs. 1,418 100.0%   Rs. 5,333 100.0%   Rs. 5,457   US$112 100.0%
                    ========  =====   ========  =====    ========= =====    ========= =====    =========   ====== =====
Allowance for
  loan losses ....  Rs. (425)         Rs. (880)          Rs.  (748)         Rs.(2,844)         Rs. (2,774) US$(57)
                    --------          --------           ---------          ---------          ---------   ------
Net impaired
  loans ..........  Rs.  179          Rs.  733           Rs.   670          Rs. 2,489          Rs.  2,683  US$ 55
                    ========          ========           =========          =========          ==========  ======

Directed lending contributed 31.9% to ICICI Bank's gross impaired loans at year-end fiscal 2002. Impaired loans in the directed lending sector as a percentage of gross loans were 2.3% at year-end fiscal 2002. Impaired loans in the other sectors as a percentage of gross loans were 4.9% at year-end fiscal 2002. At year-end fiscal 2002 and year-end fiscal 2001 impaired loans to the directed lending sector as a percentage of gross loans in the same sector was 8.7%.

                                                                   At March 31,
                                      ---------------------------------------------------------------------
                                               1998                   1999                    2000
                                      ----------------------  ---------------------  ----------------------
                                      Impaired                Impaired                  Impaired
                                        loans         %         loans          %          Loans        %
                                      ----------    ------    ---------      ------  -------------   ------
                                                        (in millions, except percentages)
Textiles.........................     Rs.     62     10.3%    Rs.  313        19.4%  Rs.   222        15.7%
Light manufacturing..............                                                          423        29.8
                                              94      15.6         400        24.8
Iron and steel...................             56       9.3         268        16.6         194        13.7
Chemicals,
  drugs and pharmaceuticals......             58       9.6          79         4.9          80         5.7
Auto including trucks ...........              -         -           -           -           -           -
Finance .........................              -         -          61         3.8          53         3.7
Paper and paper products ........              -         -           -           -           -           -
Agriculture......................             33       5.4          96         6.0          90         6.3
Construction.....................             24       4.0          24         1.5           -           -
Computer software................              -         -           -           -           1         0.1
Transport........................              -         -           -           -           -           -
Other personal loans.............              -         -           -           -           -           -
Other metals and metal products..              -         -           -           -           -           -
Electricity......................              -         -           -           -           -           -
Other industries(1)..............            277     45.9           372       23.0         355        25.0
                                      ----------    -----     ---------      -----   ---------       -----
Total............................     Rs.    604    100.0%    Rs. 1,613      100.0%  Rs. 1,418       100.0%
                                                    =====                    =====                   =====
Allowance for loan losses........     Rs.   (425)             Rs.  (880)                  (748)
                                      ----------              ---------              ---------
Net impaired loans...............     Rs.    179              Rs.   733                    670
                                      ==========              =========              =========

                                               At March 31, 2001                At March 31, 2002
                                            -----------------------   ------------------------------------
                                               Impaired
                                                loans           %          Impaired loans              %
                                            -------------    ------   --------------------------    ------
                                                           (in millions, except percentages)
Textiles................................    Rs.    679        12.7%   Rs.     792     US$     16     14.5%
Light manufacturing.....................           839        15.7            650             13     11.9
Iron and steel..........................           175         3.3            410              8      7.5
Chemicals, drugs and pharmaceuticals....           247         4.6            275              6      5.0
Auto including trucks...................            27         0.5            197              4      3.6
Finance.................................           755        14.2            168              3      3.1
Paper and paper products................           119         2.2            126              3      2.3
Agriculture.............................           246         4.6            108              2      2.0
Construction............................            92         1.7             99              2      1.8
Computer software.......................            -            -             84              2      1.5
Transport...............................            23         0.5             39              1      0.7
Other personal loans....................            85         1.6             31              1      0.6
Other metals and metal products.........           112         2.1             25              1      0.5
Electricity.............................            -            -             10              -      0.2
Other industries(1).....................         1,934        36.4          2,443             50     44.8
                                            ----------       -----    -----------     ----------    -----
Total...................................    Rs.   5,333      100.0%   Rs.   5,457     US$    112    100.0%
                                                             =====                                  =====
Allowance for loan losses...............    Rs.  (2,844)              Rs.  (2,774)    US$    (57)
                                            -----------               -----------     ----------
Net impaired loans......................    Rs.   2,489               Rs.   2,683     US$     55
                                            ===========               ===========     ==========

The proportion of gross impaired loans were the highest in the textiles, light manufacturing and iron and steel sectors. At year-end fiscal 2002, ICICI Bank had classified 7.5% of its gross loans in other industries as impaired compared to 5.9% at year-end fiscal 2001.

Textiles: Over the last few years, the textiles sector was adversely affected by the impact of erratic monsoons on the output of cotton, the South-east Asian economic crisis and anti dumping duties levied by the European Union. The majority of ICICI Bank's loans to small entities in this sector have been classified as impaired, and the balance of its exposure is primarily to large economically sized plants. At year-end fiscal 2002, ICICI Bank had classified 30.7% of its gross loans in this sector as impaired compared to 18.8% at year-end fiscal 2001.

Light Manufacturing: The light manufacturing industry category includes manufacturers of electronic equipment, electrical cables, fasteners, watches and other light manufacturing items. The capital goods industry has witnessed a slowdown in demand due to the fewer number of new projects and general recession in the manufacturing sector. At year-end fiscal 2002, ICICI Bank had classified 10.3% of its gross loans in this sector as impaired compared to 12.4% at year-end fiscal 2001.

Iron and Steel: Over the last few years, a sharp reduction in international steel prices to historic lows has had a significant impact on companies in this sector. In addition, a substantial reduction in import tariffs over the last three years led to price competition from overseas, significantly reducing domestic prices. The majority of ICICI Bank's loans to small steel plants and small re-rolling mills have already been classified as impaired, and the balance of loans in this sector is primarily to economically sized plants with advanced technology. At year-end fiscal 2002, ICICI Bank had classified 37.2% of its gross loans in this sector as impaired, compared to 15.7% at year-end fiscal 2001.

Top Ten Impaired Loans

At year-end fiscal 2002, out of the total impaired loans of ICICI Bank, the top 10 represented 32.4% of its gross impaired loans, 34.6% of its net impaired loans and 2.3% of its gross loan portfolio. Two of its top 10 impaired loans have been restructured. The merged entity is currently working out detailed restructuring packages for one of these borrowers in conjunction with other term lenders and other working capital consortium members. One of these borrowers has made an application for relief to the Board for Industrial and Financial Reconstruction.

The following table sets forth, at the date indicated, certain information regarding ICICI Bank's 10 largest impaired loans.

                                                            At March 31, 2002
                   --------------------------------------------------------------------------------------------------
                                                                         Principal
                                                                        outstanding                       Currently
                                        Type of           Gross           net of                        Servicing All
                                        banking         principal      allowance for                      Interest
                       Industry       arrangement      outstanding    loan losses(1)   Collateral(2)(3)  Payments(4)
                   --------------     ------------    ------------    ---------------  ---------------- -------------
                                                              (in millions)
Borrower A......   Petrochemicals      Consortium     Rs.      271      Rs.       190      Rs.     88        No
Borrower B......   Textile             Consortium              244                100             254        No
Borrower C......   Plastic             Consortium              200                 99             412        No
Borrower D......   Steel               Consortium              170                110           1,477        No
Borrower E......   Steel               Consortium              165                 80             307        No
Borrower F......   Textiles            Sole                    160                 66              74        No
Borrower G......   Electricals         Consortium              153                 70             271        No
Borrower H......   Light
                   Manufacturing       Consortium              151                 97              85        Yes
Borrower I......   Telephone cables    Consortium              150                 77             110        Yes
Borrower J......   Chemicals           Consortium              104                 40              80        No
                                                      ------------      -------------      ----------
Total...........                                      Rs.    1,768      Rs.       929      Rs.  3,158
                                                      ============      =============      ==========

Nine of the top 10 impaired loans were to borrowers where ICICI Bank acted together with other banks or as part of a consortium of banks with its share of exposure being a maximum of 4.9% of the total exposure of all banks to these borrowers.

                                                          Interest foregone
                                                            (in millions)
                                                      -----------------------
Fiscal 1998.......................................... Rs.     81       US$ 2
Fiscal 1999..........................................         93           2
Fiscal 2000..........................................        124           3
Fiscal 2001..........................................        495          10
Fiscal 2002..........................................        451           9

Restructuring of Impaired Loans

ICICI Bank's impaired loans were restructured on a case-by-case basis after management had determined that restructuring was the best means of realizing repayment of the loan. These loans continue to be on a non-accrual basis and will be reclassified as performing loans only after sustained performance under the loan's renegotiated terms for at least a period of one year.

The following table sets forth, at the dates indicated, ICICI Bank's impaired loans that had been restructured through rescheduling of principal repayments and deferral or waiver of interest.

                                                                       At March 31,
                                            --------------------------------------------------------------------
                                             1998         1999          2000        2001       2002       2002
                                            ------    -----------    ---------    -------    --------   --------
                                                             (in millions, except percentages)
Gross restructured loans..............        -       Rs.     38     Rs.   68     Rs. 890    Rs.  785   US$  16
Allowance for loan losses.............        -              (22)         (25)       (423)       (172)       (3)
Net restructured loans................        -               16           43         467         613        13
Gross restructured loans as a
  percentage of gross impaired loans..        -             2.4%         4.8%       16.7%       14.4%
Net restructured loans as a percentage
   of net impaired loans..............        -             2.2%         6.4%       18.8%       22.8%

The merged entity is currently working out restructuring packages for four of ICICI Bank's borrowers along with other term lenders and working capital consortium members in the case of its impaired loans under a consortium arrangement, and two of ICICI Bank's borrowers who are under sole banking arrangements. The large increase in restructured loans at year-end fiscal 2001 compared to year-end fiscal 2000 was principally on account of ICICI Bank's acquisition of nine restructured loan accounts aggregating Rs. 306 million (US$ 6 million) from Bank of Madura and the restructuring of four of ICICI Bank's loan accounts in fiscal 2001with an aggregate outstanding balance of Rs. 539 million (US$ 11 million), of which two loan accounts with an aggregate outstanding balance of Rs.187 million (US$ 4 million) were classified as impaired as at March 31, 1999.

ICICI's Impaired Loans

ICICI's gross restructured loans increased 117.7% during fiscal 2002 to Rs. 95.1 billion (US$ 1.9 billion) at year-end fiscal 2002, from Rs. 43.7 billion (US$ 895 million) at year-end fiscal 2001 primarily due to restructuring of loans to companies in the textiles, transport equipment and iron and steel sectors and reclassification of other impaired loans of Rs. 12.5 billion (US$ 257 million) as restructured loans at year-end fiscal 2002 after restructuring of these impaired loans in fiscal 2002. Gross other impaired loans increased 21.6% to Rs. 50.8 billion (US$ 1.0 billion) in fiscal 2002 over the previous year levels. As a percentage of net loans, net restructured loans were 14.8% at year-end

fiscal 2002 compared to 5.4% at year-end fiscal 2001 and net other impaired loans were 6.3% at year-end fiscal 2002 compared to 3.3% at year-end fiscal 2001.

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

                                                              At March 31,
                                    ---------------------------------------------------------------------
                                       1998       1999        2000        2001             2002
                                    ---------------------------------------------------------------------
                                                     (in millions, except percentages)
Wholesale banking(1)................Rs.  9,556  Rs. 13,171  Rs. 18,513 Rs.  37,726 Rs. 84,048 US$  1,721
  Rupee.............................     7,139       8,549      11,896      25,190     60,017      1,229
  Foreign currency..................     2,417       4,622       6,617      12,536     24,031        492
Working capital finance.............         -           -          33         818      5,283        108
  Rupee.............................         -           -          33         818      5,283        108
  Foreign currency..................         -           -           -           -          -          -
Leasing and related activities(2)...         -           -           -       5,137      5,652        116
  Rupee.............................         -           -           -       5,137      5,652        116
  Foreign currency..................         -           -           -           -          -          -
Other(3)............................         -           -           -           -        105          2
  Rupee.............................         -           -           -           -        105          2
  Foreign currency..................         -           -           -           -          -          -
Total restructured loans
  Rupee.............................     7,139       8,549      11,929      31,145     71,057      1,455
  Foreign currency..................     2,417       4,622       6,617      12,536     24,031        492
                                    ---------------------------------------------------------------------
Gross restructured loans............     9,556      13,171      18,546      43,681     95,088      1,947
Allowance for loan losses...........    (4,346)     (6,422)     (7,751)    (11,372)   (17,722)      (363)
                                    ---------------------------------------------------------------------
Net restructured loans..............Rs.  5,210  Rs.  6,749  Rs. 10,795 Rs.  32,309 Rs. 77,366 US$  1,584
                                    =====================================================================

Gross loan assets...................   399,641     503,630  Rs.595,533 Rs. 635,058 Rs.560,248 US$  11,473
Net loan assets.....................   377,184     475,106     561,448     602,023    523,601      10,723
Gross restructured loans as a
  percentage of gross loan assets...     2.39%       2.62%       3.11%       6.88%     16.97%
Net restructured loans as a
  percentage of net loan assets......... 1.38%       1.42%       1.92%       5.37%     14.78%

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

                                                                  At March 31,
                                      ---------------------------------------------------------------------
                                         1998       1999        2000        2001             2002
                                      ---------------------------------------------------------------------
                                                       (in millions, except percentages)
Wholesale banking(1)..................Rs.  31,742 Rs. 41,611  Rs. 45,616 Rs.  39,430 Rs. 48,093 US$    985
Rupee.................................     20,579     27,634      29,714      23,514     32,847        673
  Foreign currency......................  11,163      13,977      15,902      15,916     15,246        312
Working capital finance.................     604       1,158       1,420       1,234      1,699         35
  Rupee.................................     604       1,158       1,420       1,234      1,699         35
  Foreign currency......................      --          --          --          --         --         --
Leasing and related activities(2).......   1,855       2,360       2,965         899        731         15
  Rupee.................................   1,855       2,360       2,965         899        731         15
  Foreign currency......................      --          --          --          --         --         --
Other(3)................................   1,366         187         573         181        231          5
  Rupee.................................   1,366         187         573         181        231          5
  Foreign currency......................      --          --          --          --         --         --

Total other impaired loans
  Rupee.................................  24,404      31,339      34,672      25,828     35,508        728
  Foreign currency......................  11,163      13,977      15,902      15,916     15,246        312
                                      ---------------------------------------------------------------------
Gross other impaired loans..............  35,567      45,316      50,574      41,744     50,754       1039
Allowance for loan losses............... (18,111)    (22,102)    (26,334)    (21,663)   (17,567)      (360)
                                      ---------------------------------------------------------------------
Net other impaired loans..............Rs. 17,456 Rs.  23,214  Rs. 24,240 Rs.  20,081 Rs. 33,187 US$     680
                                      =====================================================================

Gross loan assets.....................Rs.399,641 Rs. 503,630  Rs.595,533 Rs. 635,058 Rs.560,248 US$  11,473
Net loan .............................   377,184     475,106     561,448     602,023    523,601      10,723
Gross other impaired loans as a
  percentage of gross loan assets.......   8.90%       9.00%       8.49%       6.57%      9.06%
Net other impaired loans as a
  percentage of net loan assets.........   4.63%       4.89%       4.32%       3.34%      6.34%

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.

                                                                         At March 31,
                                -------------------------------------------------------------------------------------------------
                                     1998               1999              2000              2001                  2002
                                -------------------------------------------------------------------------------------------------
                                                     (in millions, except percentages)
Textiles ...................... Rs. 1,447  15.1%  Rs. 1,611  12.2%  Rs. 2,276  12.3% Rs. 12,437  28.5% Rs. 21,468 US$  440  22.6%
Iron and steel ................       730   7.6         909   6.9       1,461   7.9       7,270  16.6      18,013      369  18.9
Paper and paper products ......       130   1.4         137   1.0         338   1.8       2,211   5.1       6,076      124   6.4
Transport equipment ...........        14   0.1          13   0.1          13   0.1         418   1.0       5,857      120   6.2
Man-made fibers ...............     2,452  25.7       2,616  19.9       3,456  18.6       4,561  10.4       5,759      118   6.1
Fertilizers and pesticides ....        51   0.5          99   0.8          76   0.4         141   0.3       3,695       76   3.9
Cement ........................       286   3.0         286   2.2         300   1.6         888   2.0       3,454       71   3.6
Sugar .........................       148   1.5         209   1.6         570   3.1         446   1.0       2,859       59   3.0
Plastics ......................       173   1.8       2,447  18.6       2,525  13.6       2,586   5.9       2,738       56   2.9
Services ......................       589   6.2         688   5.2       1,098   5.9       1,605   3.7       2,710       55   2.8
Basic chemicals ...............       723   7.6         703   5.2       1,527   8.2       1,306   3.0       1,991       41   2.1
Electrical equipment ..........       107   1.1         121   0.9         235   1.3       1,035   2.4       1,713       35   1.8
Non-ferrous metals ............       98    1.0         160   1.2         214   1.2         180   0.4       1,337       27   1.4
Machinery .....................       222   2.3         209   1.6         283   1.5         902   2.1       1,336       27   1.4
Electronics ...................       837   8.8         868   6.6         933   5.0         854   2.0         899       18   0.9
Petrochemicals ................       512   5.4         546   4.1         710   3.8         937   2.1         853       17   0.9
Metal products ................        93   1.0          86   0.7         171   0.9         761   1.7         636       13   0.7
Rubber and rubber products ....         7   0.1         150   1.1         143   0.8         169   0.4         460        9   0.5
Food products .................       365   3.8         588   4.5         655   3.5         707   1.6         434        9   0.5
Drugs .........................        60   0.6           -     -           -     -          27   0.1         189        4   0.2
Other(1) ......................       466   4.9         725   5.6       1,562   8.5       4,240   9.7      12,611      259  13.2
Other chemicals ...............        46   0.5           -     -           -     -           -     -           -        -     -
                                -------------------------------------------------------------------------------------------------
Gross restructured loans......  Rs. 9,556 100.0% Rs. 13,171 100.0%  Rs.18,546 100.0% Rs. 43,681 100.0% Rs. 95,088 US$1,947   100%
                                          ======            ======            ======            ======                       ====
Aggregate allowance for
  loan losses.................     (4,346)           (6,422)           (7,751)          (11,372)          (17,722)    (363)
                                ---------        ----------         ---------        ----------        -------------------
Net restructured loans .......  Rs. 5,210        Rs.  6,749         Rs.10,795        Rs. 32,309        Rs. 77,366    1,584
                                =========        ==========         =========        ==========        ===================

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,
                          ------------------------------------------------------------------------------------------------
                                   1998           1999             2000             2001                2002
                          ------------------------------------------------------------------------------------------------
                                                      (in millions, except percentages)
Iron and steel ...........Rs. 3,650   10.3% Rs. 5,058  11.2% Rs. 4,942   9.8% Rs.  5,894  14.1% Rs. 5,899   US$ 121  11.6%
Basic chemicals ..........    1,266    3.6      3,101   6.9      2,879   5.7       2,075   5.0      4,412        90   8.7
Textiles .................    2,843    8.0      3,764   8.3      5,978  11.8       6,041  14.5      4,250        87   8.4
Petrochemicals ...........      279    0.8        157   0.3        169   0.3          86   0.2      3,440        70   6.8
Metal products ...........      789    2.2      2,872   6.3      3,284   6.5       2,970   7.1      2,628        54   5.2
Machinery ................    1,094    3.1      1,696   3.7      1,802   3.6         919   2.2      2,596        53   5.1
Drugs ....................    2,151    6.0      2,448   5.4      2,481   4.9       2,401   5.7      2,544        52   5.0
Paper and paper products .      831    2.3      1,125   2.5      3,147   6.2       2,456   5.9      2,199        45   4.3
Electrical equipment .....    1,007    2.8      1,333   2.9      1,653   3.3       1,652   4.0      2,008        41   4.0
Man-made fibers ..........    3,991   11.2      3,993   8.8      4,092   8.1       2,129   5.1      1,802        37   3.6
Food products ............    2,577    7.2      2,523   5.6      2,663   5.3       2,415   5.8      1,389        28   2.8
Cement ...................    1,784    5.0      1,728   3.8      1,371   2.7       1,972   4.7      1,287        26   2.5
Electronics ..............    2,820    7.9      2,829   6.2      2,537   5.0       1,456   3.5      1,281        26   2.5
Plastics .................    1,058    3.0      1,268   2.8      1,312   2.6       1,280   3.1      1,137        23   2.2
Sugar ....................      554    1.6        291   0.7        951   1.9       1,461   3.5        722        15   1.4
Transport equipment ......      848    2.4        856   1.9        852   1.7         761   1.8        715        15   1.4
Non-ferrous metals .......      530    1.5        597   1.3        639   1.3         503   1.2        447         9   0.9
Services .................    1,153    3.2      1,768   3.9      2,015   4.0       1,324   3.2        416         9   0.8
Rubber and rubber
  products ...............      484    1.4        462   1.0        485   1.0         335   0.8        328         7   0.6
Fertilizers and pesticides      501    1.4        450   1.0        442   0.9         193   0.5        163         3   0.3
Other chemicals ..........        6      -          6     -         48   0.1          45   0.1         92         2   0.2
Other(1) .................    5,351   15.1      6,991  15.5      6,832  13.3       3,376   8.0     10,999       226  21.7
                          ------------------------------------------------------------------------------------------------
Gross other impaired
  loans ..................Rs.35,567 100.0%  45,316   100.0% Rs.50,574 100.0% Rs. 41,744 100.0% Rs. 50,754 US$ 1,039   100%
                                     ======           ======           ======            ======                       ====
Aggregate allowance for
   loan losses............   (18,111)       (22,102)           (26,334)          (21,663)         (17,567)     (360)
                           ---------      ---------          ---------        ----------        -------------------
Net other impaired loans ..Rs.17,456      Rs.23,214          Rs.24,240        Rs.  20,081      Rs. 33,187 US$   680
                           =========      =========          =========        ===========       ===================

The largest proportion of ICICI's impaired loans was to the iron and steel, basic chemicals and textile sectors. There is a risk that impaired loans in each of these sectors and in other sectors including man-made fibers, paper and paper products, transport equipment, plastics and metal products sectors could increase if Indian economic conditions deteriorate or there is a negative trend in global commodity prices.

Iron and Steel. Over the last few years, a persistent downward trend in international steel prices to historic lows has had a significant impact on companies in this sector. In addition, a significant reduction in import tariffs led to price competition from certain countries, significantly reducing domestic prices. The merged entity's outlook for the medium to long-term for this sector is positive owing to the recent increase in prices and an increase in domestic consumption. In fiscal 2000 and fiscal 2001, the increase in ICICI's assets in this sector was primarily due to phased disbursements to projects that were approved earlier. While most of these projects have now been completed, a part of these loans is to projects still under implementation. The majority of the loans to fragmented capacities and small steel plants have already been classified as impaired loans, and the balance of loans in this sector is primarily to economically sized plants with advanced technology. At year-end fiscal 2002, ICICI had classified 25.3% of its assets in this sector as restructured loans and 8.3% as other impaired loans.

Basic Chemicals. Increasing competition in the global chemical industry has resulted in significant structural changes, with players opting for increased focus on core competencies through corporate restructuring and consolidation or spin-off to attain leadership position in their core businesses. These trends in the global chemical industry environment have significantly affected the Indian chemical industry. The tariff rationalization measures effected by the government of India since 1991 have made the domestic chemical industry vulnerable to movements in international prices, with viability being closely linked to cost of production and capacity utilization. The majority of ICICI's loans to uneconomic or inefficient plants (primarily manufacturing dyes and inorganic chemicals) have been classified as impaired, and the balance of the exposure is primarily to large diversified plants with a wide product range and strong export base. At year-end fiscal 2002, ICICI had classified 14.1% of its total loans to the basic chemicals sector as restructured loans and 31.3% as other impaired loans.

Textiles. The textile industry was affected adversely by the south-east Asian economic crisis. This resulted in Indian textile exports being less competitive. Competitive pressures in global textile exports have intensified further with the entry of more price competitive south Asian producers like Bangladesh, Nepal and Sri Lanka. While textile exports have increased in fiscal 2000 and 2001, the rate of growth has been adversely impacted due to the imposition of anti-dumping duties by the European Union. The industry is expected to benefit from the successful bilateral resolution of issues between the government of India and the European Union. The majority of ICICI's loans to small entities in these sectors have been classified as impaired, and the balance of the exposure is primarily to large economically-sized plants with established raw material procurement systems and extensive distribution networks. At year-end fiscal 2002, ICICI had classified 52.5% of its total loans to the textiles sector as restructured loans and 10.4% as other impaired loans.

                                                       Interest foregone
                                                         (in billions)
                                                  -----------------------------
Fiscal 1998.....................................  Rs.      8.7  US$        0.2
Fiscal 1999.....................................          10.4             0.2
Fiscal 2000.....................................          12.4             0.3
Fiscal 2001.....................................          14.3             0.3
Fiscal 2002.....................................          16.1             0.3

Impaired Loans Strategy

The Special Asset Management Group of the merged entity is responsible for finding early solutions for large and complex impaired loans. This group works closely with other banks and financial institutions and uses outside experts and specialized agencies for due diligence, valuation and legal advice to expedite early resolution. The group also seeks to leverage the merged entity's corporate relationships to facilitate quicker resolution of impaired loans. It consists of professionals with significant experience in credit management supported by a team of dedicated legal professionals.

The merged entity places great emphasis on recovery and settlement of its stressed asset portfolio and impaired loans, and this focus has been institutionalized across the organization. Asset quality targets are a key parameter for employee performance evaluation.

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, the merged entity has 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 so as to facilitate transfer of control to the merged entity;

o ensuring majority control in the board of directors of these companies;

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

o escrow mechanisms to capture cash flows.

                                                                            At March 31,
                                             --------------------------------------------------------------------------
                                               1998       1999        2000           2001           2002         2002
                                             ---------  ---------  ---------       ---------     ---------      -------
                                                                           (in millions)
Allowance for credit losses at the
     beginning of the year...............    Rs.   187  Rs.   425  Rs.   880        Rs.  748      Rs. 2,890     US$ 59
Add:
Provision for credit losses acquired from
     Bank of Madura......................            -          -          -           1,572             -          -
Provisions for credit losses:
   Working capital.......................          256        349        470           1,034         1,786         36
   Term loans............................          104         17          9              69           422          9
   Leasing finance.......................            -        144         24              17           191          4
   Marketable corporate debt instruments.            -         30          -              73            78          2
   Credit cards..........................            -          -          -              28           268          5
   Release of provision as a result of
     cash collection ....................            -          -        (76)          (185)        (1,023)        (21)
    General Provisions on standard assets            -          -          -             46
Total provisions for loan losses.........          360         540       427           2,654         1,722          35
Less:
Write-offs...............................         (122)       (85)      (559)          (512)        (1,792)        (36)
                                             ---------  ---------  ---------       ---------     ---------      ------
Allowances for loan losses at the end
     of the year.........................    Rs.   425  Rs.   880  Rs.   748       Rs. 2,890     Rs. 2,820      US$ 58
                                             =========  =========  =========       =========     =========      ======

The following table sets forth, at the dates indicated, movements in ICICI's allowances for loan losses.

                                                                            At March 31,
                                               ------------------------------------------------------------------------
                                                  1998        1999        2000         2001              2002
                                               ------------------------------------------------------------------------
                                                                            (in millions)
Aggregate allowance for loan losses
   at the beginning of the year................Rs. 17,689   Rs. 22,457  Rs. 28,524   Rs. 34,085 Rs. 33,035    US$  677
Less: Effect of deconsolidation of subsidiary
   on Allowance for loan losses................         -            -           -         (747)         -           -
Add: Provisions for loan losses

  Wholesale banking(1).........................     3,497        5,129       5,571        9,097      7,711         158
  Working capital finance......................       152          419         518          479        513          11
  Leasing and related activities (2)...........       813          434         279          249          6           -
  Others (3)...................................       306           85          (5)          67        155           3
  Portfolio provision(4).......................         -            -           -            -      1,358          28
Total provisions for loan losses...............Rs.  4,768   Rs.  6,067   Rs. 6,363   Rs.  9,892 Rs.  9,743    US$  200
Write offs(5)..................................         -            -        (802)     (10,195)    (6,131)       (126)
                                               ------------------------------------------------------------------------
Aggregate allowance for loan losses
  at the end of the year.......................Rs. 22,457   Rs. 28,524  Rs. 34,085   Rs. 33,035 Rs. 36,647    US$  751
                                               ------------------------------------------------------------------------
Ratio of net provisions for loan losses
  during the period to average loans
  outstanding..................................      1.4%         1.4%        1.2%         1.7%       1.6%
                                               ========================================================================

The merged entity conducts a comprehensive analysis of its loan portfolio on a quarterly 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 entire loan portfolio, and an allowance is made for any probable loss on each account. In estimating the allowance, the merged entity considers the net realizable value on a present value basis by discounting the future cash flows over the expected period of recovery. Further, the merged entity also considers ICICI Bank's and ICICI's 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 for ICICI Bank" and "Operating and Financial Review and Prospects for ICICI". In fiscal 2002, ICICI also made provisions of Rs. 1,358 million (US$ 28 million) as portfolio provisions on its non-impaired lending assets.

Under US GAAP analysis of the provisions for impaired loans, the merged entity is required to take into account the time delay in its ability to foreclose upon and sell collateral. The net present value of an impaired loan includes the net present value of the underlying collateral, if any. As a result, even though the merged entity is generally over-collateralized, additional allowances are required under US GAAP over the Reserve Bank of India regulations because US GAAP takes into account the time value of money.

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. The use of different estimates or assumptions could produce different provisions for smaller balance homogeneous loan losses.

When there is an equity investment for which the corresponding loan asset is impaired, an adjustment is made to record an impairment of the related equity security.

For impaired loans in excess of Rs. 100 million, which were 84.2% of ICICI's gross impaired loan portfolio at year-end fiscal 2002, ICICI 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 impaired loan portfolio, ICICI followed the classification detailed below for determining the allowance for loan losses. The merged entity will follow the same classification for determining the allowance for loan losses for these loans.

Settlement Cases

Settlement cases include cases in which the merged entity is in the process of entering into a "one-time settlement" because it believes that the potential to recover the entire amount due (the gross principal plus outstanding interest, including penalty interest) in these cases is limited. In ICICI's experience, it recovered almost 100.0% of gross principal outstanding over a period of time and about 85.0% on a present value basis, as a result of negotiated settlements.

Enforcement Cases

Enforcement cases are those cases (excluding cases referred to the Board for Industrial and Financial Reconstruction or BIFR) in which the merged entity has commenced litigation. The merged entity expects 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. The merged entity expects 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, the merged entity expects 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

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. The merged entity expects 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, the merged entity expects 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 ICICI's impaired loan classification scheme.

                                                                     At March 31, 2002
                                                     -----------------------------------------------------
                                                                          Percentage
                                                                        expected to be       Impaired
                                                            Gross     realized on a net   loans, net of
                                                           impaired     present value     allowance for
                                                            loans            basis         loan losses
                                                     -----------------------------------------------------
                                                              (in millions, except percentages)
Gross principal greater than Rs. 100 million.........    Rs. 122,819             80.5%        Rs.  98,827
Settlement cases.....................................          1,866             85.0               1,586
Enforcement cases....................................          6,087             66.3               4,034
Non-enforcement BIFR cases...........................          3,025             44.9               1,359
Non-enforcement non-BIFR cases.......................          1,595             83.8               1,337
Other loans..........................................         10,450             32.6               3,410
                                                     ----------------                  -------------------
Total................................................   Rs.  145,842             75.8%       Rs. 110,553
                                                     ================                  ===================

-------------------------------------------------------------------------------------------------------------------
                                                                          Total        Net worth      Assets at
                       Year of                           Shareholding  revenue in      at March       March 31,
        Name          formation        Activities          by ICICI   fiscal 2002(1)  31, 2002(1)    2002(1)(2)
-------------------------------------------------------------------------------------------------------------------
                                                                        (in millions, except percentages)

ICICI Securities and  February     Investment banking          99.9%      Rs. 3,807     Rs. 3,295      Rs.  22,732
 Finance Company      1993         activities
 Limited(3)

ICICI Venture Funds   January      Venture capital            100.0             203           286              679
 Management           1988         management
 Company Limited

ICICI Prudential Life July 2000    Life insurance business     74.0           1,415         1,150            2,892
  Insurance Company
  Limited

ICICI Lombard         October 2000 General insurance           74.0             271         1,002            1,653
  General Insurance                business
  Company Limited

ICICI Home Finance    May          Home and property          100.0           1,922         1,619          16,197
  Company Limited     1999         financing

ICICI International   January      Offshore fund              100.0              47            27              30
 Limited              1996         management

ICICI Trusteeship     April        Trustees for various       100.0               -             -               -
  Services Limited    1999         funds
ICICI Investment      March        Investment manager         100.0              11           107             118
  Management          2000         for mutual fund
  Company Limited

ICICI Capital         September    Placing and                100.0             539             61            264
  Services            1994         distribution of
  Limited(4)                       liability
                                   products

ICICI Personal        March        Distribution and           100.0             497             95            408
   Financial          1997         servicing of retail
   Services                        asset
   Limited(4)                      products

Prudential ICICI      June         Trustee company for         45.0               4              7             13
   Trust Limited      1993         mutual fund

Prudential ICICI      June         Investment manager          45.0             615            699            866
   Asset Management   1993         for mutual fund
   Company Limited

The following table sets forth, for the period indicated, information on significant other entities required to be consolidated in ICICI's financial statements for fiscal 2002 under US GAAP.

-------------------------------------------------------------------------------------------------------------------
                                                         Shareholding
                                                          By ICICI,
                                                           venture
                                                         apital funds
                                                         or trusts to                 Net worth/
                                                         which ICICI      Total       net assets      Assets at
                       Date of                              was a       revenue in     at March       March 31,
        Name          formation        Activities       ccontributory fiscal 2002(1)  31, 2002(1)    2002(1)(2)
-------------------------------------------------------------------------------------------------------------------
                                                                           (in millions, except percentages)

ICICI Infotech        October     Software consulting         93.7%          2,560            627          2,484
  Services            1993        and development, IT
  Limited (3) (4)                 enabled services, IT
                                  infrastructure and
                                  facilities management

ICICI Web Trade       December    Internet-based broking     100.0             237            151            692
  Limited (4)         1999        services

ICICI OneSource       December    Business process           100.0               -              7             21
  Limited (4)         2001        outsourcing and call
                                  center services

ICICI Information     February    Investment in equity        98.5               4          2,559          3,336
  Technology Fund     2000        or equity-related
                                  securities of early
                                  stage and medium sized
                                  Indian IT companies

ICICI Equity Fund     March       Investment                 100.0              34          5,695          5,990
                      2000        predominantly in
                                  equity and equity
                                  linked securities of
                                  mid sized Indian
                                  companies.

ICICI Eco-Net         December    Investment in equity        92.1               7            996          1,218
  Internet            2000        or equity-related
  & Technology Fund               securities of early stage,
                                  unlisted internet and
                                  technology companies.

At year-end fiscal 2002, all of ICICI's subsidiaries and affiliated companies and entities consolidated or accounted for under equity method under US GAAP, were incorporated or organized in India, except the following six companies:

o ICICI Securities Holdings Inc., incorporated in the US;
o ICICI Securities Inc., incorporated in the US;
o ICICI Infotech Inc., incorporated in the US;
o ICICI Infotech Pte Limited, incorporated in Singapore;
o ICICI International Limited, incorporated in Mauritius; and
o Command International Holdings LLC, incorporated in Mauritius.

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. ICICI Infotech Inc. and ICICI Infotech Pte Limited are wholly-owned subsidiaries of ICICI Infotech and are consolidated in its financial statements.

Technology

The merged entity is focused on the application of technology to its business operations. The merged entity believes that technology is a key source of competitive advantage in the Indian banking sector. The merged entity's focus on technology emphasizes:

o Electronic and online channels to:

- Offer easy access to the merged entity's products and services;
- Reduce distribution and transaction costs;
- Reach new target customers; and
- Enhance existing customer relationships.

o Application of information systems to:

- Effectively market to the merged entity's target customers;

- Monitor and control risks; and
- Identify, assess and capitalize on market opportunities.

Technology Organization

The merged entity's technology initiatives are centralized in its Technology Management Group. In addition, there are dedicated technology groups for the retail and corporate banking businesses. The merged entity's technology initiatives are undertaken in conjunction with ICICI Infotech Services Limited, an ISO 9001 certified company promoted by ICICI.

Electronic and Online Channels

At year-end fiscal 2002, 244 branches and 44 extension counters of ICICI Bank were completely automated to ensure prompt and efficient delivery of products and services. The merged entity's branch banking software is flexible and scalable and integrates well with its electronic delivery channels.

The merged entity's ATMs are sourced from NCR and Diebold, the world's leading vendors. These ATMs work with the branch banking software. At March 31, 2002, ICICI Bank had 1,004 ATMs across the country.

ICICI Bank was one of the first banks to offer Internet banking facilities to its customers. The merged entity now offers a number of online banking services to its customers.

The merged entity's telephone banking call centers use an Interactive Voice Response System (IVRS). The call centers are based on the latest technology, providing an integrated customer database that allows the call agents to get a complete overview of the customer's relationship with the merged entity. The database enables customer segmentation and assists the call agent in identifying cross-selling opportunities. The merged entity is currently implementing a technology architecture which enables a customer to access any product from any channel.

Application of Information Systems

Treasury and Trade Finance Operations

The merged entity uses technology to monitor risk limits and exposures on a near real time basis. The merged entity has invested significantly to acquire advanced systems from IBM, Reuters and TIBCO and connectivity to the SWIFT network.

Banking Application Software

The merged entity has installed an advanced banking system which addresses the merged entity's corporate banking as well as retail banking requirements. It is robust, flexible and scalable and allows the merged entity to effectively and efficiently serve its growing customer base.

High-Speed Electronic Communications Infrastructure

The merged entity has installed a nationwide data communications network linking all its 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. The merged entity also uses a data center in Mumbai for centralized data base management, data storage and retrieval.

Customer Relationship Management

The merged entity has implemented a Customer Relationship Management solution for the automation of customer handling in all key retail products. The solution allows customer service agents to track all customer complaints and requests. It also allows target setting and centralized

tracking of turnaround times for request fulfillment. The solution went live in phases during fiscal 2002. The merged entity has also undertaken a retail data warehouse initiative to achieve customer integration at the back-office level. The merged entity seeks to use this central view of the total customer relationship extensively for identifying opportunities to cross-sell new products and services to its existing customer base.

Competition

The merged entity is the second largest among all banks in India, ranked on the basis of their total assets. The merged entity faces strong competition in all its principal areas of business from Indian and foreign commercial banks, non-bank finance companies, mutual funds and investment banks. The merged entity believes that its principal competitive advantage over its competitors arises from its long-standing customer relationships, its use of technology, its innovative products and services and its highly motivated and skilled employees. Because of these factors, the merged entity believes that it has a strong competitive position in the Indian financial services market. The merged entity evaluates its competitive position based on its principal lines of business, corporate banking and retail banking.

Corporate Banking

In corporate banking, the merged entity faces strong competition primarily from public sector banks, foreign banks and other new private sector banks. The merged entity's principal competition in corporate banking 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. The merged entity has been able, however, to build a quality loan portfolio without compromising its lending rates, because of its efficient service and prompt turnaround times that are significantly faster than public sector banks. The merged entity seeks to compete with the large branch networks of the public sector banks through its multi-channel distribution approach.

Traditionally, foreign banks have been active in providing trade finance, fee-based services and other short-term financing products to top tier Indian corporations. The merged entity effectively competes with foreign banks in cross-border trade finance as a result of its strong correspondent banking relationships, its SWIFT-enabled corporate branches and customized trade financing solutions. The merged entity has established strong fee-based cash management services and competes with foreign banks due to its 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, the merged entity's strong corporate relationships and ability to use technology to provide innovative, value-added products and services provide it 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. The merged entity believes it has a competitive advantage due to its strong market reputation and expertise in risk evaluation and mitigation. The merged entity believes that its in-depth sector specific knowledge has allowed it to gain credibility with project sponsors, overseas lenders and policy makers.

Retail Banking

The retail credit business in India is in a relatively early stage of development. As per-capita income levels grow, the merged entity expects strong growth in retail lending. In the retail markets, competition is primarily from foreign and Indian commercial banks, non-bank finance companies and housing finance companies. Foreign banks have the product and delivery capabilities but are likely to focus on limited customer segments. Effective distribution channels, which include direct selling

agents, robust credit processes and collection mechanisms, experienced professionals and superior technology, have helped the merged entity to develop and market products, leveraging on existing retail investors and infrastructure. Based on these factors, management believes that the merged entity has thus gained significant market share in this emerging market.

Indian commercial banks attract the majority of retail bank deposits, historically the preferred retail savings product in India. The merged entity has capitalized on its corporate relationships to gain individual customer accounts through payroll management products such as Power Pay and will continue to pursue a multi-channel distribution strategy utilizing physical branches, ATMs, telephone banking call centers and the Internet to reach customers.

Mutual funds are another source of competition to the merged entity. With the promise of better returns than the interest earned on term deposits, mutual fund offerings have become a viable alternative to bank deposits.

Employees

At year-end fiscal 2002, ICICI Bank had 4,820 employees, an increase from 4,491 employees at year-end fiscal 2001 and 1,344 employees at year-end fiscal 2000. Of the 4,820 employees at year-end fiscal 2002, 2,016 were professionals, holding degrees in management, accountancy, engineering, law, computer science, economics and banking.

Management believes that it has good relationships with its employees. The merged entity has a staff center, which serves as a forum for grievances, pay and benefit negotiations and other industrial relations matters. ICICI Bank inducted 2,725 employees of Bank of Madura consequent to its acquisition in March 2001. The employees inducted from Bank of Madura in the grade of clerks and sub-staffs are unionized. The merged entity has a cordial relationship with this union. ICICI Bank was able to realign the service conditions and compensation structure of the officers who came to it from Bank of Madura, which is now comparable with the one existing for the merged entity's officers.

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 the merged entity with new challenges and opportunities. To meet these challenges, the merged entity has relied extensively on its human capital, which comprises some of the best talent in the industry.

The merged entity continues to attract the best graduates from the premier business schools of the country. The merged entity dedicates 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 the merged entity encourages the involvement of all its employees in its 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 does not employ a significant number of temporary employees.

The merged entity 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, up to 5.0% of the aggregate of the merged entity's issued equity shares after the amalgamation, can be allocated under the employee stock option scheme. The stock option will entitle eligible employees to apply for equity shares. The grant of stock options is approved by the merged entity'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, the merged entity 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."

The merged entity has training centers at Khandala and Pune in the state of Maharashtra, which conduct a series of training programs designed to meet the changing skill requirements of its employees. These training programs include orientation sessions for new employees and management development programs for mid-level and senior executives. The training center regularly offers courses conducted by faculty, both national and international, drawn from industry, academia and the merged entity's own organization. Training programs are also conducted for developing functional as well as managerial skills.

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

                                                                          At March 31,
                                                  ------------------------------------------------------------
                                                              2001                             2002
                                                  ------------------------------------------------------------
                                                        Number    % to total           Number      % to total
                                                  ------------------------------------------------------------
ICICI.......................................             1,065         28.1%            1,165            19.6%
ICICI Infotech..............................             1,050         27.8             1,443           24.2
ICICI Personal Financial Services ..........               651         17.2             1,236           20.8
ICICI Prudential Life Insurance.............               294          7.8               793           13.3
ICICI Capital Services......................               325          8.6               505            8.5
ICICI Securities............................               128          3.4               143            2.4
ICICI Home Finance..........................                96          2.5               442            7.4
Other subsidiaries of ICICI.................               173          4.6               227            3.8
                                                  ------------------------------------------------------------
Total number of employees...................             3,782        100.0%            5,954          100.0%
                                                  ============================================================

At year-end fiscal 2002, ICICI and its subsidiaries and other consolidated entities (excluding ICICI Bank) had approximately 5,954 employees, an increase from 3,782 employees at year-end fiscal 2001 and from 2,159 employees at year-end fiscal 2000. Of these, 1,165 at year-end fiscal 2002, 1,065 at year-end fiscal 2001 and 1,009 at year-end fiscal 2000 were employed by ICICI. Of the 1,165 employees of ICICI at March 31, 2002, 795 were professionals, holding degrees in management, accountancy, engineering, law, computer science and economics. The increase in number of employees in fiscal 2002 was primarily in the subsidiaries ICICI Prudential Life Insurance, ICICI Infotech and ICICI Home Finance, which had been rapidly growing their business and distribution infrastructure.

The following table sets forth, the approximate number of employees in the merged entity and its subsidiaries and other consolidated entities at June 30, 2002.

                                             -----------------------------------
                                                  Number           % to total
                                             -----------------------------------

ICICI Bank...................................       8,410             70.2%
ICICI Infotech...............................       1,476             12.3
ICICI Prudential Life Insurance..............       1,195             10.0
ICICI Securities.............................         143              1.2

ICICI Home Finance...........................         537              4.5
Other subsidiaries of ICICI Bank.............         233              1.8
                                             -----------------------------------
Total number of employees....................      11,994            100.0%
                                             ===================================

Properties

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

ICICI Bank had a principal office network consisting of 359 branches, 44 extension counters and 1,000 ATMs at year-end fiscal 2002. These facilities are located throughout India. Forty of these facilities are located on properties owned by the merged entity, while the remaining facilities are located on leased properties. The net book value of all properties and equipment at year-end fiscal 2002 was Rs. 4.8 billion (US$ 98 million), which included 205 apartments and two residential facilities for employees.

ICICI's registered office and corporate headquarters were located at ICICI Bank Towers, Bandra-Kurla Complex, Mumbai 400 051, Maharashtra, India.

ICICI's principal office network consisted of 27 facilities, which were situated in Ahmedabad, Bangalore, Chennai, Coimbatore, Hyderabad, Kolkata, Mumbai, New Delhi, Pune and Vadodara. Twenty of these facilities were located on properties that were owned by ICICI and seven were located on leased properties. ICICI had 95 ICICI centers located in cities across India. All these facilities were located on leased properties primarily in cities where ICICI did not have its own office premises. ICICI Infotech, ICICI Venture and ICICI Securities own 3 properties and also have 19 properties on lease. The merged entity also provides residential and holiday home facilities to employees at subsidized rates. The net book value of property and equipment of ICICI at March 31, 2002 was Rs. 12.9 billion (US $ 264 million).

Legal and Regulatory Proceedings

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

At year-end fiscal 2002, ICICI Bank had been assessed an aggregate of Rs. 1.9 billion (US$ 40 million) in income tax and interest tax demands by the government of India's tax authorities for past year, of which Rs. 1.9 billion (US$ 39 million) has been paid. Appeals by ICICI Bank are pending in respect of disputed tax demands for Rs. 851 million (US$ 18 million) including the unpaid amount of Rs. 40 million (US$ 1 million) and an amount of Rs. 811 million (US$ 17 million) which has been paid. Management believes that the tax authorities are not likely to be able to substantiate their income tax and interest tax assessments for the following reasons:

o A major portion of the disputed tax demands consists of treatment of depreciation claim on leased assets. In accordance with the expert opinion obtained by ICICI Bank, the tax treatment adopted by ICICI Bank is in conformity with industry practice. Moreover, these tax demands are recoverable from lessees of assets under various lease agreements. Accordingly, ICICI Bank has not provided for or disclosed this tax demand as a contingent liability.

o The appellate authorities have ruled in ICICI Bank's favor in respect of tax demands relating to the deductibility of software expenses. The tax authorities, however, have appealed against this ruling. The appeal is pending adjudication before a higher appellate authority.

o The tax authorities have treated as capital expenditure, interest accrued on securities at the time of their purchase, which has been treated by ICICI Bank as revenue expenditure in accordance with standard accounting practices and the Reserve Bank of India guidelines.

o The tax authorities have disallowed an amount they have estimated as expenditure relating to ICICI Bank's income exempt from tax. The merged entity believes that there is no cost attributable to earning this income as the investments are made out of interest-free funds such as share capital, internal accruals and interest free deposit balances.

o The tax authorities have disputed computations made by ICICI Bank for claiming exemptions on provisions for doubtful assets.

At year-end fiscal 2002, ICICI had been assessed an aggregate of Rs. 9.4 billion (US$ 192 million) in excess of the provision made in its accounts, in income tax, interest tax, wealth tax and sales tax demands by the government of India's tax authorities for past years. ICICI has appealed each of these tax demands. 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 for the following reasons:

o ICICI received favorable decisions from the appellate authorities with respect to Rs. 633 million (US$ 13 million) of the assessment. The income tax authorities have appealed these decisions to higher appellate authorities and the same are pending adjudication.

o ICICI received a favorable decision of the Supreme Court of India in respect of writ petitions filed by it relating to the sales tax issues that are currently being appealed by it with respect to Rs. 270 million (US$ 6 million) of the assessment.

o ICICI received favorable appellate decisions in earlier years related to the income tax, interest tax and wealth tax issues currently being appealed by it with respect to Rs. 245 million (US$ 5 million) of the assessment, and in respect of Rs. 8,264 million (US$ 169 million), favorable appellate decisions in the cases of other Indian companies and expert opinions are available to substantiate the issues that are currently being appealed.

Of the Rs. 9.4 billion (US$ 192 million) aggregate tax assessments of ICICI, a major portion relates to the treatment of depreciation claim on leased assets. In accordance with the expert opinion obtained by ICICI and the judicial pronouncements on similar issues, the merged entity believes that the tax treatment adopted by ICICI is in conformity with Indian tax law and in its view, the demand by the Indian tax authorities cannot be substantiated. Moreover, these tax demands are recoverable from lessees of assets under various lease agreements.

In January 2001, the Bank of Nova Scotia Asia Limited and Commerzbank AG filed a claim against ICICI before the English courts in London challenging certain transactions between ICICI and Arvind Mills Limited, a borrower to whom both ICICI and the plaintiffs were lenders. These transactions related to certain lease, brand-financing and investment agreements between ICICI and Arvind Mills Limited. These transactions aggregated approximately Rs. 5.7 billion (US$ 117 million). The plaintiffs alleged that these transactions breached the Security Agent and Trust Agreement between ICICI and the plaintiffs, whereby ICICI was appointed as a trustee for the plaintiffs. The same transactions were also the subject matter of a criminal complaint filed by Commerzbank AG against ICICI and its executive directors (including the former deputy managing director) before the Indian courts. In August 2002, the English courts in London dismissed the claim with the consent of all parties and the Supreme Court of India dismissed the criminal complaint filed in the Indian courts.

In March 2002, the Securities and Exchange Board of India informed ICICI Bank that its investigation of certain transactions that had taken place in the equity shares of Bank of Madura prior to the announcement, in December 2000, of its proposed acquisition by ICICI Bank, indicated that the parties involved in these transactions may have had information regarding the proposed acquisition

and the proposed share exchange ratio prior to their public announcement. The Securities and Exchange Board of India requested ICICI Bank to conduct an internal investigation to determine whether there had been a disclosure of the proposed acquisition prior to its public announcement, by the valuers, advisers and employees of ICICI Bank and Bank of Madura. ICICI Bank had appointed an independent expert to investigate the conduct of its employees and directors as well as the employees and directors of ICICI, who were aware of the proposed acquisition prior to its public announcement. The independent expert appointed by ICICI Bank submitted his findings that there was no disclosure of the proposed acquisition by employees or directors of ICICI or ICICI Bank prior to the public announcement. The merged entity submitted these findings to the Securities and Exchange Board of India in June 2002. ICICI Bank also requested the advisers, merchant bankers and valuers to conduct their own investigations in this matter and submit the results of the investigations directly to the Securities and Exchange Board of India. The results of the internal investigations conducted by the advisers, merchant bankers and valuers were submitted to the Securities and Exchange Board of India in May and June 2002. The Securities and Exchange Board of India has not taken any further action in the matter. The merged entity does not expect any further proceedings or action in this regard.

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$ 3 million) due from Esslon Synthetics. In May 2001, the guarantor filed a counterclaim for an amount of Rs. 1.0 billion (US$ 20 million) against ICICI and other lenders who were parties to the suit on the grounds that he had been coerced by officers of the lenders, specifically IFCI Limited, into signing an agreement between LML Limited, Esslon Synthetics and the lenders on account of which he suffered, among other things, loss of business. In April 1999, ICICI also 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$ 28 million) due from Mardia Chemicals. In July 2002, the merged entity issued a notice to Mardia Chemicals under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002 demanding payment of its outstanding dues. In August 2002, Mardia Chemicals Limited filed a suit in the City Civil Court at Ahmedabad against the merged entity, Mr. K. V. Kamath, Managing Director and Chief Executive Officer and Ms. Lalita D. Gupte, Joint Managing Director, for an amount of Rs. 56.3 billion (US$ 1.2 billion) on the grounds that Mardia Chemicals has 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. Mardia Chemicals has also filed a petition in the Delhi High Court challenging the constitutional validity of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Ordinance, 2002. Management believes, based on consultation with counsel, that the legal proceedings instituted by each of Esslon Synthetics and Mardia Chemicals against the merged entity are frivolous and untenable and their ultimate resolution will not have a material adverse effect on the merged entity's results of operations, financial condition or liquidity.

SELECTED FINANCIAL AND OPERATING DATA FOR ICICI BANK

The selected financial and other data for ICICI Bank for and at year-end fiscal 1998, 1999, 2000, 2001 and 2002 have been derived from the financial statements prepared in accordance with US GAAP. These financial statements have been audited by KPMG, independent accountants.

In October 2001, the boards of directors of ICICI and ICICI Bank approved a plan of combination whereby ICICI Bank acquired ICICI, ICICI Personal Financial Services and ICICI Capital Services (otherwise referred to in this annual report as the "amalgamation"). The amalgamation was approved by the shareholders of ICICI Bank and ICICI 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 Statement on Financial Accounting Standards No. 141 on business combinations requires that business combinations be accounted for in the period in which the combination is consummated, other than in exceptional circumstances. Accordingly, under US GAAP, the amalgamation has not been reflected in the financial statements of ICICI Bank for the year ended March 31, 2002, as it was consummated in April 2002. The effective date of the amalgamation for accounting purposes under US GAAP was April 1, 2002. ICICI Bank's financial statements for fiscal 2002, therefore, do not include the assets, liabilities and results of operations of ICICI, ICICI Personal Financial Services and ICICI Capital Services. 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. The amalgamation was accounted for by the purchase method to reflect the increase in ownership interest of ICICI in ICICI Bank from 46.0%, ICICI's ownership interest in ICICI Bank at the time of the amalgamation, to 100.0%.

Under Indian GAAP, the amalgamation was accounted for on March 30, 2002, the Appointed Date specified in the Scheme of Amalgamation. As ICICI Bank is the surviving legal entity in the amalgamation, the other subsidiaries and affiliates of ICICI have become subsidiaries and affiliates of ICICI Bank.

You should read the following data with the more detailed information contained in "Operating and Financial Review and Prospects for ICICI Bank" and ICICI Bank's financial statements. You should also read the following data in light of ICICI's financial information contained in "Operating and Financial Review and Prospects for ICICI" and ICICI's financial statements in this annual report. Historical results do not necessarily predict the results in the future. Income statement data and balance sheet data for future periods will not be comparable to ICICI Bank's historical results due to the amalgamation. See "Unaudited Pro Forma Condensed Consolidated Financial Data for ICICI Bank and ICICI" for the results of operations and financial condition of ICICI Bank for the year ended March 31, 2002, reflecting the amalgamation as if it had occurred on April 1, 2000. In ICICI Bank's annual report on Form 20-F for fiscal 2003, as a result of the reverse merger accounting, ICICI Bank will be required to present three years of ICICI's financial statements only. ICICI's financial statements for fiscal 2003 will reflect the amalgamation, and ICICI's financial statements for fiscal 2002 and 2001 will reflect the results of ICICI Bank as an equity investment.

                                                                                      Year ended March 31,
                                                         ------------------------------------------------------------------------
                                                         1998          1999          2000        2001          2002       2002(1)
                                                         ----          ----          ----        ----          ----       -------
                                                                           (in millions, except per common share data)

Selected income statement data:
Interest revenue.................................     Rs. 2,579    Rs.  5,390    Rs. 8,434   Rs. 12,406    Rs. 20,837    US$  426
Interest expense.................................        (1,854)       (4,244)      (6,656)      (8,408)      (15,116)       (309)
                                                      ---------    ---------     ---------   ----------    ----------    ---------
Net interest revenue.............................           725         1,146        1,778        3,998         5,721         117
Provision for loan losses........................          (360)         (540)        (427)      (1,082)       (1,722)        (35)
                                                      ---------    ---------     ---------   ----------    ----------    ---------
Net interest revenue after provisions
   for loan losses...............................           365           606        1,351        2,916         3,999          82
Non-interest revenue, net........................           591           866        1,759        1,754         5,213         107
Net revenue......................................           956         1,472        3,110        4,670         9,212         189
Non-interest expense.............................          (554)         (799)      (1,329)      (3,104)       (6,260)       (128)
                                                      ---------    ---------     ---------   ----------    ----------    ---------
Income before taxes..............................           402           673        1,781        1,566         2,952          61
Income tax expense...............................          (104)         (170)        (379)        (258)         (931)        (19)
                                                      ---------    ---------     ---------   ----------    ----------    ---------
Net income before cumulative effect
   of change in accounting principle.............     Rs.   298    Rs.    503    Rs. 1,402   Rs.  1,308    Rs.  2,021    US$   42

Cumulative effect of change in
   accounting principle..........................             -             -            -            -            16           -
                                                      ---------    ----------    ---------   ----------    ----------    ---------
Net income.......................................     Rs.   298    Rs.    503    Rs. 1,402   Rs.  1,308    Rs.  2,037    US$   42
                                                      =========    ==========    =========   ==========    ==========    =========
Per common share data:
Basic-before cumulative effect of
   change in accounting  principle...............     Rs.  1.84   Rs.    3.05    Rs.  8.49   Rs.   6.60    Rs.   9.17    US$ 0.19
Basic-after cumulative effect of
   change in accounting principle................          1.84          3.05         8.49         6.60          9.24        0.19
Diluted-before cumulative effect of
   change in accounting principle (2)............          1.84          3.05         8.49         6.60          9.17        0.19
Diluted-after cumulative effect of
   change in accounting principle (2)............          1.84          3.05         8.49         6.60          9.24        0.19
Dividends(3).....................................          1.00          1.00         1.20         1.50          4.00        0.08
Book value.......................................         14.98         17.15        57.86        74.00         82.37        1.76
Common shares outstanding at end of
   period (in millions of common shares).........           165           165          197          220           220
Weighted average common shares outstanding -
   basic (in millions of common shares)..........           162           165          165          198           220
Weighted average common shares outstanding -
   diluted (in millions of common shares)........           162           165          165          198           220
------------

(1) Rupee amounts for fiscal 2002 have been translated into US dollars using the noon buying rate in effect on March 29, 2002 of Rs. 48.83 = US$1.00.
(2) Options to purchase 1,636,125 equity shares and 6,327,825 equity shares granted to employees at a weighted average exercise price of Rs. 171.90 and Rs. 145.98 were outstanding at March 31, 2001 and 2002, respectively, and have been included in the computation of diluted earnings per share wherever the average market price of the equity shares during the period was greater than the exercise price of the options.
(3) In India, dividends for a fiscal year are normally declared and paid in the following year. The same was true for ICICI Bank until fiscal 2001. However, in fiscal 2002 the dividend was paid by ICICI Bank as an interim dividend during fiscal 2002. 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 is different from the dividend declared for the year.

                                                                                    At March 31,
                                         ------------------------------------------------------------------------------------------
                                               1998          1999           2000            2001            2002          2002(1)
                                               ----          ----           ----            ----            ----          -------
                                                                           (in millions)
Selected balance sheet data:
Total assets............................ Rs.  35,278   Rs.  76,265     Rs. 130,386     Rs. 220,538     Rs. 404,805     US$ 8,290
Cash and cash equivalents(2)............       8,728        19,928          36,361          47,306          89,371         1,830
Trading account assets..................       7,387        15,822          28,228          18,725          26,075           534
Loans, net(3)...........................      12,765        27,597          46,986          93,030          72,474         1,484
Securities available for sale...........       1,476         3,963           4,709          24,787         155,758         3,190
Securities held to maturity ............           -             -               -          10,944          24,294           498
Impaired loans, net.....................         179           733             670           2,489           2,683            55
Total liabilities.......................      32,807        73,435         118,999         204,231         386,655         7,918
Long-term debt(4).......................         129         1,764           2,476           2,421           5,740           118
Deposits................................      26,290        60,729          98,660         164,254         325,221         6,660
Stockholders' equity....................       2,471         2,830          11,387          16,307          18,150           372
Period average(5):
Total assets............................      26,661        53,325          87,264         137,033         255,051         5,223
Interest-earning assets.................      19,467        42,521          68,982         105,697         208,254         4,265
Loans, net(3)...........................       9,498        18,546          31,148          57,889          85,381         1,749
Total liabilities.......................      24,351        50,657          83,967         123,186         237,822         4,870
Interest-bearing liabilities............      17,185        41,212          66,897          90,993         191,509         3,922
Long-term debt..........................         109         1,127           1,752           1,716           4,435            91
Total deposits..........................      18,539        39,455          67,309          93,514         194,839         3,990
Of which:
  Interest-bearing deposits.............      15,140        35,916          59,881          81,009         175,010         3,584
Stockholders' equity....................       2,310         2,668           3,297          13,847          17,229           353


                                                                                    At or for the year ended March 31,
                                                                  ------------------------------------------------------------------
                                                                      1998            1999          2000             2001     2002
                                                                      ----            ----          ----             ----     ----
                                                                                             (in percentages)
Profitability:
Net income as a percentage of:
 Average total assets...........................................         1.12%          0.94%         1.61%         0.95%     0.80%
 Average stockholders' equity...................................        12.90          18.85         42.52          9.45     11.82
Dividend payout ratio(including dividend tax)(6)................        50.34          35.39         15.53         20.95     20.95
Spread(7).......................................................         2.46           2.38          2.28          2.50      2.11
Net interest margin(8)..........................................         3.72           2.70          2.58          3.78      2.75
Cost-to-income ratio(9).........................................        42.10          39.71         37.57         53.96     57.25
Cost-to-average assets ratio(10)................................         2.08           1.50          1.52          2.27      2.45
Capital:
Total capital adequacy ratio(11)................................        13.48          11.06         19.64         11.57     16.12
Tier 1 capital adequacy ratio(11)...............................        13.38           7.32         17.42         10.42     13.16
Tier 2 capital adequacy ratio(11)...............................         0.10           3.74          2.22          1.15      2.96
Average stockholders' equity as a percentage of average total
    assets......................................................         8.66           5.00          3.78         10.10      6.76
Asset quality:
Gross impaired loans as a percentage of gross loans(12).........         4.58           5.66          2.97          5.56      7.25
Net impaired loans as a percentage of net loans.................         1.40           2.66          1.43          2.68      3.70
Net impaired loans as a percentage of total assets..............         0.51           0.96          0.51          1.13      0.66
Allowance for loan losses as a percentage of gross impaired
    loans.......................................................        70.36          54.56         52.75         53.33     50.83
Allowance for loan losses as a percentage of gross loans (12)...         3.22           3.09          1.57          3.01      3.75

(1) Rupee amounts for fiscal 2002 have been translated into US dollars using the noon buying rate in effect on March 30, 2002 of Rs. 48.83 = US$1.00.
(2) Includes interest-bearing deposits maintained with the Reserve Bank of India pursuant to the cash reserve ratio requirement.
(3) Net of allowance for loan losses in respect of impaired loans.
(4) Includes current portion of long-term debt.

(5) Average balances are the daily average outstanding amounts.
(6) Represents the ratio of dividends declared for the year on common stock, as a percentage of net income for that year.
(7) 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 revenue to average interest-earning assets. Cost of average interest-bearing liabilities is the ratio of interest expense to average interest-bearing liabilities.
(8) Represents the ratio of net interest revenue 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.
(9) Represents the ratio of non-interest expense to the sum of net interest revenue and non-interest revenue.
(10) Represents the ratio of non-interest expense to average total assets.
(11) ICICI Bank's capital adequacy is computed in accordance with the Reserve Bank of India guidelines. The computation is based on ICICI Bank's financial statements prepared in accordance with Indian GAAP. ICICI Bank's total capital adequacy ratio computed under the applicable Reserve Bank of India guidelines and based on ICICI Bank's financial statements prepared in accordance with US GAAP was 15.9% at year-end fiscal 2002. Using the same basis of computation, ICICI Bank's Tier 1 capital adequacy ratio was 13.0% and ICICI Bank's Tier 2 capital adequacy ratio was 2.9% at year-end fiscal 2002. See "Operating and Financial Review and Prospects for ICICI Bank -- Financial Condition -- Capital".
(12) Gross loans are net of unearned income.
(13) Figures for fiscal 2000 and fiscal 2001 have been reclassified. Please see the notes to ICICI Bank's financial statements for a more-detailed description.

Average Balance Sheet

The average balance is the daily average of balances outstanding. The amortized portion of loan origination fees (net of loan origination costs) is included in interest revenue on loans, representing an adjustment to the yield. The yield on average interest-earning assets is the ratio of interest revenue to average interest-earning assets. The cost of 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. Tax-exempt income on a tax-equivalent basis has not been recalculated because ICICI Bank believed the effect of doing so would not be significant. The following tables set forth, for the periods indicated, the average balances of assets and liabilities outstanding, which are major components of interest revenue, interest expense and net interest margin.

                                        Year ended March 31, 2000         Year ended March 31, 2001     Year ended March 31, 2002
                                        -------------------------         -------------------------  -----------------------------
                                                Interest  Average               Interest   Average               Interest  Average
                                      Average   revenue/   yield/  Average      revenue/    yield/    Average    revenue/  yield/
                                      balance    expense   cost    balance       expense     cost     balance    expense    cost
                                      -------    -------   ----    -------       -------   -------    -------    --------- ------
                                                                    (in millions, except percentages)

Assets:
Interest-earning assets:
Cash, cash equivalents
  and trading assets(1)...........   Rs. 31,817 Rs. 3,184 10.01%  Rs. 31,278  Rs.  2,978 Rs. 9.52%  Rs. 48,867  Rs. 4,100      8.39%
Securities, available for
   sale (2)........................       6,017       684 11.37       11,889       1,217    10.24       53,210      3,709      6.97
Securities, held to maturity.......           -         -     -        4,641         543    11.70       20,796      2,006      9.65
Loans, net.........................      31,148     4,437 14.24       57,889       7,419    12.82       85,381     10,327     12.10
Other interest income(3)...........           -       129     -            -         249        -                     695         -
                                         ------     -----            -------      ------               -------     ------
Total interest-earning assets......      68,982     8,434 12.23      105,697      12,406    11.74      208,254     20,837     10.01
Non-interest-earning assets:
Cash and cash equivalents(4).......       7,273                       16,131                            19,646
Acceptances........................       7,356                       10,727                            12,963
Property and equipment.............       1,777                        2,290                             4,605
Other assets.......................       1,876                        2,188                             9,583
Total non-earning assets...........      18,282                       31,336                            46,797
                                    ----------  ---------        ----------- -----------           ----------- ----------
Total assets....................... Rs. 87,264  Rs. 8,434        Rs. 137,033 Rs.  12,406           Rs. 255,051 Rs. 20,837
                                    ==========  =========        =========== ===========           =========== ==========
Liabilities:
Interest-bearing liabilities:
Savings account deposits........... Rs.   3,530 Rs.   118  3.34% Rs.   8,598 Rs.     244     2.83% Rs.  21,397 Rs.    649      3.03%
Time deposits......................      56,351     5,671 10.06       72,411       7,017     9.69      153,613     12,932      8.42
Long-term debt.....................       1,752       244 13.93        1,716         240    13.99        4,435        506     11.41
Trading account and other
   liabilities.....................       5,264       623 11.84        8,268         907    10.97       12,064      1,029      8.53
                                    ----------  ---------        ----------- -----------           ----------- ----------
Total interest-bearing liabilities.      66,897     6,656  9.95       90,993       8,408     9.24      191,509     15,116      7.89
                                    ==========  =========        =========== ===========           =========== ==========
Non-interest-bearing liabilities:
Non-interest-bearing deposits......       7,428                       12,505                            19,829
Other liabilities..................       9,642                       19,688                            26,484
                                          -----                       ------
Total non-interest-bearing
   liabilities.....................      17,070                       32,193                            46,313
                                    ----------- ---------        ----------- -----------           ----------- ----------
Total liabilities.................. Rs.  83,967 Rs. 6,656        Rs. 123,186 Rs.   8,408           Rs. 237,822 Rs. 15,116
                                    =========== =========        =========== ===========           =========== ==========
Stockholders' equity............... Rs.   3,297                  Rs.  13,847                       Rs.  17,229
                                    ===========                  ===========                       ===========
Total liabilities and
   stockholders' equity............ Rs.  87,264                  Rs. 137,033                       Rs. 255,051
                                    ===========                  ===========                       ===========

(1) Includes government of India securities in trading book, inter-bank deposits and lending, commercial paper, certificate of deposits, mutual fund units and equity securities.
(2) Includes corporate debt securities, government of India securities held as available for sale and mutual fund units.
(3) Includes interest income earned on balances maintained with the Reserve Bank of India pursuant to the cash reserve ratio requirement. See "Supervision and Regulation -- Legal Reserve Requirements -- Cash Reserve Ratio". The Reserve Bank of India pays interest at the bank rate on balances in excess of 3.0% of ICICI Bank's demand and time liabilities.
(4) Includes interest-bearing deposits maintained with the Reserve Bank of India pursuant to the cash reserve ratio requirement.

                                                  Fiscal 2001 vs. Fiscal 2000               Fiscal 2002 vs. Fiscal 2001
                                        ----------------------------------------  ---------------------------------------------
                                             Increase (decrease)(1) due to                    Increase (decrease)(1) due to
                                        ----------------------------------------  ---------------------------------------------
                                                                                                    Change in      Change in
                                         Net        Change in        Change in        Net            average        average
                                        change    average volume   average rate      change           volume         Rate
                                        ------    --------------   ------------      -------        ---------    ------------
                                                                           (in millions)
Interest revenue:
Cash, cash equivalents and trading
  assets...............................  Rs.  (206)   Rs.  (51)     Rs.(155)      Rs.  1,122      Rs.   1,476    Rs.    (354)
Securities, available for sale.........         533         601         (68)           2,492            2,880           (388)
Securities, held to maturity...........         543         543           --           1,463            1,558            (95)
Loans, net.............................       2,982       3,427        (445)           2,908            3,325           (417)
Other interest income..................         120         120           --             446              446             --
                                        -----------   ---------     -------       ----------      -----------    ------------
Total interest revenue.................  Rs.  3,972   Rs. 4,640     Rs.(668)      Rs.  8,431      Rs.   9,685    Rs.  (1,254)
                                        ===========   =========     =======       ==========      ===========    ============
Interest expense:
Savings account deposits...............  Rs.    126   Rs.   144     Rs. (18)      Rs.    405      Rs.     388    Rs.      17
Time deposits..........................       1,346       1,556        (210)           5,915            6,836           (921)
Long-term debt.........................         (4)         (5)            1             266              310            (44)
Trading account and other liabilities..         284         330         (46)             122              324           (202)
                                        -----------   ---------     -------       ----------      -----------    -----------
Total interest expense.................  Rs.  1,752   Rs. 2,025     Rs.(273)      Rs.  6,708      Rs.   7,858    Rs.  (1,150)
                                        ===========   =========     =======       ==========      ===========    ===========
Net interest revenue...................  Rs.  2,220   Rs. 2,615     Rs.(396)      Rs.  1,723      Rs.   1,827    Rs.    (104)
                                        ===========   =========     =======       ==========      ===========    ===========

                                                                                           Year ended March 31,
                                                                -----------------------------------------------------------------
                                                                    1998           1999          2000       2001           2002
                                                                    ----           ----          ----       ----           ----
                                                                                     (in millions, except percentages)

Interest revenue............................................    Rs.   2,579   Rs.  5,390    Rs. 8,434   Rs.  12,406   Rs. 20,837
Average interest-earning assets.............................         19,467       42,521       68,982       105,697      208,254
Interest expense............................................          1,854        4,244        6,656         8,408       15,116
Average interest-bearing liabilities........................         17,185       41,212       66,897        90,993      191,509
Average total assets........................................         26,661       53,325       87,264       137,033      255,051
Average interest-earning assets as a percentage of average
   total assets.............................................           73.0%        79.7%        79.0%         77.1%        81.7%
Average interest-bearing liabilities as a percentage of
   average total assets.....................................           64.5         77.3         76.7          66.4         75.1
Average interest-earning assets as a percentage of average
   interest-bearing liabilities.............................          113.3        103.2        103.1         116.2        108.7
Yield.......................................................          13.25        12.68        12.23         11.74        10.00
Cost of funds...............................................          10.79        10.30         9.95          9.24         7.89
Spread(1)...................................................           2.46         2.38         2.28          2.50         2.11
Net interest margin(2)......................................           3.72         2.70         2.58          3.78         2.75

(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 revenue 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 revenue 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.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS FOR ICICI BANK

You should read the following discussion and analysis of ICICI Bank's financial condition and results of operations together with ICICI Bank's audited financial statements. The following discussion is based on ICICI Bank's audited financial statements, which have been prepared in accordance with US GAAP. You should also read the discussion and analysis of ICICI's financial condition and results of operation contained in "Operating and Financial Review and Prospects for ICICI" together with ICICI's financial statements.

Introduction

ICICI Bank's loan portfolio, financial condition and results of operations have been, and in the future, are expected to be influenced by economic conditions, particularly industrial growth, in India and certain global developments, particularly in commodity prices relating to the business activities of its corporate customers. For ease of understanding the discussion of ICICI Bank's results of operations that follows, you should consider the introductory discussion of these macroeconomic factors.

Indian Economy

Overall GDP growth in the Indian economy has been in the range of 4.0-6.0% in the last three years. In fiscal 2000, GDP grew at a rate of 6.1%. For fiscal 2001, the preliminary estimate of 5.2% GDP growth was revised downwards to 4.0%, while preliminary estimates have pegged the growth rate for fiscal 2002 at 5.4%. In fiscal 2002, growth was predominantly affected by the weakness in the industrial sector. Agricultural growth, which was negative for the last two years with production falling by 0.2% in fiscal 2001 and 0.7% in fiscal 2000, saw a pick-up in fiscal 2002 with growth turning positive at 5.7%. Lower GDP growth in fiscal 2001 was a result of negative growth in the agricultural sector and weakness in the industrial sector. Growth in fiscal 2000 was affected by a slowdown in the agricultural sector. The industrial sector has seen consistent weakness over this period, particularly in the manufacturing and electricity sectors. Growth in industrial production, which had slowed to 4.9% in fiscal 2001 from 6.7% in fiscal 2000, slowed further to 2.7% in fiscal 2002. Growth between fiscal 1998 and 1999 was affected by a slowdown in the global economy stemming from the economic crisis in Asia, Russia and elsewhere.

Average inflation, as measured by the wholesale price index, rose to 7.2% in fiscal 2001 from 3.3% in fiscal 2000 mainly due to an increase of 28.5% in prices of fuel products. Therefore, inflation during fiscal 2001 was a cost-push driven phenomenon with the hardening of global crude oil prices feeding directly into domestic prices. Inflation reduced to 3.3% in fiscal 2002, mainly on account of a much lower increase of 9.1% in prices of fuel products in fiscal 2002. However, the continuing and possibly prolonged battle against terrorism by the US or any attack or other action by the US or a US-led coalition on or in relation to Iraq could result in lengthy regional hostilities in the Middle-East countries where most of the world's oil production facilities are located. This could lead to increases in oil prices or higher volatility in oil prices.

In fiscal 2002, the rupee depreciated vis-a-vis the US dollar in a volatile currency market as international developments, after the events of September 11, 2001, led to a sharp decline in equity prices and net capital outflows of foreign institutional investors. The rupee has appreciated against the US dollar in fiscal 2003 following buoyant dollar inflows into the country, combined with the US currency's weakness in global markets. Foreign exchange reserves were US$ 54.1 billion at March 30, 2002 and rose to US$ 61.5 billion at August 30, 2002.

Industrial growth in April-July 2002 was 4.0% compared to a growth of 2.3% in April-July 2001. The overall growth in industry during fiscal 2003 will affect the performance of the banking sector as it will affect the level of credit disbursed by banks. If industrial growth does not pick up further, it

could affect the overall growth prospects of the merged entity's business, including its ability to grow, the quality of its assets and its ability to implement its strategy.

Regional Hostilities and Terrorist Attacks

India has from time to time experienced social and civil unrest and hostilities with neighboring countries. In recent years, there have been military confrontations between India and Pakistan in the Kashmir region. At present, relations between India and Pakistan continue to be tense on the issues of terrorism and Kashmir. These hostilities and tensions could lead to political or economic instability in India and a possible adverse effect on the merged entity's business, its future financial performance and the price of its equity shares and its ADSs. This is important in the current context, as the terrorist attacks in the US in September 2001 have affected the markets all over the world. The continuing and possibly prolonged battle against terrorism by the US or any attack or other action by the US or a US-led coalition on or in relation to Iraq could result in lengthy regional hostilities and tensions thereby affecting the Indian economy as well as the merged entity's business and the price of the merged entity's equity shares and ADSs.

Possibility of Drought

A significant risk to the Indian economy's growth prospects also arises from the cautious agricultural outlook due to an erratic monsoon. This year, the June-September southwest monsoon, critical for the country's agricultural sector, was 24.0% below normal (the worst in more than 15 years), affecting crops in key grain-bowl states. Since agriculture accounts for 24.3% of GDP, the possibility of a drought (which can be ascertained only after October) could significantly affect the merged entity's business, including its ability to grow and the quality of its assets.

Banking Sector

According to the Reserve Bank of India's data, total deposits of all commercial banks increased by 13.9% in fiscal 2000, 18.4% in fiscal 2001 and 14.6% in fiscal 2002. In fiscal 2001, bank deposits increased mainly as a result of the India Millennium Deposits (approximately Rs. 256.6 billion) raised by the State Bank of India to augment overall foreign exchange reserves of the country. These bonds increased the level of deposits in fiscal 2001 because they were included in deposits. Excluding the India Millennium Deposits, bank deposits would have risen by 15.2% in fiscal 2001. In fiscal 2002, excluding the India Millennium Deposits outstanding at year-end fiscal 2001, the growth in deposits was 15.0%. Bank credit grew by 18.2% in fiscal 2000, 17.3% in fiscal 2001 and 15.3% in fiscal 2002. In fiscal 2000, a recovery in industrial growth pushed up the increase in credit growth rate.

In the last five fiscal years, there has been 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 corporate borrowers have access to funding at competitive rates. The Reserve Bank of India's primary motive has been to realign interest rates with the market to facilitate a smooth transition from a government-controlled regime in the early 1990s, when interest rates were heavily regulated, to a more market-oriented interest rate regime. Banks have generally followed the direction of interest rates set by the Reserve Bank of India and adjusted both their deposit rates and lending rates downwards. On July 21, 2000, the Reserve Bank of India reversed the downward movement of the last four fiscal years and announced an increase in the bank rate of 100 basis points. However, on February 16, 2001, the bank rate was reduced to 7.5% and then reduced to 7.0% on March 7, 2001, thus reversing the upward movements initiated earlier. In October 2002, it was further reduced to 6.5%. The following table sets forth the decline in average deposit rates and average lending rates of five major public sector banks for the last five years.

                                  Average deposit rate                    Average prime
     Fiscal year              for over one year term (range)          lending rate (range)
     -----------              ------------------------------          --------------------
1998.......................           10.5-11.0                                14.0
1999.......................           9.0-11.0                            12.0-13.0
2000.......................           8.0-10.5                            12.0-12.5
2001.......................           8.5-10.0                            11.0-12.0
2002.......................           8.0-8.5                             11.0-12.0
2003(through August 23)....           7.0-8.0                             11.0-12.0

                                                                                    Year ended March 31,
                                                       -----------------------------------------------------------------------------
                                                                                                                       2002/2001
                                                               2001                 2002              2002             % change
                                                       --------------------- ------------------- ---------------- ------------------
                                                                             (in millions, except percentages)
Interest revenue
Cash, cash equivalents and trading
 account assets...................................             Rs.  2,978          Rs.  4,100        US$    84               37.7%
Securities - available for sale...................                  1,217               3,709               76              204.8
Securities - held to maturity.....................                    543               2,006               41              269.5
Loans.............................................                  7,419              10,327              211               39.2
Others............................................                    249                 695               14              179.1
                                                               ----------          ----------         --------
Total interest revenue............................             Rs. 12,406          Rs. 20,837        US$   426               68.0
                                                               ----------          ----------         --------

Interest expense
Savings account deposits..........................            Rs.     244          Rs.    649        US$    13              166.0
Time deposits.....................................                  7,017              12,932              265               84.3
Long-term debt....................................                    240                 506               10              110.8
Trading account and other liabilities.............                    907               1,029               21               13.5
                                                               ----------          ----------         --------
Total interest expense............................             Rs.  8,408          Rs. 15,116         US$  309               79.8
                                                               ----------          ----------         --------
Net interest revenue..............................             Rs.  3,998          Rs.  5,721         US$  117               43.1
                                                               ==========         ===========         ========

                                                                                        Year ended March 31,
                                                                       -----------------------------------------------------
                                                                                                                  2001/2000
                                                                        2000                    2001              % change
                                                                        ----                    ----              ----------
                                                                                 (in millions, except percentages)
Interest revenue
Cash, cash equivalents and trading                                     Rs.   3,184        Rs.    2,978              (6.5)%
 account assets.........................................
Securities - available for sale.........................                       684               1,217              77.9
Securities - held to maturity...........................                         -                 543               -
Loans...................................................                     4,437               7,419              67.2
Others..................................................                       129                 249              93.0
                                                                       -----------        ------------
Total interest revenue..................................               Rs.   8,434        Rs.   12,406              47.1
                                                                       -----------        ------------

Interest expense
Savings account deposits................................               Rs.     118        Rs.      244             106.8
Time deposits...........................................                     5,671               7,017              23.7
Long-term debt..........................................                       244                 240              (1.6)
Trading account and other liabilities...................                       623                 907              45.6
                                                                       -----------        ------------
Total interest expense..................................               Rs.   6,656        Rs.    8,408              26.3
                                                                       -----------        ------------

Net interest revenue....................................               Rs.   1,778        Rs.    3,998             124.9
                                                                       ===========        ============

                                                                                    At March 31,
                                            ----------------------------------------------------------------------------------
                                                                           2001/2000                                 2002/2001
                                                 2000       2001            % change          2002          2002     % change
                                            -----------    -----------   -----------     --------------   --------   ---------
                                                                        (in millions, except percentages)
Gross impaired loans....................    Rs.   1,418    Rs.   5,333        276.0%     Rs.   5,457       US$ 112      2.3%
Allowance for impaired loans............            748          2,844        280.0            2,774            57     (2.5)
Net impaired loans......................            670          2,489        271.0            2,683            55      7.8
Gross impaired loans as a percentage of
  gross loans(1)........................           2.97%          5.56%                         7.25%
Net impaired loans as a percentage of
  net loans.............................           1.43            2.68                         3.70
Allowances for loan losses as a
  percentage of gross impaired loans....          52.75           53.33                        50.83
Allowances for loan losses as a
  percentage of gross loans(1)..........           1.57            3.01                         3.75

                                                                                     Year ended March 31,
                                                                ---------------------------------------------------------------
                                                                      2000             2001              2002           2002
                                                                 ------------     --------------     -----------     ----------
                                                                               (in millions, except percentages)
Provisions for loan losses.....................................      Rs.  427         Rs.  1,082    Rs.  1,722          US$ 35
Provisions for loan losses as a percentage of net loans........          0.91%              1.16%         2.38%
Provisions for loan losses as a percentage of total assets.....          0.33               0.49          0.43

                                                                             Year ended March 31,
                                               ----------------------------------------------------------------------------------
                                                                                                                  2002/2001
                                                      2001                 2002                2002               % change
                                               -------------------- ------------------- -------------------- --------------------
                                                                       (in millions, except percentages)
Fees and commissions (1)..................             Rs.   1,125         Rs. 1,733             US$     36              54.0%
Trading account revenue(2)................                     602             2,196                     45             264.8
Securities transactions(3) ...............                   (384)               872                     18                 -
Foreign exchange transactions(4) .........                     397               365                      7             (8.1)
Other revenue.............................                      14                47                      1             235.7
                                               -------------------- ------------------- --------------------
Total non-interest revenue, net...........            Rs.    1,754         Rs. 5,213              US$   107             197.2
                                               ==================== =================== ====================

                                                                                             Year ended March 31,
                                                                          ---------------------------------------------------------
                                                                                                                          2001/2000
                                                                                 2000                   2001              % change
                                                                                 ----                   ----              --------
                                                                                       (in millions, except percentages)
Fees and commissions (1).........................................          Rs.     607              Rs.   1,125               85.3%
Trading account revenue(2).......................................                  857                      602              (29.8)
Securities transactions(3) ......................................                   75                     (384)            (612.0)
Foreign exchange transactions(4) ................................                  220                      397               80.5
Other revenue....................................................                    -                       14                  -
                                                                           -----------              -----------
Total non-interest revenue, net..................................          Rs.   1,759              Rs.   1,754               (0.3)
                                                                           ===========              ===========
---------------

                                                                                    Year ended March 31,
                                                            ----------------- ----------------- ---------------- -----------------
                                                                                                                    2002/2001
                                                                  2001              2002             2002            % change
                                                            ----------------- ----------------- ---------------- -----------------
                                                                              (in millions, except percentages)
Employee expense:
  Salaries.............................................          Rs.     412       Rs.   1,146        US$    23          178.2%
  Employee benefits....................................                   95               372                8          291.6
                                                            ----------------- ----------------- ----------------
Total employee expense.................................                  507             1,518               31          199.4
Occupancy expense:
 Premises..............................................                  170               222                4           30.8
 Rentals, taxes and electricity........................                  361               662               14           83.4
Computer and office equipment..........................                  640             1,282               26          100.3
                                                            ----------------- ----------------- ----------------
Total occupancy expense................................                1,171             2,166               44           85.0
                                                            ----------------- ----------------- ----------------
Administration and other expenses:
  Advertisement and publicity...........................                 143                80                2          (44.1)
  Communications expense...............................                  206               377                8           83.0
  Printing and stationery..............................                  242               353                7           45.9
  Direct selling agents' expenses......................                   87                80                2              -
  Bank charges.........................................                   85               123                3           44.7
 Amortization of goodwill and
   other intangible assets.............................                   12               244                5        1,933.3
  Other................................................                  651             1,319               26          102.6
                                                            ----------------- ----------------- ----------------
Total administration and other expense.................                1,426             2,576               53           80.7
                                                            ----------------- ----------------- ----------------
Total non-interest expense.............................           Rs.  3,104       Rs.   6,260         US$  128          101.7
                                                            ================= ================= ================

                                                                                              Year ended March 31,
                                                                                   --------------------------------------------
                                                                                                                    2001/2000
                                                                                       2000             2001         % change
                                                                                   ------------      ----------     -----------
                                                                                       (in millions, except percentages)
Employee expense:
  Salaries..............................................................           Rs.      257      Rs.    412           60.3%
  Employee benefits.....................................................                     59              95           61.0
                                                                                   ------------      ----------
Total employee expense..................................................                    316             507           60.4
Occupancy expense:
 Premises...............................................................                     57             170          198.2
 Rentals, taxes and electricity.........................................                    180             361          100.6
 Computer and office equipment..........................................                    283             640          126.2
                                                                                   ------------      ----------
Total occupancy expense.................................................                    520           1,171          125.2
                                                                                   ------------      ----------
Administration and other expenses:
  Advertisement and publicity...........................................                     39             143          266.7
  Communications expense................................................                     69             206          198.6
  Printing and stationery...............................................                     82             242          195.1
  Direct selling agents' expenses.......................................                     10              87          770.0
  Bank charges..........................................................                     33              85          157.6
 Amortization of goodwill & other intangible assets.....................                      -              12            -
 Other..................................................................                    260             651          150.4
                                                                                   ------------      ----------
Total administration and other expense..................................                    493           1,426          189.2
                                                                                   ------------      ----------
Total non-interest expense..............................................            Rs.   1,329      Rs.  3,104          133.6
                                                                                   ============      ==========

                                                                               At March 31,
                                          ------------------------------------------------------------------------------------------
                                                                           2001/2000                                    2002/2001
                                             2000             2001          % change         2002            2002        % change
                                          ------------------------------------------------------------------------------------------
                                                                     (in millions, except percentages)
Cash and cash equivalents...............    Rs.  34,313     Rs.   44,896        30.8%      Rs.   87,965     US$ 1,801       95.9%
Interest-bearing deposits with banks....          2,048            2,410        17.7              1,406            29      (41.7)
Amount lent under reverse repurchase
  transactions .........................              -                -           -              9,116           187          -
Trading account assets (1)..............         28,228           18,725      (33.7)             26,075           534       39.3
Securities- Available for sale(2).......          4,709           24,787       426.4            155,758         3,190      528.4
Securities- Held to maturity............              -           10,944           -             24,294           498      122.0
Loans, net..............................         46,986           93,030        98.4             72,474         1,484      (22.1)
Acceptances(3)..........................          8,490           12,869        51.6             12,608           258       (2.0)
Property and equipment..................          2,097            3,920        86.9              4,831            99       23.2
Intangible assets.......................              -            2,641           -              2,397            49       (9.2)
Other assets (4)........................          3,515            6,316        79.7              7,881           161       24.8
                                          -------------------------------               ------------------------------
Total assets............................    Rs. 130,386     Rs.  220,538        69.1       Rs.  404,805     US$ 8,290       83.6
                                          ===============================               ==============================

                                                                               At March 31,
                                      ----------------------------------------------------------------------------------------------
                                                                         2001/2000                                         2002/2001
                                            2000             2001         % change            2002               2002      % change
                                      --------------     ------------    ---------         -------------      ----------   ---------
                                                                     (in millions, except percentages)
Deposits.............................   Rs.   98,660     Rs.  164,254        66.5%         Rs.   325,221      US$  6,660       98.0%
Amount borrowed under repurchase
transactions.........................              -              537           -                 21,399             438    3,884.9
Trading account liabilities(1).......          1,922            5,958       210.0                  1,237              25      (79.2)
Short-term borrowings(2).............          2,187            3,012        37.7                  1,409              29      (53.2)
Acceptances..........................          8,490           12,869        51.6                 12,608             258       (2.0)
Other liabilities (3)................          5,264           15,180       188.4                 19,041             390       25.4
Long-term debt.......................          2,476            2,421       (2.2)                  5,740             118      137.1
                                      --------------     ------------                      -------------      ----------
Total liabilities....................        118,999          204,231        71.6                386,655           7,918       89.3
Stockholders' equity.................         11,387           16,307        43.2                 18,150             372       11.3
                                      --------------     ------------                      -------------      ----------
Total................................   Rs.  130,386      Rs. 220,538        69.1          Rs.   404,805       US$ 8,290       83.6
                                      ==============     ============                      =============      ==========

                                                                               At March 31,
                                        --------------------------------------------------------------------------------------------
                                                                           2001/2000                                       2002/2001
                                            2000            2001            % change            2002            2002        % change
                                        --------------     --------------  ---------     -------------    -----------     ----------
                                                                     (in millions, except percentages)
Interest-bearing deposits:
   Savings deposits...................  Rs.      5,332     Rs.     18,786    252.3%      Rs.    24,970    US$     511         32.9%
   Time deposits......................          77,453            119,097     53.8             270,677          5,543        127.3
                                        --------------     --------------                -------------    -----------
Total interest-bearing deposits.......          82,785            137,883     66.6             295,647          6,054        114.4
Non-interest-bearing deposits:
   Demand deposits ...................          15,875             26,371     66.1              29,574            606         12.1
                                        --------------     --------------   ------       -------------    -----------       ------
Total deposits........................  Rs.     98,660     Rs.    164,254     66.5       Rs.   325,221    US$   6,660         98.0
                                        ==============     ==============   ======       =============    ===========       ======

                                                Notional principal amounts                 Balance sheet credit exposure(1)
                                        ---------------------------------------------------------------------------------------
                                                       At March 31,                                  At March 31,
                                        ---------------------------------------------------------------------------------------
                                            2000            2001            2002           2000          2001             2002
                                        ------------     -----------    ------------     ---------    ---------         -------
                                                      (in millions)                                 (in millions)
Interest rate products:
Swap agreements.................        Rs.      900     Rs.  11,380    Rs.   46,687             -    Rs.    12         Rs. 121
                                        ------------     -----------    ------------     ---------    ---------         -------
Total interest rate products....        Rs.      900     Rs.  11,380    Rs.   46,687             -    Rs.    12         Rs. 121
                                        ============     ===========    =============    =========    =========         =======
Foreign exchange products:
Forward contracts...............        Rs.   62,892     Rs.  78,249    Rs.  127,699     Rs.   309    Rs.   120         Rs. 240
Swap agreements.................               7,658           8,710           4,545             -            -              25
                                        ------------     -----------    ------------     ---------    ---------         -------
Total foreign exchange
  Products......................        Rs.   70,550     Rs.  86,959    Rs.  132,244     Rs.   309    Rs.   120         Rs. 265
                                        ============     ===========    ============     =========    =========         =======

                                                   At March 31,
                                ------------------------------------------------
                                    2001              2002              2002
                                ------------       -----------        ----------
                                                  (in millions)
Financial guarantees........... Rs.    7,511       Rs.  12,551        US$    257
Performance guarantees.........        5,949             8,565        US$    175
                                ------------       -----------        ----------
Total guarantees............... Rs.   13,460       Rs.  21,116        US$    432
                                ============       ===========        ==========

Year ending March 31,                            (in millions)
                                       -----------------------------------
2003...................................  Rs.      174          US$     4
2004...................................           180                  4
2005...................................           183                  4
2006...................................           190                  4
2007...................................           197                  4
Thereafter.............................           630                 12
                                       -----------------------------------
Total minimum lease requirements.......  Rs.    1,554          US$    32
                                       ===================================

               Indian GAAP                                           At March 31,
                                    ---------------------------------------------------------------------------------
                                                                                                            2002/2001
                                        2000              2001             2002              2002            % change
                                    -----------       -----------     ------------       -----------        ---------
                                                             (in millions, except percentages)
Tier 1 capital..................... Rs.  11,251       Rs.  13,024     Rs.   15,184       US$     311           16.6%
Tier 2 capital.....................       1,437             1,450            3,415                70          135.5
                                    -----------       -----------     -------------      -----------
Total capital...................... Rs.  12,688       Rs.  14,474     Rs.   18,599       US$     381           28.5
                                    ===========       ===========     ============       ===========
On-balance sheet risk assets.......      51,611           101,982           91,089             1,865          (10.7)
Off-balance sheet risk assets......      12,979            23,070           24,291               498            5.3
                                    -----------       -----------     ------------       -----------
Total risk assets.................. Rs.  64,590       Rs. 125,052      Rs. 115,380       US$   2,363           (7.7)
                                    ===========       ===========     ============       ===========
Tier 1 capital adequacy ratio......        17.4%             10.4%            13.1%
Tier 2 capital adequacy ratio......         2.2               1.2%             3.0%
                                    -----------       -----------     ------------
Total capital adequacy ratio.......        19.6%             11.6%            16.1%
                                    ===========       ===========     ============

                                            Year ended March 31,
                               -------------------------------------------------
                                   2000         2001          2002         2002
                               -----------  ------------  ------------  --------
                                                  (in millions)
Premises:
Owned......................... Rs.     132  Rs.      294  Rs.       85  US$    2
Leasehold.....................          30           289            81         2
                               -----------  ------------  ------------  --------
Total premises................         162           583           166         4
Computers and accessories.....         248           783           834        17
Other.........................         197           633           420         8
                               -----------  ------------  ------------  --------
Total capital expenditure..... Rs.     607  Rs.    1,999  Rs.    1,420  US$   29
                               ===========  ============  ============  ========

                                                                 Year ended March 31,
                                     -------------------------------------------------------------------------------
                                                                                                     2002/2001
                                             2001               2002                2002              % change
                                     -------------------------------------------------------------------------------
                                                          (in millions, except percentages)
Retail Banking segment...............   Rs.      (521)       Rs.     390           US$     8                 -%
Corporate Banking segment............            1,575               931                  19             (40.9)
Treasury segment.....................              206               716                  15             247.6
Bank of Madura.......................               48                 -                   -                 -
                                     -------------------------------------------------------
Total................................   Rs.      1,308       Rs.   2,037           US$    42              55.7%
                                     =======================================================

                                                                 Year ended March 31,
                                     -------------------------------------------------------------------------------
                                                                                                     2002/2001
                                             2001               2002                2002              % change
                                     -------------------------------------------------------------------------------
                                                          (in millions, except percentages)
Retail Banking segment...............   Rs.    32,602        Rs.   73,285          US$  1,501            124.8%
Corporate Banking segment............         116,054             126,541               2,591              9.0
Treasury segment.....................          37,944             204,979               4,198            440.2
Bank of Madura.......................          33,938                   -                   -                -
                                     -------------------------------------------------------
Total................................   Rs.   220,538        Rs.  404,805          US$  8,290             83.6%
                                     =======================================================

                                                          Year ended March 31,
                                           ---------------------------------------------------
                                                        2002                        2001
                                           ---------------------------------------------------
                                                       (in millions, except US$)
ICICI until the date of amalgamation......   Rs.     29  US$    593,897         Rs.       45
Other Affiliates..........................            4          81,917                   27
                                           ---------------------------------------------------
Total.....................................   Rs.     33  US$    675,814         Rs.       72
                                           ===================================================

                                 ----------------------------- ---------------------------------------
                                           ICICI                          Other Affiliates
                                 ----------------------------- ---------------------------------------
At March 31, 2001                                        (in millions)
Accounts receivable..............  Rs.    38       US$   0.78          Rs.     17        US$     0.35
Accounts payable.................      5,209              107               2,847                  58

At March 31, 2002
Accounts receivable..............         24             0.49                   1                0.02
Accounts payable.................      4,680               96                 893                  18

                                                                          Year ended March 31,
                                                   --------------------------------------------------------------------
                                                       1998       1999        2000       2001       2002      2002(1)
                                                   --------------------------------------------------------------------
                                                               (in millions, except per common share data)
Selected income statement data:
Interest revenue..................................  Rs. 54,387 Rs. 70,293 Rs.  79,296 Rs. 79,757 Rs. 78,570  US$ 1,609
Interest expense..................................     (42,431)   (58,043)    (67,492)   (67,892)   (69,509)    (1,423)
                                                   --------------------------------------------------------------------
Net interest revenue..............................      11,956     12,250      11,804     11,865      9,061        186
Dividends.........................................         553        676       1,502        406        467         10
                                                   --------------------------------------------------------------------
Net interest revenue, including dividends.........      12,509     12,926      13,306     12,271      9,528        195
Provisions for loan losses........................     (4,768)    (6,067)     (6,363)    (9,892)    (9,743)       (200)
                                                   --------------------------------------------------------------------
Net interest revenue, including dividends, after
   Provisions for loan losses.....................       7,741      6,859       6,943      2,379       (215)        (4)
Non-interest revenue, net.........................       5,325      5,560       9,815      9,288      9,450         194
                                                   --------------------------------------------------------------------
Net revenue......................................       13,066     12,419      16,758     11,667      9,235         189
                                                   --------------------------------------------------------------------
Non-interest expense..............................     (2,686)    (3,795)     (5,302)    (5,808)    (10,275)       (210)
Equity in earnings of affiliate...................         (9)       (34)         20        856         975          20
Minority interest.................................       (135)      (170)       (361)        34         289           6
                                                   --------------------------------------------------------------------
Income before taxes...............................      10,236      8,420     11,115      6,749         224           5
Income tax expense................................     (1,446)    (1,194)     (2,033)      (119)       (129)         (3)
                                                   --------------------------------------------------------------------
Net income (before extraordinary items and
   cumulative effect of  change in accounting
   principle, net of tax).........................       8,790      7,226       9,082      6,630         95          2
Extraordinary items, net of tax(2)................           -        292           -          -          -          -
Cumulative effect of change in accounting
   principle, net of tax (3)......................           -          -         249          -      1,265         26
                                                   --------------------------------------------------------------------
Net income/net income from continuing operations.. Rs.   8,790 Rs.  7,518 Rs.   9,331 Rs.  6,630 Rs.  1,360  US$    28
                                                   ====================================================================
Operating revenue (4) ............................ Rs.  59,770 Rs. 76,276 Rs.  90,360 Rs. 89,198 Rs. 88,487  US$ 1,812
                                                   ====================================================================
Net operating income (5).......................... Rs.   8,430 Rs.  7,330 Rs.   9,377 Rs.  6,602 Rs.     96  US$     2
                                                   ====================================================================
Per common share:
Net income/net income from continuing operations--
    Basic(6)......................................  Rs.  18.39 Rs.  15.66 Rs.   14.45 Rs.   8.44 Rs.   1.73  US$   0.03
Net income/net income from continuing operations--
    Diluted(7)....................................       15.74      13.52       13.77       8.41       1.73        0.03
Net operating income--basic........................      17.64      15.27       14.52       8.41       0.12       0.003
Net operating income--diluted......................      15.11      13.18       13.85       8.38       0.12       0.003
Dividends(8)......................................        4.50       5.50        5.50       5.50      11.00        0.23
Book value........................................       68.78      76.06       90.29      96.67      90.61        1.86
Common shares outstanding at end of period
   (in millions of common shares).................         478        480         785        785       785
Weighted average common shares outstanding
  --basic (in millions of common shares)..........         478        480         646        785       785
Weighted average common shares outstanding
  --diluted (in millions of common shares)........         575        577         687        785       785

                                                                            Year ended March 31,
                                                              -------------------------------------------------
                                                                 1998      1999     2000     2001      2002
                                                              -------------------------------------------------
Selected income statement data:
Interest revenue..............................................  12.51%    12.24%  11.23%    11.29%    10.51%
Interest expense..............................................  (9.76)   (10.11)  (9.56)    (9.61)    (9.30)
                                                              -------------------------------------------------
Net interest revenue..........................................   2.75      2.13    1.67      1.68      1.21
Dividends.....................................................   0.13      0.12    0.21      0.06      0.06
                                                              -------------------------------------------------
Net interest revenue, including dividends.....................   2.88      2.25    1.88      1.74      1.27
Provisions for loan losses....................................  (1.10)    (1.06)  (0.90)    (1.40)    (1.30)
                                                              -------------------------------------------------
Net interest revenue,  including  dividends,  after provisions
  for Loan losses.............................................   1.78      1.19    0.98      0.34     (0.03)
Non-interest revenue, net.....................................   1.22      0.97    1.39      1.31      1.27
                                                              -------------------------------------------------
Net revenue...................................................   3.00      2.16    2.37      1.65      1.24
Non-interest expense..........................................  (0.62)    (0.66)  (0.75)    (0.82)    (1.38)
Equity in earnings of affiliate...............................      -     (0.01)      -      0.12      0.13
Minority interest.............................................  (0.03)    (0.03)  (0.05)        -      0.04
                                                              -------------------------------------------------
Income before taxes...........................................   2.35      1.46    1.57      0.96      0.03
Income tax expense............................................  (0.33)    (0.21)  (0.29)    (0.02)    (0.02)
                                                              -------------------------------------------------
Net income (before extraordinary items and cumulative effect
   of change in accounting principle, net of tax).............   2.02       1.25    1.28      0.93      0.01
Extraordinary items and cumulative effect of change in
    Accounting principle, net of tax..........................      -       0.05    0.04         -      0.17
                                                              -------------------------------------------------
Net income/net income from continuing operations..............   2.02%      1.30%   1.32%     0.93%     0.18%
                                                              =================================================
Operating revenue ............................................  13.74%     13.28%  12.80%    12.62%    11.84%
                                                              =================================================
Net operating income.........................................    1.94%      1.28%   1.33%     0.93%     0.01%
                                                              =================================================

                                                                     At March 31,
                                       -------------------------------------------------------------------------
                                           1998        1999        2000        2001        2002      2002(1)
                                       -------------------------------------------------------------------------
                                                          (in millions, except percentages)
Selected balance sheet data:
Total assets........................... Rs. 489,799 Rs. 646,945 Rs. 774,279 Rs. 740,445 Rs. 745,830  US$ 15,274
Securities.............................      14,582      15,041      18,871      20,115      63,025       1,290
Loans, net(2)..........................     377,184     475,106     561,448     602,023     523,601      10,723
Troubled debt restructuring
   (restructured loans), net...........       5,210       6,749      10,795      32,309      77,366       1,584
Other impaired loans, net..............      17,456      23,214      24,240      20,081      33,187         680
Total liabilities......................     455,476     609,661     699,073     664,027     674,070      13,804
Long-term debt.........................     347,956     435,521     436,320     492,880     511,423      10,474

Deposits...............................      29,295      60,605      96,682       6,072       7,380         151

Redeemable preferred stock(3)..........       3,366      10,897      10,207         698         772          16
Stockholders' equity...................      32,876      36,494      70,908      75,922      71,161       1,457

Common stock ..........................       4,781       4,801       7,832       7,848       7,848         161
Period average(4):
Total assets...........................     434,870     574,198     706,066     706,582     747,479      15,308
Interest-earning assets................     367,646     500,966     612,452     615,867     643,150      13,171
Loans, net(2)..........................     334,465     430,830     513,421     570,989     591,398      12,111
Total liabilities(5)...................     403,168     538,213     650,794     631,563     671,937      13,761
Interest-bearing liabilities...........     356,489     483,636     583,609     576,474     613,377      12,561
Long-term debt.........................     311,601     383,286     436,718     462,916     504,081      10,323
Stockholders' equity................... Rs.  31,702 Rs.  35,985 Rs.  55,272 Rs.  75,019 Rs.  75,542 US$   1,547
Profitability:
Net income as a percentage of:
   Average total assets................       2.02%        1.30%       1.32%       0.93%       0.18%
   Average stockholders' equity........      27.73        20.89       16.88        8.84        1.80
   Average stockholders' equity
   (including redeemable preferred
   stock) (6)..........................      27.06        19.26       15.95        8.89        1.88

Dividend payout ratio(7)...............       22.3         34.8        28.3        52.9       635.2
Spread(8)..............................       2.89         2.03        1.39        1.17        0.89
Net interest margin(9).................       3.25         2.44        1.93        1.93        1.41
Cost-to-income ratio(10)...............      15.49        19.79       22.37       26.04       52.61
Cost-to-average assets ratio(11).......       0.62         0.63        0.72        0.79        1.34
Capital:
Total capital adequacy ratio
   for  ICICI(12)......................      13.02        12.46       17.27       14.66        N.A.
Tier 1 capital adequacy ratio
   for ICICI(12).......................       8.78         8.25       11.52        9.65        N.A.
Tier 2 capital adequacy ratio
   for ICICI(12).......................       4.24         4.21        5.75        5.01        N.A.
Average stockholders' equity as a
   percentage of average total assets..       7.29         6.27        7.83       10.62       10.11
Average stockholders' equity
   (including redeemable preferred
   stock) as a  percentage of average
   total assets........................       7.59         7.48        9.30       10.95       10.21

                                                                          At or for the year ended March 31,
                                                                      ---------------------------------------------
                                                                        1998    1999     2000     2001     2002
                                                                      ---------------------------------------------
                                                                                   (in percentages)
Asset quality:
Net restructured loans as a percentage of net loans..................    1.38%    1.42%    1.92%    5.37%   14.78%
Net other impaired loans as a percentage of net loans................    4.63     4.89     4.32     3.34     6.34
Allowance for loan losses on restructured loans as a percentage of
   gross restructured loans .........................................   45.48    48.76    41.79    26.03    18.64
Allowance for loan losses on other impaired loans as a percentage of
   gross other impaired loans........................................   50.92    48.77    52.07    51.89    34.61

Allowance for loan losses as a percentage of gross loans.............    5.62%    5.66%    5.72%    5.20%    6.54%

                                                                    Year ended March 31,
                             -----------------------------------------------------------------------------------------
                                          2000                         2001                         2002
                             -----------------------------------------------------------------------------------------
                                         Interest  Average             Interest Average            Interest  Average
                              Average    revenue/  yield/    Average   revenue/  yield/   Average  revenue/  yield/
                              balance    expense   cost      balance   expense    cost    balance   expense   cost
                             -----------------------------------------------------------------------------------------
Assets:                                                 (in millions, except percentages)
Cash, cash equivalents and
  Trading assets:
  Rupee...................... Rs. 61,375 Rs. 7,962  12.97% Rs. 30,082 Rs. 3,179  10.57% Rs. 28,634 Rs. 1,882   6.57%
  Foreign currency...........     33,361     1,418   4.25      13,136       567   4.32       9,422       200   2.12
                              --------------------         --------------------         --------------------
Total cash, cash equivalents
  and Trading assets.........     94,736     9,380   9.90      43,218     3,746   8.67      38,056     2,082   5.47
Securities--debt:
  Rupee......................      4,295       420   9.78       1,660       154   9.28      13,696     1,151   8.40
  Foreign currency...........          -         -      -           -         -      -           -         -      -
                              --------------------         --------------------         --------------------
Total securities--debt........     4,295       420   9.78       1,660       154   9.28      13,696     1,151   8.40
Loans, net:
  Rupee......................    431,313    62,016  14.38     491,792    67,494  13.72     521,168    69,725  13.38
  Foreign currency...........     82,108     7,322   8.92      79,197     7,778   9.82      70,230     5,512   7.85
                              --------------------         --------------------         --------------------
Total loans, net.............    513,421    69,338  13.51     570,989    75,272  13.18     591,398    75,237  12.72
Other interest income........          -       158      -           -       584      -           -       100      -
Interest-earning assets:
  Rupee......................    496,983    70,556  14.20     523,534    71,412   13.64    563,498    72,858  12.93
  Foreign currency...........    115,469     8,740   7.57      92,333     8,345    9.04     79,652     5,712   7.17
                              --------------------         --------------------         --------------------
Total interest-earning assets.   612,452    79,296  12.95     615,867    79,757   12.95    643,150    78,570  12.22
Securities--equity:
  Rupee......................     14,419     1,502  10.42      24,722       406    1.64     30,119       467   1.55
  Foreign currency...........          -         -      -           -         -       -          -         -      -
                              --------------------         --------------------         --------------------
Total securities--equity......    14,419     1,502  10.42      24,722       406    1.64     30,119       467   1.55
Earning assets:
  Rupee......................    511,402    72,058  14.09     548,256    71,818   13.10    593,617    73,325  12.35
  Foreign currency...........    115,469     8,740   7.57      92,333     8,345    9.04     79,652     5,712   7.17
                              --------------------         --------------------         --------------------
Total earning assets.........    626,871    80,798  12.89     640,589    80,163   12.51    673,269    79,037  11.74
Cash and cash equivalents....     16,653                        3,914                        6,775

Acceptances..................     11,224                        4,048                        3,552
Property and equipment.......      9,352                       11,787                       13,771
Other assets.................     41,966                       46,244                       50,112
Total non-earning assets.....     79,195                       65,993                       74,210
                              --------------------         --------------------          -------------------
Total assets................. Rs.706,066    80,798         Rs.706,582    80,163          Rs.747,479   79,037
                              ====================         ====================          ===================

                                                          Year ended March 31,
                        -----------------------------------------------------------------------------------------
                                    2000                          2001                         2002
                        -----------------------------------------------------------------------------------------
                                   Interest  Average             Interest  Average             Interest Average
                          Average  revenue/  yield/    Average   revenue/  yield/    Average   revenue/  yield/
                          balance  expense    cost     balance   expense    cost     balance   expense    cost
                        -----------------------------------------------------------------------------------------
Liabilities:                                       (in millions, except percentages)
Savings account deposits:
  Rupee.................Rs.  3,530 Rs.   118  3.34%  Rs.     -   Rs.    -     -%  Rs.       -  Rs.     -    -%
  Foreign currency......         -         -     -           -          -     -             -          -    -
                        --------------------         --------------------         ----------------------
Total savings account
  Deposits..............      3,530      118  3.34           -          -     -             -          -     -
Time deposits:
  Rupee.................     61,252    5,828  9.51       3,682        490 13.31         6,618        744 11.24
  Foreign currency......      3,056      158  5.15           -          -     -             -          -     -
Total time deposits.....     64,308    5,986  9.31       3,682        490 13.31         6,618        744 11.24
                        --------------------         --------------------         ----------------------
Long-term debt:
  Rupee.................    340,461   46,277 13.59       373,603   50,337  13.47      424,723     54,387 12.81
  Foreign currency......     96,257    5,467  5.68        89,313    6,249   7.00       79,358      5,337  6.72
                        --------------------         --------------------         ----------------------
Total long-term debt....    436,718   51,744 11.85       462,916   56,586  12.22      504,081     59,724 11.85
Redeemable preferred
  Stock.................     10,427    1,149 11.02         2,321      244  10.51          735         74 10.07
Trading account and
  other Liabilities:
  Rupee.................     68,626    8,495 12.38       100,569   10,229  10.17       85,056      8,206 9.65
  Foreign currency......          -        -     -         6,986       343  4.91       16,888        761 4.50
                        --------------------         --------------------         ----------------------
Total trading account
  and Other liabilities.     68,626    8,495 12.38       107,555   10,572   9.83      101,944      8,967 8.80
Interest-bearing
liabilities:
  Rupee.................    484,296   61,867 12.77       480,175   61,300  12.77      517,132     63,412 12.26
  Foreign currency......     99,313    5,625  5.66        96,299    6,592   6.84       96,246      6,097  6.34
                        --------------------         --------------------         ----------------------
Total interest-bearing
  Liabilities...........    583,609   67,492 11.56       576,474   67,892  11.78      613,378     69,509 11.33
Non-interest-bearing
  Deposits:
  Rupee.................      7,180                            -                            -
  Foreign currency......        263                            -                            -
                        ------------                 -----------
Total non-interest-
  bearing Deposits......      7,443                            -                            -
Other liabilities.......     59,742                       55,089                       58,560
                        ------------                 -----------                  -----------
Total non-interest-
  bearing Liabilities...     67,185                       55,089                       58,560
                        ---------------------        --------------------         ----------------------
Total liabilities.......Rs. 650,794 Rs.67,492        Rs. 631,563 Rs.67,892        Rs. 671,938 Rs. 69,509
                        =====================        =====================        ======================
Stockholders' equity....Rs.  55,272                  Rs.  75,019                  Rs.  75,541
                        -----------                  -----------                  -----------
Total liabilities and
  Stockholders' equity..Rs. 706,066                  Rs. 706,582                   Rs.747,479
                        ============                 ============                  ==========

                                            Fiscal 2001 vs. Fiscal 2000        Fiscal 2002 vs. Fiscal 2001
                                         -------------------------------------------------------------------------------
                                             Increase (decrease) due to        Increase (decrease) due to
                                         -------------------------------------------------------------------------------
                                          Net change    Change in      Change in  Net change      Change in    Change in
                                                         average        average                    average      average
                                                         volume          rate                       volume        rate
                                         -------------------------------------------------------------------------------
                                                                    (in millions)
Interest revenue:
Cash, cash equivalents and trading
assets:
    Rupee...............................  Rs. (4,783)  Rs. (3,307)   Rs. (1,476) Rs. (1,297)        (95)       (1,202)
    Foreign currency....................        (851)        (873)           22        (367)        (79)         (288)
                                          ----------   ----------    ----------  ----------         ---        ------
Total cash, cash equivalents and trading
  assets................................      (5,634)      (4,180)       (1,454)     (1,664)       (174)       (1,490)
Securities:
    Rupee...............................        (266)        (244)          (22)        997       1,012           (15)
    Foreign currency....................          --           --            --          --          --            --
                                         ----------------------------------------------------------------------------
Total securities........................        (266)        (244)          (22)        997       1,012           (15)
Loans:
    Rupee...............................       5,478        8,300        (2,822)      2,231       3,930        (1,699)
    Foreign currency....................         456         (286)          742      (2,266)       (704)       (1,562)
                                         ----------------------------------------------------------------------------
Total loans.............................       5,934        8,014        (2,080)        (35)      3,226        (3,261)
Other interest revenue..................         427          427            --        (485)       (485)           --
                                         ----------------------------------------------------------------------------
Total interest revenue:
    Rupee...............................         856        5,176        (4,320)      1,446       4,362        (2,916)
    Foreign currency....................        (395)      (1,159)          764      (2,633)       (783)       (1,850)
                                         ----------------------------------------------------------------------------

Total interest revenue..................  Rs.    461 Rs.    4,017    Rs. (3,556) Rs. (1,187) Rs.  3,579   Rs.  (4,766)
                                         ============================================================================
Interest expense:
Savings account deposits:
    Rupee...............................   Rs.  (118) Rs.   (118)    Rs.     --  Rs.     --   Rs.    --   Rs.      --
    Foreign currency....................          --         --              --          --          --            --
                                         ----------------------------------------------------------------------------
Total savings account deposits..........        (118)       (118)            --          --          --            --
Time deposits:
    Rupee...............................      (5,338)     (7,661)         2,323         254         330           (76)
    Foreign currency....................        (158)       (158)            --          --          --            --
                                         ----------------------------------------------------------------------------
Total time deposits.....................      (5,496)     (7,819)         2,323         254         330           (76)
Long-term debt:
    Rupee...............................       4,060       4,465          (405)       4,050       6,546        (2,496)
    Foreign currency....................         782        (486)         1,268        (912)       (669)         (243)
                                         ----------------------------------------------------------------------------
Total long-term debt....................       4,842       3,979            863       3,138       5,877        (2,739)
Redeemable preferred stock(1)...........        (905)       (852)           (53)       (170)       (160)          (10)
Trading account and other liabilities:
    Rupee...............................       1,734       3,249         (1,515)     (2,023)     (1,497)         (526)
    Foreign currency....................         343         343             --         418         446           (28)
                                         ----------------------------------------------------------------------------
Total trading account and other
liabilities.............................       2,077       3,592         (1,515)     (1,605)     (1,051)         (554)
Total interest expense:
    Rupee...............................        (567)       (917)           350       2,111       5,219        (3,108)
    Foreign currency....................         967        (301)         1,268        (494)       (223)         (271)
                                         ----------------------------------------------------------------------------
Total interest expense..................  Rs.    400  Rs.  (1218)   Rs.   1,618  Rs.  1,617   Rs. 4,996   Rs.  (3,379)
                                         ============================================================================
Net interest revenue:
    Rupee...............................       1,423      6,093          (4,670)       (665)       (858)          193
    Foreign currency....................      (1,362)      (858)           (504)     (2,138)       (559)       (1,579)
                                         ============================================================================
Total net interest revenue..............  Rs.     61  Rs. 5,235      Rs. (5,174) Rs. (2,803) Rs. (1,417)  Rs.  (1,386)
                                         ============================================================================

                                                                                  Year ended March 31,
                                                        ------------------------------------------------------------------------
                                                           1998             1999          2000              2001          2002
                                                        ------------------------------------------------------------------------
                                                                (in millions, except percentages)
Interest revenue....................................    Rs.  54,387    Rs.  70,293     Rs. 79,296    Rs.   79,757    Rs. 78,570
Average interest-earning assets.....................        367,646        500,966        612,452         615,867       643,150
Interest expense....................................         42,431         58,043         67,492          67,892        69,509
Average interest-bearing liabilities................        356,489        483,636        583,609         576,474       613,377
Average total assets................................        434,870        574,198        706,066         706,582       747,479
Average interest-earning assets as a percentage of
   average total assets.............................          84.54%         87.25%         86.74%          87.16%        86.04%
Average interest-bearing liabilities as a percentage
   of  average total assets.........................          81.98          84.23          82.66           81.59         82.10
Average interest-earning assets as a percentage of
average Interest-bearing liabilities................         103.13         103.58         104.94          106.83         104.9
Yield...............................................          14.79          14.03          12.95           12.95         12.22
   Rupee............................................          16.74          15.67          14.20           13.64         12.93
   Foreign currency.................................           9.23           8.63           7.57            9.04          7.17
Cost of funds.......................................          11.90          12.00          11.56           11.78         11.33
   Rupee............................................          13.98          13.64          12.77           12.77         12.26
   Foreign currency.................................           6.42           6.07           5.66            6.84          6.34
Spread(1)...........................................           2.89           2.03           1.39            1.17          0.89
   Rupee............................................           2.76           2.03           1.43            0.87          0.67
   Foreign currency.................................           2.81           2.56           1.91            2.20          0.83
Net interest margin(2)..............................           3.25           2.44           1.93            1.93          1.41
   Rupee............................................           3.46           2.23           1.75            1.93          1.68
   Foreign currency.................................           2.65           3.16           2.70            1.90         (0.48)

                                                            Year ended March 31,
                                  --------------------------------------------------------------------------
                                                             2001/2000                          2002/2001
                                      2000         2001      % change            2002            % change
                                  --------------------------------------------------------------------------
                                                     (in millions, except percentages)
Interest revenue................. Rs.  79,296   Rs.  79,757         0.6%  Rs. 78,570   US$ 1,609      (1.5)%
Interest expense.................     (67,492)      (67,892)        0.6      (69,509)     (1,423)      2.4
                                  ---------------------------            -----------------------
Net interest revenue............. Rs.  11,804   Rs.  11,865         0.5%  Rs.  9,061   US$   186      (23.6)%
                                  ===========================            =======================

                                                                          At March 31,
                                                   ---------------------------------------------------------------------------------
                                                                               2001/2000                                  2002/2001
                                                           2000      2001       % change                    2002           % change
                                                   ---------------------------------------------------------------------------------
                                                                           (in millions except percentages)
Gross restructured loans...........................   Rs.  18,546    Rs.  43,681     135.5%     Rs.  95,088     US$  1,947   117.7%
Allowance for loan losses on restructured loans....        (7,751)       (11,372)     46.7          (17,722)          (363)   55.8
                                                      ---------------------------               ---------------------------
Net restructured loans.............................        10,795         32,309     199.3           77,366          1,584   139.5
                                                      ---------------------------               ---------------------------

Gross other impaired loans.........................        50,574         41,744     (17.5)          50,754          1,039    21.6
Allowance for loan losses on other impaired loans...      (26,334)       (21,663)    (17.7)         (17,567)          (360)  (18.9)
                                                      ---------------------------               ---------------------------
Net other impaired loans...........................        24,240         20,081     (17.2)          33,187            680    65.3
                                                      ---------------------------               ---------------------------
Gross impaired loans...............................        69,120         85,425      23.6          145,842          2,987    70.7
Allowance for loan losses (1)......................       (34,085)       (33,035)     (3.1)         (35,289)          (723)    6.8
                                                      ---------------------------               ---------------------------
Net impaired loans.................................        35,035         52,390      49.5          110,553          2,264   111.0
                                                      ===========================               ===========================
Gross total loans..................................       595,533        635,058       6.6          560,248         11,473   (11.8)
Net total loans....................................       561,448        602,023       7.2          523,601         10,723   (13.0)
Gross restructured loans as a percentage of gross
loans................................................      3.11%           6.88%                     16.97%

Gross other impaired loans as a percentage of
gross loans..........................................      8.49%            6.57       9.06
Net restructured loans as a percentage of net
loans................................................      1.92             5.37      14.78
Net other impaired loans as a percentage of net
loans................................................      4.32             3.34       6.34
Allowance for loan losses on restructured loans
   as a percentage of gross restructured
   loans.......                                           41.79            26.03      18.64
Allowance for loan losses on other impaired loans
as a percentage of gross other impaired loans........     52.07            51.89      34.61
Allowance for loan losses as a percentage of
   gross loans.......................................      5.72             5.20       6.54

                                                                     Year ended March 31,
                                                       -------------------------------------------------------------------------
                                                                                       2001/ 2000                  2002/2001
                                                       2000           2001              % change        2002        %change
                                                       -------------------------------------------------------------------------
                                                               (in millions, except percentages)
Provisions for loan losses.......................      Rs. 6,363    Rs. 9,892          55.5%    Rs.8,385  US$ 172   (15.2)%
Portfolio provisions on non-impaired lending asset             -            -             -        1,358       28       -
                                                       ----------------------                   -----------------
Total provisions for  the year...................          6,363        9,892          55.5        9,743      200    (1.5)
Provisions for loan losses as a percentage of net
   loans.........................................           1.13%        1.64%                      1.86%
Provisions for loan losses as a percentage of
   average total assets..........................           0.90         1.40                       1.30

                                             -----------------------------------------------------------------
                                                                   Year-ended March 31,
                                             ----------------------------------------------------------------------
                                                                         2001/2000                        2002/2001
                                                2000      2001           % change      2002       2002    % change
                                             ----------------------------------------------------------------------
                                                            (in millions, except percentages)

Fees, commission and brokerage...............  Rs.  4,258   Rs. 5,317       24.9%   Rs. 4,747     US$ 97     (10.7)%
Trading account revenue(1)...................       2,157         847      (60.7)       2,442         50       188.3
Securities transactions(2)...................       2,363     (1,709)     (172.3)      (3,447)       (70)      101.7
Foreign exchange transactions(3).............         428       (108)     (125.2)          78          2          --
Gain on sale of loans .......................          --         705         --        1,979         41       180.7
Software development and services............           5         701         --        1,493         31       113.0
Insurance premium ...........................          --          60         --        1,178         24      1863.3
Gain on the sale of
  Equity interest in ICICI Bank.............           --       1,996         --           57          1      (97.1)
Gain on sale of stock in other
   Subsidiaries and affiliates...............          --         511         --          108          2      (78.9)
Profit on the sale of certain premises and
equipment....................................         212        (31)     (114.6)          29          1          --
Effect of business combinations..............         253         253        0.0           --         --          --
Other revenue................................         139       1,511      987.1          786         16      (48.0)
                                               -----------  ----------              --------------------
Total non-interest revenue.................    Rs.  9,815   Rs. 9,288       (5.4)   Rs. 9,450    US$ 194        1.7%
                                               ===========  ==========              ====================

                                                                   Year ended March 31,
                                             -------------------------------------------------------------------
                                                                      2001/2000                        2002/2001
                                                2000      2001       % change     2002       2002     %change
                                             -------------------------------------------------------------------
Employee expense:                                           (in millions, except percentages)
   Salaries...................................Rs. 1,386 Rs.  1,606     15.9%   Rs.  2,824  US$  58      75.8%
   Employee benefits...........................     232        334     44.0           454        9      35.9
Total employee expense.........................   1,618      1,940     19.9         3,278       67      69.0
Premises and equipment expense.................   1,055      1,514     43.5         2,262       46      49.4
Administration and other expense...............   2,442      2,046    (16.2)        3,065       63      49.8
Policy holder benefits and claims                     -         49       -          1,379       28   2,714.3
Amortization of intangible assets..............     187        259     38.5           290        6      12.0
                                             ----------------------            --------------------
Total non-interest expense....................Rs. 5,302 Rs.  5,808      9.5%   Rs. 10,275  US$ 210      76.9%
                                             ======================            ====================

                                                                                 At March 31,
                                             ---------------------------------------------------------------------------------
                                                                      2001/2000                                    2002/2001
                                                2000      2001       % change              2002         2002        %change
                                             ---------------------------------------------------------------------------------
                                                                      (in millions, except percentages)
Cash and cash equivalents............     Rs.   71,131    Rs.  30,987      (56.4)%      Rs.  41,760    US$    855      34.8%
Trading account assets(1)............           57,396         18,878      (67.1)            42,376           868     124.5
Securities, excluding venture
   capital investments(2)..........             18,335         16,346      (10.8)            59,104         1,210     261.6
Venture capital investments..........              536          3,769         --              3,921            80       4.0
Investments in affiliates............              264          7,899         --              8,590           176       8.7
Loans, net:
   Rupee.............................          502,196        549,195        9.4            488,025         9,994     (11.1)
   Foreign currency..................           93,337         85,863       (8.0)            72,223         1,479     (15.9)
   Less: Allowances..................          (34,085)       (33,035)      (3.1)           (36,647)         (751)     10.9
                                          ----------------------------                  ------------------------------------
Total loans, net.....................         561,448         602,023         7.2           523,601        10,723     (13.0)
Acceptances..........................          12,333           2,715       (78.0)            4,783            98      76.2
Property and equipment...............          11,775          12,039         2.2            12,949           265       7.6
Other assets.........................          41,061          45,789        11.5            48,746           998       6.5
                                          ---------------------------                   ------------------------------------
Total assets.........................     Rs. 774,279     Rs. 740,445        (4.4)      Rs. 745,830    US$ 15,274       0.7
                                          ===========================                   ====================================

                                                                                 At March 31,
                                             ---------------------------------------------------------------------------------
                                                                      2001/2000                                    2002/2001
                                                2000      2001       % change              2002         2002        %change
                                             ---------------------------------------------------------------------------------
                                                                      (in millions, except percentages)
Deposits................................. Rs.  96,682     Rs.   6,072       (93.7)%     Rs.   7,380    US$    151     21.5%
Trading account liabilities..............      19,263          12,483       (35.2)           17,095           350     36.9
Short-term borrowings....................      68,495          99,656        45.5            70,804         1,450    (29.0)
Acceptances..............................      12,333           2,715       (78.0)            4,783            98     76.2
Long-term debt:
   Rupee.................................     342,816         404,015        17.9           438,529         8,984      8.5
   Foreign currency......................      93,504          88,865        (5.0)           72,894         1,490    (18.0)
                                          ---------------------------                   -------------------------
Total long-term debt.....................     436,320         492,880        13.0           511,423        10,473      3.8
Other liabilities........................      43,023          39,024        (9.3)           50,763         1,040     30.1
Taxes and dividends payable..............      12,750          10,498       (17.7)           11,050           226      5.3
Redeemable preferred stock(1)............      10,207             698       (93.2)              772            16     10.6
                                          ---------------------------                   -------------------------
Total liabilities........................     699,073         664,027        (5.0)          674,070        13,804      1.5
Minority interest........................       4,298             496       (88.5)              599            12     20.8
Stockholders' equity.....................      70,908          75,922         7.1            71,161         1,457     (6.3)
Total liabilities and stockholders'
   Equity................................ Rs. 774,279     Rs. 740,445        (4.4)%     Rs. 745,830    US$ 15,274      0.7%
                                          =======================                       =========================

                                                                               At March 31,
                                       --------------------------------------------------------------------------------------------
                                              Notional principal amounts             Balance sheet credit exposure(1)
                                       --------------------------------------------------------------------------------------------
                                               2000      2001        2002              2002       2000    2001       2002    2002
                                       --------------------------------------------------------------------------------------------
                                                                   (in millions)
Interest rate products:
   Swap agreements..................... Rs.  40,201    Rs. 50,430    Rs. 87,824   US$ 1,799   Rs.  --   Rs    (5)  Rs. 620  US$ 13
   Others..............................         --            --             --          --        --          --       --      --
                                        -------------------------------------------------------------------------------------------
Total interest rate products........... Rs.  40,201    Rs. 50,430    Rs. 87,824   US$ 1,799   Rs.  --   Rs    (5)  Rs. 620  US$ 13
                                        ===========================================================================================
Foreign exchange products:
   Forward contracts................... Rs. 104,514    Rs. 21,091    Rs. 41,873   US$   858   Rs.  309  Rs  (159)  Rs. (41) US$ (1)
   Swap agreements.....................      30,552        23,429        20,395         418         --        --   Rs. 328       7
                                        -------------------------------------------------------------------------------------------
Total foreign exchange products........ Rs. 135,066    Rs. 44,520    Rs. 62,268   US$ 1,275   Rs.  309  Rs. (159)  Rs. 287  US$  6
                                        ===========================================================================================

Lease rental commitments for the year ending March 31,                                      Rs. in millions
------------------------------------------------------                                      ---------------
 2003...............................................................................                Rs. 252
 2004...............................................................................                    187
 2005...............................................................................                     66
 2006...............................................................................                     47
 2007...............................................................................                     29
 Thereafter.........................................................................                     31
                                                                                       ----------------------
 Total minimum lease commitments....................................................                Rs. 612
                                                                                       ======================

                                                                    At March 31,
                                        ----------------------------------------------------------------------
                                                                2001/2000                          2002/2001
                                            2000       2001     % change      2002        2002     % change
                                        ----------------------------------------------------------------------
                                                          (in millions, except percentages)
Financial guarantees(1).................  Rs. 46,253 Rs. 53,167      14.9% Rs. 53,037   US$ 1,086       (0.2)%
Performance guarantees(2)...............      11,811      6,083     (48.5)     21,266         436      249.6
                                        ------------------------           -------------------------
Total guarantees........................  Rs. 58,064 Rs. 59,250       2.0% Rs. 74,303   US$ 1,522       25.4%
                                        ========================           =========================

Indian GAAP                                             At March 31,                    At December 31,
                                          --------------------------------------------------------------------
                                                                          2001/2000
                                                2000          2001         % change           2002
                                          --------------------------------------------------------------------
                                                           (in millions, except percentages)
Tier 1 capital............................    Rs.   74,700 Rs.   72,212     (3.3)%    Rs.   69,404    US$ 1,421
Tier 2 capital............................          37,350      37,526       0.5             3,933           81
                                          ------------------------------              -------------------------
Total capital.............................     Rs. 112,050 Rs. 109,738     (2.1)      Rs.  108,737        2,227
                                          =============================               =========================
On- balance sheet risk weighted assets....     Rs. 587,810     682,353      16.1      Rs.  664,232       13,603
Off-balance sheet risk weighted assets....          60,820      66,007       8.5            72,283        1,480
                                          ------------------------------              -------------------------
Total risk weighted assets................     Rs. 648,630 Rs. 748,360      15.4      Rs. 736,515       15,083
                                          =============================               =========================
Tier 1 capital adequacy ratio.............          11.52%       9.65%                      9.42%
Tier 2 capital adequacy ratio.............          5.75         5.01%                      5.34%
                                          -----------------------------               ------------
Total capital adequacy ratio..............          17.27%      14.66%                    14.76%
                                          =============================               ============

                                                                  Fiscal 2001
                                ------------- ------------- ------------- -------------- -----------------------
                                  Cost at
                                 March 31,     Additions/    Deletions/   Depreciation    Net assets at March
                                    2000       transfers     transfers                          31, 2001
                                ------------- ------------- ------------- -------------- -----------------------
                                                                 (in millions)
Land.............................Rs.   1,328    Rs.     18   Rs.       4   Rs.       77  Rs.   1,265  US$    26
Buildings...........................   4,248         2,450            30            327        6,341        130
Equipment and furniture.............   3,053         1,512           235          1,011        3,319         68
Construction in progress............   1,815           156         1,169             --          802         16
Others..............................     161           219            25             43          312          7
                                ------------- ------------- ------------- -------------- ------------ ----------
Total.............................Rs. 10,605    Rs.  4,355   Rs.   1,463     Rs.  1,458  Rs.  12,039   US$  247
                                ============= ============= ============= ============== ============ ==========

                                                                 Fiscal 2002
                               -------------- ------------ ------------- -------------- -----------------------
                                  Cost at
                                 March 31,    Additions/    Deletions/   Depreciation    Net assets at March
                                   2001        transfers    transfers                          31, 2002
                               -------------- ------------ ------------- -------------- -----------------------
                                                                (in millions)
Land........................       Rs.  1,342  Rs.      -     Rs.      6      Rs.   103    Rs. 1,233      US$ 25
Buildings...................            6,668          731            83            439        6,877         141
Equipment and furniture.....            4,330        1,479           242          1,664        3,903          80
Construction in progress....              802            -           319              6          477          10
Others......................              355          144             9             31          459           9
                               -------------- ------------ ------------- -------------- ------------ -----------
Total.......................       Rs. 13,497  Rs.   2,354    Rs.    659     Rs.  2,243   Rs. 12,949     US$ 265
                               ============== ============ ============= ============== ============ ===========

                                                                                     As of March 31,
                                                                                   2001         2002
                                                                                --------------------------
                                                                                     (in millions)
Cash and cash equivalents....................................................    Rs.  4,882   Rs.  4,360
Loans........................................................................           192          209
Other assets.................................................................           147          320
Other liabilities............................................................            55           24

                                     --------------------------- ---------------------------------- ---------------
                                                                                                      Pro Forma
                                             Historical                Pro Forma Adjustments           Combined
                                     --------------------------- ---------------------------------- ---------------
                                        ICICI       ICICI Bank    Elimination    Step acquisition
                                                                                  method & other
                                                                   of equity        adjustments
                                     ------------- ------------- --------------- ------------------ ---------------
                                                                     (in millions)
Assets
Cash and cash equivalents........... Rs.   41,760  Rs.   98,487   Rs.         -   Rs. (25,676) (a)   Rs.   114,571
Securities..........................      105,401       206,127               -          2,416 (b)         313,944
Investment in equity affiliates.....        8,590             -      (8,204) (e)                  -            386
Loans, net of allowance for
   Loan  losses ....................      523,601        72,474               -        (6,104) (a)         590,083
                                                                                           112 (b)
Goodwill and other intangible
   assets, net......................        2,098         2,397               -          5,739 (c)           8,963
                                                                                       (1,271) (c)
Other assets........................       64,380        25,320               -        (1,454) (a)          88,256
                                                                                            10 (b)
                                     ------------- ------------- --------------- ------------------ ---------------
Total assets........................  Rs. 745,830   Rs. 404,805  Rs. (8,204)           (26,228)      Rs.  1,116,20
                                     ============= ============= =============== ================== ===============

                                      --------------------------- ---------------------------------- ----------------
                                              Historical                Pro Forma Adjustments           Pro Forma
                                                                                                        Combined
                                      ------------- ------------- ---------------- ----------------- ----------------
                                                                                   Step acquisition
                                         ICICI       ICICI Bank     Elimination     method & other
                                                                     of equity       adjustments
                                      ------------- ------------- ---------------- ----------------- ----------------
                                                                      (in millions)
Liabilities
Deposits............................   Rs.   7,380  Rs.  325,221                -   Rs.  (4,277)(a)   Rs.    328,723
                                                                                            399 (b)
Borrowings and trading
   Liabilities......................       605,881        29,785                -      (27,186) (a)          608,570
                                                                                             90 (b)
Other liabilities...................        60,809        31,649                -       (1,772) (a)           93,632
                                                                                          2,946 (b)
                                      ------------- ------------- ---------------- ----------------- ----------------
Total liabilities...................   Rs. 674,070   Rs. 386,655  Rs.           -   Rs.    (29,800)    Rs. 1,030,925
Minority interest...................           599             -                -                 -              599
Stockholders' equity................
Common stock at Rs. 10 par value....         7,848         2,203                -       (3,927) (d)            6,125
Additional paid-in capital..........        38,110        10,926                -        12,520 (d)           61,556
Retained earnings...................        26,042         4,040                -       (4,040) (d)           26,042
Deferred stock compensation.........           (7)           (5)                -              5(d)              (7)
Accumulated   other    comprehensive
   income...........................         (832)           986                -         (986) (d)            (832)
Treasury stock......................             -             -      (8,204) (e)                 -          (8,204)
Total stockholders' equity..........        71,161        18,150          (8,204)             3,572           84,679
                                      ------------- ------------- ---------------- ----------------- ----------------
Total liabilities and
   Stockholders' equity.............   Rs. 745,830   Rs. 404,805  Rs.     (8,204)   Rs.    (26,228)    Rs. 1,116,203
                                      ============= ============= ================ ================= ================

                                     -------------------------------------------------------------------------------
                                             Historical                 Pro Forma Adjustments          Pro Forma
                                     --------------------------------------------------------------     Combined
                                                                                   Step acquisition
                                                                    Elimination     method & other
                                        ICICI       ICICI Bank       of equity       adjustments
                                     -------------------------------------------------------------------------------
                                                                     (in millions)
Interest income.....................  Rs. 79,037      Rs. 20,837   Rs.          -  Rs.    (582) (a)    Rs.   98,277
                                                                                        (1,015) (k)
Interest expense....................      69,509          15,116                -         (582) (a)          84,127
                                                                                             84 (k)
                                     -------------------------------------------------------------------------------
Net interest income.................       9,528           5,721                -        (1,099)             14,150
Provision for loan losses...........       9,743           1,722                -             -              11,465
                                     -------------------------------------------------------------------------------
Net interest income after provision
  for loan losses...................       (215)           3,999                -       (1,099)               2,685
Non-interest income.................
  Fees, commission and brokerage....       4,747           1,733                -          (29) (a)           6,451
  Other non-interest income.........       4,703 (j)       3,480                -         (549) (a)           7,747
                                                                                           113  (k)
Total non-interest income...........       9,450           5,213                -         (465)              14,198
Non-interest expense................      10,275           6,260                -         (431) (a)          16,561
                                                                                          (215) (f)
                                                                                           672  (l)
Earnings in equity of affiliates....         975               -             (929)           -                   46
Minority Interest...................         289               -                -            -                  289
                                     -------------------------------------------------------------------------------
Income before income taxes..........         224           2,952             (929)       (1,590)                657
Income tax expense..................         129             931                -          (438)(I)             622
                                     -------------------------------------------------------------------------------
Net income before cumulative
  effect of accounting changes...... Rs.      95      Rs.  2,021   Rs.       (929) Rs.   (1,152)       Rs.       35
Cumulative effect of accounting
  changes...........................       1,265              16                -             -               1,281
                                     -------------------------------------------------------------------------------
Net income after cumulative effect
  of accounting changes............. Rs. 1,360        Rs.  2,037   Rs.       (929) Rs.    (1,152)      Rs.     1,316
                                     ===============================================================================

                                     -------------------------------------------------------------------------------
                                             Historical                 Pro Forma Adjustments          Pro Forma
                                     ---------------------------------------------------------------    Combined
                                        ICICI       ICICI Bank      Elimination    Step acquisition
                                                                                    method & other
                                                                     of equity       adjustments
                                     -------------------------------------------------------------------------------
                                                                     (in millions)
Interest income.....................   Rs. 80,163     Rs. 12,406   Rs.          -     Rs. (366) (a)    Rs.   91,879
                                                                                          (324) (k)
Interest expense....................       67,892          8,408                -         (366) (a)          75,652
                                                                                          (282) (k)
                                     -------------------------------------------------------------------------------
Net interest income.................       12,271          3,998                -              (42)          16,227
Provision for loan losses...........        9,892           1,082               -                 -          10,974
                                     -------------------------------------------------------------------------------
Net interest income after
provision
  for loan losses...................        2,379          2,916                -              (42)           5,253
Non-interest income
   Fees, commission and brokerage...        5,317          1,125                -          (58) (a)           6,384
   Other non-interest income........    3,971 (j)            629                -         (505) (a)           4,095
                                     -------------------------------------------------------------------------------
Total non-interest income...........        9,288          1,754                -             (563)          10,479
Non-interest expense................        5,808          3,104                -         (563) (a)           9,023
                                                                                           (12) (m)
                                                                                            686 (l)
Earnings in equity of affiliates....          856              -            (814)                 -              42
Minority interest...................           34              -                                                 34
                                     -------------------------------------------------------------------------------
Income before income taxes..........        6,749          1,566            (814)             (716)           6,785
Income tax expense..................          119            258                -          (260)(i)             117
                                     -------------------------------------------------------------------------------
Net income from continuing
   Operations.......................    Rs. 6,630      Rs. 1,308     Rs.    (814)    Rs.      (456)   Rs.     6,668
                                     ==============================================================================

                                                                                         Rs. million
Particulars                                                                          (except share data)
-----------                                                                          -------------------
Number of shares held other than by ICICI (54% of 220 million shares)........                   118.99
Value per share..............................................................                   101.11
Purchase consideration (1)*(2)...............................................                   12,032
Add: Merger costs (g)........................................................                    1,331
Fair value of ICICI Bank stock options (h)...................................                       27
Total purchase consideration.................................................                   13,390

                                               --------------------------------------------------------------------
                                                                                                 Adjustments to
                                                                                                  reflect step
                                                                                                 acquisition of
                                                 Book Value       Fair Value      Difference           54%
                                               --------------------------------------------------------------------
                                                                        (in millions)
Cash and cash equivalents.................     Rs.   98,487    Rs.   98,487      Rs.      -       Rs.        -
Securities................................          206,127         210,601           4,474              2,416
Loans.....................................           72,474          72,681             207                112
Goodwill and other intangibles............            2,398              44         (2,354)            (1,271)
Other assets..............................           25,319          25,204           (115)               (62)
Total assets..............................          404,805         407,017           2,212              1,195
Deposits..................................          325,221         325,959             738                398
Borrowings................................           29,785          29,951             166                 90
Other liabilities.........................           31,649          31,649               -                  -
Total liabilities.........................          386,655         387,559             904                488
Net assets................................     Rs.   18,150    Rs.   19,458       Rs. 1,308       Rs.      707

                                        Particulars                                             (in millions)
                                        -----------                                             -------------
Purchase consideration.....................................................................    Rs.   13,390
Less: Net assets taken over (54.0%)........................................................          10,508
Less: Deferred tax liability created on fair value differences.............................            (352)
                                                                                               --------------
Intangible asset on step acquisition of 54.0%..............................................    Rs.    3,232

 Add:46.0% of existing ICICI Bank goodwill ................................................           1,083
        Intangible asset before gross up for deferred tax..................................           4,315
        Deferred taxes (36.75%)............................................................           2,506
                                                                                               --------------
Intangible asset after gross up for deferred tax (deposit and customer relationships).......    Rs.   6,821
                                                                                               ==============

                                                           Year ended March 31, 2001   Year ended March 31, 2002
                                                           ------------------------------------------------------
                                                                            Fully                         Fully
                                                              Basic        diluted          Basic        diluted
                                                           ------------------------------------------------------
                                                                     (millions, except per share data)
Pro forma earnings
Income from continuing operations....................       Rs.   6,668   Rs.   6,668       Rs.  1,316  Rs. 1,316
Contingent issuances of subsidiaries/affiliates......                 -          (25)                -           -
                                                           ------------------------------------------------------
Income (adjusted for full dilution)..................             6,668         6,643            1,316      1,316
                                                           ======================================================
Common stock
Common stock of legal acquirer.......................               613           613              613        613
Treasury stock.......................................             (101)         (101)            (101)      (101)
Dilutive effect of employee stock options (1) .......                 -             -                -           -
                                                           ------------------------------------------------------
Total................................................               512           512              512        512
                                                           ======================================================
Pro forma earnings per share
Income from continuing operations ...................      Rs.    13.02   Rs.   12.97      Rs.    2.57  Rs.   2.57
                                                           ======================================================

-------------------------------------------------------------------------------------------------------------------------
Name, Designation and Profession               Age   Date of Appointment Other appointments
-------------------------------------------------------------------------------------------------------------------------
Mr. Narayanan Vaghul                           66    March 27, 2002       Chairman
Chairman                                                                  ICICI Knowledge Park
                                                                          Intercommercial Bank, West Indies
Chairman:                                                                 Mahindra Industrial Park Limited
Board Governance and Remuneration Committee                               Director
Business Strategy Committee                                               Air India Limited
Credit Committee                                                          Apollo Hospitals Enterprise Limited
Risk Committee                                                            Azim Premji Foundation
                                                                          Himatsingka Seide Limited
Profession:                                                               Ispat International N.V.,  The Netherlands
Development Banker                                                        Ispat Mexicana, S.A. de C.V., Mexico
                                                                          Mahindra & Mahindra Limited
                                                                          Nicholas Piramal India Limited
                                                                          Technology Network (India) Private Limited
                                                                          Wipro Limited
                                                                          Chairman - Board of Governors
                                                                          Institute for Financial Management and
                                                                          Research
                                                                           India, Chennai
                                                                          Member - Governing Body
                                                                          National Institute of Public Finance and
                                                                          Policy,
                                                                           Delhi
                                                                          Trustee
                                                                          GIVE Foundation
                                                                          LNM Foundation
                                                                          Pratham, Mumbai
                                                                          Pratham, USA
-------------------------------------------------------------------------------------------------------------------------

Mr. Uday Madhav Chitale                        52    August 21,1997       Partner
                                                                          M.P. Chitale and Company
Chairman:                                                                 M.P. Chitale and Associates
Share Transfer and Shareholders'/Investors'                               Director
Grievance Committee                                                       Crossdomain Solutions Private Limited
                                                                          D2K Technologies Private Limited
Profession:                                                               DFK Consulting Services (India) Private
Chartered Accountant                                                      Limited
                                                                          DFK International (the Netherlands)
                                                                          Indian Council for Dispute Resolution
                                                                          Member - Executive Committee
                                                                          Shishu Vihar Mandal
                                                                          Member - Governing Council
                                                                          Maharashtra Chamber of Commerce and Industry
-------------------------------------------------------------------------------------------------------------------------


                                       200

-------------------------------------------------------------------------------------------------------------------------
Name, Designation and Profession               Age   Date of Appointment Other appointments
-------------------------------------------------------------------------------------------------------------------------

Mr. Dinesh Chandra Gupta                       57    July 19, 2002        Director
                                                                          Industrial Development Bank of India
Secretary (Banking & Insurance)                                           Infrastructure Development Finance Company
Ministry of Finance & Company Affairs                                      Limited
Government of India                                                       Life Insurance Corporation of India
                                                                          National Bank for Agriculture and Rural
Profession:                                                                Development
Government Service                                                        State Bank of India
-------------------------------------------------------------------------------------------------------------------------

Dr. Satish Chandra Jha                         68    May 2, 1997          Director
                                                                          Phillips India Limited
Profession:                                                               Walchand Capital Limited
Development Economist
-------------------------------------------------------------------------------------------------------------------------

Mr. Lakshmi Niwas Mittal                       52    May 3, 2002          Director
                                                                          Artha Limited
Profession:                                                               Caribbean Ispat Limited
Industrialist                                                             Consorcio Minero Benito Juarez Pena Colorada
                                                                            S.A. de C.V.
                                                                          Dunmurray Company Unlimited
                                                                          Galmatias Limited
                                                                          Grupo Ispat International S.A. de C.V.
                                                                          Irish Ispat Limited
                                                                          Iscor Limited, South Africa
                                                                          Ispat Annaba Spa
                                                                          Ispat Canada Inc.
                                                                          Ispat Europe Group S.A.
                                                                          Ispat Germany GmbH
                                                                          Ispat Hamburger Stahlwerke GmbH
                                                                          Ispat Inland Holdings Inc.
                                                                          Ispat Inland Inc.
                                                                          Ispat Inland L.P.
                                                                          Ispat Inland S.A.
                                                                          Ispat International Limited
                                                                          Ispat International N.V.
                                                                          Ispat Karmet JSC
                                                                          Ispat Mexicana S.A. de C.V.
                                                                          Ispat Shipping Limited
                                                                          Ispat Sidbec Inc.
                                                                          Ispat Sidex Holdings B.V.
                                                                          Ispat Stahlwerk Ruhrort GmbH
                                                                          Ispat Tebessa Spa
                                                                          Ispat Unimetal S.A.
                                                                          Ispat US Holdings B.V.
                                                                          Ispat (US) Holdings Inc.
                                                                          Ispat US Investments B.V.
                                                                          Kent Wire (Ispat) Limited
                                                                          LNM Capital Limited
                                                                          LNM Holdings B.V.
                                                                          LNM Holdings N.V.
                                                                          LNM Holdings S.L.
                                                                          LNM International Ventures Limited
                                                                          LNM Internet Ventures Limited
                                                                          Lucre Limited
                                                                          Nestor Limited
                                                                          Nuav Limited
                                                                          Penna Colarada Servicios S.A.De C.V.
                                                                          PT Ispat Indo
                                                                          SC Ispat Sidex S.A.
                                                                          Tecvest Corporation N.V.
                                                                          Tommyfield Limited
                                                                          Trefileurope S.A.
                                                                          Walker Wire (Ispat) Inc.
                                                                          3019693 Nova Scotia ULC
                                                                          9064-4816 Quebec Inc.
-------------------------------------------------------------------------------------------------------------------------


                                       201

-------------------------------------------------------------------------------------------------------------------------
Name, Designation and Profession               Age   Date of Appointment Other appointments
-------------------------------------------------------------------------------------------------------------------------

Mr. Anupam Pradip Puri                         56    May 3, 2002          Director
                                                                          Dr. Reddy's Laboratories Limited
Profession:                                                               Godrej Consumer Products Limited
Management Consultant                                                     HCL Technologies Limited
                                                                          Mahindra & Mahindra Limited
-------------------------------------------------------------------------------------------------------------------------

Mr. Somesh Ramchandra Sathe                    57    January 29, 1998     Managing Director
                                                                          Arbes Tools Private Limited
Profession:                                                               ESSP Meditek Private Limited
Technocrat Entrepreneur                                                   Sukeshan Equipments Private Limited
-------------------------------------------------------------------------------------------------------------------------

Mr. Ramaswamy Seshasayee                       54    May 3, 2002          Managing Director
                                                                          Ashok Leyland Limited
                                                                          Chairman
Chairman:                                                                 Irizar TVS Pvt. Limited
Audit Committee                                                           Director
                                                                          Ashley Holdings Limited
Profession:                                                               Ashley Investments Limited
Company Executive                                                         Ashok Leyland Finance Limited
                                                                          EID Parry (India) Limited
                                                                          Ennore Foundries Limited
                                                                          Sundaram Newton Asset Management Company
                                                                           Limited
-------------------------------------------------------------------------------------------------------------------------

Mr. Priya Mohan Sinha                          62    January 22, 2002     Director
                                                                          Azim Premji Foundation
                                                                          Bharti Televentures Limited
Profession:                                                               Lafarge India Limited
Professional Manager                                                      Wipro Limited
                                                                          Member - Board of Governors
                                                                          Management Development Institute
                                                                          Member - Steering Committee
                                                                          Federation of Indian Chamber of Commerce &
                                                                           Industry
-------------------------------------------------------------------------------------------------------------------------

Prof. Marti Gurunath Subrahmanyam              56    May 3, 2002          Director
                                                                          Infosys Technologies Limited
                                                                          Nexgen Financial Holdings Limited
Profession:                                                               Nexgen Re Limited
Professor of Finance, Economics and                                       Nomura Asset Management (U.S.A.), Inc.
International Business                                                    Supply Chainge Inc.
                                                                          Usha Communication Inc.
-------------------------------------------------------------------------------------------------------------------------

Mr. Kundapur Vaman Kamath                      54    April 17, 1996       Chairman
Managing Director & CEO                                                   ICICI Lombard General Insurance Company
                                                     (Managing Director    Limited
Chairman:                                            and Chief            ICICI Prudential Life Insurance Company
Committee of Directors                               Executive Officer     Limited
                                                     effective May 3,     ICICI Securities and Finance Company Limited
Profession:                                          2002)                ICICI Venture Funds Management Company
Company Executive                                                          Limited
                                                                          Vice-Chairman - Governing Board
                                                                          Indian School of Business
                                                                          Director
                                                                          Indian Institute of Management, Ahmedabad
                                                                          Director - Asia Pacific
                                                                          Visa International Asia-Pacific Regional
                                                                          Board,
                                                                           Singapore
                                                                          Director - Board of Governors
                                                                          Indian Institute of Information Technology,
                                                                           Bangalore
                                                                          Member - Board
                                                                          Confederation of Indian Industry
-------------------------------------------------------------------------------------------------------------------------


                                       202

-------------------------------------------------------------------------------------------------------------------------
Name, Designation and Profession               Age   Date of Appointment Other appointments
-------------------------------------------------------------------------------------------------------------------------

                                                                          Member  - Advisory Board
                                                                          NCR Financial Solutions Group Limited, London
                                                                          Member - Board of Governors
                                                                          Karnataka Regional Engineering College,
                                                                           Mangalore
                                                                          Member - Board of Management
                                                                          Manipal Academy of Higher Education
                                                                          Member - Court of Governors
                                                                          Administrative Staff College of India
                                                                          Member - Governing Board
                                                                          National Institute of Bank Management
                                                                          Trustee - Board of Trustees
                                                                          Dr. T.M.A. Pai Foundation
-------------------------------------------------------------------------------------------------------------------------

Mr. Hoshang Noshirwan Sinor                    57    August 21, 1997      Director
Joint Managing Director                                                   ICICI Lombard General Insurance Company
                                                                           Limited
                                                                          ICICI Venture Funds Management Company
Profession:                                                                Limited
Company Executive                                                         Chairman
                                                                          Committee on Swadhan Network constituted by
                                                                           The Indian Banks' Association
                                                                          Confederation of Indian Industry - Banking
                                                                           Committee
                                                                          Confederation of Indian Industry - The
                                                                          National
                                                                           Committee on Banking (2002-03)
                                                                          Member
                                                                          ASSOCHAM - Corporate Governance Committee
                                                                          The Indian Institute of Bankers - Committee
                                                                          on Education and Training
                                                                          The Indian Institute of Bankers - Governing
                                                                           Council
                                                                          The Indian Banks' Association - Finance
                                                                           Committee
                                                                          The Indian Banks' Association - Managing
                                                                           Committee
                                                                          Narsee Monjee Institute of Management Studies
                                                                          - Governing Council
                                                                          Reserve Bank of India - Committee on the
                                                                           Payment Systems in India
                                                                          Reserve Bank of India - National Payments
                                                                           Council
-------------------------------------------------------------------------------------------------------------------------

Ms. Lalita Dileep Gupte                        53    September 12, 1994   Director
Joint Managing Director                              (Joint Managing      ICICI Lombard General Insurance Company
                                                     Director effective    Limited
Chairperson:                                         May 3, 2002)         ICICI Prudential Life Insurance Company
Asset Liability Management Committee                                       Limited
                                                                          ICICI Securities and Finance Company Limited
Profession:                                                               ICICI Venture Funds Management Company
Company Executive                                                          Limited
-------------------------------------------------------------------------------------------------------------------------

Ms. Kalpana Morparia                           53    May 3, 2002          Chairperson
Executive Director                                                        ICICI Investment Management Company Limited
                                                                          Director
Profession:                                                               ICICI Home Finance Company Limited
Company Executive                                                         ICICI Lombard General Insurance Company
                                                                           Limited
                                                                          ICICI Prudential Life Insurance Company
                                                                          Limited
                                                                          ICICI Venture Funds Management Company
                                                                           Limited
                                                                          ICICI Securities and Finance Company Limited
-------------------------------------------------------------------------------------------------------------------------


                                       203

-------------------------------------------------------------------------------------------------------------------------
Name, Designation and Profession               Age   Date of Appointment Other appointments
-------------------------------------------------------------------------------------------------------------------------

Mr. Subrata Mukherji                           49    May 3, 2002          Director
Executive Director                                                        ICICI Lombard General Insurance Company
                                                                           Limited
Profession:                                                               ICICI Securities and Finance Company Limited
Company Executive
-------------------------------------------------------------------------------------------------------------------------

Ms. Chanda Kochhar                             40    April 1, 2001        Chairperson
Executive Director                                                        ICICI Home Finance Company Limited
                                                                          Director
Profession:                                                               ICICI Prudential Life Insurance Company
Company Executive                                                         Limited
                                                                          Member
                                                                          E-Visa Advisory Board for Asia Pacific
-------------------------------------------------------------------------------------------------------------------------

Dr. Nachiket Mor                               38    April 1, 2001        Chairman
Executive Director                                                        Fixed Income Money Market and Derivatives
                                                                           Association of India
Profession:                                                               Regional Director
Company Executive                                                         Global Association of Risk Professionals
                                                                          Board Member & Chairman
                                                                          (Programmes Committee)
                                                                          Institute for Financial Management and
                                                                          Research
                                                                          Director
                                                                          Azim Premji Foundation
                                                                          ICICI Home Finance Company Limited
                                                                          ICICI Venture Funds Management Company
                                                                            Limited
                                                                          Member
                                                                          National Dairy Development Board Investment
                                                                           Committee
                                                                          NSE Executive Committee for Futures & Options
                                                                           Segment
                                                                          RBI Technical Advisory Committee on Money and
                                                                           Government Securities Markets
                                                                          Member - Review Group
                                                                          Society for Education, Action & Research in
                                                                           Community Health  (SEARCH) - ANKUR Project
                                                                          Member- Steering Committee
                                                                          NCFM- National Stock Exchange of India
-------------------------------------------------------------------------------------------------------------------------

The executive officers of the merged entity at August 31, 2002 were as follows:

-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                       Total
                                                                                                          Stock        stock
                                                                                                          options     options
                                                         Years of       Total            Shareholdings    granted    granted at
                                  Designation and          work     remuneration in       at September   in fiscal    June 30,
 Name                     Age     Responsibilities      experience   fiscal 2002(1)       5, 2002 (2)     2002 (3)      2002
-------------------------------------------------------------------------------------------------------------------------------
 Mr. K.V. Kamath (4)      54    Managing Director and       31       Rs. 15,248,667          18,500       120,000      375,000
 (5)                            Chief Executive
                                Officer

 Mr. H.N. Sinor           57    Joint Managing              36       Rs.  9,670,600           1,100       100,000      276,250
                                Director
                                - Domestic Banking

 Ms. Lalita D.            53    Joint Managing              31       Rs. 12,928,725           6,041       110,000      327,500
  Gupte (4) (5)                 Director
                                - International Banking

 Ms. Kalpana Morparia     53    Executive Director          26       Rs.  7,651,439          16,190       100,000      215,000
 (4) (5)                        - Corporate Centre

 Mr. S. Mukherji (4) (5)  49    Executive Director          24       Rs.  8,429,909           2,504       100,000      208,000
                                - Project Finance and
                                Special Assets

 Ms. Chanda D.            40    Executive Director          18       Rs.  7,825,151 (6)       3,881        80,000      155,000
  Kochhar                       - Retail Banking

 Dr. Nachiket Mor         38    Executive Director          15       Rs.  7,546,530 (6)           -        80,000      152,000
                                - Wholesale Banking

 Mr. Sanjiv               51    Senior General              26       Rs.  7,264,421           4,289        40,000      148,000
  Kerkar (4) (5)                Manager

 Ms. Ramni Nirula(4) (5)  50    Senior General              26       Rs.  5,656,332           2,066        60,000      132,000
                                Manager

 Mr. P. H. Ravikumar      51    Senior General              29       Rs.  3,971,686           1,070        50,000      110,700
 (4) (5)                        Manager

 Mr.  Devdatt Shah (4)    47    Senior General              23       Rs.  5,737,506               -             -       60,000
 (5) (7)                        Manager

 Mr. Balaji               37    Chief Financial             13       Rs.  3,073,622               -        75,000      105,000
  Swaminathan (4) (5)           Officer

(1) Including bonuses as described under "-Compensation and Benefits to Directors and Officers- Bonus" and the merged entity's contribution to the gratuity, superannuation fund and provident fund as described under "-Compensation and Benefits to Directors and Officers- Gratuity, Superannuation Fund and Provident Fund."

(2) Executive officers and directors (executive and non executive) as a group held less than 0.1% of the merged entity's equity shares as of this date.

(3) Each stock option, once exercised, is equivalent to one equity share of the merged entity. ICICI Bank and ICICI 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. In fiscal 2002, Mr. K. V. Kamath, Ms. Lalita D. Gupte, Ms. Kalpana Morparia, Mr. S. Mukherji, Mr. Sanjiv Kerkar, Ms. Ramni Nirula, Mr. P. H. Ravikumar and Mr. Balaji Swaminathan received stock options from ICICI and the number of stock options mentioned above is the equivalent number of ICICI Bank stock options received by them pursuant to the Scheme of Amalgamation.

(4) Remuneration paid by ICICI for fiscal 2002, except salary for two days from March 30, 2002, as they were employees of ICICI in fiscal 2002.

(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. The stock options mentioned above include ICICI stock options converted into ICICI Bank stock options on this basis.

(6) Ms. Chanda Kochhar and Dr. Nachiket Mor were executive directors of ICICI Bank during fiscal 2002. Ms. Kochhar's total remuneration in fiscal 2002 was Rs. 7,825,151 of which Rs. 1,928,283 (being bonus and leave encashment for fiscal 2001) was paid by ICICI and Dr. Mor's total remuneration in fiscal 2002 was Rs. 7,546,530 of which Rs. 1,896,971 (being bonus and leave encashment for fiscal 2001) was paid by ICICI.

(7) Mr. Devdatt Shah has expressed his desire to resign from office due to personal reasons and is expected to step down as Managing Director and Chief Executive Officer of ICICI Securities by the end of 2002.

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 gained experience in 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 major private sector group in Indonesia as advisor to the Chairman. Mr. Kamath joined the board of ICICI in October 1995. He was appointed Managing Director and Chief Executive Officer of ICICI in May 1996 and was re-appointed in May 2001. Mr. Kamath was a non-executive director on the board of ICICI Bank since April 1996. Effective May 3, 2002 the board appointed Mr. Kamath as Managing Director & CEO.

Mr. H. N. Sinor holds Bachelor's degrees in commerce and law. Mr. Sinor started his career with the Central Bank of India in September 1965 and moved to the Union Bank of India in 1969. He worked in various positions gaining experience in working capital finance, branch banking, resources and corporate planning. Mr. Sinor returned to Central Bank of India as its Executive Director in December 1996. Mr. Sinor joined ICICI Bank on July 1, 1997 and ICICI Bank's board on August 21, 1997 and was appointed ICICI Bank's Managing Director and Chief Executive Officer with effect from June 1, 1998. The board redesignated Mr. Sinor as Joint Managing Director with effect from May 3, 2002. He is currently in charge of domestic banking.

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 an executive director and was designated as the 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. Lalita D. Gupte was a non-executive director on the board of ICICI Bank since September 1994. Effective May 3, 2002, the board appointed Ms. Gupte as Joint Managing Director. She is currently in charge of international business.

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 as a Senior General Manager of ICICI. She joined the board of directors of ICICI in May 2001. Effective May 3, 2002 the board appointed Ms. Morparia as an Executive Director. She is currently in charge of the merged entity's Corporate Centre which includes the strategy, risk management, legal, accounts, taxation, planning, management information systems, investor relations, secretarial, human resources management, corporate communications and facilities management and administration departments.

Mr. S. Mukherji holds a management degree from the Jamnalal Bajaj Institute of Management Studies, University of Mumbai and a Master's degree from the London School of Economics. Mr. Mukherji worked in the projects and operations department of ICICI at Mumbai between 1978 and 1992. He was Zonal Manager of ICICI's Kolkata zonal office between 1992 and 1997. During 1997,

he headed the western regional office of ICICI. He was designated as Senior General Manager of ICICI in 1998. He joined the board of directors of ICICI in May 2001. Effective May 3, 2002 the board appointed Mr. Mukherji as an Executive Director. He is currently in charge of the project finance and special assets management groups.

Ms. Chanda D. Kochhar holds a management degree from the Jamnalal Bajaj Institute of Management Studies, Mumbai and has wide experience in the fields of corporate credit, infrastructure financing, e-commerce strategy and retail business. She started her career in 1984 at ICICI in its projects department. Ms. Kochhar was designated a Senior General Manager of ICICI in 2000 and was in charge of its retail business. She was appointed to the board of directors of ICICI Bank as an Executive Director in April 2001. She is currently responsible for retail banking.

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 ICICI in 1987. He has specialized knowledge in project finance, corporate planning and treasury. Dr. Mor was designated a Senior General Manager of ICICI in 2000 and was in charge of treasury and the social initiatives group. He was appointed to the board of directors of ICICI Bank as an Executive Director in April 2001. He is currently responsible for wholesale banking.

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 until 1993, when he joined Asian Finance and Investment Company Limited (AFIC), an affiliate of the Asian Development Bank. Mr. Kerkar worked with AFIC from 1993 to 1996. In 1996, he re-joined ICICI as a General Manager and was in charge of the risk management department in ICICI. In 1998 he was designated as a Senior General Manager of ICICI. Currently, Mr. Kerkar heads the Organizational Excellence Group which is responsible for the merged entity's quality initiatives.

Ms. Ramni Nirula is a post-graduate in management studies from a reputed Indian University. She joined ICICI in 1975 and held various positions in the northern regional office of ICICI. Ms. Nirula became General Manager in 1998 and was the Zonal Manager of the Delhi zonal office for the period 1998 to 2000. She was designated as Senior General Manager of ICICI in fiscal 2000. Currently, she is in charge of the Corporate Solutions Group in the Wholesale Banking Group. She is also responsible for ICICI Securities concurrently with Mr. Devdatt Shah.

Mr. P.H. Ravikumar is a graduate from Osmania University. Mr. Ravikumar started his career with Bank of India in 1972. He joined ICICI Bank in 1994. He became Senior Executive Vice-President in 1998 and was in charge of treasury, foreign exchange and credit. Mr. Ravikumar joined ICICI in April 2001 as Senior General Manager. Currently, he is in charge of the Emerging Corporates Group and Agri-Business Group in the Wholesale Banking Group.

Mr. Devdatt Shah is an electrical engineer from the Indian Institute of Technology, Mumbai and holds a Masters degree in Business Administration from the State University of New York. From 1979 to 1981, Mr. Shah was an associate consultant with Policy Planning and Evaluation Inc. Mr. Shah joined J.P. Morgan & Co. in 1981 and worked in various departments including equity research, structured products and financial advisory services. He left J.P. Morgan in 1995 to join India Capital Advisors, Toronto. In 1996, Mr. Shah joined the Canadian Imperial Bank of Commerce as Managing Director (India). Mr. Shah joined ICICI in 1999 and was appointed Managing Director and Chief Executive Officer of ICICI Securities. In July 2002, Mr. Shah expressed his desire to resign from office due to personal reasons and is expected to step down as Managing Director and Chief Executive Officer of ICICI Securities by the end of 2002.

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. He is the Chief Financial Officer of the merged entity.

Corporate Governance

The merged entity's 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 the merged entity's economic activities.

The merged entity's 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, comprising a majority of independent directors and chaired by an independent director, to oversee critical areas and functions of executive management.

The merged entity's 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.

The board's role, functions, responsibility and accountability are clearly defined. In addition to its primary role of monitoring corporate performance, the functions of the 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 the board of directors to discharge these responsibilities effectively, executive management gives detailed reports on the performance of the merged entity on a quarterly basis.

The board functions either as a full board or through various committees constituted to oversee specific operational areas. These board committees meet regularly.

During fiscal 2002, there were eight committees constituted by the board of ICICI Bank, namely the Audit & Risk Committee, the Committee of Directors, the Compensation Committee, the Nomination Committee, the Share Transfer Committee, the Shareholders' Grievance Committee, the Steering Committee and the Settlement Committee. Subsequent to the amalgamation and the re-constitution of the board of directors, the merged entity's board has with effect from May 3, 2002, dissolved the old committees and constituted new committees of the board in order to create an effective corporate governance model, commensurate with the scale and complexity of the merged entity's operations. The constitution and main functions of the various committees are given below.

Audit Committee

The Audit Committee consists of three independent directors - Mr. R. Seshasayee and Mr. Uday M. Chitale, who are chartered accountants, and Mr. Somesh R. Sathe, and is chaired by Mr. R. Seshasayee.

The Audit Committee provides direction to the audit and risk management function and monitors the quality of the internal and statutory audits. The responsibilities of the Audit Committee include overseeing the financial reporting process to ensure financial statements are fair, sufficient and credible, recommending appointment and removal of central and branch statutory auditors and fixing their remuneration, reviewing the annual financial statements before submission to the board, reviewing adequacy of internal control systems and the internal audit function, reviewing compliance with the inspection and audit reports of the Reserve Bank of India and reports of statutory auditors, reviewing findings of internal investigations, discussing the scope of audit with external auditors and investigating reasons for substantial defaults, if any, of non-payment to stakeholders.

Board Governance & Remuneration Committee

The Board Governance & Remuneration Committee consists of three independent directors - Mr. N. Vaghul, Mr. R. Seshasayee and Mr. P. M. Sinha, and is chaired by Mr. N. Vaghul.

The functions of the Board Governance & Remuneration Committee include recommending appointments to the board, evaluating the performance of the Managing Director and Chief Executive Officer, the board and individual members on pre-determined parameters, recommending to the board the remuneration (including performance bonus and perquisites) to executive directors, approving the policy for and amount of bonus payable to employees, framing guidelines for the employees stock option scheme and recommending the grant of stock options to the merged entity's employees and executive directors and employees and executive directors of the merged entity's subsidiary companies and formulating a code of ethics and governance.

Business Strategy Committee

The Business Strategy Committee consists of five directors - Mr. N. Vaghul, Mr. Anupam Puri, Mr. R. Seshasayee, Mr. P. M. Sinha and Mr. K. V. Kamath. The majority of the members of this Committee are independent directors and it is chaired by Mr. N. Vaghul.

The functions of this committee are to approve the annual income and expenditure and capital expenditure budgets for presentation to the board for final approval and to review and recommend to the board the business strategy of the merged entity.

Credit Committee

The Credit Committee consists of four directors - Mr. N. Vaghul, Dr. Satish C. Jha, Mr. Somesh R. Sathe, and Mr. K. V. Kamath. The majority of the members of the committee are independent directors and it is chaired by Mr. N. Vaghul.

The functions of this Committee include reviewing developments in key industrial sectors and approving credit proposals in accordance with the authorization approved by the board.

Risk Committee

The Risk Committee consists of four directors - Mr. N. Vaghul, Mr. Uday M. Chitale, Mr. Marti G. Subrahmanyam and Mr. K. V. Kamath. The majority of the members of this committee are independent directors and it is chaired by Mr. N. Vaghul.

This committee reviews the merged entity's risk management policies in relation to various risks including 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 consists of four directors - Mr. Uday M. Chitale, Mr. Somesh R. Sathe, Mr. H. N. Sinor and Ms. Kalpana Morparia, and is chaired by an independent director, Mr. Uday M. Chitale.

The functions and powers of this Committee include approving and rejecting transfers or transmissions of equity and preference shares, bonds, debentures and securities, including under stock options, issuance of duplicate certificates, allotment of shares and securities issued from time to time, review and redressal of shareholders' and investors' complaints, opening and operating of bank accounts for payment of interest and dividend and the listing of securities on stock exchanges.

Committee of Directors

The Committee of Directors consists of all the executive directors and is chaired by the Managing Director and Chief Executive Officer.

The functions and powers of this committee include reviewing performance against targets for various business segments and credit approvals in accordance with authorization approved by the board, borrowing and treasury operations and premises and property related matters.

Asset Liability Management Committee

The Asset Liability Management Committee consists of five executive directors and is chaired by Ms. Lalita D. Gupte.

The functions of this committee include managing the balance sheet, reviewing the asset-liability profile with a view to managing the market risk exposure and determining the deposit and lending rates.

Compensation and Benefits to Directors and Officers

Remuneration

Under the merged entity's organizational documents, each director, except the government director, is entitled to receive remuneration for attending each meeting of the board or of a board committee. The amount of remuneration is set by the board from time to time in accordance with limitations prescribed by the Indian Companies Act or the government of India. The remuneration for each board or committee meeting is currently fixed at Rs. 5,000 (US$ 102). In addition, the merged entity 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 the merged entity beyond attending meetings, the merged entity may remunerate the director as determined by the board of directors and this remuneration may be either in addition to or as substitution for the remuneration discussed above. Non-executive directors are not entitled to the payment of any benefits at the end of their term of office.

At its meeting held on April 26, 2002, the board of directors appointed Mr. K. V. Kamath as Managing Director and Chief Executive Officer, Ms. Lalita D. Gupte as Joint Managing Director and Ms. Kalpana Morparia and Mr. S. Mukherji as Executive Directors effective May 3, 2002, and approved their remuneration effective that date. The board also revised the remuneration payable to Mr. H. N. Sinor, Ms. Chanda D. Kochhar and Dr. Nachiket Mor effective May 3, 2002. This was approved at the annual general meeting of the shareholders on September 16, 2002. The remuneration of executive directors requires the approval of the Reserve Bank of India. Approval of the Reserve

Bank of India for the remuneration of Mr. K. V. Kamath, Ms. Lalita D. Gupte, Ms. Kalpana Morparia and Mr. S. Mukherji and for the revision in remuneration of Mr. Sinor, Ms. Chanda D. Kochhar and Dr. Nachiket Mor has been received.

The board or any committee thereof may in its exclusive discretion fix within the range stated below the salary payable to the executive directors:

Mr. K. V. Kamath,  Managing Director and Chief Executive
  Officer.................................................  Rs. 400,000 to Rs. 650,000 (US$ 8,192 to US$ 13,311) per month
Mr. H. N. Sinor, Joint Managing Director..................  Rs. 200,000 to Rs. 400,000 (US$ 4,096 to US$  8,192) per month
Ms. Lalita D. Gupte, Joint Managing Director..............  Rs. 200,000 to Rs. 400,000 (US$ 4,096 to US$  8,192) per month
Ms. Kalpana Morparia, Executive Director..................  Rs. 200,000 to Rs. 400,000 (US$ 4,096 to US$  8,192) per month
Mr. S. Mukherji, Executive Director.......................  Rs. 200,000 to Rs. 400,000 (US$ 4,096 to US$  8,192) per month
Ms. Chanda D. Kochhar, Executive Director.................  Rs. 150,000 to Rs. 400,000 (US$ 3,072 to US$  8,192) per month
Dr. Nachiket Mor, Executive Director....................... Rs. 150,000 to Rs. 400,000 (US$ 3,072 to US$  8,192) per month

The executive directors are entitled to perquisites (evaluated pursuant to Indian Income-Tax Rules, wherever applicable, and otherwise at actual cost to the merged entity), 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 the merged entity to the extent permissible under the Indian Income-tax Act, 1961, 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 the merged entity from time to time.

Where accommodation is not provided, each of the executive directors is eligible for a house rent allowance of Rs. 50,000 (US$ 1,024) per month and maintenance of accommodation including furniture, fixtures and furnishings, as may be provided by the merged entity.

The total compensation paid by ICICI Bank to its executive directors, Mr. H.N. Sinor, Ms. Chanda D. Kochhar and Dr. Nachiket Mor in fiscal 2002 was Rs. 21 million (US$ 430,063).

The total compensation paid by ICICI to its executive directors and executive officers, Mr. K.V. Kamath, Ms. Lalita D. Gupte, Ms. Kalpana Morparia, Mr. S. Mukherji, Ms. Chanda D. Kochhar, Dr. Nachiket Mor, Mr. Sanjiv Kerkar, Mr. Ramni Nirula, Mr. P.H. Ravikumar, Mr. Devdatt Shah and Mr. Balaji Swaminathan in fiscal 2002 was Rs. 65.7 million (US$ 1.3 million). Prior to their appointment as executive directors of ICICI Bank effective April 1, 2001, Ms. Chanda D. Kochhar and Dr. Nachiket Mor were employees of ICICI. During fiscal 2002, they received bonus and leave benefits for fiscal 2001 from ICICI in addition to their remuneration from ICICI Bank.

Bonus

Each year, the board of directors awards discretionary bonuses to employees, including executive directors, on the basis of performance and seniority. The performance of each employee is judged by a performance management appraisal system. The aggregate amount paid by ICICI Bank for bonuses to all eligible employees in fiscal 2002 was Rs. 198 million (US$ 4 million).

The aggregate amount paid by ICICI towards bonuses to all eligible employees in fiscal 2002 was Rs. 298 million (US$ 6 million).

Employee Stock Option Scheme

On January 24, 2000, ICICI Bank's 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 ICICI Bank's 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 limits the maximum number of options granted to any eligible employee (as defined below) to 0.05% of the merged entity's issued equity shares at the time of the grant, and the aggregate of all such options is limited to 5% of the merged entity's issued equity shares following the amalgamation. The stock options entitle the merged entity's eligible employees, and eligible employees of the merged entity's subsidiary companies to apply for equity shares. The options 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. 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 of the options is the closing market price on the stock exchange, which records the highest trading volume on the date of grant. An eligible employee is a permanent employee or a director of the merged entity or of its subsidiaries or its holding company. The merged entity has no holding company.

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-executive directors.

-------------------------------------------------------------------------------
                                        Number of
Date of grant                        options granted     Exercise price (1)
-------------------------------------------------------------------------------
February 21, 2000............           1,713,000     Rs. 171.90      US$ 3.52
April 26, 2001...............           1,580,200         170.00          3.48
March 27, 2002...............           3,155,000         120.35          2.46

---------------

(1) The exercise price is equal to the market price of ICICI Bank's equity shares on the date of grant.

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-executive directors.

-------------------------------------------------------------------------------
                                        Number of
Date of grant                        options granted     Exercise price (1)
-------------------------------------------------------------------------------
August 3, 1999...............           2,323,750      Rs. 85.55      US$ 1.75
April 28, 2000...............           2,902,500         133.40          2.73
November 14, 2000............              20,000          82.90          1.70
May 3, 2001..................           3,145,000          82.00          1.68
August 13, 2001..............              60,000          52.50          1.08
March 27, 2002...............           6,473,700          60.25          1.23

--------------

(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.

The following table sets forth particulars of options granted by ICICI Bank (not including options granted by ICICI) and ICICI to date.

----------------------------------------------------------------------------------------------------------
Particulars                                                   ICICI Bank                 ICICI
----------------------------------------------------------------------------------------------------------
Options granted.......................................             6,448,200                    14,924,950
Options vested........................................             1,172,540                     3,035,750
Options exercised.....................................                     -                        33,900
Options forfeited/lapsed..............................               248,225                       984,750
Extinguishment or modification of options.............                     -                             -
Amount realized by sale of options....................                     -   Rs. 3 million (US $ 61,438)
Total number of options in force......................             6,199,975                    13,906,300

In accordance with the Scheme of Amalgamation, directors and employees of ICICI and its subsidiary companies have received stock options in the merged entity 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.

In April 2000, ICICI Infotech approved an employee stock option plan. Under the plan, ICICI 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. ICICI Infotech granted 2,044,800 options during fiscal 2002 at the fair value of the underlying shares on the grant date of Rs. 68 (US$ 1.39) per equity share. ICICI Infotech granted 2,347,800 stock options during fiscal 2001 at the fair value of the underlying shares on the grant date of Rs.
37.50 (US$ 0.77) per equity share. As shares of ICICI Infotech are not quoted on stock exchanges, the fair value represents management's best estimates considering all available factors. Of the stock options granted, 449,360 were forfeited by year-end fiscal 2002. Of the stock options granted, 1,125,900 were granted to the merged entity's directors and executive officers.

In July 2000, ICICI Venture approved an employee stock option plan under which ICICI Venture was authorized to issue up to 125,000 equity shares to its employees and employees of ICICI and ICICI group companies. Eligible employees were granted an option to purchase shares subject to vesting conditions. The options vest over a period of three years with 20.0%, 30.0% and 50.0% of the options vesting at the end of each year. The options can be exercised within 10 years from the date of the grant. ICICI Ventures granted 81,400 stock options during fiscal 2001 at the fair value of the underlying shares on the grant date of Rs. 835 (US$ 17.10) per equity share. As shares of ICICI Venture are not quoted on exchanges, the fair value represents management's best estimates considering all available factors. Of the above, 2,500 stock options were forfeited by year-end fiscal 2001. ICICI Venture's employee stock option plan was withdrawn in February 2002. ICICI Venture did not grant any stock options in fiscal 2002. Of the stock options, 20,425 were granted to the merged entity's directors and executive officers.

Loans

ICICI Bank had, and the merged entity has, internal rules and regulations to grant loans to employees to acquire certain assets such as property, vehicles and other consumer durables. ICICI Bank's loans to employees were made at interest rates ranging from 3.5% to 11.0% 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. At year-end fiscal 2002, there were loans of Rs. 792 million (US$ 16 million) outstanding to employees of ICICI Bank. Pursuant to the Indian Banking Regulation Act, ICICI Bank's non-executive directors were not eligible for any loans. There was no outstanding loan from ICICI Bank to its directors as of March 31, 2002.

ICICI had internal rules and regulations to grant loans to employees to acquire certain assets such as property or vehicles. ICICI's loans to employees were 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. At year-end fiscal 2002, there were loans of Rs. 745 million (US$ 15 million) outstanding to ICICI's employees, including Rs. 11 million (US$ 225,271) to certain of its directors and executive officers.

ICICI Personal Financial Services had similar internal rules and regulations and granted loans at interest rates ranging from 2.5% to 3.5% per annum, repayable over fixed periods of time. These loans are generally secured by assets acquired by the employees. At year-end fiscal 2002, there were loans of Rs. 155 million (US$ 3 million) outstanding to employees of ICICI Personal Financial Services.

ICICI Capital Services had internal rules and regulations to grant loans to employees to acquire certain assets such as property or vehicles. These loans to employees were made at interest rates ranging from 2.5% to 3.5% per annum and were repayable over fixed periods of time. The loans are generally secured by the assets acquired by the employees. At year-end fiscal 2002, there were loans of Rs. 11 million (US$ 225,271) outstanding to employees of ICICI Capital Services.

Gratuity

Under Indian law, the merged entity is required to pay a gratuity to employees who retire or resign after at least five years of continuous service. The merged entity makes contributions to five separate gratuity funds, for ICICI Bank employees (other than employees inducted from Bank of Madura), employees inducted from ICICI, Bank of Madura, ICICI Personal Financial Services and ICICI Capital Services.

The gratuity funds for employees of ICICI Bank and ICICI Personal Financial Services are 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 2002 for employees of ICICI Bank and ICICI Personal Financial Services was Rs. 50 million (US$ 1 million) and Rs. 4 million (US$ 81,917) respectively.

In respect of employees inducted from ICICI, Bank of Madura and ICICI Capital Services, separate gratuity funds are managed by in-house trustees. Actuarial valuation of the funds is done by an independent actuary. 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 ICICI, Bank of Madura and ICICI Capital Services based on the latest unaudited figures, at year-end fiscal 2002 were Rs. 221 million ( US$ 4.5 million), Rs. 360 million (US$ 7 million), and Rs. 5 million (US$ 102,396) respectively.

Superannuation Fund

The merged entity contributes 15.0% of the total annual salary of each employee to two separate superannuation funds, for ICICI Bank employees and employees inducted from ICICI respectively. The funds are administered by the Life Insurance Corporation of India. The merged entity'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%. The merged entity also gives

a cash option to its employees, allowing them to receive the amount contributed by the merged entity in their monthly salary during their employment. The total corpus of the superannuation fund for ICICI Bank employees was Rs. 510 million (US$ 10 million) at year-end fiscal 2002. The total corpus of the superannuation fund for employees inducted from ICICI was Rs. 400 million (US$ 8 million) at year-end fiscal 2002.

Provident Fund

The merged entity is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees. There are separate provident funds for ICICI Bank employees (other than employees inducted from Bank of Madura), and employees inducted from ICICI, Bank of Madura (other than those employees who have opted for pensions), ICICI Personal Financial Services and ICICI Capital Services. These funds are managed by in-house trustees. Each employee, contributes 12.0% of his or her salary and the merged entity 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 ICICI Bank employees (other than employees inducted from Bank of Madura), and the employees inducted from ICICI and Bank of Madura, based on the latest unaudited figures, at year-end fiscal 2002 were Rs. 178 million (US$ 4 million), Rs. 444 million (US$ 9 million) and Rs. 610 million (US$ 12 million) respectively. The total corpuses of the funds for employees inducted from ICICI Personal Financial Services and ICICI Capital Services based on the latest audited figures at year-end fiscal 2002 were Rs. 12 million (US$ 245,751) and Rs 18 million (US$ 368,626) respectively. ICICI Bank made contributions of Rs. 33 million (US$ 675,814) and Rs. 21 million (US$ 430,063) to the funds for ICICI Bank employees (other than employees inducted from Bank of Madura) and employees inducted from Bank of Madura, respectively, during fiscal 2002. ICICI made a contribution of Rs. 31 million (US$ 634,856) to the provident fund for its employees during fiscal 2002. ICICI Personal Financial Services and ICICI Capital Services made contributions of Rs. 6 million (US$ 122,875) and Rs. 2 million (US$ 40,958), respectively, to the provident funds for their employees during fiscal 2002.

Pension Fund

Out of the employees inducted from Bank of Madura, 1,162 employees have opted for pensions and 1,499 employees have opted for a provident fund. For employees who have opted for a provident fund, the merged entity's contribution of 10.0% of his or her salary is credited to the provident fund every month. For employees who have opted for pensions, the merged entity's contribution of 10.0% of his or her salary is credited to the pension fund every month. These funds are managed by in-house trustees. The investments of the funds are made according to rules prescribed by the government of India. The accounts of the fund are audited by independent auditors. The employees who have opted for pensions are entitled to a monthly pension from the day after their retirement. The merged entity 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 2002 was Rs. 823 million (US$ 17 million).

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 the merged entity's directors or executive officers.

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 the merged entity. This is the latest available information to the merged entity's knowledge at year-end fiscal 2002.

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; and

o other specialized financial institutions, and state-level financial institutions.

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 and the long-term lending institutions. 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 standards, income recognition, asset classification, provisioning for impaired assets, investment valuation and capital adequacy standards 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 the Reserve Bank of India 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 the merged entity, 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 2002, there were 299 scheduled commercial banks in the country, with a network of 66,276 branches serving approximately Rs. 10.97 trillion (US$ 225 billion) in deposit accounts. Scheduled commercial banks are banks which are listed in the schedule to the Reserve Bank of India Act, 1934, and may further be classified as public sector banks, private sector banks and foreign banks. Commercial banks have a presence throughout India, with nearly 71.1% 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 associate banks, 19 nationalized banks and 196 regional rural banks. Excluding the regional rural banks, the remaining public sector banks have 46,316 branches, and account for 72.5% of the outstanding gross bank credit and 77.2% of the aggregate deposits of the scheduled commercial banks. 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 public sector bank in India. At year-end fiscal 2002, the State Bank of India and its seven associate banks had 13,556 branches. They accounted for 24.7% of aggregate deposits and 26.9% 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 2002 with 14,486 branches, accounting for 4.0% of aggregate deposits and 2.7% 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. Furthermore, 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 by the private sector into the banking system. This resulted in the introduction of nine private sector banks, including ICICI Bank. These banks are collectively known as the "new" private sector banks. With the merger of Times Bank Limited into HDFC Bank Limited in February 2000, there are only eight "new" private sector banks at present. In addition, 24 private sector banks existing prior to July 1993 are currently operating. Bank of Madura was an "old" private sector bank before it was acquired by ICICI Bank effective March 10, 2001.

At year-end fiscal 2002, private sector banks accounted for approximately 13.7% of aggregate deposits and 17.5% of gross bank credit outstanding of the scheduled commercial banks. Their network of 5,290 branches accounted for 8.0% of the total branch network of scheduled commercial banks in the country.

Foreign Banks

At year-end fiscal 2002, there were approximately 40 foreign banks with 184 branches operating in India. Foreign banks accounted for 5.1% of aggregate deposits and 7.3% of outstanding gross bank credit of scheduled commercial banks at year-end fiscal 2002. 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. While presenting its budget for fiscal 2003, the government of India announced that foreign banks would be permitted to incorporate subsidiaries in India. Subsidiaries of foreign banks will have to adhere to all banking regulations, including priority sector lending norms, applicable to domestic banks. The primary activity of most foreign banks in India has been in the corporate segment. However, in recent years, some of the larger foreign banks have started to make consumer financing a larger part of their portfolios based on the growth opportunities in this area in India. 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 co-operative societies, and the National Bank for Agriculture and Rural Development (NABARD) for State Co-operative Banks and District Central Co-operative Banks. In its monetary and credit policy for fiscal 2002, the Reserve Bank of India proposed the setting up of a new supervisory body exclusively to oversee cooperative banks, which could take over the entire inspection and supervisory functions in relation to scheduled and non-scheduled urban cooperative banks.

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 ICICI, Industrial Development Bank of India, IFCI Limited and Industrial Investment Bank of India. ICICI has now been amalgamated into ICICI Bank, which is a private sector commercial bank.

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 has required them to expand the scope of their business activities. Their new activities include:

o fee-based activities like investment banking and advisory services; and

o short-term lending activity including issuing corporate finance and working capital loans.

In addition, there are three other investment institutions at the national level, Life Insurance Corporation of India, General Insurance Corporation of India and its subsidiaries and Unit Trust of India, which also provide long-term financial assistance to the industrial sector.

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 and Finance Company Limited, the

investment-banking subsidiary of the merged entity, is a non-bank finance company, which does not accept public deposits. The scope and activities of non-bank finance companies have grown significantly over the years. 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.

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.

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. The merged entity is a major housing finance provider and also has a subsidiary housing finance company, 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. The Reserve Bank of India has directed commercial banks to lend at least 3.0% of their incremental deposits in the form of housing loans. Further, the Reserve Bank of India has reduced the risk weight for loans for residential properties to 50.0% for the purpose of determining capital adequacy. Housing loans up to certain limits prescribed by the Reserve Bank of India as well as mortgage-backed securities qualify as priority sector lending under the Reserve Bank of India's directed lending rules. See also "Supervision and Regulation - Capital Adequacy Requirements" and "Supervision and Regulation - Directed Lending - Priority Sector Lending."

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, ICICI Venture Funds Management Company Limited, 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.

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 as 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.

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. This meant that the significance of the statutory liquidity ratio shifted from being a major instrument for financing the public sector in the pre-reform era to becoming a prudential requirement;

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 5.0% currently;

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;

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 1999, aggregate recapitalization amounted to Rs. 204.5 billion. The stronger public sector banks were given permission to issue equity to further increase capital; and

o banks were granted the freedom to open or close branches.

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.

Working Group on Role of Banks and Financial Institutions

In December 1997, the Reserve Bank of India created a working group under the chairmanship of S. H. Khan to harmonize the role and operations of long-term lending institutions and banks. In its report submitted in April 1998, the Khan Working Group recommended that banks and long-term lending institutions progressively move towards universal banking and encouraged the development of a regulatory framework for this purpose.

Based on the recommendations of the Khan Working Group and the Narasimham Committee II, the Reserve Bank of India, in January 1999, issued a discussion paper entitled "Harmonizing the Role and Operations of Development Financial Institutions and Banks", describing the future of the financial system.

Recent Structural Reforms

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. The salient features of the guidelines included the following.

Reserve requirements. Following conversion into a universal bank, a long-term lending institution would have to comply with the cash reserve ratio and statutory liquidity ratio requirements under the provisions of the Reserve Bank of India Act and the Indian Banking Regulation Act;

Priority sector lending. Following conversion of a long-term lending institution into a universal bank, the obligation to lend to the priority sector up to a prescribed percentage of net bank credit would apply;

Permissible activities. Any activity currently undertaken by a long-term lending institution but not permissible for a bank under the provisions of the Banking Regulation Act would have to cease or be divested after the conversion of a long-term lending institution into a universal bank;

Nature of subsidiaries. If any of the existing subsidiaries of a long-term lending institution were engaged in an activity not permitted under the provisions of the Indian Banking Regulation Act, then on conversion of the long-term lending institution into a universal bank, such subsidiary or activity would have to be separated from the operations of the universal bank since the provisions of the Indian Banking Regulation Act permit a bank to have subsidiaries only for specified activities;

Restriction on investments. A long-term lending institution with an equity investment in a company in excess of 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, following its conversion into a universal bank, would be required to divest such excess holding to comply with the provisions of the Indian Banking Regulation Act.

Legislative Framework for Recovery of Debts due to Banks

Following the recommendations of the Narasimham Committee, the Recovery of Debts due to Banks and Financial Institutions Act, 1993 was enacted. The purpose of this legislation is to provide for the establishment of a tribunal for speedy resolution of litigation and recovery of debts owed to banks or financial institutions. This 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. 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. This Act, however, has not been repealed to date.

In June 2002, the President of India promulgated the Securitization and Reconstruction of Financial Assets and Enforcement of Security Ordinance, 2002, which was re-promulgated in August 2002. The ordinance provides that a secured creditor may, in respect of loans classified as non-performing in accordance with 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 ordinance is yet to be approved by legislation passed by the Indian parliament.

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.

Credit Policy for Fiscal 2002

In the monetary and credit policy for fiscal 2002, the Reserve Bank of India introduced the following major changes applicable to the banking and financial sector:

o With effect from March 31, 2004, loans are to be classified as impaired by banks when interest payment or principal repayment is overdue for more than 90 days (currently 180 days).

o Banks were allowed to maintain a minimum of 50.0% of their cash reserve requirements in the first week of the reporting cycle and 65.0% in the following week.

o Lending below the prime lending rate by banks was allowed.

o The minimum term for term deposits of Rs.1.5 million and above was reduced to seven days from 15 days.

o The interest rate on cash reserve balances maintained with the Reserve Bank of India was raised to 6.0% from the existing level of 4.0%.

o Inter-bank term liabilities for terms from 15 days up to one year were freed from the computation of the minimum 3% cash reserve requirement.

o The exposure ceiling is computed uniformly in relation to total capital as defined under International Capital Adequacy Standards effective March 31, 2002. Total capital now includes both Tier-1 and Tier-2 capital.

o Non fund-based exposures will be reckoned at 100.0% in computing exposure limits effective April 1, 2003.

o The ceiling on exposure for a single borrower was brought down to 15.0% of total capital from 20.0% and the group exposure ceiling was brought down to 40.0% of total capital from 50.0% effective March 31, 2002.

The mid-term review of monetary and credit policy for fiscal 2002 introduced the following major changes in the banking and financial sector:

o The bank rate, the rate at which the Reserve Bank of India provides refinance to the banking system, was reduced from 7.0% to 6.5%.

o The minimum cash reserve balances required to be maintained by banks with the Reserve Bank of India were reduced from 7.5% to 5.5% of their demand and time liabilities in India, excluding inter-bank liabilities.

Credit Policy for Fiscal 2003

In the monetary and credit policy for fiscal 2003, the Reserve Bank of India introduced the following major changes applicable to the banking and financial sector:

The minimum cash reserve balances required to be maintained by banks with the Reserve Bank of India were further reduced from 5.5% to 5.0% of their demand and time liabilities in India, excluding inter-bank liabilities, effective June 15, 2002.

To impart flexibility to the interest rate structure, banks have been encouraged to introduce a flexible interest rate system for all new deposits with reset at six-monthly intervals, and to devise schemes for encouraging depositors to convert their existing long-term fixed rate deposits into variable rate deposits.

Banks are now required to announce the maximum spread over the prime lending rate for all advances other than consumer credit, as well as provide information on maximum and minimum interest rates charged to their borrowers and deposit rates for various maturities.

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. A new set of regulatory measures were announced by the Reserve Bank of India in January 1998. Effective from November 1, 2001, the Reserve Bank of India stipulated a cap of 12.5% on interest rates on the deposits raised from the public by non-bank finance companies.

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. These include requiring non-bank finance companies to register and to have minimum net owned funds of Rs. 2.5 million. 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 beginning in April 1999, 15.0% of public deposits must be maintained.

The focus of supervision has now shifted to non-bank finance companies accepting public deposits. This is because these companies are subject to deposit regulations and standards. 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 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 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.

Proposed Measures for Reform of Unit Trust of India

Unit Trust of India, a large investment institution in India, with a high level of investment in equity securities, is currently facing difficulties in meeting redemption and assured return obligations due to a significant decline in the market value of its securities portfolio. The government of India has announced 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. The reform package also provides for the division of Unit Trust of India 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. In view of the significance of Unit Trust of India in the Indian financial system, the difficulties faced by Unit Trust of India and the Indian government's reforms package may have an impact on the Indian financial sector.

Regulations Review Authority

In March 1999, the Reserve Bank of India set up a Regulations Review Authority to provide an opportunity to the public at large to seek justification for and suggest deletion or modification of any regulation, circular or return issued, or required by the Reserve Bank of India. This authority is neither a forum for grievance redressal nor a policy-making forum. This authority will, however, convey its views on an application to the relevant department of the Reserve Bank of India. Based on the recommendations of this authority, some of the existing regulations may come under review over time.

Insurance

The R. N. Malhotra Committee was set up in April 1993 to recommend reforms in the insurance industry. This committee submitted its report on January 7, 1994 and its major recommendations were as follows:

o the entry of the private sector in the insurance industry should be allowed;

o India's two insurance corporations, the Life Insurance Corporation of India and General Insurance Corporation of India should be privatized, with the government retaining a 50.0% stake;

o the licensing system for surveyors should be abolished;

o the tariff regime in general insurance must continue;

o contributions to pension schemes must be exempt from tax;

o settlement of claims must be expedited; and

o high priority should be given to activating the regulatory apparatus.

As a first step towards implementation of the recommendations of the Malhotra Committee on Reforms in the Insurance Sector, the government of India's budget for fiscal 1996 indicated that an independent regulatory authority would be set up for the insurance industry, and the Insurance Regulatory Authority was set up in 1996.

In December 1999, the parliament approved the Insurance Regulatory and Development Authority Bill, 1999. This bill has opened up the Indian insurance sector for foreign and private investors. This bill 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 to carry out the business of life insurance or general insurance or Rs. 2.0 billion to carry out exclusively the business of reinsurance. The Insurance Regulatory and Development Authority was established to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith.

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 objective of the guidelines is to allow only financially strong banks and financial institutions to enter the insurance business. These guidelines permit banks and financial institutions to enter the business of underwriting insurance through joint ventures if they meet the stipulated criteria relating to their net worth, capital adequacy ratio, profitability track record and level of impaired loans and the performance of their existing subsidiary companies. These guidelines specify the maximum percentage of the paid up capital and of the net worth of the bank or financial institution that can be invested in the joint venture. To keep the risks associated with each of the businesses distinct, the guidelines envisage an "arms length" relationship between the bank or financial institution and the insurance company. Banks that do not satisfy the prescribed criteria are allowed to enter the insurance business as strategic investors, without risk participation, to the extent of 10.0% of their net worth or Rs. 500 million, whichever is lower. Approval from the Reserve Bank of India is mandatory in all cases. Currently, foreign equity participation of up to 26.0% is allowed in the insurance sector subject to the issuance of a necessary license by the Insurance Regulatory and Development Authority.

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 banks.

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.

The merged entity, being licensed as a banking company, is regulated and supervised by the Reserve Bank of India. The Reserve Bank of India requires the merged entity 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 the 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

Banks are required to obtain licenses from 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, the merged entity 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.

Capital Adequacy Requirements

The merged entity is subject to the capital adequacy requirements of the Reserve Bank of India, which, based on the guidelines of the Basle Committee on Banking Regulations and Supervisory Practices, 1998, require the merged entity 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 Income-Tax Act as reduced by equity investments in subsidiaries, intangible assets, gap in provisioning and losses in the current period and those brought forward from the previous period.

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 weighted risk 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 foreign currency exposures and open positions in gold. In respect of banks and financial institutions, a risk weight of 2.5% to cover market risk has to be assigned in respect of the entire investment portfolio effective March 31, 2001 over and above the existing risk weights for credit risk in non-government and non-approved securities. Banks and financial institutions are required to assign a 100.0% risk weight for all state government guaranteed securities issued by defaulting entities. The aggregate risk weighted assets are taken into account for determining the capital adequacy ratio.

Loan Loss Provisions and Impaired 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 under Indian GAAP. The discussion of asset quality in this annual report is under US GAAP and the US GAAP standards applied are set forth in "Business--Impaired Loans."

The principal features of these Reserve Bank of India guidelines, which have been implemented with respect to the merged entity's loans, debentures, lease assets, hire purchases and bills are set forth below.

Impaired Assets

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 two quarters. In particular, an advance will be an impaired asset where:

o interest and/or instalment of principal remains overdue for a period of more than 180 days in respect of a term loan;

o the account remains "out-of-order" for a period of more than 180 days in respect of an overdraft or cash credit;

o the bill remains overdue for a period of more than 180 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 180 days in respect of other accounts.

With effect from fiscal 2004, banks will be required to classify an asset as impaired when principal or interest has remained overdue for more than 90 days. Interest in respect of impaired assets is not recognized or credited to the income account unless collected.

Asset Classification

In line with the Reserve Bank of India master circular on income recognition, asset classification and provisioning pertaining to advances portfolio of banks, issued in July 2002 for banks, non-performing assets are classified as described below:

Sub-Standard Assets. Assets that are non-performing assets for a period not exceeding 18 months (12 months effective 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 18 months. 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. With effect from year-end fiscal 2004, an asset will be classified as doubtful if it remains in the sub-standard category for 12 months.

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 the treatment of restructured assets. A rescheduling of the instalments of principal alone does not cause a standard asset to be classified in the sub-standard category provided the loan or credit facility is fully secured. A rescheduling of interest element does not cause an asset to be downgraded to the sub- standard category subject to the condition that 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. In respect of restructured sub-standard accounts, a rescheduling of the instalments of principal alone renders a sub-standard asset eligible to be continued in the sub-standard category for the specified period, provided the loan/credit facility is fully secured. A rescheduling of interest element renders a sub-standard asset eligible to be continued to be classified in the sub-standard category for the specified period subject to the condition that 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. 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.

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 the this framework is to ensure a timely and transparent mechanism for the restructuring of the corporate debts of viable entities facing problems, outside the purview of the 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.

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.

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. In cases where there is a secured portion of the asset, depending upon the period for which the asset remains doubtful, a 20.0% to 50.0% provision is 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

o Loss Assets. The entire asset is required to be written off or provided for.

While the provisions indicated above are mandatory, a higher provision in a loan amount would be required if considered necessary.

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.

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. The prime lending rate is the minimum rate of interest charged by banks on advances of over Rs. 200,000. Separate prime lending rates can be fixed for short-term and long-term credit. Each bank should also indicate the maximum spread over the prime lending rate for all credit exposures other than consumer credit. The interest charged by banks on advances up to Rs. 200,000 to any one entity (other than most personal banking 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 creditworthy borrowers and exposures. Interest rates for certain categories of advances are regulated by the Reserve Bank of India.

The Reserve Bank of India, however, does not require interest rates to be linked to the bank's prime lending rate in respect of the following categories:

o loans covered by the refinance scheme of financial institutions;

o interest rates on bank lending to intermediary agencies including housing finance intermediary agencies;

o bill discounting by banks; and

o advances or overdrafts against domestic and non-resident deposits.

With respect to cash credit facilities (revolving asset-backed overdraft facilities for meeting working capital needs), up to 80.0% of the facility can be in the form of a demand loan.

Penalty interest represents additional interest charged over and above the base rate of interest on certain events, including default in the repayment of loans. Penalty interest is not chargeable for loans up to Rs. 25,000. For loans over Rs. 25,000, penalty interest cannot exceed 2.0%.

There are guidelines on loans against equity shares in respect of amount, margin requirement and purpose.

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% 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 government sponsored developmental banks like the National Bank for Agriculture and the Rural Development and Small Industries Development Bank of India. These deposits can be for a period of one year or five years.

The Reserve Bank of India requires banks to lend up to 3.0% of their incremental deposits in the previous fiscal year towards housing finance. This can be in the form of home loans to individuals or subscription to the debentures and bonds of the National Housing Bank and housing development institutions recognized by the government of India.

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, the merged entity 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 the merged entity.

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. The merged entity 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 set by the Reserve Bank of India are as follows:

o Internationally, exposure ceilings are computed in relation to total capital as defined under capital adequacy standards (Tier 1 and Tier 2 capital). Taking into account the best international practices, the Reserve Bank of India adopted the concept of capital funds as

defined under capital adequacy standards for determining the exposure ceiling uniformly both for domestic and foreign banks, effective from March 31, 2002.

o In line with international best practices, the Reserve Bank of India decided that non-fund based exposures should be calculated at 100.0% and in addition, banks should 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 from April 1, 2003.

o As the concept of capital funds has been broadened to represent total capital (Tier 1 and Tier 2), the Reserve Bank of India adjusted the exposure ceiling for single borrowers from 20.0% to 15.0% effective from March 31, 2002. Similarly, the group exposure limits have been adjusted to 40.0% of capital funds effective from March 31, 2002. In case of financing for infrastructure projects, the limit is extendable by another 10.0%, i.e., up to 50.0% of capital funds.

Credit exposure is the aggregate of:

o all types of funded and non-funded credit limits,

o facilities extended by way of equipment leasing, hire purchase finance and factoring services,

o advances against shares, debentures, bonds and units of mutual funds to stock brokers and market makers,

o bank loan for financing promoters' contributions, and

o bridge loans against equity flows/issues.

The merged entity is in compliance with these limits, except in the case of two borrowers to whom its exposures are in excess of the single borrower exposure limit. This is mainly due to the write-down of reserves pursuant to the fair valuation of ICICI's assets for the purpose of accounting for the amalgamation under Indian GAAP. ICICI had not exceeded the limit at the time of providing the assistance. Subsequent to the amalgamation, the merged entity has applied to the Reserve Bank of India for its approval for exceeding the exposure limit in respect of these two borrowers.

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. The merged entity has fixed a ceiling of 15.0% on its exposure to any one industry and monitors its exposures accordingly.

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 outstanding domestic credit (excluding inter-bank lending and advances outside India) 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.

These guidelines were revised on May 11, 2001 specifying the types of capital market exposure that could be undertaken by banks. Further, the 5.0% ceiling is now required to be computed in relation to the total advances (including commercial paper) at March 31 of the previous fiscal year.

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.

Banks' Investment Classification and Valuation Norms

Based on the comments to the Report of the Informal Group on Banks' Investment Portfolio, the Reserve Bank of India finalized its guidelines on categorization and valuation of banks' investment portfolio. These guidelines were effective from September 30, 2000. The salient features of the guidelines 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.

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 (PDAI) jointly with the Fixed Income Money Market and Derivatives Association of India (FIMMDA) 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.

o The Reserve Bank of India no longer announces the yield to maturity rates on unquoted government of India securities for the purpose of valuation of investments by banks.

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.

With a view to the building up of adequate reserves to guard against any possible reversal of interest rate environment in the future due to unexpected developments, the Reserve Bank of India has

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 This reserve should be computed with respect to investments in held for trading and available for sale categories. It will not be necessary to include investments under the held to maturity category for the purpose of building up this reserve.

Regulations relating to Investments

There are no limits on the amount of investments by banks in non-convertible debt instruments. However, credit exposure limits specified by the Reserve Bank of India in respect of a bank's lending to individual borrowers and borrower groups apply in respect of these investments. The Reserve Bank of India requires that the net incremental investment by banks in equity securities in a fiscal year cannot exceed 5.0% of the incremental deposits in the previous fiscal year. Investments in debentures convertible into equity and equity related mutual funds are included in this 5.0% limit. 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.

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.

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.

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 pay interest of up to 4.0% per annum on savings deposits. In respect of savings and time deposits accepted from employees, the merged entity 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 15 days (seven days in respect of deposits over Rs. 1.5 million with effect from April 19, 2001) and a maximum maturity of 10 years. 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 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.

Deposit Insurance

Demand and time deposits of up to Rs. 100,000 (US$ 2,048) 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.

Regulations relating to Knowing the Customer

The Reserve Bank of India requires banks to open accounts only after verifying the identity of customers as to their name, residence and other details to ensure that the account is being opened by the customer in his own name. To open an account, a prospective customer is required to be introduced by:

o An existing customer who has had his own account with the bank for at least six months duration and has satisfactorily conducted that account; or

o A well known person in the local area where the prospective customer is residing.

If the prospective customer does not have an introducer, the prospective customer is required to submit documents like his identity card, passport or details of bank accounts with other banks.

Legal Reserve Requirements

Cash Reserve Ratio

A banking company such as the merged entity is required to maintain a specified percentage of its 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. At present, the cash reserve ratio is 5.0%.

The following liabilities are excluded from the calculation of 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 at the bank rate on the balance.

The cash reserve ratio has to be maintained on an average basis for a fortnightly period and should not be below 50.0% of the required cash reserve ratio for the first seven days of the fortnight and 65.0% for any day of the rest of the fortnight, except the last business day of the fortnight. On the last business day of the fortnight, no restrictions apply.

Ever since the Reserve Bank of India introduced the financial sector reforms, its goal has been to reduce the cash reserve ratio. It has been indicated by the Reserve Bank of India that the ratio would ultimately be reduced to the statutory minimum of 3.0%.

Statutory Liquidity Ratio

In addition to the cash reserve ratio, a banking company such as the merged entity is required to maintain a specified percentage of its net demand and time liabilities by way of liquid assets like cash, gold or approved 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%.

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 has been made mandatory with effect from April 1, 2000.

Foreign Currency Dealership

The Reserve Bank of India has granted the merged entity a full-fledged authorized dealers' license to deal in foreign exchange through its designated branches. Under this license, the merged entity 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.

The merged entity'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, the merged entity 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.

Authorized dealers, like the merged entity, 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. At present, the limit for the merged entity's over-night open positions is Rs. 3 billion. Further, the merged entity 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.

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.

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.

Restrictions on Payment of Dividends

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, organization 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 government of India may exempt banks from this provision by issuing a notification on the recommendation of the Reserve Bank of India. ICICI Bank obtained approval to write off, over a period of three years including fiscal 2002, its issue expenses incurred in respect of its ADS program for preparing its accounts as provided under the Banking Regulation Act.

Prior approval of the Reserve Bank of India is required for a dividend payment above 25.0% of face value of a company's shares or for an interim dividend payment.

The government of India may, on the recommendation of the Reserve Bank of India, exempt a bank from the restrictions on dividend payment.

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. 3.50 billion (US$ 72 million). The government of India, on the recommendation of the Reserve Bank of India, has granted an exemption to the merged entity which allows the inclusion of preference capital in the capital structure of the merged entity for a period of five years, though the merged entity is a bank incorporated after January 15, 1937.

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 the merged entity 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 the merged entity, has to be placed before the board of directors. On approval by the board of directors, the merged entity is 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 and Chief Executive Officer.

The Reserve Bank of India also conducts on-site supervision of selected branches of the merged entity with respect to their general operations and foreign exchange related transactions.

Appointment and Remuneration of the Chairman, Managing Director and Other Directors

The merged entity is required to obtain prior approval of the Reserve Bank of India before it appoints its chairman and managing director and any other executive directors and fixes their remuneration. The Reserve Bank of India is empowered to remove such an appointee on the grounds of public interest, interest of depositors or to ensure the proper management of the merged entity. Further, the Reserve Bank of India may order meetings of the merged entity's board of directors to discuss any matter in relation to the merged entity, 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 the merged entity to elect new directors.

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.

Restriction on Transfer of Shares

The Reserve Bank of India's approval is required for the transfer of shares of the merged entity to an individual or a group which acquires 5.0% or more of the merged entity's total paid up capital.

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.

Secrecy Obligations

The merged entity's obligations relating to maintaining secrecy arise out of common law principles governing its relationship with its customers. The merged entity 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 the merged entity needs to disclose information in its interest; and

o where disclosure is made with the express or implied consent of the customer.

The merged entity is required to comply with the above in furnishing any information to any parties. The merged entity 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 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. The merged entity 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. The merged entity 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. The merged entity 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 the merged entity 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 the merged entity.

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. The merged entity 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 the merged entity.

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 effective, such event of default was waived by the respective lenders pursuant to the terms of such foreign currency borrowing agreements.

Income Tax Benefits

As a banking company, the merged entity is entitled to certain tax benefits under the Indian Income-tax Act including the following:

o The merged entity 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. The merged entity 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 The merged entity is entitled to a tax deduction on the provisioning towards bad and doubtful debts equal to 7.5% of the merged entity's total business income, computed before making any deductions permitted pursuant to the Indian Income-tax Act, to the extent of 10.0% of the aggregate average advances made by its rural branches computed in the manner prescribed. The merged entity 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 The merged entity is eligible to issue tax saving bonds approved in accordance with the provisions of 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, the merged entity's deposits and bonds are prescribed modes of investing and depositing surplus money by charitable and religious trusts.

o The income of non-resident persons and persons not ordinarily resident in India, by way of interest on the merged entity's deposits in a foreign currency is exempt from tax.

Regulations governing Insurance Companies

ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance Company, the subsidiaries of the merged entity offering life insurance and non-life insurance respectively, are subject to the provisions of the Insurance 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, licensing of insurance agents, advertising, sale and distribution of insurance products and services and protection of policyholders' interests. In May 2002, the parliament approved the Insurance (Amendment) Bill 2001, which facilitates the appointment of corporate agents by insurance companies and prohibits intermediaries and brokers from operating as surrogate insurance agents.

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 IMF, 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 indicates 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 is 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.

Restrictions on Sale of the Equity Shares underlying the ADSs and for Repatriation of Sale Proceeds

ADSs issued by Indian companies to non-residents have free transferability outside India. However, under Indian regulations and practice, the approval of the Reserve Bank of India is required for the sale of equity shares underlying the ADSs by a non-resident of India to a resident of India as well as for renunciation of rights to a resident of India. However sale of such shares under the portfolio investment scheme prescribed by the Reserve Bank of India, does not require the approval of the Reserve Bank of India provided the same is made on a recognized stock exchange and through a registered stock broker.

If the prior approval of the Reserve Bank of India has been obtained for the sale of the equity shares underlying the ADSs, then the sale proceeds may be remitted in terms of such an approval. However, 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 broker and a no objection/ tax clearance certificate from the income-tax authority has been produced.

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 has been introduced, subject to sectoral caps, wherever applicable.

An Indian company may sponsor an issue of ADSs with an overseas depository against shares held by its shareholders at a price to be determined by the lead manager. The proceeds of the issue shall 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 Depository 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;

o the non-resident investor, broker, custodian and the overseas depository comply with the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and the guidelines issued thereunder by the government of India from time to time.

MARKET PRICE INFORMATION

Equity Shares

The outstanding equity shares of the merged entity are listed and traded on the Chennai, Delhi, Kolkata and Vadodara Stock Exchanges, the Bombay Stock Exchange or the BSE and on the National Stock Exchange of India Limited or the NSE. At September 2, 613.03 million equity shares were outstanding (including 392.67 million shares issued to shareholders of ICICI pursuant to the amalgamation) and the equity shares were first listed on the Vadodara Stock Exchange in 1997. 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 the equity shares on the NSE; and

o the reported high and low closing prices for the equity shares, translated into U.S. 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 1998.................................     Rs. 54.50   Rs. 35.00    US$ 1.38    US$ 0.89
Fiscal 1999.................................         65.00       20.75        1.53        0.49
Fiscal 2000.................................        275.00       22.70        6.30        0.52
Fiscal 2001.................................        279.65      189.70        5.97        4.05
Fiscal 2002 ................................        193.50       66.75        3.96        1.37
Quarterly prices:
Fiscal 2001:
First Quarter...............................        279.65      189.70        6.26        4.25
Second Quarter..............................        234.00      133.00        5.10        2.90
Third Quarter...............................        182.00      103.60        3.89        2.22
Fourth Quarter..............................        220.00      145.80        4.70        3.11
Fiscal 2002:
First Quarter...............................        193.50      124.60        4.11        2.65
Second Quarter..............................        140.00       66.75        2.92        1.39
Third Quarter ..............................        114.55       71.50        2.37        1.48
Fourth Quarter..............................        144.90       85.95        2.97        1.76
Fiscal 2003:
First Quarter...............................        164.40      111.00        3.36        2.27
Second Quarter (through August 30)..........        158.40      130.10        3.26        2.68
Monthly prices:
March 2002..................................        139.85      118.50        2.86        2.43
April 2002..................................        131.50      111.00        2.68        2.27
May 2002....................................        154.95      111.50        3.16        2.27
June 2002...................................        164.40      133.15        3.36        2.72
July 2002...................................        158.40      134.30        3.25        2.76
August 2002.................................        145.85      130.10        3.01        2.68

On August 30, 2002, the closing price of equity shares on the NSE was Rs. 143.60 equivalent to US$ 2.96 per equity share (US$ 5.92 per ADS on an imputed basis) translated at the noon buying rate of Rs. 48.52 per US$ 1.00 on August 30, 2002.

At September 2, 2002, there were approximately 602,324 holders of record of equity shares, of which 120 had registered addresses in the United States and held an aggregate of approximately 98,851 equity shares.

During the past three years, there were no suspensions in the trading of equity shares by any of the stock exchanges on which the equity shares were listed.

ADSs

ICICI Bank's 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 have been listed on the Calcutta, Chennai, Delhi and Vadodara Stock Exchanges, the BSE and the NSE.

At September 2, 2002, the merged entity had approximately 78.80 million ADSs, equivalent to 157.61 million equity shares, outstanding (including 64.10 million ADSs issued to the ADS holders of ICICI pursuant to the amalgamation). At this date, there were 23 record holders of the merged entity's ADSs, all of which 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 the outstanding ADSs traded under the symbol IBN.

                                                       Price per ADS
                                                --------------------------
                                                    High          Low
                                                --------------------------
Fourth Quarter (from March 28, 2000).........     US$ 15.38   US$ 14.38
Annual prices:
Fiscal 2001..................................         18.75        4.62
Fiscal 2002..................................          7.50        2.50
Quarterly prices:
Fiscal 2001:
First Quarter................................         18.75       11.75
Second Quarter...............................         15.12        7.37
Third Quarter................................          9.00        4.62
Fourth Quarter...............................          9.50        6.00
Fiscal 2002:
First Quarter................................          7.50        5.00
Second Quarter...............................          5.85        2.50
Third Quarter................................          5.30        2.80
Fourth Quarter...............................          6.80        4.00
Fiscal 2003:
First Quarter................................          8.31        4.89
Second Quarter (through August 30)...........          7.54        5.40
Monthly prices:
March 2002...................................          6.60        5.75
April 2002...................................          6.60        4.92
May 2002.....................................          8.06        4.89
June 2002....................................          8.31        6.28
July 2002....................................          7.54        5.74
August 2002..................................          6.80        5.40

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.

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.

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 Depository 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;

o the non-resident investor, broker, custodian and the overseas depository comply with the provisions of the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 and the guidelines issued thereunder by the Central Government from time to time.

Under the foreign investment rules, the following are the applicable restrictions on foreign ownership:

o Under the foreign direct investment scheme, foreign investors may own up to 49.0 % of the merged entity's equity shares subject to conformity with guidelines issued by the Reserve Bank of India from time to time.

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, foreign institutional investors, subject to registration with the Securities and Exchange Board of India and the Reserve Bank of India, and non-resident Indians and overseas corporate bodies may hold in aggregate up to 49.0% of the paid-up equity capital of the merged entity. Provided that (i) no single foreign institutional investor may own more than 10.0% of the merged entity's total paid-up equity capital; and (ii) no single non-resident Indian or overseas corporate body may own more than 5.0% of the merged entity's total paid-up equity capital.

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.

ICICI Bank obtained the approval of the Foreign Investment Promotion Board for its ADS offering in March 2000 which was a foreign direct investment. 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. As of September 2, 2002, foreign investors owned approximately 46.6% of the merged entity's equity in total, of which 25.7% 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 offering, ICICI Bank obtained the approval of the Department of Company Affairs and the relevant stock exchanges.

Equity shares which have been withdrawn from the depositary facility and transferred on the merged entity's 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 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 the merged entity exceeds 15.0% of its total equity under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 1997.

ADSs issued by Indian companies to non-residents have free transferability outside India. However, under Indian regulations and practice, the approval of the Reserve Bank of India is required for the sale of equity shares underlying the ADSs by a non-resident of India to a resident of India as well as for renunciation of rights to a resident of India. However sale of such shares under the the portfolio investment scheme prescribed by the Reserve Bank of India, does not require the approval of the Reserve Bank of India provided the same is made on a recognized stock exchange and through a registered stock broker.

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.

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 has paid dividends consistently every year since fiscal 1996, the second year of its operations.

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. This may be different from the dividend declared for the year.

                                              Dividend per      Total amount of
                                              equity share       dividends paid
                                            ----------------     --------------
                                                                  (in millions)
For fiscal year
1998 .....................................       Rs.   1.00         Rs.   150
1999 .....................................             1.20               162
2000 .....................................             1.20               198
2001 .....................................             1.50               247
2002(1)...................................             4.00(1)            881

--------------

(1) Includes dividend of Rs. 2.00 per share declared for each of the fiscal years 2001 and 2002.

Until May 1997, investors were required to pay tax on dividend income. From June 1997, dividend income was made tax-exempt. However, ICICI Bank was required to pay a 10.0% tax on distributed profits. From fiscal 1999, this tax rate rose to 11.0% because of a 10.0% surcharge imposed on all taxes by the government. For all distributions subsequent to May 2000, ICICI Bank was required to pay a 22.6% tax on distributed profits which included a 20.0% tax and a 13.0% surcharge on such tax. The tax rate was then reduced and ICICI Bank was required to pay a 10.2% tax on distributed profits for all distributions subsequent to May 2001 which included a 10.0% tax and a 2.0% surcharge on such tax. The government of India's budget for fiscal 2003 has now abolished this tax on distributed profits, but investors are required to pay tax on dividend income.

ICICI Bank declared an interim dividend at Rs. 2.00 per equity share in January 2002. ICICI also declared an interim dividend at Rs. 5.50 per equity share in January 2002. Future dividends will depend upon the merged entity's revenues, cash flow, financial condition 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, the merged entity has 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 the merged entity 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, the merged entity is required under the 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). Before declaring dividends, the merged entity is 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 the merged entity from such a requirement. The merged entity requires prior

approval from the Reserve Bank of India to pay a dividend of more than 25.0% of the par value of its shares. The merged entity also requires 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. This may be different from the dividend declared for the year.

                                              Dividend per      Total amount of
                                              equity share       dividends paid
                                            ----------------     --------------
                                                                  (in millions)
For fiscal year
1998......................................       Rs.   4.50         Rs.  1,959
1999......................................             5.50              2,618
2000......................................             5.50              2,641
2001......................................             5.50              3,505
2002(1)...................................            11.00(1)           8,639

-----------------

(1) Includes dividend of Rs. 5.50 per share declared for each of the fiscal years 2001 and 2002.

TAXATION

Indian Tax

The following discussion of Indian tax consequences for investors in ADSs and equity shares received upon redemption of ADSs who are not resident in India whether of Indian origin or not 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 the Section 115AC regime may be amended or modified by future amendments to the Indian 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 on the tax consequences of such acquisition, ownership and sale, including specifically 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 within the four years preceding that year been in India for a period or periods amounting in all to 365 days or more, is in India for a period or periods amounting in all to 60 days or more in that 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 financial year or an Indian citizen who leaves India for the purposes of his employment during the financial 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 Distribution

Dividends distributed by an Indian company after March 31, 2002 are now subject to tax in the hands of ADR holders and shareholders at the rate of 10.0% in accordance with the provisions of Section 115 AC of the Income-Tax Act. The Indian company making such distribution will be required to withhold tax at the rate of 10.2% (inclusive of surcharge) upon the distribution of the dividend, and credit for such deduction may be claimed by the ADR holder or the shareholder, as the case may be, in the country of residence of such holder in accordance with the applicable double taxation treaty between India and such country. In the event that dividend income is taxable at a rate lower than 10.0% under the applicable treaty, the provisions of such treaty shall be applicable and tax may be deducted in accordance with the provisions thereof. United States holders are not entitled to a rate lower than 10.0% under the double taxation treaty between the United States and India.

Taxation on Redemption of ADSs

The acquisition of equity shares upon a redemption of ADSs by a non-resident investor will not give rise to a taxable event for Indian tax purposes.

Taxation on Sale of Equity Shares or ADSs

Any transfer of ADSs outside India by a non-resident investor to another non-resident investor does not give rise to Indian capital gains tax in the hands of the transferor.

Subject to any relief under any relevant double taxation treaty, a gain arising on 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 notice of redemption of the ADS by the Depositary as specified below), the rate of tax is 10.5% (inclusive of surcharge). 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 42.0% (inclusive of surcharge) in the case of foreign companies. The actual rate depends on a number of factors, including without limitation the nature of the non-resident investor. During the period the underlying equity shares are held by non-resident investors on a transfer from the depository upon redemption of ADSs, 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 be applicable in the matter of taxation of any capital gain 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 BSE or the NSE 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 from the date of advice of redemption by the depositary.

Rights

Distribution to non-resident holders 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 tax in the hands of the non-resident holder.

It is unclear as to whether capital gain derived from the sale of rights by a non-resident holder not entitled to exemption under a tax treaty to another non-resident holder outside India will be subject to Indian capital gains tax. If the rights are deemed by the Indian tax authorities to be situated within India, as the merged entity's situs is in India, the gains realized on the sale of rights will be subject to customary Indian taxation as discussed above.

Stamp Duty

Upon the issuance of the equity shares underlying the ADSs, the merged entity is 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 acquisition of equity shares from the depositary in exchange for ADSs representing such equity shares in physical form, an investor would be liable for Indian stamp duty at the rate of 0.5% of the market value of the equity shares at the date of registration. Similarly, a sale of equity shares in physical form by an investor would also be subject to Indian stamp duty at the rate of 0.5% 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, the merged entity's equity shares are compulsorily deliverable in dematerialized form except for trades up to 500 shares only, which may be for delivery in physical form. Under Indian stamp law, no stamp duty is payable on the acquisition or transfer of equity shares in dematerialized form.

Other Taxes

At present, there are no taxes on wealth, gifts and inheritance which apply to the ADSs and underlying equity shares.

Service Tax

Brokerage or commissions paid to stockbrokers in connection with the sale or purchase of shares is subject to a service tax of 5.0%. 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 that are generally applicable to US investors. For these purposes, you are an US investor if you are:

(1) a citizen or resident of the United States under US federal income tax laws;

(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 in securities;

(4) financial institutions;

(5) persons who own the ADSs as part of an integrated investment (including a straddle, hedging or conversion transaction) comprised of the ADS, and one or more other positions for tax purposes;

(6) persons whose functional currency is not the US dollar; or

(7) persons who own, actually or constructively, 10.0% or more of the merged entity's voting stock.

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.

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.

Please consult your tax advisor 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.

Taxation of Dividends

Subject to the discussion under "Passive Foreign Investment Company Rules" below, dividends you receive on the ADSs or equity shares, other than certain pro rata distributions of common shares or rights to acquire common shares or ADSs, 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 rupees, 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. If you realize gain or loss on a sale or other disposition of rupees, it will be US source ordinary income or loss. You will not be entitled to claim a dividends-received deduction for dividends paid by the merged entity.

Taxation of Capital Gains

Subject to the discussion under "Passive Foreign Investment Company Rules" below, you will recognize capital gain or loss for U.S. 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 U.S. source income or loss. You should consult your own tax advisors 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.

Passive Foreign Investment Company Rules

Based upon proposed Treasury regulations, which are proposed to be effective for taxable years after December 31, 1994, and upon certain management estimates, the merged entity does not expect itself or ICICI Bank to be considered a passive foreign investment company for their most recent taxable year or in the foreseeable future. In general, a foreign corporation is a passive foreign investment company 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. The merged entity has based the expectation that it or ICICI Bank is not a passive foreign investment company on, among other things, provisions in the proposed regulations that provide that certain restricted reserves (including cash and securities) of banks are assets used in connection with banking activities and are not passive assets, as well as the composition of our income and assets. Since there can be no assurance that the proposed regulations will be finalized in their current form and the manner of the application of the proposed regulations is not entirely clear, and the composition of the merged entity's income and assets will vary over time, there can be no assurance that the merged entity or ICICI Bank will not be considered a passive foreign investment company for any fiscal year.

If ICICI Bank is treated as a passive foreign investment company 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 U.S. 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 equity shares or ADSs, including, under certain circumstances, a disposition pursuant to an otherwise tax-free reorganization, gain reorganized by you would be allocated ratably over your holding period for the ADS or equity share. The amounts allocated to the taxable year of the sale or other exchange and to any year before the merged entity or 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 125 per cent of the average of the annual distributions on ADSs or ordinary 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 equity shares or ADSs are regularly traded on a "qualified exchange", you may make a mark-to-market election. 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 each year as ordinary income the excess, if any, of the fair market value of the ADSs at the end of the 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 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 will be adjusted to reflect any such income or loss amounts. Any gain recognized on the sale or other disposition of ADSs will be treated as ordinary income.

Special rules apply to determine the foreign tax credit with respect to withholding taxes imposed on distributions on shares in a passive foreign investment company. If you own shares or ADSs during any year in which the merged entity or ICICI Bank is a passive foreign investment company, you must file Internal Revenue Service Form 8621.

USE OF PROCEEDS

Pursuant to ICICI's Registration Statement on Form F-1 (File No. 333-10792), which was declared effective by the Securities and Exchange Commission on September 21, 1999, ICICI registered US$ 315 million of its equity shares, par value Rs. 10 per share, each represented by 0.2 ADSs, and offered and sold 32,142,857 ADSs, each representing five equity shares, at the public offering price of US$ 9.80 per ADS or aggregating US$ 314,999,999. ICICI received net proceeds of US$ 302,400,000 from the sale of these ADSs, after deducting the underwriting discount and actual offering expenses of US$ 12,599,999. The joint global coordinators of this offering were Merrill Lynch (Singapore) Pte. Limited and Morgan Stanley & Co. International Limited.

From September 21, 1999 to May 3, 2002, ICICI had used net offering proceeds of US$ 302,400,000 for financing purposes. This use of proceeds was in line with the use of proceeds described in ICICI's Registration Statement.

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. The merged entity's fiscal year, like ICICI Bank's and ICICI's fiscal year, 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. ICICI Bank's and ICICI's financial statements, including the notes to these financial statements, audited by KPMG, independent accountants, are set forth at the end of this annual report.

The amalgamation, which was consummated in April 2002, was not accounted for in the financial statements of ICICI Bank for fiscal 2002, as the Statement on Accounting Standards No. 141 on business combinations requires that business combinations be accounted for in the period in which they are consummated. ICICI Bank's financial statements for fiscal 2002, therefore, do not include the assets, liabilities and results of operations of ICICI, ICICI Personal Financial Services and ICICI Capital Services. The unaudited pro forma condensed consolidated financial data for ICICI Bank and ICICI have been prepared to illustrate the amalgamation which is being accounted for, under US GAAP, as a step acquisition. Under US GAAP, the acquisition is a reverse merger wherein ICICI is the accounting acquirer and ICICI Bank is the accounting acquiree. The unaudited pro forma condensed consolidated balance sheet has been prepared to give effect to the acquisition transaction as though such transaction had occurred as of March 31, 2002. The unaudited pro forma condensed consolidated statements of income have been prepared to give effect to the acquisition transaction as though such transaction had occurred as of April 1, 2000 for both the unaudited pro forma condensed consolidated statement of income for the year ended March 31, 2001 and the unaudited pro forma condensed consolidated statement of income for the year ended March 31, 2002.

The acquisition of Bank of Madura by ICICI Bank effective March 10, 2001 was accounted for under the purchase method of accounting. Accordingly, ICICI Bank's income statement for fiscal 2001 includes the income and expenses of Bank of Madura from March 10, 2001, the effective date of the acquisition, to March 31, 2001, and ICICI Bank's balance sheet at March 31, 2001 includes the assets and liabilities of Bank of Madura. The assets acquired and liabilities assumed were recorded at estimated fair values as determined by ICICI Bank's management based on information then available and on assumptions made at that time as to future operations.

Although the merged entity has 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 30, 2002. 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 29, 2002 was Rs. 48.83 per US$1.00. The exchange rates used for convenience translations differ from the actual rates used in the preparation of ICICI Bank's and ICICI's financial statements and the unaudited pro forma condensed consolidated financial data for ICICI Bank and ICICI.

ADDITIONAL INFORMATION

Memorandum and Articles of Association

Objects and Purposes

Pursuant to Clause III. A. 1 of the merged entity's Memorandum of Association, the merged entity's main objective is to carry on the business of banking in any part of India or outside India.

Directors' Powers

The merged entity's directors' powers include the following:

o Article 140 of the Articles of Association provides that no director of the merged entity 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 the merged entity (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 the merged entity has 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 the merged entity, 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 the merged entity and that such change would be prejudicial to the interests of the merged entity. However, under the Indian Companies Act, the enforceability of such transfer restrictions is unclear.

Material Contracts

Scheme of amalgamation of Bank of Madura with ICICI Bank

Pursuant to the scheme of amalgamation between ICICI Bank and Bank of Madura, approved by the Reserve Bank of India on February 27, 2002, ICICI Bank acquired Bank of Madura in an all-stock acquisition effective March 10, 2001. ICICI Bank issued equity shares to the equity shareholders of Bank of Madura in the ratio of two equity shares of ICICI Bank, par value Rs. 10 each, fully paid up, for one equity share of Bank of Madura, par value Rs. 10 each, fully paid up. This scheme of amalgamation is attached as an exhibit to this annual report.

Scheme of Amalgamation of ICICI, ICICI Personal Financial Services and ICICI Capital Services with ICICI Bank

Pursuant to the Scheme of Amalgamation among ICICI, ICICI Personal Financial Services, ICICI Capital Services and 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, ICICI, ICICI Personal Financial Services and ICICI Capital Services were merged with ICICI Bank in an all-stock merger. ICICI Bank is the surviving legal entity in the amalgamation. ICICI Bank issued equity shares to the equity shareholders of ICICI in the ratio of one equity share of ICICI Bank, par value Rs. 10 each, fully paid up, for two equity shares of ICICI, par value Rs. 10 each, fully paid up. As there were five equity shares of ICICI underlying each ADR of ICICI and two equity shares of ICICI Bank underlying each ADR of ICICI Bank, ICICI Bank issued ADRs of ICICI Bank to ADR holders of ICICI in the ratio of five ADRs of ICICI Bank for two ADRs of ICICI. For more information about the amalgamation, see "Business-History". This Scheme of Amalgamation is attached as an exhibit to this annual report.

Incorporation by Reference

The merged entity incorporates by reference the information disclosed under "Description of Equity Shares" in ICICI Bank's Registration Statement on Form F-1 (File No. 333-30132).