Public Issue of ICICI Safety Bonds - August 2001

Under the Umbrella Prospectus approved by the Securities and Exchange Board of India (SEBI) for the year 2001-2002, ICICI is making the third public offering of Unsecured Redeemable Bonds in the nature of Debentures aggregating Rs. 400 crore with a right to retain oversubscription of up to Rs. 400 crore ("ICICI Safety Bonds - August 2001"). The issue will open for subscription on August 16, 2001 and will close on September 5, 2001.

Two premier credit rating agencies have assigned AAA ratings for the bonds: - "LAAA" by ICRA and "CARE AAA" by CARE. The ratings signify highest safety with regard to timely payment of principal and interest.

The Issue offers various options under five types of bonds - Tax Saving Bond, Encash Bond, Regular Income Bond, Money Multiplier Bond and Children Growth Bond.

NRIs/OCBs are also eligible to invest in these bonds (except for Encash Bonds) on both repatriable and non-repatriable basis.

1. Tax Saving Bond
The investor may choose any of the following options in respect of the Tax Saving Bond:

* Subject to TDS as per the then prevailing tax laws
# Rounded off to the nearest multiple of 0.1
$ It has been assumed that a surcharge of 2% of tax is payable in case of all the options.

Option I provides for annual payment of interest. Options II and III are in the nature of a deep discount bond. Hence, no periodic interest is payable under these option.

Full and firm allotment is assured for all valid applications for the Tax Saving Bond.

As per the Finance Act 2001, the maximum limit for taking benefit of the rebate under Section 88 of the Income Tax Act is fixed at Rs. 80,000/-. Out of this, Rs. 20,000/- can be invested only in such eligible issue of capital, the proceeds of which are to be utilised in infrastructure projects.

Tax Saving Bonds offered by ICICI is one such eligible investment for this purpose.

This means that out of the overall limit of Rs. 80,000/-, Rs. 20,000/- can be invested only in such issues. Further to the Rs. 20,000/- one can also invest the balance Rs. 60,000/- in these Bonds to avail the benefit under Section 88. Thus it may be noted that the investors may put the entire amount of Rs. 80,000/- in these bonds for taking benefit of rebate under section 88.

Option III of the Tax Saving Bond, introduced in this issue, is designed to serve the dual purpose of tax benefit as well as Investment. The tenure of the bond is 6 years 6 months, and offers a good yield of 9.5% without tax rebate. Also, since the same is in the nature of a deep discount bond, the tax payment on interest income (i.e. the difference between Face Value and Issue Price) is deferred up to the 7th year. Thus, the investor not only enjoys a tax rebate on his investment, but also earns a fairly good return with postponement of tax payments.

2. Encash Bond

In today's investment scenario, when investors have been badly hit by dwindling stock prices, uncertain returns from mutual funds and low returns from Bank Fixed Deposits, Encash bond provides an excellent investment opportunity to the investors, i.e. good returns coupled with liquidity. In addition to regular interest payment, a premature withdrawal option is given to the investors to facilitate withdrawal of their money anytime after a period of one year. Such encashment can be done across the counter at any of the specified branches of ICICI Bank.

* Subject to TDS as per the then prevailing tax laws
# The yield to the investor if he opts for encashment at the end of the 1st, 2nd, 3rd, 4th and 5th year
@ Rounded off to the nearest multiple of 0.1

3. REGULAR INCOME BOND
The investor may choose any of the following option in respect of the Regular Income Bond:

# Rounded off to nearest multiple of 0.1
* Subject to TDS as per the then prevailing tax rates

Under the Regular Income Bond, an investor can invest for 5 years and earn regular income on a monthly, semi-annual or annual basis under Options I, II and III respectively.

Option III offers a five-year Regular Income Bond with an interest rate of 9.75% p.a., payable annually.

4. MONEY MULTIPLIER BOND (in the nature of Deep Discount Bond)
This Bond has been launched to cater to the needs of various investors who would want to save today to meet the cash flow requirements in near future for events such as purchase of house, car, etc.

The investor may choose any of the following options in respect of the Money Multiplier Bond:

# Rounded off to nearest multiple of 0.1
* Subject to TDS as per the then prevailing tax laws.

The savings under option II doubles in 7 years 3 months. For investors looking for a shorter maturity product, under option I, Rs.5,000 becomes Rs.7,475 in 4 years 5 months.

5. CHILDREN GROWTH BOND
This Bond has been designed to provide for the requirements of any lumpsum amounts, once the child has grown up. Parents may judiciously invest in these options for events such as wedding, higher education and other needs of their children. Under option I, the investment grows to 5 times and under option II the investment grows to 8 times.

There is no Gift Tax or Wealth Tax on these Bonds, so one can gift these Bonds to near and dear ones.

The investor may choose any of the following options in respect of the Children Growth Bond:

# Rounded off to nearest multiple of 0.1
* Subject to TDS as per the then prevailing tax laws.

As per the current tax laws, the difference between the Face value and Issue price of the Money Multiplier Bond/Children Growth Bond would be taxed as interest income in the year of maturity at the then prevailing tax rates. Hence, neither would there be any TDS nor would the investor require to pay any tax during the tenure of the bond as interest does not accrue during this period. This compares favourably with investments offering cumulative interest option in case of investors who have exhausted their 80L limit and who fall in the highest income-tax bracket.

Moreover, in case of an investment made in the Children Growth Bond in the name of a minor child, the Bond would mature after the child grows and attains majority, and therefore, on redemption the interest on these Bonds will be virtually tax free in the beneficiary's hands, assuming that he has no other income.

Money Multiplier Bond/ Children Growth Bond is a very effective tax deferment tool. In an investment offering cumulative interest option, tax is required to be paid every year on the amount of interest accrued whereas in case of Money Multiplier Bond/ Children Growth Bond, tax has to be paid only at the end of the tenure of the bond. This amount of tax deferred every year remains invested in the Bond, thereby increasing the effective yield of the investor. Further, if these Bonds are sold prior to maturity, capital gains earned would be taxed at a lower tax rate.

All the Bonds (except Encash Bonds) are available in Demat mode too. For the investors who are investing for long term, holding the investment has been made more convenient as the same can now be held in dematerialized mode. All the Bonds will be listed on BSE and NSE, and are freely transferable before maturity.

The ICICI Safety Bonds - August 2001 issue provides the investors another opportunity to save at market interest rates and offers various redemption periods and options to choose from. The investor can opt for regular monthly income or invest for 21 years with no intermediate coupon payments or invest in the Tax Saving Bond to help him plan his taxes.

Disclaimer:
Except for the historical information contained herein, statement in this release which contain words or phrases such as "will", "aim", "will likely result", "believe", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", "seek to", "future", "objective", "goal", "project", "should", "will pursue" and similar expressions or variations of such expressions may constitute "forward-looking statement". These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, future levels of non-performing loans, our growth and expansion, the adequacy of our allowance for credit losses, technological changes, investment income, cash flow projections, our exposure to market risks as well as other risks detailed in the reports filed by ICICI Limited with the Securities and Exchange Commission of the United States. ICICI undertakes no obligation to update forward-looking statements to reflect events or circumstances after the date thereof.