Risk Management
Get benefits from customized hedging solutions from plain vanilla options to structured swaps with daily Mark-to-Market (MTM) settlement and flexible margin-based limits.
With the focus on providing complete interest rate risk management solutions, we offer a full suite of interest rate derivative products.
Under an interest rate swap, it is an obligation for the counterparties to pay or receive interest, either fixed or floating as per the agreed terms, on an agreed amount (notional) in the same currency.
ICICI Bank offers a vast range of Option products to cater to the diverse risk management requirements of clients. Our product range varies from plain vanilla options to structured products, enabling us to provide customisable and effective currency risk management solutions to clients.
A Currency option is a contract between a buyer and a seller that gives the buyer the right to buy (Call option) or to sell (Put option) an underlying currency at a future date at an agreed rate (Strike) for an agreed price (Premium).
Similarly, an Interest rate option gives the floating rate borrower the right to place an upper limit on the rate of interest exposure (Cap). A Collar is a combination of a bought Cap agreement and a sold Floor agreement, or vice versa.
Our risk management solution also comprises various currency swaps to hedge interest rate and the currency risks simultaneously, e.g. an Indian client who has taken a USD loan linked to USD Alternate Reference Rate (ARR) can eliminate the floating Alternate Reference Rate (ARR) risk and the currency risk due to movement in USD/INR by doing a USD-INR full currency swap.