ICICI Bank - Prepayment Details

Details of ICICI Bank’s Prepayment of the Cost of Dispute Resolution

 Firstly, the cost per dispute must be set by considering the fees payable to an arbitrator, fees, cost and charges of operating the online platform & providing various services, administrative expenses etc. 

 Since cost effectiveness is one of the main objectives of the E-ADR Institution, if we assume that the total cost per dispute (inclusive of all heads of expense/fees/costs) is INR 5000 (ideally could be even lower), then for an organisation prepaying the total cost, it could do so after applying a suitable discount rate, (e.g.: the base rateprescribed by RBI).

 Accordingly, a user such as ICICI Bank would make prepayment as under:

Indicative Total Cost per dispute: INR 5000/-
Indicative Rate of Discount: 8%
Cost per Dispute after Discount: INR 4600/- 
Number of Disputes for which amount is being prepaid (over one year or more): 10000   
Prepayment amount (Total cost per case less discount rate × no of disputes per annum)
= Approximately 4, 60,00, 000/- per annum* 

* This cost which has been prepaid shall be treated as a recoverable (full or in part) in future from the other party on the initiation of the dispute before the E-ADR Institution or based on the final award on the cost at the end of the resolution process.  

The organisation that intends to make such a prepayment may do so on incorporation of the entity managing the E-ADR Institution or at the stage of launch of the functional platform or subsequently as an when they become users of the institution.   

The above numbers are indicative and participants are encouraged to provide other financial models and other methods which would ensure long term financial sustenance of the E-ADR Institution. Participants are also greatly encouraged to device mechanisms which would reduce the Total cost per dispute even below INR 5000 mentioned above. One method that can be adopted would be to provide slabs based on the monetary value of the dispute and the Total cost per dispute may be fixed based on such slabs. E.g. with indicative numbers: Disputes with monetary value of INR 5 – 10 lakhs – Total cost per dispute is INR 5000; disputes with monetary value of INR 1- 5 lakhs - Total cost per dispute is INR 2000;  for dispute less than INR 1 lakh - the total cost per dispute can be lesser.”