1. Reconciliation of entries outstanding as on 31.03.2018 in the inter-branch and other accounts has been done. Matching of entries outstanding in inter-branch and inter-bank accounts including balances in drafts accounts, suspense accounts, GST, branch adjustment accounts, clearing transactions, funds transfers, balances pertaining to dividends / interest / refund orders paid / payable accounts, advances paid for acquisition of assets etc. is complete up to 31.03.2018. In the opinion of the Bank, consequential effect of the above on the revenue / assets / liabilities is not material.
2. In respect of certain premises having written down value of Rs.3.56 Crore (PY Rs.3.96 Crore) documentation / registration in favour of the bank are yet to be completed pending legal or other formalities.
3. In the case of un-audited branches, the returns / classification of advances as reported by the concerned branches/by the concurrent auditors have been adopted.
4. Claims pending and to be preferred with ECGCI Limited amounting to Rs.79.60 Crore (PY Rs.98.80 Crore) have been considered as realisable for the purpose of computing provisions.
5. No provision has been considered necessary by the Management in respect of certain disputed tax liabilities in view of the judgements in favour of the Bank. Provision for Income Tax act have been considered on the basis of legal opinion obtained.
6. As per Indian Banks’Association (IBA) communication vide letter no LEGAL/CIR Dtd. March 03rd 2015, Ministry of Company Affairs (MCA) has advised that provisions related to Corporate Social Responsibility (CSR) are not applicable to the nationalised banks, as they are not registered under the Companies Act.
7. During the year the bank has issued 11,10,22,997 equity shares of face value of Rs.10 each at a premium of Rs.53.05 per share aggregating to Rs.699,99.99 lakhs through Qualified Institutional Placement (QIP) for augmenting Bank’s Tier I Capital to support growth plans of the Bank and for other general corporate purposes. Further, during the year the bank has issued 19,42,79,628 equity shares of face value of Rs.10 each at a premium of Rs.55.73 per share aggregating to Rs.1277.00 Crore to the Government of India by way of preferential issue. Also during the year, Bank has redeemed Upper Tier II Series Bonds aggregating to Rs.300.00 Crores by exercising call option.
8. During the year Goods and Service Tax (GST) Act has been implemented and income are stated inclusive of GST in consistence with the accounting treatment of service tax.
9. In terms of RBI circular RBI/2015-16/366 FIDD.C0/Plan.BC.23/04.09.01/2015-16 dated April 7, 2016 Banks are allowed for issuance of Priority Sector Lending Certificates (PSLCs) and trade their Priority sector portfolios by selling/buying these certificates. During the year, the bank has purchased PSLCs (Agriculture Category) amounting to Rs.981.00 Crores and has not sold any PSLCs.
10. In terms of the guidelines issued by the Reserve Bank of India, the following disclosures are made:
Gross value of investments includes securities pledged with RBI under LAF Repo of Rs.3,435.00 Crore (PY Rs.300.00 Crore), MSF of Rs.Nil (PY Rs.Nil) and securities pledged with other market participants under Non-Standard Repo of Rs.97.67 Crore (PY Rs.6857.39 Crore) and CBLO of Rs.Nil (PY Rs.Nil) outstanding as on 31.03.2018.
*Includes provision of Rs.174.25 Crore (PY Rs.90.13 Crore) made on NPI.
**excluding RIDF Investments.
Note:
(1) *Total under column 3 should tally with the total of Investments included under the following categories in Schedule 8 to the balance sheet:
a) Shares
b) Debentures & Bonds
c) Subsidiaries/joint ventures
d) Others
(2) Amounts reported under columns 4, 5, 6 and 7 above may not be mutually exclusive.
(3) The column (6) “Unrated Securities” mainly include Special State Government securities of Rs.833.34 Crore, Central Govt. Securities issued as per Capital Infusion Plan of Rs.1,277 Crore,
Equity Shares of Rs.618.46 Crore, Venture Capital Rs.17.70 Crore, Mutual Fund Rs.5.00 Crore, Security Receipt of Rs.329.11 Crore and DISCOM bonds of Rs.447.73 Crore.
** Excludes the investment under RIDF of Rs.3,907.88 Crore outstanding as on Mar 31, 2018.
(iv) Sale and Transfer to/from HTM category
During the year the book value of securities sold under HTM category exceeds 5% of the book value of investments held on HTM category as at the beginning of the year. The details of HTM category on 31.03.2018 are furnished hereunder:
(vi) RBI circular DBR.No.BPBC.102/21.04.048/2017-18 dated April 2, 2018 grants the banks an option to spread provisioning for Mark to Market Losses (MTM Loss) on investments for the quarters ended December 31, 2017 and March 31, 2018, equally over the four quarters commencing with the quarter in which the loss is incurred. However, the Bank has not exercised the option and recognised the mark to market loss on investments in the quarter of incurrence.
(vii) Disclosures on risk exposure in derivatives
a) Qualitative Disclosure
Bank has put in place Board approved derivative policy for undertaking derivative transactions for hedging, trading and for catering to customer requirements as per RBI guidelines. The policy lays down the type, scope and usage with appropriate limits for derivative transactions. From the view point of operational efficiency and risk oversight the derivative desk is segregated into Front Office, Mid Office and Back office with clear segregation of functions.
p. In terms of directions of RBI vide letter no DBR.No.BP15199/21.04.048/2016-17 dt.23.06.2017 and DBR.No.BP.1926/21.04.048/2017-18 dt.28.08.2017 in respect of certain NPA accounts under Insolvency and Bankruptcy code (IBC), bank has fully provided the additional provision of Rs.14979 lakhs required to be provided by 31st March 2018 in respect of such accounts. In this regard RBI has reduced the provisioning requirement from 50% to 40 % vide circular number DBR.No.BP.8756/21.04.048/2017-18 dated 2nd April 2018. The bank, however, has not reduced the provision and maintained the provision as aforesaid.
q. In respect of advances under IBC, provision has been done considering the value of security as per available records in view of uncertainty involved in fair value which will be decided on resolution of the case in NCLT.
r. RBI vide its circular no DBR.N0.BP.BC.101/21.04.048/2017-18 dated 12th February 2018, has issued revised framework on Resolution of Stressed Assets. In pursuance to the revised framework the bank has classified the specific restructured accounts as non performing and accordingly made provision towards such stressed accounts of Rs.116.45 Crores.
s. In view of fraud detected during the year in certain banks, in respect of a Gems and Jewellery borrower Group, the Bank has classified certain accounts as non-performing and made an additional provision of Rs.27.38 Crores by way of abundant caution.
Assets and Liabilities are classified as per the guidelines issued by the Reserve Bank of India and compiled by the management and relied upon by the auditors.
* Figures are broadly net of provision.
** Borrowings in India.
(VI) Disclosure for investments under SDR :-
Pursuant to the master circular DBR.BPBC.No.101/21.04.132/2014-15 dated June 08, 2015, on Strategic Debt Restructuring Scheme, Point No. 7, and acquisition of shares under SDR mechanism is exempted from regulatory ceilings/restrictions on Capital Market Exposures, investment in Para-Banking activities and intra-group exposure.
Details of shares held under SDR mechanism and details of the same as on 31.03.2018 are as under:
The net funded exposure of the Bank in respect of foreign exchange transactions with each country is within 1% of the total assets of the Bank and hence no provision is required to be made as per the Reserve Bank of India Circular DBOD. BPBC.71/21.01.103/2002-03 dated 19.02.2003 read with DBOD. BPBC.96/21.04.103/2003-04 dated 17.06.2004.
11. Disclosure requirements as per Accounting Standards notified by the Ministry of Corporate Affairs under section 133 of Companies Act 2013 read rule 7 of Companies (Act) Rules 2014 where RBI has issued guidelines:
i) There were no material prior period income/ expenditure required to be disclosed as per AS -5.
ii) As per the past practice, the bank does not provide details for the gross amount of each class of depreciable asset as and related accumulated depreciation as required under AS-6.
iii) In terms of accounting policy No.8 of the Bank, some items are recognised on cash basis. However, the management is of the view that since the amount involved is not material, it does not require any disclosure under AS-9.
iv) The Bank is revaluing foreign currency transactions consistently at the weekly average rate of the last week of the preceding month, prescribed by FEDAI, instead of the rate at the date of the transaction as per AS 11. The management is of the view that there is no material impact on the accounts for the year.
*includes part service cost of Rs.78.68 Crore
Actuarial assumptions relating to provisions for compensated absence are given below :
Interest rate :- 7.71% p.a
Salary inflation:-5.50% p.a
Mortality :- LICI 1994-96
Attrition rate :- 10 per thousand p.a
Formula :- projected unit credit method
vii) In view of fraud detected during the year in certain banks, in respect of Two Gems and Jewellery borrower Group, the Bank has classified those accounts as non-performing assets and made necessary prvisions.
# For the purpose of segment reporting in terms of AS-17 and as prescribed in RBI guidelines, the business of the Bank has been classified into four segments i.e., a) Treasury Operations (b) Corporate/ Wholesale Banking, (c) Retail Banking and (d)Other Banking Operations. Segmenting is based on the current policy of the bank.
# Since the Bank does not have any Overseas Branch, reporting under geographic segment is not applicable.
# Expenses wherever directly related to segments have been accordingly allocated to segments and wherever not directly related have been allocated on the basis of segment revenue.
# Assets/liabilities wherever directly related to segments have been accordingly allocated to segments and wherever not directly related have been allocated on the basis of segment revenue/segments assets ratio.
The above information has been compiled based on data available at Head Office.
ix) The Bank has identified the following as related party as per AS-18 on Related Party Disclosures -
a) Key Management Personnel :
a. Dr. Kishore Sansi (EX- M.D & CEO)-Part of the year
b. Shri B.S. Rama Rao (EX-ED)- Part of the year
c. Shri R. A. Sankara Narayanan (M.D & CEO)
d. Shri Nageswara Rao Y (Executive Director)
e. Shri Murali Ramaswami (Executive Director)
The transactions with Related Parties during the year are as under:
a) i) Remuneration paid to Key Management Personnel during the year
b) There has been no transaction with the relatives of the Key Management Personnel during the year.
c) Associates: NIL
x) Leases (AS -19)
a) Lease rent paid for operating leases are recognized as an expense in the Profit & Loss Account in the year to which it relates.
b) Future Lease Rent Payable for operating lease :
c) Future lease rents and escalation in the rent are determined on the basis of agreed terms.
d) At the expiry of initial lease term, generally the Bank has an option to extend the lease for a further pre-determined period.
e) The Bank does not have any financial lease.
xi) Earning Per Share (AS-20)
The Bank reports basic earnings per equity share in accordance with Accounting Standard 20 on “Earnings per Share”. Basic earnings per share for the period is computed by dividing net profit after tax by the weighted average number of equity shares outstanding during the year.
(xii) Accounting for Taxes on Income (AS-22)
The Bank has accounted for Taxes on Income in compliance with Accounting Standard 22 - “Accounting for Taxes on Income” issued by the ICAI. Accordingly, deferred tax assets and liabilities are recognised.
a) The components of deferred tax are as under:
In view of the application of ICDS (Income Computation and Disclosure Standards) from the year 2017-18, provisions of AS 22 in respect of DTL on Investments under HTM category are not applicable.
b) During the financial year 2017-18, the Bank has recognised DTA in respect of provision made in excess of deduction allowable u/s 36(i)(vii)(a) of the Income Tax Act.
c) Amount of provisions made for Income Tax during the year:
(xiii) In the opinion of the Management, there is no material impairment of any of the Fixed Assets of the Bank as per Accounting Standard 28 - Impairment of Assets.
d) During the current financial year RBI has levied penalty of Rs.93.61 lacs (Previous year Rs.18.31 lacs).
(iv) During the year 2017-18 the Bank had issued 453 Letters of Undertaking (LoU) amounting to USD 139107187.37 covering imports of goods into India. These Letters of Undertaking have been issued after due assessment of its financial impact on the Bank and with the approval of the competent authorities. As on the date of balance sheet 150 Letters of Undertaking amounting to USD 55495216.68 (approximately Rs.361.69 Crore @ USD 1 = Rs.65.175) are outstanding which, in the opinion of the management, will not have any significant impact on the Bank’s financial position.
(v) Provision coverage ratio (PCR): Provision Coverage ratio as of 31.03.2018 is 59.39% (previous year 58.15%) as per RBI guidelines. The Bank has achieved the PCR as envisaged in RBI circular DBOD. No.BPBC.87-21.048/2010-11 dt.21.04.2011.
12. Intra Group Exposure: -
a) Total Amount of Intra group Exposures: NIL
b) Total amount of top-20 intra group exposures: NIL
c) Percentage of intra group exposures to total exposure of the bank on borrowers/customers: NIL
d) Details of breach of limits on intra-group exposures and regulatory action thereon, if any: NIL
13. Un hedged Foreign Currency Exposure:
(To the extent bank has been able to ascertain from borrowers and as certified by bank and relied upon by auditors)
Incremental provisioning as on 31.03.2018: Rs.3.70 Crore Regulatory requirement for incremental capital: Rs.5.90 Crore
14 (b) Qualitative disclosures around LCR:
(a) The main drivers of their LCR results and the evolution of the contribution of inputs to the LCR’s calculation over time:
The main drivers of the LCR is HQLA, the involvement of healthy HQLA not only improve the LCR percentage but also increase the ability of the bank to meet the liquidity requirement upto 30 days.
(b) Intra-period changes as well as changes over time:
Not Applicable
(c) The composition of HQLA:
The composition of HQLA is divided into Level 1 Asset and Level 2A & Level 2B.
Level 1 Asset includes:
i. Cash including cash reserves in excess of required CRR.
ii. Government securities in excess of the minimum Statutory Liquidity Ratio (SLR) requirement.
iii. Within the mandatory Statutory Liquidity Ratio(SLR) requirement, Government securities to the extent allowed by Reserve Bank of India (RBI), under Marginal Standing Facility (MSF).
iv. Marketable securities issued or guaranteed by foreign sovereigns satisfying all the following conditions:-
(a) Assigned a 0% risk weight under the Basel II standardized approach for credit risk.
(b) Traded in large, deep and active repo or cash markets characterized by a low level of concentration and proven record as a reliable source of liquidity in the markets (repo or sale) even during stressed market conditions.
(c) Not issued by a bank/financial institution/NBFC or any of its affiliated entities.
Level 2 assets (comprising Level 2A assets and Level 2B assets) can be included in the stock of liquid assets, subject to the requirement that they comprise no more than 40% of the overall stock of HQLAs after haircuts have been applied.
Level 2A and Level 2B assets would comprise of the following:
Level 2A Assets includes:
A minimum 15% haircut should be applied to the current market value of each Level 2A asset held in the stock. Level 2A assets are limited to the following:
1) Marketable securities representing claims on or claims guaranteed by sovereigns, Public Sector Entities (PSEs) or multilateral development banks that are assigned a 20% risk weight under the Basel II Standardised Approach for credit risk and provided that they are not issued by a bank/ financial institution/NBFC or any of its affiliated entities.
2) Corporate bonds, not issued by a bank/financial institution/NBFC or any of its affiliated entities, which have been rated AA- or above by an Eligible Credit Rating Agency.
3) Commercial Papers not issued by a bank / Primary dealers (PD)/financial institution or any of its affiliated entities, which have a short-term rating equivalent to the long-term rating of AA- or above by an Eligible Credit Rating Agency.
Level 2B Assets includes:
A minimum 50% haircut should be applied to the current market value of each Level 2B asset held in the stock. Further, Level 2B assets should comprise no more than 15% of the total stock of HQLA. They must also be included within the overall Level 2 assets. Level 2B assets are limited to the following:
i. Marketable securities representing claims on or claims guaranteed by sovereigns having risk weights higher than 20% but not higher than 50%, i.e., they should have a credit rating not lower than BBB- as per RBI Master Circular on ‘Basel III - Capital Regulations’.
ii. Common Equity Shares which satisfy all of the following conditions:
a) not issued by a bank/financial institution/NBFC or any of its affiliated entities;
b) included in NSE CNX Nifty index and/or S&P BSE Sensex index.
(d) Concentration of funding sources:
Amount to be received by RBI / Central banks.
(e) Derivative exposures and potential collateral calls:
Not Applicable
(f) Currency mismatch in the LCR:
Not Applicable
(g) A description of the degree of centralization of liquidity management and interaction between the group’s units and
The Fund Management desk in Treasury Management Department (TMD) is centralized liquidity management desk that manages the flow of funds between the two units.
(h) Other inflows and outflows in the LCR calculation that are not captured in the LCR common template but which the institution considers to be relevant for its liquidity profile.
Not Applicable
15. As per RBI circular no. DBR.N0.BP.BC.92/21.04.048/2015-16 dated April 18, 2016 on disclosures pertaining to Provisions for frauds is as follows:-
16. The bank has drawn down a sum of Rs. NIL/- (Previous year Rs. NIL) from General Reserve on account of payment of Lapsed Demand Drafts which were taken to general reserve earlier as per RBI approval.
17. Bank is not having adequate information in respect of Suppliers/Service providers covered under Micro, Small and Medium Enterprises Development Act, 2006. In view of this, information required to be disclosed u/s 22 of the said Act is not given.
18. Previous year’s figures have been re-grouped / re-classified / re-cast wherever necessary to conform to current year’s classification.
19. Cash flow has been prepared using Indirect method.
|