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Notes to Accounts of Bank of Baroda

Mar 31, 2017

A-1.1.1 Disclosures on risk exposure in derivatives

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions. The Bank uses financial derivative transactions for hedging; it’s on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk. The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, Value at Risk (VaR) and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank’s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

The hedge/ non-hedge (trading) transactions are recorded separately. Derivative contracts designated as hedges are not marked to market unless their underlying is marked to market. Derivative contracts classified as hedge and where underlying is not marked to market are recorded on accrual basis. Trading derivative positions are marked to market and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any, is ignored. Interest income/ expense on interest rate swaps are recognized on daily basis. Gains/ Losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

A.1.1.2 Credit Default Swaps (CDS)

Valuation Methodology- As per RBI guidelines on CDS dated 23rd May, 2011 the banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA Or any other proprietary model if it results in a more conservative valuation. Our Bank uses the FIMMDA curve for valuing our CDS positions, we do not use any internal proprietary model for CDS valuation. No CDS swaps have been entered into during the year.

A-1.2.1. Details of non-performing financial assets purchased/sold

A. Details of non-performing financial assets purchased:

B. Details of non-performing financial assets sold:

C. Non Performing Accounts sold to Securitization Companies

A-1.2.2 Amount of Unsecured advances

The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as tangible security is Nil as per RBI Circular No. DBR.BRBC No.23/21.04.018/2015-16 dated 01st July 2015.

A-1.3 Miscellaneous

A-1.3.1 Amount of Provisions for Taxation during the year

A-1.3.2 Disclosure of penalties imposed by RBI / Overseas Regulators

During the year penalty of Rs.5,00,00,000/- was levied by Reserve Bank of India for FEMA violations related to Import of Goods & Services, penalty of Rs.40,51,869/- was levied by RBI for forged/soiled notes in currency chest.

Penalty of Rs.6,67,000/- was levied on Kenya subsidiary for violation under prudential guidelines for risk classification of Assets and provisioning and violation of prudential guidelines on outsourcing. Penalty of Rs.8,70,000/- was levied in OMAN territory due to delay in Euro Master Visa (EMV) up-gradation project. Rs.57,04,000/- was levied as penalty in Uganda subsidiary for not establishing an in country primary data center and Disaster Recovery Site.

A-1.3.3 Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

A-1.4.1 Disclosures on Strategic Debt Restructuring Scheme (accounts which are currently under the stand-still period)

A-1.4.2 Disclosures on Change in Ownership outside SDR Scheme (accounts which are currently under the stand-still period)

A-1.4.3Disclosures on Change in Ownership of Projects Under Implementation (accounts which are currently under the stand-still period)

A-2.1. Provision on Unhedged Foreign Currency Exposure-

The Bank has not prepared any policy with regard to Currency induced Credit Risk. However, the Bank is following regulatory guideline issued by the Reserve Bank of India.

As on 31.03.2017, the amount of bank’s credit exposure against Unhedged Foreign Currency Exposure of borrowers attracting 80 bps provisions was Rs. 6128.02 Crores. The additional RWA on this exposure is Rs. 921.38 crores against this additional minimum capital requirement is Rs. 94.44 crores.

A-2.2 Draw Down from Reserves

During the Financial Year 2016-17, there has been no draw down from the reserves.

A-3 Disclosure of complaints

I. Customer Complaints (Other than ATM)

* Out of these, all 302 nos. of complaints (Previous year 121 nos.) are pending for less than 30 days.

II. ATM Complaints

A-4. Status of Letters of Comfort

I Letters of Comfort (LOC’s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

II Cumulative position of LOC’s outstanding as on 31.03.2017

The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/ opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank’s subsidiary in that country. As on 31.03.2017, the deposits of the Subsidiary are Rs.228.56 Crores and outside liabilities are Rs.3.36 Crores. However, the net worth of the Subsidiary as on 31.03.2017 is Rs.208.50 Crores and therefore it covers the entire deposits and outside liabilities.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank Negara Malaysia to the extent of the Bank’s 40% shareholding in the joint venture Bank - India International Bank (Malaysia) Bhd’ (IIBMB). As on 31.03.2017, the deposits of IiBmB are Rs.198.55 Crores and other liabilities are Rs.2.09 Crores i.e. total of Rs.200.65 Crores. The net worth of the Subsidiary as on 31.03.2017 is Rs.466.79 crores.

A-5.1 Qualitative Disclosure:

From 1st January 2015, the bank has implemented guidelines on Liquidity Coverage Ratio (LCR) of the Reserve Bank of India.

The LCR standard aims to ensure that a bank maintains an adequate level of unencumbered HQLAs that can be converted into cash to meet its liquidity needs for a 30 calendar day time horizon under a significantly severe liquidity stress scenario. The LCR and monitoring tools are applicable for Indian banks initially w.e.f. 1st January 2015 at whole bank level only i.e. on a stand-alone basis including overseas operations through branches and subsequently at consolidated basis w.e.f. 1st January 2016 i.e. including domestic and overseas subsidiaries.

The LCR has two components:

(i) The value of the stock of high-quality liquid assets (HQLA) in stressed conditions -the numerator.

(ii) Total net cash outflows : The term “Total net cash outflows” is defined as “Total expected cash outflows” minus “Total expected cash inflows” in the specified stress scenario for the subsequent 30 calendar days (the stressed period).-the denominator.

LCR = Stock of High Quality Liquid Assets/Total Net Cash Outflows over the next 30 calendar days > = 100%

According to RBI, the LCR will be introduced in a phased manner starting with a minimum requirement of 60% from January 1,2015 and reaching minimum 100% on January 1, 2019.

As per the RBI guidelines dated 31st March 2015, the Bank has made LCR disclosure on solo basis for the financial year ending March 2016. In terms of extant guideline disclosure on consolidated basis is applicable to the Indian banking system from 1st January 2016 and onwards. As starting from January 2017, banks have to disclose LCR on daily average basis, the bank has computed LCR on daily average basis both for Solo and Consolidated Level for the quarter ended March 2017.

Composition of HQLA

Based on daily averages for the quarter ended March 2017, excess SLR securities constitute the highest portion of HQLA i.e 49.93% followed by Facility to Avail Liquidity for Liquidity Coverage Ratio which constitute 35.50% of HQLA. Level 1 Assets constitute 98.69% of HQLA against minimum 80% mandated by the Reserve Bank of India. Level 2 assets which are lower in quality as compared to level 1 asset as HQLA constitute 1.31% of total HQLA, against the maximum mandated level of 40% and 15% respectively.

Intra-period changes as well as changes over time:

The composition of excess SLR in total HQLA stands high due to demonetization impact, which resulted into accumulation of huge liquidity in form of deposit and was invested in excess SLR securities thereby increasing level of HQLA. The LCR was maximum at 195.28% as on January 2017, 149.46% in February 2017 and 150.91% in March 2017.

Concentration of funding sources

There has been no undue concentration of funding sources and no counterparty is significant in terms of concentration risk in sources of funds. No counterparty contributes more than 1% of the bank’s total liabilities. A significant counterparty is defined as a single counterparty or group of connected or affiliated counterparties accounting in aggregate for more than 1% of the bank’s total liabilities.

Similarly no instrument/product constitutes more than 1% of the bank’s total liabilities. A "significant instrument/product" is defined as a single instrument/product of group of similar instruments/products which in aggregate amount to more than 1% of the bank’s total liabilities. Example of funding instruments/products - wholesale deposits, certificates of deposits, long term bonds, etc. Top 10 depositors of the bank on solo basis constitute 4.19 % of our total deposits.

Currency mismatch in the LCR:

Bank calculates currency wise LCR for all significant currencies. A significant currency is one where aggregate liabilities denominated in that currency amount to 5 per cent or more of the bank’s total liabilities viz USD, EURO, GBP and others.

The LCR for the significant foreign currencies is as under:

Description of the degree of centralization of liquidity management and interaction between the group’s units:

The liquidity management for the Bank on enterprise wide basis is the responsibility of the Board of Directors. Board of Directors has delegated its responsibilities to a Committee of the Board called as the "Risk Management Committee of Board”. The Committee is responsible for overseeing the inter linkages between different types of risk and its impact on liquidity.

Bank has Group ALM Policy which provides the broad guidelines under which all the entities within the Group operate in terms of liquidity and interest rate risk. The bank’s entities operating in foreign countries manage their operational liquidity or liquidity in the short-term on their own on an ongoing basis. The monitoring of liquidity and interest risk management of the overseas operations of the bank is being done by the Risk Management Department of the bank.

The guidelines of the Group ALM policy, unless otherwise specifically exempted, apply to overseas operations as well. All the legal entities of the bank i.e.-subsidiaries, joint ventures and associates manage their operational liquidity on an ongoing basis at their own according to their business models and liquidity requirement. As to the legal entities carrying out banking business, they have their own ALM Policy in line with the host country guidelines as well as RBI guidelines whichever is more stringent

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1 AS-5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies

B-1.1 Bank is providing for employee benefits in accordance with the accounting standard (AS) -15 issued by ICAI. The same is calculated by actuarial valuation.

B-2 AS-15 Employee Benefits

B-2.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007.

B-2.2 Gratuity

The Bank pays gratuity to employees who retire or resign from Bank’s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees.

B-2.3 Pension

B-2.3.1Bank pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank’s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees’) Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees’) Pension Regulations, 1995 are not eligible for Bank’s contribution to Provident fund.

B-2.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organizations’ on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank’s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank, who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

B-2.3 Provident Fund

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank’s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B-2.4 Leave Encashment

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B-2.5 Additional Retirement Benefit

The scheme for additional retirement benefit provides that an officer on Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided the officers satisfy the conditions mentioned in BOB officer’s service regulations.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

B-3 Related Party Disclosures (AS-18)

Names of the Related Parties and their relationship with the Bank:

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Baroda Global Shared Services Ltd

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited.

(Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(xiv) Bank of Baroda (Botswana) Limited

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Baroda Rajasthan Kshetriya Gramin Bank

(iii) Baroda Gujarat Gramin Bank

(iv) Baroda Pioneer Asset Management Company Limited

(v) Indo Zambia Bank Limited

(vi) Baroda Pioneer Trustee Company Private Limited

(c) Joint Ventures

(i) India First Life Insurance Company Limited

(ii) India International Bank (Malaysia) Bhd.

(iii) India Infradebt Limited

Keeping in line with para 9 of the (AS) -18 Related Party Disclosures issued by ICAI of The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises. For other enterprises, no disclosure has been made as all the transactions are done in the ordinary course of business such as Fixed Deposits, interest thereon etc

B-4 AS-22 Accounting for Taxes on Income

The Bank has complied with the requirements of AS 22 on Accounting for Taxes on Income issued by ICAI and has accordingly revalued assets and liabilities @ 34.608% i.e. the rate as per enacted Finance Bill 2016. The net balance of deferred tax Asset as on 31st March 2017 amounting to Rs.4320.75 Crores consists of the following

* Rs. 540.73 crores out of past reserves and balance out of profit.

B-5 AS-24 Discontinuing operations

During the financial year 2016-17 the Bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-6 AS-28 Impairment of Assets

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

B-7 AS-29 Provisions, Contingent Liabilities and Contingent Assets

B-7.1 Movement of provisions for Liabilities (excluding provisions for others)

As per the policy of the Bank, provision for the claims not been acknowledged as debt, has been provided for.

B-7.2 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgment / arbitration awards / out of court settlement/disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

C. Other Notes to Accounts

C-1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2017, the reconciliation of which is in progress.

C-2 Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects for small / medium scale industries.

C-3 Investments

C-3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Investment from “Available for Sale (AFS)” category to “Held to Maturity (HTM)” category and from HTM to AFS category. The resultant depreciation of ‘. 12.38 Crores (previous year ‘. 11.05 Crores) has been charged to the Profit & Loss Account.

C-3.2FCNR (B) Swap with RBI

RBI introduced US Dollar-Rupee concessional swap window for fresh FCNR (B), funds mobilized in any permitted currency for a minimum tenor of three years and above. In this window RBI offered a concessional rate of Swaps to banks only for fresh FCNR (B) deposits mobilized in any of the permitted currencies.

Bank has swapped USD 1,710 Million mobilized with RBI for the corresponding tenor. As the swaps done with RBI were at 3.5% as against the prevailing rate of around 8% there would have been a distortion in profits on the first year as well as on maturity date. To avoid this inherent distortion, and as prescribed by RBI, we have adopted the method of amortization of swap points to even out expenses throughout the tenor of swaps.

C-3.3Profit on sale of investment held under “Held to Maturity” category amounting to Rs. 720.99 crores, which has been transferred to Profit & Loss Account initially and thereafter an amount of Rs. 353.65 crores net of tax and transfer to statutory reserve has been appropriated to Capital Reserve.

C-4 Provision for Taxes

C-4.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

C-4.2 In terms of Income Computation and Disclosure Standards (ICDS) notified by CBDT which are effective from 01.04.2016 and the clarification issued by CBDT through FAQs, the FCTR balance as on 01.04.2016 pertaining to Exchange difference on monetary items of non-integral operations is required to be recognised in the income computation of the previous year relevant to AY2017-18 to the extent not recognised earlier. The balance in FCTR as on 01.04.2016 amounts to Rs. 2238.55 Crs. Based on legal opinion, bank has not considered the opening balance of FCTR for computing taxable income and consequently tax amounting to Rs. 774.71 Crs has not been provided for. Further this will not impact the profit for the year since deferred tax assets has not been recognised to that extent.

C-4.3 Tax paid in advance/tax deducted at source appearing under “other Assets” amounting to Rs.2857.69 (Previous year Rs.5360.77 Crores) is inclusive of Rs.2405.95 Crores (previous year Rs.3616.78 crores) which represents amount adjusted by the department / paid by the bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank’s view, duly supported by counsels opinion and/or judicial pronouncements, additions / disallowances made buy the assessing officer are not sustainable.

C-5 Premises

C-5.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs.23.86 Crores (Previous Year Rs.64.97 Crores).

C-5.2 Premises include assets under construction/ acquisition amounting to Rs.371.70 Crores (Previous Year Rs.336.09 Crores).

C-6 BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court.

C-7 Based on RBI’s clarification that the repatriation of accumulated profits shall not be considered as disposal or partial disposal of interest in non-integral foreign operations, the bank has not recognized exchange gain of Rs.193.36 crore as income arising on repatriation of funds from foreign offices during the year. In the previous year, the bank had recognized an amount of Rs.302.97 crores in the profit and loss account being the proportionate exchange gain in FCTR on repatriation of profits from overseas operations. In the opinion of the management, the circular is not retrospective in nature and has applied the same from financial year 2016-17 onwards and hence no adjustment has been made in respect of previous year.

C-8 As per the RBI notification vide RBI/2016-17/283 dated April18, 2017 banks are required to disclose the divergence in the asset classification and provisioning if the additional provisioning requirements assessed by RBI exceeds 15% of published net profit after tax or additional Gross NPAs identified by RBI exceed 15% of published incremental Gross NPA during reference period.

In this regard, no separate disclosure is made as the divergence is not beyond the above mentioned criteria.

C-9 The Bank has made provision @ 20% on the Secured Sub-standard Advance as against the Regulatory requirement of 15%. However on unsecured sub standard advances, the bank has made provision @ 25% as per regulatory requirement.

C-10 The Reserve Bank of India (RBI) vide DBR.BRBC. No. 76/21.07.001/2015-16 dated 11th February 2016, has prescribed the roadmap for implementation of Indian Accounting Standards (Ind-AS) in the Banks and the Banks needs to disclose the strategy for Ind-AS implementation, including the progress made in this regard. The Bank accordingly, has appointed a consultant to assist in implementation of the Ind-AS. The Bank has also constituted a Steering Committee to oversee the progress made and the Audit Committee of the Board is being apprised of the same from time to time. In terms of the requirement stipulated vide said circular, the Bank has submitted proforma Ind-AS financial statements to the RBI for the half year ended 30thSeptember 2016.

C-11 Figures of previous year have been regrouped/ rearranged wherever necessary, so as to make them comparable with those of the current period


Mar 31, 2014

1. Disclosures on risk exposure in derivatives (i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank''s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under- Conversion factor to be applied on notional principal amount

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

2. Credit Default Swaps (CDS)

As per RBI guidelines on CDS dated 23rd May, 2011 the Banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA or any other proprietary model if it results in a more conservative valuation. Our Bank uses the FIMMDA curve for valuing our CDS positions, Bank does not use any internal proprietary model for CDS valuation.

3. Disclosure of penalties imposed by RBI

During the financial year 2013-14, the Bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949. However, under various rules of RBI related to Currency chest and non-compliance of KYC norms, the Bank has paid penalty of Rs. 3.34 crores during the financial year 2013-14.

4. Off-balance sheet SPVs sponsored (which are required to be consolidated as per accounting norms)

5. Status of Letters of Comfort

I Letters of Comfort (LOC''s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

II Cumulative position of LOC''s outstanding as on 31.03.2014 The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank''s subsidiary in that country. As per audited accounts as on 31.03.2014, the deposits of the Subsidiary are Rs. 137.92 Crores and outside liabilities are Rs. 0.83 Crores. The LOC issued by Bank of Baroda covers this entire amount of Rs. 138.75 Crores i.e. deposit and outside liabilities. However, the net worth of the Subsidiary as on 31.03.2014 is Rs. 222.31 Crores and therefore it covers the entire deposits and outside liabilities.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank of Negara Malaysia to the extent of the Bank''s 40% shareholding in the joint venture Bank-India International Bank (Malaysia) Bhd'' (IIBMB). As on 31.03.2014, the deposits of the Bank are Rs. 273.89 Crores and other liabilities are Rs.4.82 Crores i.e. total ofRs. 278.71 Crores. The net worth of the Subsidiary as on 31.03.2014 is Rs. 591.13 crores.

6. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

7. AS-5 Net Profit or Loss for the period, Prior Period Items and Changes in Accounting Policies In accordance with new RBI circular DBOD.BP.BC. No. 98/ 21.04.13/2013-14 dated 26th February, 2014, pertaining to financial assets sold to Asset Reconstruction Company (ARC)/ Securitization Company, if the sale is at a price below the net book value (NBV), (i.e. Book value less provisions held) the shortfall is debited to the profit and loss account spread over a period of two years. If the sale value is higher than the NBV, excess provision is reversed to profit & loss account in the year the amounts are received as against the existing policy, if the sale is at price below the Net Book Value (i.e Book Value Less Provision held), the short fall is debited to the profit and loss account and if the sale value is higher than the NBV surplus is carried forward and utilized to meet the short fall/loss on account of subsequent sale of Non Performing financial assets.

During the year the bank has recognized a net gain of Rs.4.26 crores in this transaction as per new RBI guidelines.

8. (AS-15) Employee Benefits

B-2.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007.

9. GRATUITY

The Bank pays gratuity to employees who retire or resign from Bank''s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees.

10. PENSION

B. 2.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank''s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees'') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees'') Pension Regulations, 1995 are not eligible for Bank''s contribution to Provident fund.

11. New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organisations'' on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank''s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

12. Prudential Regulatory treatment (reopening of Pension) During the financial year 2010-11, the Bank had reopened the Pension Option for such of its employees who had not opted for the Pension Scheme earlier. As a result of exercise of such option by 18,989 number of employees, the Bank had incurred a liability of Rs.1,829.90 Crores. In terms of the requirements of AS 15 - Employee Benefits, the entire amount of Rs. 1,829.90 Crores was required to be charged to the Profit and Loss Account. However, the RBI had issued a circular no. DBOD.

BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated February 9, 2011, by which such pension amount can be amortised over a period of five year. Accordingly, the Bank has charged an amount of Rs. 1,463.92.Crores (representing four-fifth of Rs.1,829.90 Crores) upto March 31, 2014. During the FY 2013-14, the Bank charged Rs. 365.98 crores to profit and loss account and the unrecognised balance amount of Rs. 365.98 Crores shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employee relating to separated/ retired employees.

13. PROVIDENT FUND

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank''s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

14. LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death. However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

15. ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on Retirement/Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided the officer had completed-twenty five-years of service in Bank. In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank. However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

Notes on Segment Reporting

1. As per guidelines of RBI on compliance with Accounting Standards AS-17, The Bank has adopted "Treasury Operations", Wholesale, Retail and "Other Banking Operations" as Primary business segments and "Domestic" and "International" as secondary / geographic segments for the purpose of compliance with AS-17 on segment Reporting issued by ICAI.

2. Segment revenue represents revenue from external customers.

3. In determining the segment results, the funds transfer price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocated proportionate to the assets of the Segment.

5. Results, Revenue and Capital Employed of International operations are included in other banking operations.

16. Related Party Disclosures (AS - 18)

Names of the Related Parties and their relationship with the Bank:

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Bank of Baroda (Botswana) Limited

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Baroda Rajasthan Kshetriya Gramin Bank

(iii) Baroda Gujarat Gramin Bank

(iv) Baroda Pioneer Asset Management Company Limited

(v) Indo Zambia Bank Limited

(vi) Baroda Pioneer Trustee Company Private Limited

(c) Joint Ventures

(i) India First Life Insurance Company Ltd. (ii) India International Bank (Malaysia) Bhd. (iii) India Infradebt Limited

The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises.

Issue of shares has been made on 18th Jan, 2014 to Government of India. (Resolution dated 15th Jan. 2014 of Share Allotment Committee.)

17. Accounting for Taxes on Income (AS-22)

The Bank has complied with the requirements of AS 22 on Accounting for Taxes on Income issued by ICAI and accordingly deferred tax assets and liabilities are recognized. The net balance of deferred tax assets as on 31st March 2014 amounting to Rs. 791.84 Crores consists of the following:

18. Discontinuing operations (AS-24)

During the financial year 2013-14 the Bank has discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

19. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

20. Provisions, Contingent Liabilities and Contingent Assets (AS-29)

As per the policy of the Bank, provision for the claims, which has not been acknowledged as debt has provided.

21. Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgement / arbitration awards / out of court settlement / disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

22. Other Notes to Accounts

22.1 Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2014, the reconciliation of which is in progress.

22.2 Capital

a During the year, the Bank has allotted 81,58,784 equity shares of Rs. 10/- each at a cash premium of Rs. 664.12 per share (total issue price of Rs. 674.12 per share) to Government of India as determined by the Board in accordance with regulation 76 (1) of SEBI Issue of Capital and Disclosures Requirements Regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs. 550.00 Crores. The resolution in this regard was duly passed in Extra Ordinary General Meeting held on 15th January 2014. b During the year, the Bank has also raised tier 2 capital via bond of Rs. 2000 crores in two trenches of Rs. 1000 crores each.

22.3 Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank''s Scheme for Export Development Projects for small / medium scale industries.

22.4 Investments

22.5 In terms of RBI Guidelines, the bank has transferred a portion of Government Securities (SLR) kept in "Available for Sale" category to "Held to Maturity" category during the year. The resultant depreciation of Rs. 18.97 Crores (previous year Rs. 20.69 Crores) has been charged to the Profit & Loss Account.

22.5 Profit on sale of investments held under "Held to maturity" category amounting to Rs. 17.55 Crores, which has been taken to profit and loss account initially and thereafter an amount of Rs. 8.69 crores net of tax has been appropriated to the capital reserve.

23 Provision for Taxes

23.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

23.2 Tax paid in advance /tax deducted at source appearing under "Other Assets" amounting to Rs. 4826.09 Crores (previous year Rs. 3374.52 Crores) represents amount adjusted by the Department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank''s view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

23.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs. 912.06 Crores (previous year Rs. 850 crores) to the corresponding Special Reserve account during the financial year 2013-14 and reported under Other Reserve.

23.4 Pursuant to Reserve Bankof India (RBI) circular no. DBOD. no.BP.BC.77/21.04.018/2013-14 dated 20th December 2013, the Bank has created deferred tax liability (DTL) on the Special Reserve under section 36(1 )(viii) of the Income Tax Act, 1961. As required by the said RBI Circular, the amount of Rs. 818.90 crores being the provision of DTL on Special Reserve as at March 31, 2013, not previously charged to Profit and Loss Account, has now been adjusted directly from Reserves. Had this amount been charged to the Profit and Loss Account in accordance with generally accepted accounting principles in India, the amount of Profit for the year would have been lower by such amount. Further to above, the bank has created DTL of Rs. 310.01 crores out of current year profit on amount transferred to special reserve during the current financial year.

24 Securitisation

During the year bank has sold Non performing financial assets with Net Book Value of Rs. 253.64 crores (Outstanding less Provisions) to Asset Reconstruction companies on cash and security receipt basis in accordance with RBI guidelines. The bank has made investment of Rs. 494.57 crores in security receipts and the security receipts have been valued at Net Book Value of the financial assets. The security receipts are treated as Non SLR investments.

25. Premises

25.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs. 65.30 Crores (Previous Year Rs. 65.30 Crores) - (Original Cost).

25.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of revaluation included in cost of premises as at end of the year is Rs. 1,782.73 Crores (previous year Rs. 1,778.33 crores) including Rs. 35.85 Crores at overseas offices (previous year Rs. 31.45 crores). The revalued amount net of depreciation is Rs. 1,052.61 Crores (Previous Year Rs. 1,104.26 Crores).

25.3 Premises include assets under construction/acquisition amounting toRs. 154.58 Crores (Previous Year Rs. 98.73 Crores).

26. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court.

27. The Bank has taken over specified Assets & Liabilities of The Memon Co-operative Bank Ltd on ~8h April, 2011 as per approval granted by RBI vide letter no. UBD.COMEROER No. 7814/09.16.901/2010.11 dated 04th March 2011. Further, RBI vide letter no. DBOD.No.BP.1311/21.04.048/2010-11 dated 25th July, 2011 permitted bank to amortize the net deficit arising out of Transfer of Specific Assets and Liabilities over a period of not exceeding three years starting from financial year 2011 -12. An amount of Rs. 62.20 crores was brought forward from previous year, which bank has charged to profit and loss account during the FY 2013-14. Now, the deficit stands fully charged to profit & loss Account.

28. Pending settlement of the proposed wage revision effective from November 2012, an adhoc provision of. Rs. 425 crores is held as at 31st March 2014 and during the year bank has made a provision of Rs. 300 crores. Management is of the opinion that the said provision is adequate.

29. The Bank has made provision @ 20% on the Secured Sub- standard Advance as against the Regulatory requirement of 15%.

30. Figures of previous year have been regrouped/ rearranged wherever considered necessary to conform to current year''s presentation.


Mar 31, 2013

A-1.1.1 Disclosures on risk exposure in derivatives

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank''s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

A.1.1.2 Credit Default Swaps (CDS)

As per RBI guidelines on CDS dated 23rd May, 2011 the Banks are required to value their CDS contracts by using daily CDS curve published by FIMMDA or any other proprietary model if it results in a more conservative valuation. Our Bank uses the FIMMDA curve for valuing our CDS positions, Bank does not use any internal proprietary model for CDS valuation.

A-1.1.3 Amount of Unsecured Advances

The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as security is Rs. 333.35 crores (previous year Rs. 1,033.30 Crores) and the same has been classified as unsecured, forming part of unsecured advances as reflected in schedule 9 of the balance sheet. Such advances to total unsecured advances are 0.79 % (previous year 2.20%). The intangible collateral valued at Rs. 3268.14 crores as per valuation report dated 31st December 2010.

A-1.1.4 Disclosure of penalties imposed by RBI

During the financial year 2012-13, the Bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949. However, under various rules of RBI related to Currency chest, the Bank has paid penalty of Rs. 0.02 crores during the financial year 2012-13.

A-2.1 Draw Down from Reserves

During the financial year 2012-13, there has been no draw down from Reserves.

A-3. Status of Letters of Comfort

I Letters of Comfort (LOC''s) issued during the Current Financial Year

During the current financial year, the Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

II Cumulative position of LOC''s outstanding on 31.03.2013 The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/ opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank''s subsidiary in that country. As per audited accounts as on 31.03.2013, the deposits of the Subsidiary are Rs. 98.56 Crores and outside liabilities are Rs. 0.60 Crores. The LOC issued by Bank of Baroda covers this entire amount of Rs. 99.16 Crores i.e. deposit and outside liabilities. However, the net worth of the Subsidiary as on 31.03.2013 is Rs. 186.80 Crores and therefore it covers the entire deposits and outside liabilities.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank of Negara Malaysia to the extent of the Bank''s 40% shareholding in the joint venture Bank - India International Bank (Malaysia) Bhd'' (IIBMB). As on 31.03.2013, the deposits of the Bank are Rs. 183.71 Crores and other liabilities are Rs. 9.63 Crores i.e. total of Rs. 193.34 Crores. The net worth of the Subsidiary as on 31.03.2013 is Rs. 534.96 crores.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India (ICAI).

B-1. (AS-15) Employee Benefits

B- 1.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007.

B-1.2 GRATUITY

The Bank pays gratuity to employees who retire or resign from Bank''s service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. In accordance with the rule of Gratuity Fund, actuarial valuation of gratuity liability is calculated based on certain assumptions regarding rate of interest, salary growth, mortality and staff attrition as per the Projected Unit credit actuarial method. The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of three different schemes and the entitlement is based on what is most beneficial to employees.

B- 1.3 PENSION

B. 1.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank''s service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from service of the Bank in terms of Bank of Baroda (Employees'') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees'') Pension Regulations, 1995 are not eligible for Bank''s contribution to Provident fund.

B. 1.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organisations'' on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which was introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank''s Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the basic pay and dearness allowance from the salary with a matching contribution by the Bank is being made.

B-1.3.3 Prudential Regulatory treatment (reopening of Pension)

During the financial year 2010-11, the Bank had reopened the Pension Option for such of its employees who had not opted for the Pension Scheme earlier. As a result of exercise of such option by 18,989 number of employees, the Bank had incurred a liability of Rs.1,829.90 Crores.

In terms of the requirements of AS 15 - Employee Benefits, the entire amount of Rs. 1,829.90 Crores was required to be charged to the Profit and Loss Account. However, the RBI had issued a circular no. DBOD. BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated February 9, 2011, by which such pension amount can be amortised over a period of five year. Accordingly, the Bank has charged an amount of Rs. 1,097.94.Crores (representing three-fifth of Rs.1,829.90 Crores) upto March 31, 2013. The unrecognised balance amount of Rs. 731.96 Crores shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employee relating to separated/ retired employees.

B- 1.4 PROVIDENT FUND

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank''s service on or before 31.03.2010. This fund is administered by a trust managed by the Bank. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B- 1.5 LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B- 1.6 ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided the officer had completed-twenty five-years of service in Bank.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided the staff member had completed thirty-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation, additional retirement benefit shall not be payable irrespective of any number of years of service.

Notes on Segment Reporting

1. As per guidelines of RBI on compliance with Accounting Standards AS-17, The Bank has adopted "Treasury Operations", Wholesale, Retail and "Other Banking Operations" as Primary business segments and "Domestic" and "International" as secondary / geographic segments for the purpose of compliance with AS-17 on segment Reporting issued by ICAI.

2. Segment revenue represents revenue from external customers.

3. In determining the segment results, the funds transfer price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocated proportionate to the assets of the Segment.

5. Results, Revenue and Capital Employed of International operations are included in other banking operations.

B-3. Related Party Disclosures (AS - 18)

Names of the Related Parties and their relationship with the Bank:

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Bank of Baroda (Botswana) Limited

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Baroda Rajasthan Kshetriya Gramin Bank

(iii) Baroda Gujarat Gramin Bank

(iv) Baroda Pioneer Asset Management Company Limited

p(v) Indo Zambia Bank Limited

(vi) Baroda Pioneer Trustee Company Private Limited

(c) Joint Ventures

(i) India First Life Insurance Company Ltd.

(ii) India International Bank (Malaysia) Bhd.

(iii) India Infradebt Limited

The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) -18 Related Party Disclosures issued by ICAI, which exempts state controlled enterprises from making any disclosure pertaining to transactions with other related state controlled enterprises.

B-5. Accounting for Taxes on Income (AS-22)

The Bank has complied with the requirements of AS 22 on Accounting for Taxes on Income issued by ICAI and accordingly deferred tax assets and liabilities are recognized. The net balance of deferred tax assets as on 31st March 2013 amounting to Rs. 88.81 Crores consists of the following:

B-6. Discontinuing operations (AS 24)

During the financial year 2012-13 the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-7. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

The Bank has provided for claims against it, which have not been acknowledged as debt as per the policy framed by it.

B-8.1 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon the outcome of court judgement / arbitration awards / out of court settlement / disposal of appeals. No reimbursement is expected in such cases.

C. Other Notes to Accounts

C-1. Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2013, the reconciliation of which is in progress.

C-2. Capital

During the year, the Bank has allotted 1,01,32,920 equity shares of Rs. 10/- each at a premium of Rs. 828.85 per share to Government of India as determined by the Board in accordance with regulation 76 (1) of SEBI Issue of Capital and Disclosures Requirements Regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs. 850.00 Crores.

C-3. Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank''s Scheme for Export Development Projects for small / medium scale industries.

C-4. Investments

C-4.1 In terms of RBI Guidelines, the bank has transferred a portion of Government Securities (SLR) kept in "Available for Sale" category to "Held to Maturity" category during the year. The resultant depreciation of Rs. 20.69 Crores (previous year Rs. 46.64 Crores) has been charged to the Profit & Loss Account.

C-4.2 Profit on sale of investments held under "Held to maturity" category amounting to Rs. 47.45 Crores on redemption of units of Venture Capital funds has been taken to the Profit and Loss Account initially and thereafter an amount of Rs. 24.04 Crores has been appropriated to the Capital Reserve net of taxes and Rs. 8.01 crores has been transferred to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.

C-5 Provision for Taxes

C5.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

C5.2 Tax paid in advance /tax deducted at source appearing under "Other Assets" amounting to Rs. 3,374.52 Crores (previous year Rs. 1,993.11 Crores) represents amount adjusted by the Department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank''s view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

C-5.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs. 850.00 Crores (previous year Rs. 533.85 crores) to the corresponding Special Reserve account during the financial year 2012-13 and reported under Other Reserve.

C-6. Premises

C-6.1 Execution of conveyance deeds is pending in respect of certain properties amounting to Rs. 65.30 Crores (Previous Year Rs. 78.37 Crores) - (Original Cost).

C-6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of revaluation included in cost of premises as at end of the year is Rs. 1,778.33 Crores (previous year Rs. 1,777.43 crores) including Rs. 31.45 Crores at overseas offices (previous year Rs. 30.55 crores). The revalued amount net of depreciation is Rs. 1,104.26 Crores (Previous Year Rs. 1,173.68 Crores).

C-6.3 Premises include assets under construction/acquisition amounting to Rs. 98.73 Crores (Previous Year Rs. 51.87 Crores).

C-7. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda (BOB), had passed a special resolution for voluntary winding up of the Company on 24.09.1990 and the Liquidator was appointed for the same.

BOBFSL had entered into an agreement with BOB pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the Company could not be liquidated due to pending legal cases, a decision to merge BOBFSL with BOB was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Board of Directors of BOB has approved the merger of BOBFSL with BOB in its Board meeting on 28.01.2009 and authorized the Management to file necessary petition for merger of BOBFSL with BOB before the Bombay High Court.

C-8. The Bank has taken over specified Assets & Liabilities of The Memon Co-operative Bank Ltd on 18th April, 2011 as per approval granted by RBI vide letter no. UBD.CO.MEROER No. 7814/09.16.901/2010.11 dated 04th March, 2011. Initially, Rs. 149.25 crores of deficit was calculated considering Rs. 61.10 crores as receivable from DICGC claims. Out of the deficit of Rs. 149.25 Crores on account of the said take over, the Bank has proportionately charged Rs. 49.75 Crores of the said deficit to the Profit and Loss Account during the financial year 2011-12 as approved by RBI vide letter no. DBOD.No.BP.1311/21.04.048/2010-11 dated 25th July, 2011 and an amount of Rs. 99.50 crores was carried forward to be charged proportionately during the remaining period till the financial year 2013-14. During the financial year 2012-13, Rs. 23.75 crores has been received by the Bank from DICGC as final settlement and consequently the deficit increased by Rs. 37.35 crores. Accordingly, an amount of Rs. 74.64 crores (Rs. 49.75 crores being 1/3rd of original deficit of Rs. 149.25 crores and Rs. 24.89 crores being 2/3rd of deficit of DICGC claims of Rs. 37.35 crores) is charged to Profit and Loss Account during the current financial year. The balance amount of Rs. 62.20 crores (1 /3rd of original deficit of Rs. 149.25 crores and 1/3rd of deficit of DICGC claim receipt of Rs. 12.45 crores) will be charged during the next financial year 2013-14.

C-9. The Bank has made provision @ 20% on the Secured Sub- standard Advance as against the Regulatory requirement of 15%.

Further the Bank has made an additional ad-hoc provision of Rs.136.75 Crores for the year ended March 31, 2013 (previous year Rs. 342.79 Crores) in certain non performing domestic advance accounts.

C-10.As per the Government of India notification dated 01st November 2012, Jhabua Dhar Kshetriya Gramin Bank and Nainital Almora Kshetriya Gramin Bank sponsored by Bank of Baroda were amalgamated into Narmada Jhabua Gramin Bank under the sponsorship of Bank of India and Uttarakhand Gramin Bank under the sponsorship of State Bank of India respectively, from the date of publication of the notification in the Official Gazette.

Further, as per the Government of India notification dated 1st January 2013, Hadoti Kshetriya Gramin Bank (sponsored by Central Bank of India), and Rajasthan Gramin Bank (sponsored by the Punjab National Bank) were amalgamated with Baroda Rajasthan Gramin Bank (sponsored by Bank of Baroda). On amalgamation, the name of Baroda Rajasthan Gramin Bank was changed to Baroda Rajasthan Kshetriya Gramin Bank from the date of publication of the notification in the Official Gazette.

C-11. Figures of previous year have been regrouped/ rearranged wherever considered necessary to conform to current year''s presentation.


Mar 31, 2012

A-1.1.1 Disclosures on risk exposure in derivatives

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging, its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank's Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

Conversion factor to be applied on notional principal amount

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

Figures in bracket denote previous year numbers

* In respect of one restructured account, the bank shall amortize the provision towards diminution in fair value of the said advance and the additional provision required for restructured standard asset over a period of 8 quarters starting from the first quarter of financial year 2012-2013 as per the directives from Reserve Bank of India vide their letter dated 2nd April 2012.

A-1.1.2 Amount of Unsecured Advances

The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as security is ' 1033.30 Crores and the same has been classified as unsecured, forming part of unsecured advances as reflected in schedule 9 of the balance sheet. Such advances to total unsecured advances are 2.20 %.

One account with unsecured loan of Rs 277.23 Crores has intangible collateral valued at Rs 1099.28 Crores as per valuation report dated 23.04.2010. In respect of other accounts for unsecured outstanding of Rs 756.07 Crores, the estimated value of intangible security is not taken.

A-1.2.1 Disclosure of penalties imposed by RBI

During the financial year 2011-12, the bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949, or any rules or conditions specified by the Reserve Bank of India in accordance with the said Act.

A-2.1 Draw Down from Reserves

During the financial year 2011-12, there has been no draw down from Reserves.

A-3. Status of Letters of Comfort

i Letters of Comfort (LOC's) issued during the Current Financial Year

During the current financial year Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

ii Cumulative position of LOC's outstanding on 31.03.2012 The Bank has issued the following Letter of Comforts

(i) During financial year 2008-09 to meet the requirements of the overseas/ domestic regulators while seeking their approval for establishing subsidiaries/ opening of branches, the Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank's subsidiary in that country As per audited accounts as on 31.03.2012, the deposits of the subsidiary are Rs 80.90 Crores and outside liabilities are Rs0.46 Lacs The LOC issued by Bank of Baroda covers this entire amount of Rs 81.36 Crores i.e. deposit and outside liabilities. However, the net worth of the subsidiary is Rs 170.33 Crores and as such there is no liability arising on account of operations of the subsidiary for the period ended 31st March 2012.

(ii) During financial year 2010-11, the Bank has issued Letter of comfort to the Bank of Negara Malaysia to the extent of the Bank's 40% shareholding in the joint venture Bank - India International Bank (Malaysia) Bhd' (IIBMB)- The Bank is yet to commence operations and therefore no financial liabilities arise to Bank of Baroda.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India:

B-1. Employee Benefits (AS-15)

B- 1.1 The Bank has adopted the Accounting Standard (AS-15) issued by ICAI, effective from 07.12.2006. The standard has been revised and notified on 17.12.2007. The provisions contained in AS-15 give option to the bank, to charge the transitional liability as an expense in its Profit and Loss Account spread over a period of 5 years. Bank has exercised this option and accordingly made an incremental provision for employee benefits such as pension, gratuity, leave encashment and other retirement benefits to the extent of 1/5th of the total transitional liability commencing from financial year 2007-08, which is crystallized on Actuarial valuation at Rs 901.00 Crores, which has been fully provided as on March 31, 2012

B-1.2 GRATUITY

The Bank pays gratuity to employees who retire or resign from Bank's service, after initial service period of five years. Accordingly, the Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. 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 attrition as per the projected unit credit actuarial method.

The investment of the funds is made according to investment pattern prescribed by the Government of India. The gratuity payable is worked out by way of 3 different schemes and the entitlement is based on what is most beneficial to employees.

B- 1.3 PENSION

B. 1.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank's service on or after 29.9.1995 but before 01.04.2010. The plan provides for a pension on a monthly basis to these employees on their cessation from Bank's service in terms of Bank of Baroda (Employees') Pension Regulations, 1995. Employees covered under Bank of Baroda (Employees') Pension Regulations, 1995 are not eligible for Bank's contribution to Provident fund.

B. 1.3.2 New Pension Scheme

In terms of Bipartite Settlement and Joint Note dated 27.04.2010 between IBA and Employees Organisations' on extending another option for pension, employees joining the services of the Bank on or after 01.04.2010 are eligible for the Defined Contributory Pension Scheme, which is introduced by the Bank in terms of the Joint Note / Settlement dated 27.04.2010, similar to the one governed by the provisions of New Pension Scheme introduced for the employees of Central Government w.e.f. 01.01.2004 and as modified from time to time. Hence they are not eligible for becoming members of Bank's Provident Fund Scheme and Pension Scheme. In respect of the employees of the Bank who have joined the services of the Bank on or after 01.04.2010, deduction towards New Pension Scheme at the rate of 10% of the pay and Dearness Allowance from the salary with a matching contribution by Bank is being made.

B-1.3.3 Prudential Regulatory treatment (reopening of Pension)

During the year 2010-11, the Bank had reopened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of exercise of which by 18,989 employees, the Bank had incurred a liability of Rs 1829.90 Crores.

In terms of the requirements of AS 15 - Employee Benefits, the entire amount of Rs 1829.90 Crores was required to be charged to the Profit and Loss Account. However, the RBI had issued a circular no. DBOD. BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits - Prudential Regulatory Treatment, dated February 9, 2011. In accordance with the provisions of the said Circular, the Bank has charged an amount of Rs 731.96.Crores (representing two-fifth of Rs1829.90 Crores) upto March 31, 2012. The unrecognised balance amount of Rs1097.94 Crores shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employees relating to separated/ retired employees.

B- 1.4 PROVIDENT FUND

The Bank is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees who joined Bank's service on or before 31.03.2010. This fund is administered by a Bank managed trust. Each employee contributes 10% of their basic salary and eligible allowances and the Bank contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

B- 1.5 LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

B- 1.6 ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on his Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided he had completed-25-years of service in Bank.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided he had completed - 30-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation additional retirement benefit shall not be payable, irrespective of any number of years of service

Notes on Segment Reporting

1. As per guidelines of RBI on compliance with Accounting Standards AS-17, The Bank has adopted "Treasury Operations", Wholesale, Retail and "Other Banking Operations" as Primary business segments and "Domestic" and "International" as secondary / geographic segments for the purpose of compliance with AS-17 on segment Reporting issued by ICAI.

2. Segment revenue represents revenue from external customers.

3. In determining the segment results, the funds transfer price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocated proportionate to the assets of the segment.

5. Results, Revenue and Capital Employed of International operations is included in other banking operations.

B-5. Related Party Disclosures (AS - 18)

Names of the Related Parties and their relationship with the Bank:

(a) Subsidiaries

(i) BOB Capital Markets Limited

(ii) BOB Cards Limited

(iii) The Nainital Bank Limited

(iv) Bank of Baroda (Botswana) Limited

(v) Bank of Baroda (Kenya) Limited

(vi) Bank of Baroda (Uganda) Limited

(vii) Bank of Baroda (Guyana) Inc.

(viii) Bank of Baroda (UK) Limited

(ix) Bank of Baroda (Tanzania) Limited

(x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

(xi) BOB Trinidad & Tobago Ltd.

(xii) Bank of Baroda (Ghana) Ltd.

(xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates

(i) Baroda Uttar Pradesh Gramin Bank

(ii) Nainital-Almora Kshetriya Gramin Bank

(iii) Baroda Rajasthan Gramin Bank

(iv) Baroda Gujarat Gramin Bank

(v) Jhabua-Dhar Kshetriya Gramin Bank

(vi) Baroda Pioneer Asset Management Co. Ltd.

(vii) Indo Zambia Bank Limited

(c) Joint Ventures

(i) India First Life Insurance Company Ltd.

(ii) India International Bank (Malaysia) Bhd.

B-6. Discontinuing operations (AS 24)

During the financial year 2011-12 the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

B-7. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of AS 28 Impairment of Assets, no impairment of fixed assets is required in respect of current financial year.

B-8. Provisions, Contingent Liabilities and Contingent Assets (AS-29)

The Bank has provided for claims against the bank which have not been acknowledge as debt as per the policy framed by it.

B-8.1 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon, the outcome of court, arbitration, out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

C. Other Notes to Accounts

C-1. Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2012, the reconciliation of which is in progress.

C-2. Capital

During the year, the Bank has allotted 1,95,77,304 equity shares of Rs 10/- each at a premium of Rs 830.10 per share to Life Insurance Corporation of India as determined by the Board in accordance with regulation 76 (1) of SEBI Issue of Capital and Disclosures Requirements Regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs1644.69 Crores.

C-3. Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank's Scheme for Export Development Projects for small / medium scale industries.

C-4. Investments

C-4.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Government Securities (SLR) kept in "Available for Sale" category to "Held to Maturity" category. The resultant depreciation of Rs 49.01 Crores (previous year Rs75.80 Crores) has been charged to the Profit & Loss Account.

C-4.2Profit on sale of investments held under "Held to maturity" category amounting to Rs 44.20 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs.22.40 Crores has been appropriated to the Capital Reserve, net of taxes and amount transferred to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.

C-5 Provision for Taxes

C5.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

C5.2 Tax paid in advance /tax deducted at source appearing under "Other Assets" amounting to Rs1993.11 Crores (previous year Rs1316.28 Crores) represents amounts adjusted by the department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands, as in the bank's view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

C-5.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs 533.85 Crores to the corresponding Special Reserve account and reported under Other Reserve.

C-6. Premises

C-6.1 Execution of conveyance deeds is pending in respect of certain properties at Rs 78.37 Crores (Previous Year Rs.88.63 Crores) - (Original Cost).

C-6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of the revaluation included in premises as at the year Rs1777.43 Crores (including Rs30.55 Crores at overseas offices) and net of depreciation the revaluation amounts to Rs1173.68 Crores (Previous Year Rs1242.49 Crores).

C-6.3 Premises include assets under construction/acquisition amounting to Rs 51.87 Crores (Previous Year Rs 43.77 Crores).

C-7. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda, had passed a special resolution for voluntary winding up of the company on 24.09.1990 and the liquidator was appointed for the same. BOBFSL entered into an agreement with Bank of Baroda pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the company could not be liquidated due to pending legal cases; a decision to merge BOBFSL with Bank of Baroda was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

The Bank has approved the merger of BOBFSL with Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank to file necessary petition for merger of BOBFSL with BOB before the High Court.

C-8. The Bank has taken over specified Assets & Liabilities of The Memon Co-operative Bank Ltd on 18th April, 2011 as per approval granted by RBI vide letter no. UBD.CO.MEROER No. 7814/09.16.901/2010.11 dated 04th March, 2011. Out of the deficit of Rs 149.25 Crores on account of the said take over, the Bank has proportionately charged Rs 49.75 Crores of the said deficit to the Profit and Loss Account during the year ended March 31, 2012. The balance amount of Rs 99.50 Crores will be charged proportionately during the remaining period till Financial Year 2013-14, as approved by RBI vide letter no. DBOD.No.BP.1311/21.04.048/2010-11 dated 25th July, 2011.

C-9. The Bank has made provision @ 20% on the Secured Sub- standard Advance as against the Regulatory requirement of 15%.

Further the Bank has made an additional ad-hoc provision of Rs 342.79. Crores for the year ended March 31, 2012 (previous year Rs 320.08 Crores) in certain non performing domestic advance accounts.

C-10.The Board of Directors has proposed dividend of Rs17/- per share (on face value of Rs10/-) which is subject to compliance of Section 15 of Banking Regulation Act, 1949 and consequential notification to be issued to this effect by the Government of India under Section 53 of Banking Regulation Act, 1949 and approval of the shareholders.

C-11. Previous Year figures have been regrouped/ rearranged wherever considered necessary to conform current year presentation.


Mar 31, 2011

1.0.0 Disclosures on risk exposure in derivatives :

(i) Qualitative Disclosure

The Treasury Policy of the bank lays down the types of financial derivative instruments, scope of usages, approval procedures and the limits like open position limits, stop loss limits and counter party exposure limits for undertaking derivative transactions.

The Bank uses financial derivative transactions for hedging its on or off balance sheet exposures as well as for market making. Basically, these products are used for hedging risk, reducing cost and increasing the yield in such transactions and for proprietary trading.

The types of risk to which the bank is exposed to are credit risk, market risk, country risk and operational risk, The Bank has risk management policies (approved by Board of Directors of the Bank), which is designed to measure the financial risks for transactions in the trading book on a regular basis, by way of MTM, VaR and PV01, and to set appropriate risk limits. These are monitored by means of reliable and up to date Management Information Systems by the Risk Management Department of the Bank from time to time who, in turn, appraises the risk profile to the Risk management Committee of Directors, which is presided over by the Bank’s Chairman and Managing Director.

The counter parties to the transactions are banks and corporate entities. The deals are done under approved exposure limits. The bank has adopted the current exposure method prescribed by Reserve Bank of India for measuring Credit Exposure on Derivative products as per which the bank sums the total replacement cost (obtained by mark to market of all its contracts with positive value i.e. when the bank has to receive money from the counter party) and an amount for potential future changes in credit exposure calculated on the basis of the total notional principal amount of the contract multiplied by the relevant credit conversion factors according to the residual maturity as detailed herein under:-

The hedge/non-hedge (market making) transactions are recorded separately. Hedging derivatives are accounted for on an accrual basis. Trading derivative positions are marked-to- market (MTM) and the resulting losses, if any, are recognized in the Profit and Loss Account. Profit, if any is not recognized. Income and Expenditure relating to interest rate swaps are recognized on the settlement date. Gains/losses on termination of the trading swaps are recorded on the termination date as income/expenditure.

1.1.1 Amount of Unsecured Advances The amount of advances, for which intangible securities, such as charge over the rights, licenses, authority etc. have been taken as security is Rs. 832.88 crores and the same has been classified as unsecured, forming part of unsecured advances as reflected in schedule 9 of the balance sheet. Such advances to total unsecured advances are 1.70 %

1.1.2 Disclosure of penalties imposed by RBI

During the financial year 2010-11, the bank has not been subjected to any penalty for contravention or non-compliance with any requirement of the Banking Regulation Act, 1949, or any rules or conditions specified by the Reserve Bank of India in accordance with the said Act.

2. Status of Letters of Comfort

A. Letters of Comfort (LOC’s) issued during the Current Financial Year.

During the current financial year Bank has not issued any Letter of Comfort to meet the requirements of the overseas/domestic regulators while seeking their approval for establishing subsidiaries / opening of branches.

B. Cumulative position of LOC’s outstanding on 31.03.2011

During the financial year 2009-10, Bank has issued only one Letter of Comfort to meet the requirements of the overseas / domestic regulators while seeking their approval for establishing subsidiaries / opening of branches. The Letter of Comfort was issued to Reserve Bank of New Zealand for the Bank’s subsidiary in that country.

The subsidiary Bank of Baroda (New Zealand) Ltd. has been registered as a Bank in New Zealand on 01.09.2009.

B. Disclosure in terms of Accounting Standards (AS) issued by the Institute of Chartered Accountants of India:

1. Employee Benefits (AS-15)

1.1 Bank has adopted the Accounting Standard (AS-15) issued by ICAI and effective from 07.12.2006. The standard has been revised and notified on 17.12.2007. The provisions contained in AS-15 give option to the bank, to charge the transitional liability as an expense in its Profit and Loss Account spread over a period of 5 years. Bank has exercised this option and accordingly made an incremental provision for employee benefits such as pension, gratuity, leave encashment and other retirement benefits to the extent of 1/5th of the total transitional liability commencing from financial year 2007-08, which is crystallized on Actuarial valuation at Rs. 901.00 Crores. The unrecognized amount of Rs. 180.20 Crores will be charged by end of March 31, 2012.

1.2 GRATUITY:

The Bank pays gratuity to employees who retire or resign from Bank’s service. The Bank makes contributions to an in-house trust, towards funding this gratuity, payable every year. 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 attrition as per the projected unit credit actuarial method.

The investment of the funds is made according to investment pattern prescribed by the Government of India.

The gratuity payable is worked out by way of 3 different schemes and the entitlement is based on what is most beneficial to employees.

1.3 PENSION

1.3.1 Bank of Baroda pays pension, a defined benefit plan covering the employees who have opted for pension and also to the employees joining the bank’s service on or after 29.9.1995. The plan provides for a pension on a monthly basis to these employees on their cessation from Bank’s service based on the respective employee’s salary and years of qualifying service with the Bank. Employees covered under Bank of Baroda (Employees’) Pension Regulations, 1995 are not eligible for Bank’s contribution to Provident Fund. Pension fund is managed by in-house trustees.

1.3.2 Prudential Regulatory treatment (reopening of Pension option and enhancement of gratuity)

During the year, the Bank reopened the pension option for such of its employees who had not opted for the pension scheme earlier. As a result of exercise of which by 18989 employees, the Bank has incurred a liability of Rs.1829.90 Crores. Further, during the year, the limit of gratuity payable to the employees of the banks was also enhanced pursuant to the amendment to the Payment of Gratuity Act, 1972. As a result, the gratuity liability of the Bank has increased by Rs. NIL.

In terms of the requirements of the AS 15 - Employee Benefits, the entire amount of Rs.1829.90 Crores is required to be charged to the Profit and Loss Account. However, the RBI has issued a circular no. DBOD. BP.BC.80/21.04.018/2010-11 on Re-opening of Pension Option to Employees of Public Sector Banks and Enhancement in Gratuity Limits – Prudential Regulatory Treatment, dated 9th February 2011. In accordance with the provisions of the said Circular, the Bank has charged an amount of ` 365.98 Crores (representing one-fifth of Rs.1829.90 Crores) to the Profit and Loss Account. The unrecognised balance amount of Rs.1463.92 Crores (Rs.1829.90 – Rs.365.98 Crores) shall be accounted for and charged off over the balance period stipulated in the said circular. This amount does not include any employees relating to separated/ retired employees.

Had the said Circular not been issued by the RBI, the profit of the Bank would have been lower by Rs.1463.92 Crores pursuant to application of the requirements of AS 15.

Consequential financial effect on other components of the financial statements, including on Provision for Taxation, deferred Taxation, the transfer to statutory / other reserves & earning per share has not been ascertained.

The Bank has proposed dividend of Rs.753.35 Crores (Rs.16.50 per share) which is subject to compliance of section 15 and consequential notification to this effect by the Government of India under Section 53 of the Banking Regulation Act, 1949.

1.4 PROVIDENT FUND

Bank of Baroda is statutorily required to maintain a provident fund as a part of its retirement benefits to its employees. This fund is administered by a Bank managed trust. Each employee contributes 10% of their basic salary and eligible allowances and Bank of Baroda contributes an equal amount to the fund. The investment of the fund is made according to investment pattern prescribed by the Government of India.

1.5 LEAVE ENCASHMENT

An employee is entitled to encash privilege leave standing to his/her credit subject to a maximum of 240 days on the date of superannuation/Voluntary Retirement/death.

However, on resignation, an employee is entitled to get encashment to the tune of 50% of the privilege leave standing to the credit subject to a maximum of 120 days.

1.6 ADDITIONAL RETIREMENT BENEFIT

The scheme for additional retirement benefit provides that an officer on his Retirement/ Voluntary retirement/ Death shall be eligible for additional retirement benefit, provided he had completed-30-years of service in Bank.

In the same manner, award staff member on Retirement/ Voluntary Retirement/ Death shall be eligible for additional retirement benefit, provided he had completed – 30-years of service in Bank.

However, in case of dismissal, discharge, termination, compulsory retirement and resignation additional retirement benefit shall not be payable, irrespective of any number of years of service.

Notes on Segment Reporting:

1. As per guidelines of RBI on compliance with Accountin Standards AS-17, Bank has adopted “Treasur Operations”, Wholesale, Retail and “Other Bankin Operations” as Primary business segments an “Domestic” and “International” as secondary / geographi segments.

2. Segment revenue represents revenue from externa customers.

3. In determining the segment results, the funds transfe price mechanism followed by the bank has been used.

4. Capital employed for each segment has been allocate proportionate to the assets of the segment.

5. Results, Revenue and Capital Employed of Other Banking operations include figures relating to International Operations.

4. Related Party Disclosures (AS – 18)

Names of the Related Parties and their relationship wit the Bank:

(a) Subsidiaries:

i) BOB Capital Markets Limited

ii) BOB Cards Limited

iii) The Nainital Bank Limited

iv) Bank of Baroda (Botswana) Limited

v) Bank of Baroda (Kenya) Limited

vi) Bank of Baroda (Uganda) Limited

vii) Bank of Baroda (Guyana) Inc.

viii) Bank of Baroda (UK) Limited

ix) Bank of Baroda (Tanzania) Limited

x) Baroda Capital Markets (Uganda) Limited. (Subsidiary of Bank of Baroda Uganda Ltd.)

xi) BOB Trinidad & Tobago Ltd.

xii) Bank of Baroda (Ghana) Ltd.

xiii) Bank of Baroda (New Zealand) Ltd.

(b) Associates: (i) Baroda Uttar Pradesh Gramin Bank

(ii) Nainital-Almora Kshetriya Gramin Bank

(iii) Baroda Rajasthan Gramin Bank

(iv) Baroda Gujarat Gramin Bank

(v) Jhabua-Dhar Kshetriya Gramin Bank

(vi) Indo Zambia Bank Limited

(vii) Baroda Pioneer Asset Management Co. Ltd.

(c) Joint Ventures

i) India First Life Insurance Company Ltd.

ii) India International Bank (Malaysia) Bhd.

(D) Key Management Personnel:

* Amount includes arrears on account of VI pay commission and incentives.

The transactions with the Subsidiaries and Associate Banks have not been disclosed in view of para 9 of the (AS) – 18 Related Parties Disclosure, which exempts state controlled enterprises from making any disclosure pertaining to their transactions with other related parties which are also state controlled.

7. Discontinuing operations (AS 24)

During the financial year 2010-11 the bank has not discontinued the operations of any of its branches, which resulted in shedding of liability and realization of the assets and no decision has been finalized to discontinue an operation in its entirety, which will have the above effect.

8. Impairment of Assets (AS-28)

In view of the absence of indication of material impairment within the meaning of clause 5 to clause 13 of Accounting Standard-28 “Impairment of Assets”, no impairment of fixed assets is required in respect of current financial year.

9. Provisions, Contingent Liabilities and Contingent Assets (AS-29)

9.2 Contingent Liabilities

Such liabilities as mentioned at Serial No (I) to (VI) of Schedule 12 of Balance Sheet are dependent upon, the outcome of court, arbitration, out of court settlement, disposal of appeals, the amount being called up, terms of contractual obligations, development and raising of demand by concerned parties respectively. No reimbursement is expected in such cases.

C. Other Notes to Accounts

1. Balancing of Books and Reconciliation

Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed upto 31.03.2011, the reconciliation of which is in progress.

2. Capital

During the year bank has allotted 2,72,79,579 equity shares of Rs.10/- each at a premium of Rs. 892.14 per share to Govt. of India as determined by the Board in accordance with regulation 76 (1) of SEBI ICDR regulation on preferential basis. The total amount of capital received by the Bank on this account is Rs. 2,461.00 Crores and consequently the Government holding have increased from 53.81% to 57.03%.

3. Capital Reserves

Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects for small / medium scale industries.

4. Investments

4.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Government Securities (SLR) kept in “Available for Sale” category to “Held to Maturity” category. The resultant depreciation of Rs. 75.80 Crores (previous year Rs. 3.25 Crores) has been charged to the Profit & Loss Account.

4.2 Profit on sale of investments held under “Held to maturity” category amounting to Rs..41.92 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs. 20.99 Crores has been appropriated to the Capital Reserve, net of taxes and transferred to Statutory Reserve under section 17 of the Banking Regulation Act, 1949.

5 Provision for Taxes

5.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

5.2 Tax paid in advance / tax deducted at source appearing under “Other Assets”

amounting to Rs.1958.16 Crores (previous year Rs.1293.49 Crores) represents amounts adjusted by the department / paid by the Bank in respect of disputed tax demands for various assessment yeaRs. No provision is considered necessary in respect of the said demands, as in the bank’s view, duly supported by counsels opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

5.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax

Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs. 335.39 Crores to the corresponding Special Reserve account and reported under Other Reserve.

6. Premises-

6.1 Execution of conveyance deeds is pending in respect of certain properties at Rs. 88.63 Crores (Previous year Rs..65.30 Crores) - (Original Cost).

6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of the revaluation included in premises as at the year Rs. 1747.83 Crores) and net of depreciation the revaluation amounts to Rs.1223.90 Crores (Previous Year Rs. 1321.25 Crores).

6.2 Premises include assets under construction / acquisition amounting to Rs. 43.77 Crores (Previous year Rs. 63.93 Crores).

7. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda, had passed a special resolution for voluntary winding up of the company on 24.09.1990 and the liquidator was appointed for the same.

BOBFSL entered into an agreement with Bank of Baroda pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f.28.2.1991. As the company could not be liquidated due to pending legal cases; a decision to merge BOBFSL with Bank of Baroda was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

Bank has approved the merger of M/s. BOB Fiscal Services Limited with Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank to file necessary petition for merger of BOBFSL with BOB before the High Court.


Mar 31, 2010

1. Balancing of Books and Reconciliation

1.1 The balancing / Reconciliation of control accounts with subsidiary ledgers / registers is in progress in certain branches.

1.2 Initial matching of debit and credit outstanding entries in various heads of accounts included in Inter office Adjustments has been completed up to 31.03.2010, the reconciliation of which is in progress.

1.3 Reconciliation of accounts with banks, Nostro, Drafts / TTs payable, Suspense, dividend / Interest / refund orders paid / payable etc. is in progress.

The impact, if any, on the Profit and Loss Account and the Balance Sheet, though not quantified, in the opinion of the management will not be material.

2. Capital Reserves

2.1 Capital Reserve includes appreciation arising on revaluation of immovable properties and amount subscribed by Government of India under the World Bank’s Scheme for Export Development Projects / Industrial Export Projects for small / medium scale industries.

2.2 During the current financial year, the Bank has revalued one foreign immovable property by an amount of Rs. 3.10 Crores. The amount of revaluation has been shown as an addition to Fixed Assets and credited to Revaluation Reserve Account under Capital Reserves as part of Reserves and Surplus.

3. Investments

3.1 In terms of RBI Guidelines, during the year, the bank has transferred a portion of Government Securities (SLR) kept in “Available for Sale” category to “Held to Maturity” category. The resultant depreciation of Rs.3.25 Crores (previous year Rs. 38.22 Crores) has been charged to the Profit & Loss Account.

3.2 Profit on sale of investments held under “Held to maturity” category amounting to Rs.255.43 Crores has been taken to the Profit and Loss Account and thereafter an amount of Rs.126.59 Crores has been appropriated to the Capital Reserve, net of taxes and transfer to Statutory Reserve under section 17 of the Banking Regulation Act, 1949

4. Provision for Taxes.

4.1 Provision for Taxes has been arrived at after due consideration of decisions of the appellate authorities and advice of counsels.

4.2 Tax paid in advance / tax deducted at source appearing under “Other Assets” amounting to Rs. 1293.49 Crores (previous year Rs 1019.84 Crores) represents amounts adjusted by the department / paid by the Bank in respect of disputed tax demands for various assessment years. No provision is considered necessary in respect of the said demands as in the bank’s view, duly supported by counsels’ opinion and / or judicial pronouncements, additions / disallowances made by the Assessing Officer are not sustainable.

4.3 The Bank has claimed deduction under section 36(1) (viii) of the Income-tax Act,1961 in respect of the eligible business as specified in the said section and has accordingly transferred a sum of Rs.270 Crores to the corresponding Special Reserve account.

5. During the year, the bank has not annulled the forfeiture of any equity shares (previous year 100 equity shares).-

6. Premises-

6.1 Execution of conveyance deeds is pending in respect of certain properties aggregating to Rs 65.30 Crores (Previous year Rs.79.72 Crores) - (original cost).

6.2 Certain properties of the Bank are stated at revalued amounts. The gross amount of the revaluation included in premises as at the year-end is Rs.1768.34 Crores (Previous Year Rs.1766.66 Crores) and net of depreciation the revaluation amounts to Rs. 1321.25 Crores (Previous year Rs.1448.34 Crores).

6.3 Premises include assets under construction / acquisition amounting to Rs.96.87 Crores (Previous year Rs.74.79 Crores).

7. During the year ended March 31, 2010, Tier II Bonds amounting to Rs. 320.00 Crores have been redeemed and Tier I Bonds amounting to Rs. 900.00 Crores and Tier II Bonds amounting to Rs. 1000.00 Crores (Previous year Rs.1800.20 Crores) were raised.

8. Other Reserves include an amount of Rs.943.95 Crores (previous year Rs.673.95 Crores) on account of special reserves created under requirements of Income Tax Act.

9. Bank has made a provision of Rs. 300.00 Crores (Previous year Rs 325.00 Crores) for the year on an estimated basis for salary revision of officers & award staff. The accumulated provision on this account is Rs. 725 crores on 31.03.2010 against such revision due w.e.f. November 1, 2007.

10. BOB Fiscal Services Limited (BOBFSL), erstwhile wholly owned subsidiary of Bank of Baroda, had passed a special resolution for voluntary winding up of the company on 24.09.1990 and the liquidator was appointed for the same. BOBFSL entered into an agreement with Bank of Baroda pursuant to which entire assets and liabilities of BOBFSL were transferred to BOB as a going concern / as sale in liquidation of the entire business w.e.f. 28.2.1991. As the company could not be liquidated due to pending legal cases; a decision to merge BOBFSL with Bank of Baroda was taken in the Annual General Meeting of BOBFSL held on 30th March 2007.

Bank has approved the merger of M/s. BOB Fiscal Services Limited with Bank of Baroda in its Board meeting on 28.01.2009 and authorized Bank to file necessary petition for merger of BOBFSL with BOB before the High Court. Accordingly, the legal formalities for the merger are under process and pending such formalities; no impact of the same is given in accounts.

11. During the year Bank has sold 6.5% stake in UTI AMC Ltd. and UTI Trustee Co Pvt Ltd resulting which Bank’s stake has reduced to 18.5% in both the companies. Accordingly these companies have been derecognized as associates.

12. As per the RBI circular DBOD.No.BP.BC.82/21.04.048/2009- 10 dated 30-03-2010, the last date for payment of 75% of the overdue portion of the other farmers have been extended from 31-12-2009 to 30-06-2010 and the banks are allowed to treat such accounts as standard assets. However, keeping in view of the inherent weakness in such accounts, as a prudent measure, bank has continued to classify such accounts as NPA.

13. Previous year figures have been regrouped / rearranged wherever considered necessary.

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